15. TC - Ethics Flashcards
What are the 5 fundamental principles?
Integrity Objectivity Professional competence and due car Professional behaviour Confidentiality
Define integrity
Members should act in a straight forward and honest manner when performing their work
Define objectivity
Members should not allow prejudice or bias, or the influence of others to override objectivity
Define professional competence and due care
Members must exercise sound judgement in applying professional knowledge and skill
What are the consequences of members being obliged to carry out professional competence and due care?
Members must exercise sound judgement in applying professional knowledge and skill
Members should not undertake work that they are not competent to carry out
Member have an ongoing duty to maintain prof knowledge and skills
Members should carry ut their work with due care having regard to the nature and scope of the assignment
Define professional behaviour
Members should refrain from any conduct that might bring discredit to the profession
Define confidentiality
Members should respect the confidentiality of info acquired as a result of prof and business relationships
Members shouldn’t disclose any such info to 3rd parties unless
- have proper and specific authority
- there is a legal or prof right or duty to disclose e.g. money laundering
Should not be used for personal advantage of members or third party
What are the threats to compliance?
Self interest Self review Advocacy Familiarity Intimidation
Define self interest
Threat may occur as a result of a members/ their families financial or other interests influencing behaviours or decision of the member
Define self review
Threat may occur when a previous judgement needs to be re-evaluated or reviewed by the same person responsible for that judgement
Define advocacy
Threat may occur when a member promotes a position or opinion to the point that objectivity may be compromised
Define familiarity
Threat may occur when, because of a close relationship, a member becomes too sympathetic to the interests of a client
Define intimidation
Threat may occur when a member is deterred from acting objectively by actual or perceived pressures from others
Give some examples of safeguards against threats
Following reduces threats
- Education/ training/ experience required for entry into profession
- CPD requirements
- Corporate governance regulations
- Professional standards
- Monitoring/ disciplinary procedures
- External review
- Complaints systems
- Explicitly stated duty to report breaches of ethics
What must be done if appropriate safeguards can’t be implemented?
Accountant should
- Decline/ discontinue the specific service
- Resign where necessary
What doe PCRT stand for?
Professional Conduct in Relation to Taxation
Who produced the PCRT?
Various accountancy and taxation bodies
What does the PCRT do?
Includes practical advice about ethical and legal issues arising in the course of tax work
Considers the relationship with both clients and HMRC
Has produced 5 standards which professional accountants must observe when advising tax planning
What are the 5 standards which prof accs must observe when advising on tax planning
Client specific Lawful Disclosure Tax planning on arrangements Professional judgement and appropriate documentation
Where can the 5 standards which prof accs must observe when advising on tax planning be found?
In the PCRT Prof Conduct in Relation to Taxation
Describe the standard in the PCRT that states prof accountants must be Client Specific when advising on tax planning
Tax planning must be specific to a particular clients FACTS and CIRCUMSTANCES
Clients must be alerted to the wider risks and the implications of any courses of actions
Describe the standard in the PCRT that states prof accountants must be lawful when advising on tax planning
At all times members must act lawfully and with integrity and expect the same from their clients
- Tax planning should be based on a realistic assessment of all the facts, and on a credible view of the law
- Members should draw their clients’ attention to material legal uncertainties e.g. HMRC is known to view the law differently
- Members should consider taking further advice appropriate to the risks and circumstances of the case, e.g. where litigation is likely
Describe the standard in the PCRT that states prof accountants must have full disclosure and transparency when advising on tax planning
Tax advice must not rely on HMRC having less than the relevant facts for it to be effective
Any disclosure must fairly represent all the relevant facts
Describe the standard in the PCRT that states prof accountants must provide tax planning arrangements when advising on tax planning
Members must not create, encourage or promote tax planning arrangements or structures that
- Set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation
- Are highly artificial / contrived and seek to exploit shortcomings within the relevant legislation