ethical conflict and reporting unethical behaviour Flashcards

1
Q

How can a conflict of interests occur for the accountant’s clients ? P143

A
  • public practice work =Several different clients
  • chance- conflict- two or more clients
  • same market- same customer - success of 1 = failure for others
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What fundamental principles are affected by an accountant working for clients with conflicting interests ? P143

A
  • Objectivity
  • Confidentiality
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the two potential problems facing an accountant working for a client with conflicting interests ? P143

A
  • Advice to one - adverse affect on other (objectivity)
  • information gained on one - beneficial to other client (confidentiality)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How can the risks associated with working for clients with conflicting interests be reduced ? P143

A
  • safeguarding:
  • Compartmentalising - reponsibiltiy and knowledge each client - use different staff each assignement
  • no safeguards = not accept/ continue - one / more appointments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What should an accountant do before taking on a new client/ there are changes in circumstances of existing client ? P143

A
  • Reasonable steps - conflict interests exists / could arise
  • client fully informed - if conflict
  • client decision - use of accountant
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a definition of loyalty ? P144

A
  • Firm / not changing
  • support - person
  • support organisation
  • belief in your principle
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are examples of an employer pressuring an accountant not to comply with their fundamental principles ? P145

A
  • Law break
  • rulees and standards break - profession
  • part - unethical / illegal earnings plan
  • lie/mislead (silence) - auditors/ regulators
  • name/association - misrepresenting statements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What options does the accountant have if the employer puts pressure on them to break their fundamental principle or the law ? P145

A
  • employer broken law - persuade employer not to
  • difference of opinion - accounting / ethical matter - senior staff / employer’s dispute resolution
  • resign - remain confidential
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What should an accountant do before offering their resignation for non compilance with employer demands to break fundamental ethical principles ? P146

A
  • Advice - professional body/ legal
  • now legal protection against dismissal - whistleblowing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How should an accountant go about solving an ethical conflict when applying their fundamental principles ? P148

A
  • formal conflict resolution process
  • solve informally
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What factors should an accountant consider when attempting to resolve the ethical conflict, which arises when trying to apply fundamental ethical principles ? P148

A
  • facts relating to conflict
  • ethical issues involved
  • fundamental principles involved
  • established internal procedures
  • alternative course of actrion available
  • advice from others
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What if the accountant cannot resolve the ethical issue, when applying fundamental principles, by themselves ? P148

A
  • Consult other appropriate colleagues
  • line manager raising - discreet & confidential
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What should the accountant do if they are still unable to resolve the ethical dilemma through consulting an colleague? p148

A
  • seek further advice
  • larger organisation - employer’s ethics helpline
  • smaller organisation - not own helpline - professional accounting body contact E.G. aat confiedential ethics helpline
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Who should the accountant report to if the conflict is between the accountant and another member of staff/ organisation that they work for ? P148

A
  • Person charged with governance management - directors / audit committee
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What must the accountant always remember throughout dealing with ethical dilemmas? P149

A
  • Document - ethical issue detail and discussions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What advice can the professional accoutant get if the ethical issue has not ben resolved ? P150

A
  • professional advice - professional accounting body
  • Legal advice
  • on confidential basis
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What if the accountant is still unable to resolve the issue after reporting it to a professional accounting body ? P150

A
  • Disassociate from issue
  • withdrawing from engagement team - working on assignment
  • resigining - engagement/ firm / employer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How do organisations comply with relevant laws and regulations ? P150

A
  • Own code of conduct
  • business code of practice / conduct - organisational values included
19
Q

What are the key organisational values that should be included in a business’ code of conduct ? P150

A
  • transparency - colleagues, customers, suppliers
  • reporting info clearly & on time - financial and regulatory
  • open and honest - appropraite to accept gifts and hospitality
  • supplier fair & timely pay
  • fair treatment, good wage, good working condition
  • appropriate social media use
20
Q

What should an accountant ensure when complying with organisational ethics and values ? P151

A
  • Application of own ethical values and fundamental principles
  • conflict:
  • feelings known - management in business
  • conflict resolution process use (referenced earlier)
21
Q

What is a consequence of a business not being transparent with colleagues, customers, and supplier ? P151

