Financial Reporting Issues in Context

Case Study scenarios contain numerous financial reporting issues — many SUBTLE. Effective identification requires:

• Knowing the standards thoroughly (foundation from FAR, CR modules)
• Recognising scenario triggers
• Reading carefully — implications often implied not explicit
• Considering interactions between standards
• Applying professional scepticism

Common scenario triggers and likely IFRS issues:

Approach to identifying issues in Case Study answers:

For each transaction or balance, ask:

1. What IFRS standard(s) apply?
2. Is recognition appropriate?
3. How should it be measured?
4. How should it be presented?
5. What disclosure is required?
6. Are there interactions with other standards?

Critical — ALWAYS consider:

1. Recognition vs no recognition:

• Asset/liability/income/expense criteria met?
• Recognition off vs on balance sheet implications

2. Measurement basis:

• Historical cost
• Fair value
• Amortised cost
• Recoverable amount
• Settlement amount

3. Presentation:

• Statement classification (current vs non-current; operating vs financing)
• P&L vs OCI
• Aggregation vs disaggregation
• Discontinued operations separation (IFRS 5)

4. Disclosure:

• Standard-specific requirements
• Material judgements (IAS 1)
• Estimates and assumptions (IAS 1)
• Risk disclosures (IFRS 7 financial instruments)

EARNINGS MANAGEMENT INDICATORS:

Apply professional scepticism — common indicators in Case Study:

• Aggressive revenue recognition (early; bill-and-hold; channel stuffing)
• Capitalising costs that should be expensed (e.g., R&D where development criteria not met)
• Manipulating provisions ("cookie jar" reserves)
• Improper classification (operating vs non-operating)
• Off-balance sheet financing (despite IFRS 16 closing many gaps)
• Window dressing (year-end transactions reversed early next year)
• "Big bath" charges in poor years to inflate future
• Manipulation of estimates (depreciation lives; impairment timing)
• Goodwill impairment delay or avoidance
• Inappropriate use of OCI (vs P&L) to manage earnings

If any indicators present in scenario: identify; explain implications; recommend audit/review; consider professional/ethical issues.

Alternative Performance Measures (APMs):

• Common in scenarios: "underlying profit", "adjusted EBITDA"
• ESMA guidelines; FRC scrutiny
• Reconciliation to IFRS measures required
• Should not be more prominent than IFRS
• Adjustments should be consistent year-on-year
• Symmetrical treatment (gains and losses)
• Common APM "adjustments" that warrant scrutiny:
  • Recurring restructuring costs as "exceptional"
  • Acquisition-related costs as "non-underlying"
  • Impairments excluded
  • Share-based payments excluded

Below are the most commonly tested IFRS standards in Case Study scenarios with key application points.

IFRS 15 — Revenue from Contracts with Customers:

Five-step model:

1. Identify the contract
2. Identify the performance obligations (POs)
3. Determine the transaction price
4. Allocate transaction price to POs
5. Recognise revenue when (or as) PO satisfied

Key Case Study issues:

• Multiple POs in single contract: software + implementation + support — separate POs typically
• Variable consideration: discounts, rebates, performance bonuses, returns; constraint applies (only include if highly probable no significant reversal)
• Significant financing component: long-term contracts where payment timing differs from performance
• Over time vs point in time:
  • Over time: customer simultaneously receives benefits; OR customer controls asset as created; OR no alternative use AND right to payment for work to date
  • Point in time: control transfer (legal title; physical possession; risks/rewards; customer acceptance)
• Principal vs agent: who controls goods/services before transfer to customer? Principal recognises gross; agent net
• Bill-and-hold: revenue recognised pre-delivery only if specific criteria met (substantive reason, separately identifiable, ready to be physically transferred, no ability to use)
• Right of return: refund liability + asset for product to be returned
• Warranties: assurance type vs service type (separate PO if service)
• Loyalty programs: separate PO; allocation based on relative standalone selling price

IFRS 16 — Leases:

Lessee:

• Right-of-use (RoU) asset and lease liability recognised
• Lease liability: PV of lease payments at incremental borrowing rate
• RoU asset: lease liability + initial direct costs + prepayments − lease incentives + decommissioning
• Subsequent: depreciate RoU asset; amortise lease liability (interest + principal)
• Exemptions: short-term (≤12 months); low-value (e.g., laptops)

Common Case Study issues:

