CH10 QB Structure and regulation of the accountancy profession Flashcards
Luton & Co, a firm of chartered accountants, has been offered a consent order by ICAEW’s
Investigation Committee. This means that:
A the firm could be excluded from membership of ICAEW
B the firm’s practising certificate could be suspended
C there is a case to answer but it is not so serious as to warrant either exclusion from
membership of ICAEW or suspension of the firm’s practising certificate
D there would be less publicity than under an order issued by the Disciplinary Committee
C A consent order (C) is offered when there is a case to answer but the case is not so
serious as to involve options A or B. Publicity under a consent order would be exactly
the same as under a Disciplinary Committee order (D).
A complaint against Roche & Co has just been brought to the attention of ICAEW’s
Professional Standards department. The complaint is already in the public domain and is so
serious that it might affect the reputation of the accountancy profession in general. In such
circumstances, the department may refer the matter straight to:
A the FRC’s Professional Discipline team within its Conduct Committee, running the
Accountancy Scheme
B the FRC’s Professional Oversight team
C the FRC’s Audit Quality Review Committee within its Conduct Committee
D the Financial Conduct Authority LO 4
A The department may refer the matter straight to the Professional Discipline team at
Financial Reporting Council (FRC) under the Accountancy Scheme in these circumstances.
One of his clients has complained about Tom, a chartered accountant. The initial stage of
ICAEW’s complaints and disciplinary procedure will involve trying to find a practical
solution such as giving an explanation or providing information to solve the problem. This
stage of the process is referred to as:
A consideration
B arbitration
C investigation
D conciliation
D Conciliation means trying to find a practical solution to a problem and will always
precede other measures such as investigation and disciplinary proceedings.
ICAEW’s Investigation Committee has recently looked into a complaint against Denton & Co,
a firm of chartered accountants. The Investigation Committee has found that there is a case to
answer and has offered an unpublicised caution to the firm. The firm does not agree that
there is a case to answer. Denton & Co have a right to ask for the case to be considered by
the:
A Appeal Committee
B Disciplinary Committee
C Financial Reporting Council
D Prudential Regulation Authority
B If members disagree with a decision of the Disciplinary Committee (rather than the
Investigation Committee) then cases might be referred to the Appeal Committee (A).
Neither the Financial Reporting Council (C) nor the Prudential Regulation Authority (D)
is relevant in this context
Paula recently established her own accountancy practice from small retail premises in
Hightown. She operates as a sole trader. Paula passed the last of her ICAEW examinations
last month although she is not yet permitted to offer statutory audit, insolvency, investment
business or probate services. She has already been successful in attracting several clients to
her new practice. She has not yet become a member of ICAEW but she is registered with an
approved body for supervision under the money laundering regulations.
Which of the following statements is correct?
A Paula cannot call herself an accountant.
B ICAEW can legally stop Paula from practising as a sole trader.
C Paula can offer any accountancy services she considers appropriate.
D Paula can offer any accountancy services except those in the reserved areas
D The term ‘accountant’ has no special position in English law (A). There is no legal
requirement for an accountant to be a paid up member of ICAEW (or any of the CCAB
bodies) (B). Paula can call herself an accountant and because she is registered for
supervision under the money laundering regulations, she can offer any accountancy
services except those in the reserved areas where specific levels of competence and
regulation are required (C, D)
In relation to which of the following does the Financial Reporting Council have statutory
powers?
A Regulation of the auditing profession
B Professional discipline of accountants
C Registration of students into the accountancy profession
D Continuing professional education and development
A In areas other than the regulation of audit, such as options B, C and D, the FRC does
not have statutory powers.
In addition to its functions in relation to audit and accountancy, the Financial Reporting Council also oversees regulation of: A the actuarial profession B the insolvency profession C the financial advisory profession D the investment management profession
A The FRC’s Professional Oversight team in its Conduct Committee also oversees
regulation of the actuarial profession.
Kath wants to train as an accountant. She is aware that one of the pathways to ICAEW
membership is joining as a member of another CCAB body. A colleague has made the
following two statements about the CCAB to Kath.
Statement (1) The CCAB has five members.
Statement (2) The CCAB provides a forum in which matters affecting the profession as a
whole can be discussed and coordinated, so it enables the profession to
speak with a unified voice to government.
Identify whether each statement is true or false.
A Statement (1) true; Statement (2) false
B Statement (1) false; Statement (2) false
C Statement (1) true; Statement (2) true
D Statement (1) false; Statement (2) true
C
The CCAB has five members. -/> True
The CCAB provides a forum in which matters affecting the profession as a
whole can be discussed and coordinated so it enables the profession to
speak with a unified voice to government.
-> True
The five members of the CCAB are ICAEW, ACCA, CIPFA, ICAS and Chartered
Accountants Ireland.
Chris runs his own printing company. He is experiencing financial difficulties and some of
his credit suppliers are threatening to take him to court. He needs some advice and has
seen an advertisement in his local paper for an accountancy service that is much cheaper
than he expected. He calls the accountant to check that the price is not a misprint and is
surprised at some of the answers he is given to his questions.
The accountant made the following statements to Chris.
Statement (1) Anyone is free to advertise as an ‘accountant’ and offer the full range of
accountancy services, with no exceptions.
