YOU DECIDE Scenario Summary You are the new CFO of Graves Corporation and are sitting in on a meeting between the CEO and the Controller who has been...

YOU DECIDEScenario SummaryYou are the new CFO of Graves Corporation and are sitting in on a meeting between the CEO and the Controller who has been with the company for five years. Jackson Herb, the CEO of Graves Corporation, was discussing with the Controller, Kara Rose, whether the company should adopt IFRS for financial reporting purposes. Graves Corporation is based in a country that permits the use of either IFRS or domestic GAAP.K E Y P L A Y E R S - Jackson Herb, the CEO of Graves Corporation:Kara, reporting under our domestic GAAP would be more expensive to the company than reporting under IFRS. I understand that fewer disclosures are required under IFRS. Moreover, IFRS provides more choices when it comes to applying accounting methods to our financial statements to produce the most favorable results. And, to be honest with you, the company is going to have to report its first operating loss in over 15 years; if we continue to report under our domestic GAAP, I certainly don’t want that to happen while I’m CEO.- Kara Rose, the Controller of Graves Corporation:I hear you Jackson, but converting to IFRS might look bad to investors. What if the public finds out that we are trying to hide the operating loss or switch to IFRS to manipulate the bottom line? That could prove more costly in the long run, while saving the company pennies now.Y O U D E C I D E Activity/Assignment Assignment Prepare a two to three page memo (at least 300 words per page) to the CEO addressing whether the company should prepare this year’s financial statements in accordance with its domestic GAAP or IFRS. Be sure to give the pros and cons related to IFRS adoption. Also include an ethical assessment of his rationale for the adoption of IFRS in your memo.