• Sale and leaseback: only partial gain recognised (transferred portion only); seller-lessee retains RoU asset
• Lease modifications: separate lease vs modification of existing
• Variable lease payments: only those based on index/rate in lease liability
• Lessor accounting: operating vs finance lease classification (similar to old IAS 17)
• Transition: now beyond transition period for most

IFRS 9 — Financial Instruments:

Classification of financial assets:

• Amortised cost (business model: hold to collect; SPPI)
• FVOCI (business model: hold to collect AND sell; SPPI)
• FVTPL (other; including held for trading and equity instruments unless OCI election)

Expected Credit Loss (ECL):

• Three stages:
  • Stage 1: 12-month ECL (no significant increase in credit risk)
  • Stage 2: lifetime ECL (significant increase but not credit-impaired)
  • Stage 3: lifetime ECL on net carrying amount (credit-impaired)
• Simplified approach for trade receivables (always lifetime ECL)
• Forward-looking information required

Hedge accounting:

• Three types: fair value hedge; cash flow hedge; net investment hedge
• Documentation; effectiveness; rebalancing
• Cash flow hedge: effective portion to OCI (cash flow hedge reserve); ineffective to P&L
• Recycling to P&L when hedged item affects P&L

IFRS 3 — Business Combinations:

• Acquisition method (no merger accounting)
• Identify acquirer; acquisition date
• Recognise and measure identifiable assets/liabilities at fair value
• Measure non-controlling interest (NCI): full goodwill (FV of NCI) OR proportionate (% of net assets)
• Goodwill = consideration + NCI − net identifiable assets
• Bargain purchase: recognise gain in P&L (rare; requires re-examination)
• Acquisition costs expensed
• Contingent consideration: classified as liability or equity; subsequent fair value through P&L (if liability)
• Step acquisitions: previously held interest remeasured to FV; gain/loss to P&L

IAS 36 — Impairment of Assets:

• Indicators required for non-goodwill non-indefinite-life intangibles (annual otherwise)
• Goodwill: annual impairment test (allocated to CGUs)
• Indefinite-life intangibles: annual impairment test
• Recoverable amount = HIGHER of fair value less costs to sell OR value in use
• Value in use: PV of future cash flows (entity-specific assumptions)
• If carrying amount > recoverable amount: impairment loss to P&L (or OCI for revalued)
• CGU allocation: lowest level of independently generating cash inflows
• Goodwill impairment NOT reversed in subsequent periods
• Other asset impairment may be reversed (capped at original carrying amount less normal depreciation)

Common Case Study issues:

• Indicators: declining performance; market value decline; obsolescence; physical damage; significant changes; covenant breach
• CGU identification controversies
• Goodwill allocation challenges
• VIU model assumptions scrutiny
• Climate-related impairment

IAS 37 — Provisions, Contingent Liabilities and Contingent Assets:

• Provision recognition criteria (all 3 required):
  1. Present obligation (legal or constructive) from past event
  2. Probable outflow of economic benefits
  3. Reliable estimate
• Measurement: best estimate of expenditure required to settle
• Discount if material time value
• Contingent liability: disclosed (unless remote)
• Contingent asset: disclosed only if probable; recognise when virtually certain

Common Case Study issues:

• Restructuring provisions: detailed plan + announced or commenced before year-end
• Onerous contracts: unavoidable costs > expected benefits; provide for lower of (cost to fulfil; cost to exit)
• Environmental obligations: present obligation from past contamination
• Warranties: assurance vs service type
• Litigation: probable vs possible; reliable estimate
• Decommissioning: capitalised on PPE; provision for present value of future cost

IAS 19 — Employee Benefits:

Defined contribution:

• Expense recognition when service rendered
• No actuarial calculations
• Recent UK trend: closure of DB schemes to new entrants

Defined benefit:

• Defined Benefit Obligation (DBO) — actuarial calculation
• Plan assets — fair value
• Net DB liability/asset = DBO − plan assets (asset capped)
• Service cost (current + past) → P&L
• Net interest (DB liability × discount rate) → P&L
• Remeasurements (actuarial gains/losses + return on plan assets above net interest) → OCI (no recycling)
• Past service cost (plan amendments) → P&L immediately

Common Case Study issues:

• Pension scheme deficit; funding plan
• Plan amendments (e.g., closing benefits)
• Curtailments and settlements
• Discount rate assumptions (corporate bond yields)
• Mortality assumptions