Statement (2) ICAEW members are open to competition from anyone, whether
professionally qualified or not, who chooses to enter the market.
Statement (3) There is no legal requirement for an accountant to be a paid-up member of
one of the CCAB bodies.
Which of the statements are true?
A (1) and (2) only
B (2) and (3) only
C (1) and (3) only
D (1), (2) and (3)
B
Anyone is free to advertise as an ‘accountant’ and offer the full range of
accountancy services, with no exceptions.
-> No
ICAEW members are open to competition from anyone, whether
professionally qualified or not, who chooses to enter the market.
-> Yes
There is no legal requirement for an accountant to be a paid-up member of
one of the CCAB bodies.
-> Yes
The first statement is incorrect because although anyone is free to advertise as an
accountant, there are four ‘reserved’ areas of business (insolvency, investment
business, probate and statutory audit) where statute demands specific levels of
competence and regulation. To offer accountancy services the provider must be
supervised for money laundering purposes.
The Financial Reporting Council comprises:
A the Conduct Committee and the Codes and Standards Committee
B the Accountancy Committee and the Actuarial Committee
C the Audit Regulation Committee, the Accountancy Oversight Committee and the
Professional Discipline Committee
D the Conduct Committee, the Codes Committee and the Standards Committee
A The FRC consists of the Conduct Committee and the Codes and Standards Committee.
The following statements have been made about the purpose of regulating professions.
Statement (1) Regulation of professions should protect the public from being misled or
from suffering from abuse of power through knowledge or monopoly.
Statement (2) Regulation of professions should protect the profession’s vested interests
from competition in order to maintain public trust.
Identify whether each statement is true or false.
A Statement (1) true; Statement (2) false
B Statement (1) false; Statement (2) false
C Statement (1) true; Statement (2) true
D Statement (1) false; Statement (2) true
A
Regulation of professions should protect the public from being misled or
from suffering from abuse of power through knowledge or monopoly.
-> True
Regulation of professions should protect the profession’s vested interests
from competition in order to maintain public trust.
-> False
Regulation of professions should specifically not protect the profession’s vested
interests from competition.
The following statements concern the role of the Disciplinary Tribunal convened by the FRC
under the Accountancy Scheme.
Statement (1) To ensure their independence, no member of a Tribunal can be an officer or
employee of any of the accountancy professional bodies, or the FRC.
Statement (2) Tribunal hearings are not normally open to the public, except in exceptional
circumstances where the Tribunal decides that this would be in the interests
of justice.
Identify whether each statement is true or false.
A Statement (1) true; Statement (2) false
B Statement (1) false; Statement (2) false
C Statement (1) true; Statement (2) true
D Statement (1) false; Statement (2) true
A
To ensure their independence, no member of a Tribunal can be an officer or
employee of any of the accountancy professional bodies, or the FRC.
-> True
Tribunal hearings are not normally open to the public, except in exceptional
circumstances where the Tribunal decides that this would be in the interests
of justice.
-> False
The following statements concern the role of the FRC’s Disciplinary Tribunal under the
Accountancy Scheme.
Statement (1) A Tribunal hearing is less formal than court proceedings but is subject to the
same restrictions as a court in accepting evidence.
Statement (2) The accountant or firm which is the subject of the complaint is entitled to
attend and be legally represented at the Tribunal hearing, and will have full
opportunity to defend any complaints, present evidence and challenge any
evidence against them.
Identify whether each statement is true or false.
A Statement (1) true; Statement (2) false
B Statement (1) false; Statement (2) false
C Statement (1) true; Statement (2) true
D Statement (1) false; Statement (2) true
D
A Tribunal hearing is less formal than court proceedings but is subject to the
same restrictions as a court in accepting evidence.
-> False
The accountant or firm which is the subject of the complaint is entitled to
attend and be legally represented at the Tribunal hearing, and will have full
opportunity to defend any complaints, present evidence and challenge any
evidence against them.
-> True
Rules of evidence are less strict than in a court
Raymond & Co, a firm of chartered accountants, is the subject of the ICAEW disciplinary
procedure. Its senior partner has been told by a colleague that if the Disciplinary
Committee decides a penalty should be imposed on the firm, it has the power to:
1 fine the firm
2 exclude the firm from membership of ICAEW
3 offer an unpublicised caution
4 take away the firm’s practising certificate
Which of these penalties may in fact be imposed on Raymond & Co?
A 1, 2 and 3 only
B 2, 3 and 4 only
C 1, 2 and 4 only
D 1, 3 and 4 only
C
Fine the firm Yes
Exclude the firm from membership of ICAEW Yes
Offer an unpublicised caution No
Take away the firm’s practising certificate Yes
The offering of an unpublicised caution is a course of action open to the Investigation
Committee at an earlier stage in the disciplinary process.
The Professional Standards department of ICAEW is responsible for implementing ICAEW’s
disciplinary procedures, including the handling of complaints against members. A
colleague has stated that complaints are usually that a member or firm:
1 has departed from guidance
2 has brought ICAEW, the profession or themselves into disrepute
3 is in breach of a principle
Which of the statements are true?
A 1 and 2 only
B 2 and 3 only
C 1 and 3 only
D 1, 2 and 3
A Has departed from guidance True Has brought ICAEW into disrepute True Is in breach of a principle False The third option should refer to the breach of a bye-law rather than a principle.
