10. Law and ethics.

Question 1

The five fundamental principles of ethical behaviour: I*, O, PC&DC, C, PB

Answer 1

integrity

Question 2

The five fundamental principles of ethical behaviour: I, O*, PC&DC, C, PB

Answer 2

objectivity

Question 3

The five fundamental principles of ethical behaviour: I, O, PC&DC*, C, PB

Answer 3

professional confidence and due care

Question 4

The five fundamental principles of ethical behaviour: I, O, PC&DC, C*, PB

Answer 4

confidentiality

Question 5

The five fundamental principles of ethical behaviour: I, O, PC&DC, C, PB*

Answer 5

professional behaviour

Question 6

Threats to the ethical principles: SI*, SR, F, A, I

Answer 6

self interest

Question 7

Threats to the ethical principles: SI, SR*, F, A, I

Answer 7

self review

Question 8

Threats to the ethical principles: SI, SR, F*, A, I

Answer 8

familiarity

Question 9

Threats to the ethical principles: SI, SR, F, A*, I

Answer 9

advocacy

Question 10

Threats to the ethical principles: SI, SR, F, A, I*

Answer 10

intimidation

Question 11

Integrity: S and H in B and PR.

Answer 11

Integrity: straightforward and honest in business and professional relationships.

Question 12

Objectivity: not allow B, CoI or the IoO to O P or BJ.

Answer 12

Objectivity: not allow bias, conflict of interest or the influence of others to override professional or business judgements.

Question 13

Professional competence and due care: be aware of all PK necessary to give PS and apply the same D and in accordance with T and PS.

Answer 13

Professional competence and due care: be aware of all prevailing knowledge necessary to give professional service and apply the same diligently and in accordance with technical and professional standards.

Question 14

Confidentiality: respect the confidentiality of I acquired as a consequence of professional or business engagements and not use the same for PA or that of third parties.

Answer 14

Confidentiality: respect the confidentiality of information acquired as a consequence of professional or business engagements and not use the same for personal advantage or that of third parties.

Question 15

Professional behaviour: comply with L and R and not to D the profession.

Answer 15

Professional behaviour: comply with laws and regulations and not to discredit the profession.

Question 16

…: straightforward and honest in business and professional relationships.

Answer 16

integrity

Question 17

…: not allow bias, conflict of interest or influence of others to override professional or business judgement.

Answer 17

objectivity

Question 18

…: be aware of all prevailing knowledge necessary to give professional service and apply the same diligently to affairs of the client in accordance with technical and professional standards.

Question 19

…: respect the confidentiality of information acquired as a consequence of professional or business engagements and not use the same for personal advantage or that of third parties.

Answer 19

confidentiality

Question 20

…: comply with laws and regulations and not to discredit the profession.

Answer 20

professional behaviour

Question 21

…: financial interests, loans or guarantees; incentive compensation arrangements; innapropriate use of corporate assets; concern over employment security; commercial pressure from outside the employing organisation.

Answer 21

self interest

Question 22

…: business decisions or data being subject to review and justification by the same professional accountant in business responsible for making those decisions preparing that data.

Answer 22

self review

Question 23

…: when furthering the legitimate goals and objecitves of their employing organisations, professional accountants in business may promote the organisation, provided any statements made are neither false nor misleading. Such actions generally would not create an advocacy threat.

Answer 23

advocacy

Question 24

…: a professional accountant in business in a position to influence financial or non-financial reporting or business decisions having an immediate or close family member who is in a position to benefit from that influence; acceptance of a gift or preferential treatment, unless the value is clearly insignficant.

Answer 24

familiarity

Question 25

…: threat of dismissal or replacement of the professional accountant in business or a close or immediate family member, over a disagreement about the application of an accounting principle or the way in which financial information is to be reported; a dominant personality attempting to influence the decision making process, for example with regard to the awarding of contracts or the application of an accounting principle.

Answer 25

intimidation

Question 26

Threats to the fundamental ethical principles are countered with the use of … intended to reduce them to an acceptable level.

Answer 26

safeguards

Question 27

Threats to the fundamental ethical principles are countered with the use of safeguards intended to reduce them to an …

Answer 27

acceptable level

Question 28

…: a firm or professional accountant having a financial interest in an assurance client; a firm which has undue dependence on fees from a client or fears losing a significant client; a firm which enters into a contingent fee arrangement with a client; a member of the firm enters into employment negotiations with a client; a firm which develops a significantly close relationship with a client.

Answer 28

self interest

Question 29

…: a firm designs a financial reporting system and is then asked to issue an assurance report on the effectiveness of the same system; a firm which has prepared the original data used to produce records that are reviewed as part of an assurance engagement; a member of the assurance team has been a director of the client; a member of the assurance team has been employed by the client and is now able to significantly influence the subject matter of the engagement.

Answer 29

self review

Question 30

…: the firm promotes shares in an audit client; the professional accountant acts as an advocate on behalf of a client in litigation.

Answer 30

advocacy

Question 31

…: a member of the engagement team having an immediate or close family member who is a director or officer of the assurance client; a member of the engagement team having a close or immediate family member who is employed by the client who is in a position so significantly influence the subject matter of the engagement,

Answer 31

familiarity

Question 32

…: a firm which is threatened with dismissal by a client; an audit client indicating that it will not award non-assurance related work to the firm if the firm disagrees with the client’s accounting treatment; a firm being threatened with legal action by a client; a firm being pressured to reduce fees; a professional accountant being pressured to agree with a member of the client’s staff due to the employee’s level of expertise on a particular matter.

Answer 32

intimidation