IFRS 2 — Share-Based Payment:

• Equity-settled: measure at fair value of equity instruments at grant date; spread over vesting period; no remeasurement (except changes in service/non-market conditions)
• Cash-settled: measure at fair value of liability; remeasure at each reporting date through P&L
• Modifications: incremental fair value
• Vesting conditions:
  • Service conditions: affect timing
  • Non-market performance conditions: affect timing AND number expected to vest
  • Market conditions: affect grant date FV; not subsequent revisions
  • Non-vesting conditions: similar to market

IAS 12 — Income Taxes:

• Current tax: amount payable in respect of period
• Deferred tax:
  • Temporary differences (tax base vs carrying amount)
  • Taxable temporary differences → DT liability
  • Deductible temporary differences → DT asset (only if probable future taxable profits)
• Tax base: amount attributable for tax purposes
• Recognise at rates expected at reversal (not current rates if changes substantively enacted)
• Initial recognition exemption (some)
• Group considerations: investments in subsidiaries — DT not always recognised

Common Case Study issues:

• Acquisition fair value adjustments (DT impact)
• Loss recognition (DT asset only if probable utilisation)
• Tax rate changes
• Pillar Two (15% global minimum tax) — IAS 12 amendments allow temporary mandatory exception from recognition of DT for Pillar Two top-up tax
• Uncertain tax positions (IFRIC 23)

IAS 21 — Foreign Currency:

• Functional currency: primary economic environment
• Foreign transactions: use spot rate at transaction date
• Monetary items: retranslate at closing rate; differences to P&L
• Non-monetary items at historical cost: use historical rate
• Non-monetary items at fair value: use rate when FV measured
• Foreign operation translation:
  • Assets/liabilities at closing rate
  • Income/expenses at average rate (or transaction date)
  • Differences to OCI (foreign currency translation reserve)
  • On disposal: cumulative reserve recycled to P&L

IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors:

• Accounting policy changes: apply RETROSPECTIVELY (restate comparatives)
• Estimate changes: apply PROSPECTIVELY
• Errors: correct RETROSPECTIVELY (third balance sheet if material)
• Distinction important: aggressive estimate vs error

EMERGING / RECENT STANDARDS:

• IFRS 18 (effective 1 January 2027) — Presentation and Disclosure of Financial Statements: replaces IAS 1; new income statement structure (operating, investing, financing categories); MPMs (management performance measures) required reconciliation; aggregation/disaggregation principles
• IFRS S1 (effective 2024) — General Sustainability Disclosures
• IFRS S2 (effective 2024) — Climate-related Disclosures (TCFD-aligned)
• IFRS 19 — Subsidiaries without Public Accountability (Disclosures) — reduced disclosure framework for eligible subsidiaries

Case Study often requires preparing extracts of financial statements demonstrating proposed accounting treatments.

Format expectations:

• Use IFRS-compliant headings and terminology
• Show comparative figures (prior year)
• Indicate units (£'000, £m)
• Present in appropriate statement
• Include NOTES with detail and disclosures

Common extract requirements in Case Study:

1. Statement of Profit or Loss extracts:

For a specific issue, show how P&L is affected:

Statement of Profit or Loss (extract)
For the year ended 31 December 2025
                              2025     2024
                              £m       £m
Revenue                        450      400
Cost of sales                (300)    (260)
Gross profit                   150      140
Distribution costs            (40)     (35)
Administrative expenses       (50)     (45)
Other income                   10        5
Operating profit                70       65
Finance costs                 (15)     (10)
Share of profit of associates   8        7
Profit before tax               63       62
Income tax expense            (15)     (15)
Profit for the year             48       47

Show JOURNAL ENTRIES where relevant:

Journal entry to record acquisition (illustrative):
Dr  Net identifiable assets at FV   400
Dr  Goodwill                         80
    Cr Cash                                300
    Cr Contingent consideration             50
    Cr Share consideration (equity)        130

2. Statement of Financial Position extracts:

Statement of Financial Position (extract)
At 31 December 2025
                                           2025    2024
                                            £m      £m
Non-current assets
Property, plant and equipment              350     320
Right-of-use assets                         80      75
Intangible assets                           45      40
Goodwill                                    80       0
Investment in associate                     35      30
Total non-current assets                   590     465

