Property Plant and Equipment

Question: Discuss about the Property Plant and Equipment. Answer: Introduction: It is clear that the conduct of the general manager as well as the accountant of Pringles Limited were unethical. A company can change its method of depreciation anytime but for the same there has to be a valid reason so as to satisfy the shareholders about such a change. Further to this, no company can make changes in its accounting principles and estimates simply because they want to manipulate the actual profits made by the company in order to show consistency in the performance during years of recession as well. This would defeat the very principle of true and fair view. There are two ethical issues which have occurred in this case study. First and foremost, the general manager, Mr. Peter Pringle should not have asked the accountant to make such adjustments which would ensure that the company has been making profits during years when the economy was in a recession. The general manger is an employee of the company and he has no rights to mislead the owners i.e. the shareholders of the company. His stance is unethical. Although he had not asked the accountant to make changes in the depreciation method yet the same is unethical on his part to ask Marion to find a way wherein the profits of the company can be spread over a few years. Further he also agreed to Marions solution and the fact that the reason for such a change was also not disclosed in the notes (McNamara, 2010). Thus Peter Pringle has misinformed the shareholders by hiding the actual details. The second issue is that the accountant, Marion has also behaved in an unethical manner. An accountant can change the method of depreciation from straight line to sum of years digit method but only if there is a change in the expected method of consumption of the asset which would yield the expected benefits as per AASB 116 (aasb.gov.au., 2009). However in the present case the accountant has not adhered to the accounting standards and changed the depreciation method simply because the company wanted to show lesser profits. This is in contravention to AASB 116. Further to this the standard also specifies that adequate disclosure in case of change in the accounting estimate should be made with reasons about such a change in the notes to accounts but the same has also not been disclosed by Marion. Therefore in the present case both the general manager and the accountant are held responsible for the said act as the companys personnel should not ask for such an action from the accountant and the accountant should also have objected to the same and informed the shareholders of the company of such an issue (Fazal, 2013). A companys shareholders appoint the general manager on trust that he or she would ensure that the accounts are presented in a fair manner which would reveal the true picture of the companys financial performance. Further an accountant is considered to be very high on his profession and is expected to act ethically in accordance to the various accounting principles which would reveal the true scenario of the companys performance. Thus the fact that the actual financial situation of the company is being painted dark by the general manager and the accountant of Pringles Ltd. is unethical. References aasb.gov.au., (2009), AASB 116 Property Plant and Equipment, Available at https://www.aasb.gov.au/admin/file/content105/c9/AASB116_07-04_COMPjun09_01-09.pdf (Accessed 09th January 2017) Fazal,H., (2013), Is change in Depreciation method a change in accounting policy or accounting estimate?, Available at https://pakaccountants.com/change-in-depreciation-method-a-change-in-policy-or-estimate/ (Accessed 09th January 2017) McNamara, C., (2010), Complete Guide to Ethics Management : An Ethics Toolkit for Managers, Available at https://managementhelp.org/businessethics/ethics-guide.htm (Accessed 09t January 2017)