hard · CFA Level I Ethical and Professional Standards
Ironvale Mining enters a joint venture with a foreign entity. An analyst covering Ironvale uses the foreign entity's own localized financial reports to estimate the venture's value, without realizing the local reports use a 'cash-basis' accounting system instead of the IFRS 'accrual-basis' used by Ironvale.
The analyst's valuation is likely to be:
- Compliant with Standard V(A) as long as she discloses that the joint venture's numbers were provided by the partner.
- Compliant with Standard V(A) because she used the official reports provided by the joint venture partner.
- In violation of Standard V(A) because she failed to adjust for material differences in accounting standards.
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