Current assets
Inventories                                100      90
Trade receivables                          120     110
Cash and cash equivalents                   60      80
Total current assets                       280     280

TOTAL ASSETS                               870     745

Equity and liabilities
Share capital                               50      50
Share premium                              200     150
Retained earnings                          230     200
Other reserves                              20      15
Equity attributable to owners              500     415
Non-controlling interest                    30      20
Total equity                               530     435

Non-current liabilities
Long-term borrowings                       150     150
Lease liabilities                           60      55
Deferred tax                                30      20
Provisions                                  20      15
Total non-current liabilities              260     240

Current liabilities
Trade payables                              40      40
Short-term borrowings                       30      20
Lease liabilities                           10      10
Total current liabilities                   80      70

TOTAL EQUITY AND LIABILITIES               870     745

3. Statement of Cash Flows extracts:

Indirect method typical. Show effects of:

• Working capital changes
• Non-cash items added back
• Operating, investing, financing categorisation
• Acquisitions affect investing (cash element)

4. Notes to financial statements:

Common notes required:

• Accounting policies (significant judgements)
• Critical estimates and judgements (IAS 1)
• Revenue disaggregation (IFRS 15)
• Operating segments (IFRS 8)
• Acquisition disclosures (IFRS 3)
• Financial instruments (IFRS 7 — categories, fair values, risks)
• Related party transactions (IAS 24)
• Provisions (IAS 37)
• Pension obligations (IAS 19)
• Share-based payments (IFRS 2)
• Leases (IFRS 16)

Critical disclosure types:

Acquisition disclosures (IFRS 3):

• Name and description of acquiree
• Acquisition date
• % of equity acquired
• Reasons for acquisition
• Consideration: total + breakdown by type
• Recognised amounts of identifiable assets/liabilities at acquisition
• Goodwill recognised + qualitative description of factors
• Acquisition-related costs
• If applicable: bargain purchase reasons; contingent consideration; step acquisitions
• Revenue and profit/loss of acquiree included in current year + as if acquired at start of year

Going concern disclosure (IAS 1):

• If material uncertainty: nature; events/conditions; management plans
• If basis appropriate without uncertainty: standard policy disclosure
• Period of management assessment

Provisions disclosure (IAS 37):

• Carrying amount; movements during period
• Brief description of nature
• Expected timing
• Uncertainties about timing or amount
• Reimbursements (if applicable)

Critical judgements and estimation uncertainty (IAS 1):

• Judgements made in applying policies
• Major sources of estimation uncertainty
• Carrying amounts of relevant assets/liabilities
• Sensitivity
• Particularly important for: impairment; pensions; provisions; deferred tax; revenue (variable consideration)

Best practices for extracts in Case Study answers:

• Show calculations clearly
• Use appropriate IFRS terminology
• Comparative figures for context
• Cross-reference to notes
• Highlight key disclosures
• Don't reproduce entire FS — only relevant extracts
• Tables work well
• Notes can be summary form (key elements only)

Where IFRS allows alternatives, choice has financial statement and commercial implications. Case Study may require advice on policy choices.

Common areas where IFRS allows choice:

1. PPE measurement (IAS 16):

• Cost model: cost − accumulated depreciation − accumulated impairment
• Revaluation model: fair value at revaluation date − subsequent depreciation
• If revaluation: must be done with sufficient regularity; entire class
• Surplus to revaluation reserve (OCI); deficits to P&L (or against prior surplus in OCI)
• Most companies use cost model (simpler; fewer estimates)
• Revaluation common for: investment property (IAS 40); banks' premises in some jurisdictions

2. Investment property (IAS 40):

• Cost model: as IAS 16
• Fair value model: changes through P&L (NOT OCI as for revaluation under IAS 16)
• Most property companies (REITs) use fair value

3. NCI measurement at acquisition (IFRS 3):

• Full goodwill method: NCI at fair value (acquirer pays for FV of NCI in goodwill)
• Proportionate share method: NCI at % of identifiable net assets
• Choice transaction-by-transaction
• Affects goodwill amount; impairment testing scope

4. Inventories — cost formula (IAS 2):

• FIFO (First In First Out)
• Weighted average
• LIFO PROHIBITED under IFRS
• Same formula for all similar inventories
• FIFO usually higher inventory and profit in inflation

