Chapter 1 Definitions

Question 1

Professional accountant

Answer 1

A member of the ICAEW

Question 2

Integrity

Answer 2

To be straightforward and honest in all professional and business relationships

Question 3

Objectivity

Answer 3

To not allow bias, conflict of interest or the undue influence of others to override professional or business judgements

Question 4

Professional competence and due care

Answer 4

To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently in accordance with applicable technical and professional standards

Question 5

Confidentiality

Answer 5

To respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose such information without proper and specific authority unless there is a legal or professional right or duty to disclose, nor use the information for their personal advantage or the advantage of third parties

Question 6

Professional behaviour

Answer 6

To comply with relevant laws and regulations and avoid any actions that discredits the profession

Question 7

Self-interest threats

Answer 7

Which may occur as a result of the financial or other interests of a professional account or of an immediate/close family member

Question 8

Self-review threats

Answer 8

Which may occur when a previous judgement needs to be re-evaluated by the professional accountant responsible for that judgement

Question 9

Advocacy threats

Answer 9

Which may occur when a professional accountant promotes a position or opinion to the point that objectivity may be compromised

Question 10

Familiarity threats

Answer 10

Which may occur when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others

Question 11

Intimidation threats

Answer 11

Which may occur when a professional accountant may be deterred from acting objectively by actual or perceived pressures, including attempts to exercise undue influence over the professional accountant

Question 12

Safeguards

Answer 12

Measures that may eliminate threats or reduce them to an acceptable level

Question 13

Tax avoidance

Answer 13

Any legal method of reducing a taxpayer’s liability. The fact that avoidance is legal does not mean that it will always be acceptable

Question 14

Tax evasion

Answer 14

Tax evasion is illegal. It consists of seeking to pay less tax than is due by deliberately misleading HMRC

Question 15

Proceeds of Crime Act

Answer 15

POCA criminalises all forms of money laundering and creates other offences such as failing to report suspicion of money laundering and ‘tipping off’

Question 16

Money laundering

Answer 16

The term used for a number of offences involving the proceeds of crime or terrorist funds. It includes possessing, or in any way dealing with, or concealing, the proceeds of any crime

Question 17

Criminal property

Answer 17

• the proceeds of tax evasion, other tax-related offences, or any other crime
• A benefit obtained through bribery and corruption
• Benefits obtained, or income received, through the operation of a criminal cartel
• Benefits (in the form of saved costs) arising from a failure to comply with a regulatory requirement, where that failure is a criminal offence

Question 18

Money laundering reporting officer

Answer 18

All firms who are subject to the anti-money laundering rules must appoint an MLRO. They are responsible for the oversight of the firm’s compliance with its AML obligations and should act as a focal point for the firm’s AML activity

Question 19

Suspicious Activity Report

Answer 19

A report made to the National Crime Agency about suspicions of money laundering or terrorist financing. Commonly known as SAR

Question 20

National Crime Agency

Answer 20

The NCA became operational in 2013 and replaced the Serious Organised Crime Agency

Question 21

Professional scepticism

Answer 21

An attitude that includes a questioning mind