A
  • customer/ supplier reluctant to trade
  • e.g. small print contract - later enforce
22
Q

What is a consequence of a business failing to report financial and regulatory information clearly and on time ? P151

A
  • inaccurate & untimely financial info = Poor management decision by business
  • untimely tegulatory info = fines
23
Q

What are the conseqeunces of not having clear policies regarding gifts and hospitality ? P152

A
  • Adverse affect - business image
  • accusations - unethical business dealings
24
Q

What are the consequeces of not paying a supplier fairly and on time ? P152

A
  • Adverse affect - supplier relationship
  • e.g. supermarkets - low price from farmers
25
Q

What are the consequences of not providing fair treatment, decent wages, and good working conditions from employees ? P152

A
  • Employees leave - high staff turnover
  • poor working conditiions = poor staff morale, poor quality , poor commitment from staff
26
Q

What type of leverage does an organisation’s values and code of practice have ? P152

A
  • Not legally enforceable
27
Q

What leverage do regulations have ? P152

A
  • fines - failure to comply
  • health and safety at work act 1974 - significant penalities
28
Q

What is whistleblowing defined as ? P153

A
  • Tells - to someone in authority
  • misconduct / alleged dishonesty / illegal activity
  • has or may occur
  • in organisation
29
Q

What can the misconduct referenced in the whistleblowing definition mean ? P153

A
  • Breaking the law - E.G. fraud
  • contravening regulations - health and safety regulations
  • contrary public interests - e.g. corruption
30
Q

How can the allegations of misconduct by a whistleblower be made ? P153

A
  • Internally
  • Externally - regulators / police
31
Q

What should be consider if someone is to whistleblow internally ? P153

A
  • Have facts for issue & evidence
  • follow internal procedure - prescribed internal department
  • explained to management - concerns if not addressed
32
Q

WHat should an individual accoutnant do if they’ve raised the issue internally but it’s not been addressed / the matter is so serious ? P154

A

Appropirate regulator - financial reporting council

33
Q

Why should an external whistleblower seek third party advice before whistle blowing ? P154

A
  • Legal protection limited
34
Q

What protection agaisnt dismissal is there for external whistleblowers ? P154

A
  • The public interest disclosure act 1998
  • disclosure - otherwise confidential information
35
Q

In order for the employee to gain protection from PIDA, they must believe at least one of these incidents has or is likely to occur. What are these ? P154

A
  • Criminal offence
  • breach of legal obligation
  • miscarriage of justice
  • individual’s health and safety endangerment
  • environmental damage
36
Q

What must the employee show in order to be protected from PIDA ? P154

A
  • Disclosure - good faith
  • information dislcosed is true
  • victimised employee / evidence concealed or destroyed- info not disclosed
37
Q

Where are the main places an employer can seek advice from externally when reporting unethical behaviour ? P155

A
  • Citzen advice bureau
  • Protect
  • AAT ethics helpline - BEFORE WHISTLE BLOWING
38
Q

What is the definition of liability ? P156

A
  • legal responsibility for something
  • possibility having to pay damages
39
Q

What are the main facotrs causing liability ? P156

A
  • Criminal acts
  • breach of contract - supply of services
  • breach of trusts
  • professional negligence & fraud
40
Q

What is negligence in law ? P156

A
  • Breach - implied duty of care - situation / relationship
  • accountant - assignements - skilled & professional manner
41
Q

What is professional negligence ? P156

A
  • client - accountant duty - financial loss
  • proven accountant fault
  • breach of contract
  • accusations - fraud & money laundering
42
Q

What rules should be followed for all assignments, to minimise the possibility of the accountant committing professional negligence ? P156

A
  • Letter of engagement - excluded & included duties
  • further duties - written down & agreed - both parties
  • limitation to advice - advising without required info
  • unaudited accounts/ financial statements - confidential & for private use
  • complex assignement - take specialised advice/ tell client to take
43
Q

What is professional indemnity insurance ? P157

A
  • Legal liability cover
  • third party compensation - injury , loss , damage
  • student accountants, self-employed work
44
Q

What should professional indemnity insurance NOT be used as ? P157

A
  • Safety net
  • no necessary skills