5. Borrowing costs (IAS 23):

• MUST capitalise on qualifying assets (no longer choice)
• For non-qualifying: expense to P&L

6. Cash flow statement (IAS 7):

• Indirect or direct method (operating section)
• Most use indirect (reconcile from profit before tax)
• Interest paid: operating or financing classification
• Interest received: operating or investing
• Dividends paid: operating or financing
• Dividends received: operating or investing

7. Government grants (IAS 20):

• Asset-related: deduct from carrying amount OR present as deferred income
• Income-related: present separately or net

8. Joint ventures (IFRS 11):

• Joint operations: account for own share of assets/liabilities/income/expenses
• Joint ventures: equity method (no choice now — was proportionate consolidation pre-IFRS 11)

9. Equity instruments (IFRS 9):

• Default: FVTPL (changes to P&L)
• Election (irrevocable): FVOCI (no recycling to P&L on disposal)
• Per-instrument basis

10. Functional currency (IAS 21):

• Determined by primary economic environment
• Not technically a "choice" but judgement-based
• Important for foreign operations

IMPACT ANALYSIS framework:

For each policy choice, analyse:

1. FINANCIAL STATEMENT EFFECTS:

• Profit or loss
• OCI
• Balance sheet — assets, liabilities, equity
• Cash flow statement
• Per-share metrics

2. RATIO IMPACTS:

• Profitability (ROCE, margins)
• Liquidity (current, quick)
• Gearing (debt/equity)
• Coverage (interest, dividend)
• Asset turnover
• EPS

3. COVENANT IMPLICATIONS:

• Loan covenants (gearing; interest cover; minimum equity)
• If covenants based on IFRS measures: policy change may trigger
• If "frozen GAAP" covenants: policy change protected
• Impact on borrowing capacity

4. INVESTOR PERCEPTION:

• Earnings quality
• Volatility (e.g., FV model creates more volatility)
• Comparability with peers
• Analyst views
• Credit rating implications

5. TAX CONSEQUENCES:

• Tax base often differs from accounting carrying value
• Deferred tax adjustments
• Tax-deductible items vs not

6. COMMERCIAL/OPERATIONAL:

• Cost of preparation (e.g., revaluation requires valuations)
• Audit cost
• Management decision-making
• Stakeholder communication complexity

7. CONSISTENCY:

• Once chosen, change requires retrospective application (IAS 8)
• Strong reason required (more relevant or reliable)
• Disclosure of change

Worked example — investment property choice:

Property holding company has £500m of investment property. Choice: cost model or fair value model.

Recommendation considerations:

• For REIT/property fund: FV model standard expectation
• For owner-occupier with single property: cost model often more practical
• For financial reporting transparency: FV provides current information
• For income smoothing: cost model preferred

Once policy chosen:

• Change requires significant justification
• Apply retrospectively under IAS 8
• Restate comparatives
• Disclose impact

Where IFRS DOES NOT allow choice but flexibility exists:

Some areas have judgement embedded:

• USEFUL LIVES of PPE and intangibles
• RESIDUAL VALUES
• DEPRECIATION METHODS
• FAIR VALUE estimates
• EXPECTED CREDIT LOSSES
• IMPAIRMENT testing assumptions
• PROVISION estimates
• PENSION assumptions
• WARRANTY estimates
• SHARE-BASED PAYMENT volatility, dividend yield

These are CRITICAL ESTIMATES — disclose under IAS 1; subject to professional scepticism in audit.

Case Study tests INTEGRATION. Financial reporting issues rarely stand alone — they connect to audit, tax, strategy, and ethics.

Financial reporting × AUDIT:

Reporting issues create audit risks:

• Complex IFRS application → significant risk
• Estimates → ISA 540 procedures
• Acquisition → IFRS 3 application + audit risks
• Going concern disclosure → ISA 570 work
• Earnings management indicators → fraud risk per ISA 240
• Modified opinion implications if treatment incorrect and uncorrected

For each reporting issue, consider:

• What audit procedures would be needed?
• What evidence supports management's position?
• Could there be Key Audit Matter (KAM) implications?
• If misstatement found: opinion modification?

Financial reporting × TAX:

Almost every reporting issue has tax implications:

• Recognition timing differences → deferred tax
• Acquisitions → step-up bases; goodwill (often non-deductible); deferred tax on FV adjustments
• Provisions → typically not tax-deductible until paid (specific exceptions)
• Share-based payment → corporate tax deduction often differs from accounting
• Pensions → DT impact
• Capital allowances vs depreciation → DT
• FX → translation; transfer pricing
• Pillar Two (15% global minimum tax) effective 2024 — significant implications

For reporting issues, also consider:

• Current tax impact
• Deferred tax impact
• Disclosure (effective tax rate reconciliation; uncertain tax positions per IFRIC 23)

Financial reporting × STRATEGY:

Reporting choices have strategic implications:

• How are external stakeholders reading results?
• Investor messaging
• Credit rating considerations
• M&A pricing impact
• Performance management metrics
• Compensation impact (where based on accounting figures)

And strategic decisions create reporting issues:

• Acquisition (IFRS 3, IAS 36)
• Restructuring (IAS 37, IAS 36, IFRS 5)
• Divestment (IFRS 5)
• Sustainability strategy (IFRS S1/S2)
• Digital transformation (impairment of legacy assets; capitalisation criteria)

Financial reporting × ETHICS:

Reporting decisions raise ethical issues:

• Aggressive vs conservative treatment
• Pressure to manage earnings
• Specific ethical issues:
  • Concealing material information
  • Inappropriate revenue recognition
  • Avoiding impairment when warranted
  • Misclassifying expenses
  • Window dressing transactions
  • Bias in estimates

For each significant reporting issue, consider:

• Is treatment reasonable and supportable?
• Are there pressures suggesting bias?
• Apply ICAEW Code (5 principles, 5 threats)
• NOCLAR if non-compliance
• Whistleblowing if material concerns

WORKED EXAMPLE — Integration:

Scenario: Acquired subsidiary has product subject to recall after acquisition.

Reporting:

• IAS 37: provision for warranty/recall costs (constructive obligation)
• IFRS 3: was this a pre-acquisition obligation? Adjust acquisition accounting if measurement period (12 months)
• IAS 36: impairment indicator — review goodwill
• IFRS 15: variable consideration if affects revenue
• IAS 19: HR costs if redundancies follow

Audit:

• Significant audit risk
• Estimate of recall cost (ISA 540)
• Going concern implications
• KAM likely
• Subsequent events procedures

Tax:

• Provision typically not deductible until paid
• Deferred tax asset (if probable utilisation)
• If acquisition adjustment within measurement period: tax base implications

Strategy:

• Reputational impact on combined business
• Customer relationships
• Strategic rationale for acquisition revisited
• Future product strategy

Ethics:

• Disclosure adequacy
• Could acquirer have known pre-acquisition? (due diligence quality)
• Communication to investors
• Customer protection

STRUCTURING financial reporting answers in Case Study:

For each issue:

1. IDENTIFY THE ISSUE from scenario facts
2. STATE APPLICABLE STANDARD(S) and key principles
3. APPLY TO SCENARIO with specific reasoning
4. SHOW JOURNALS / EXTRACTS if quantitative
5. CONSIDER DISCLOSURE requirements
6. NOTE INTERACTIONS with other standards/disciplines
7. STATE COMMERCIAL IMPLICATIONS
8. RECOMMEND/CONCLUDE on appropriate treatment

Common pitfalls in financial reporting answers:

1. Missing standards:

• Failing to identify all applicable IFRS
• Mitigation: systematic scan of scenario facts

2. Generic application:

• Reciting standard requirements without scenario-specific analysis
• Mitigation: link each requirement to specific scenario fact

3. Calculation errors:

• Arithmetic mistakes; wrong formulas
• Mitigation: show workings; cross-check; sensible review

4. Ignoring disclosure:

• Focusing only on recognition/measurement
• Mitigation: always consider disclosure

5. Missing interactions:

• Treating each issue in silo
• Mitigation: think about connections (e.g., acquisition → multiple standards)

6. Ignoring earnings management indicators:

• Failing to apply professional scepticism
• Mitigation: scan for aggressive treatment indicators

7. Not addressing commercial implications:

• Pure technical answer without context
• Mitigation: include impact on ratios, covenants, investor perception

8. Generic recommendations:

• "Apply IFRS correctly" — not specific
• Mitigation: specific recommendations addressing scenario

9. Inadequate ethical consideration:

• Missing aggressive accounting flags
• Mitigation: ethics integrated throughout

10. Poor presentation:

• Technical content without structure
• Mitigation: clear headings; numbered points; tables