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TC > Ethics > Flashcards

Ethics Flashcards

1
Q

What should a firm do to ensure compliance with money laundering regulations?

A
  • register with appropriate supervisory authority (ICAEW)
  • appoint an MLRO
  • implement internal reporting procedures
  • train staff to be aware, identify, report and deal with clients in ML scenarios
  • establish internal procedures to deter and prevent ML, and make relevant individuals aware of the procedures
  • carry out customer due diligence on new clients and monitor existing clients to ensure client is known and establish areas of risk
  • verify the identity of new clients and maintain evidence of identification and records of any
    transactions undertaken for or with the client
  • report suspicions of money laundering to the National Crime Agency (NCA), using a
    suspicious activity report (SAR)
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2
Q

What are the legal requirements of a tax practice in terms of data protection legislation? Are there
any exemptions available from these requirements?

A
  • anyone with personal info has legal obligations to protect it under the data protection act 98
  • organisations that processes personal information must notify the ICO unless it is exempt, and be entered onto the ICO’s register of data controllers
  • only exemption at all applicable to practising firms of accountants would be where computers are
    not used in any way to process or store any client information, records or correspondence
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3
Q

What is the conflict resolution process in the ICAEW code of ethics?

A 
consider the following factors:
 relevant facts
 ethical issues involved
 fundamental principles related to matter in question
 established internal procedures
 alternative courses of action.
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4
Q

What if the conflict remains unresolved?

A

 seek advice within own firm and document advice given
 seek legal advice/advice from professional body
 consider withdrawing from engagement/conflict situation.

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5
Q

What steps should be taken when a conflict of interest is identified?

A

 Notify relevant parties of any actual/potential conflicts of interest.
 Obtain consent of relevant parties to act.
 If consent is refused, cease acting for one party involved in the conflict.
 Use separate engagement teams.
 Impose procedures to prevent access to information.
 Issue guidelines to team members re: security and confidentiality.
 Use confidentiality agreements for partners/employees.
 Regular review of safeguards by senior not involved with engagements.
 If conflict cannot be resolved consider not accepting/resigning from one
engagement.

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6
Q

What should a secondee to HMRC do whilst on their secondment?

A

The secondee should serve the interests of HMRC whilst on secondment and avoid
any situation where there is scope for a conflict of interest between HMRC and his or
her employer.
 The secondee should not be involved in matters relating to his or her employer
or employer’s clients while working for HMRC.
 After the secondment, the secondee should not be involved in the affairs of any
taxpayer he or she was involved with at HMRC for a significant period.

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7
Q

What are the 5 fundamental ethical principles?

A 
Integrity.
Objectivity.
Professional competence and due care.
Confidentiality.
Professional behaviour.
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8
Q

What are the threats to compliance with the fundamental principles?

A 
Self interest
Self review
Advocacy 
Intimidation
Familiarity
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9
Q

What are your responsibilities if you are acting as an agent?

A

Prepares documents on the client’s behalf but the client retains responsibility for the documents e.g. performing tax compliance work, submitting tax return (on behalf of the client).

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10
Q

What are your responsibilities if you are acting as an principal?

A

Provides advice on the tax consequences of certain courses of action and is responsible for the advice given. The principal is liable if advice is incorrect or inappropriate.

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11
Q

What is the guidance on professional indemnity insurance?

A
  • every professional member should have professional indemnity insurance
  • when they cease to be in practice, it should be retained for 2 years
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12
Q

What is tax evasion?

A

Deliberately misleading HMRC in order to pay less tax - illegal

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13
Q

What is tax avoidance?

A

Tax avoidance describes any legal method to reduce an entity’s tax burden, for example utilising tax shelters such as ISAs.

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14
Q

Do you have a obligation to report tax evasion?

A
  • Yes, it has money laundering obligations and therefore there is a duty to report this.
  • Could face 5 yrs if not
  • Could also be disqualified from ICAEW
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15
Q

Safeguards to reassure clients when working with ICAEW accountants

A
  • extensive training to qualify
  • continued professional development
  • ICAEW professional standards
  • regulatory monitoring
  • ICAEW complaints procedure which is detailed in engagement letters
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16
Q

What is the procedure when a HMRC error has been identified?

A

 Seek client authority to advise HMRC of error (usually in engagement letter).
 Warn the client of possible legal consequences.
 If consent is not given, seek legal advice about informing HMRC without consent and ceasing to act for client.
 Keep written records of all correspondence and the actions taken.

17
Q

How is a person engaged in money laundering?

A

A person is engaged in money laundering if he or she:
 conceals, disguises, converts, transfers or removes (from the UK) criminal property.
 enters into/becomes concerned in an arrangement which he or she knows or suspects facilitates the acquisition, retention, use or control of criminal property.
 acquires, uses or has possession of criminal property.

18
Q

What are examples of criminal property in relation to money laundering?

A

Criminal property includes:
 proceeds of tax evasion
 a benefit obtained through bribery or corruption
 benefits obtained through operation of a criminal cartel
 benefits from failure to comply with regulatory requirement (where that failure is a criminal offence).

19
Q

What anti-ML regs are accountants supposed to comply with?

A

Accountants are required to comply with:
 Proceeds of Crime Act 2002 (POCA) as amended by the Serious Organised Crime and Police Act 2005 (SOCPA)
 Money Laundering Regulations 2007.

20
Q

What are the penalties for money laundering?

A

The following penalties apply in relation to money laundering:
 unlimited fines
 up to 14 years imprisonment for most money laundering offences
 up to 5 years for failure to report offence/tipping off
 up to 2 years for contravention of the regulations.

21
Q

Defences to money laundering?

A
  • accountant does not know about it and has not been trained to spot it - employer offence
  • if knowledge arose in privileged circumstances
  • extreme excuse (threat to safety)
  • outside the UK so we don’t give a shit
22
Q

What data precautions should be taken to prevent unauthorised to client info?

A

 Computers should be kept physically secure.
 Access credentials (e.g. passwords) should be kept safe from unauthorised use.
 Passwords should be changed regularly; the HMRC recommendation is once every three months.
 Any unusual or unexpected activity on a client’s online HMRC records should be reported to HMRC immediately.
 Suspicious emails claiming to be from HMRC should be forwarded to HMRC’s phishing team.

23
Q

What are the safeguards against threats to the fundamental principles?

A 
 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.
24
Q

What should you do if appropriate safeguards against threats to the fundamental principles cannot be implemented?

A

 decline/discontinue the specific service.

 resign where necessary.

25
Q

When may an ICAEW member disclose confidential info?

A

 disclosure is permitted by law and authorised by the client.
 disclosure is required by law (e.g. evidence in legal proceedings).
 there is a professional duty or right to disclose.

26
Q

What are the procedures when accepting a new client?

A
  • make sure it doesn’t cause a conflict of interest
  • consider any threats to the principles and apply safeguards where necessary
  • should consider if you are competent enough to perform the engagement
27
Q

What is an engagement letter and what are the features?

A

Contract between accountant and client setting out each party’s responsibilities

  • should explain whether accountant is agent or principal
  • engagement letter per contractual relationship
28
Q

Is a deliberate intention to benefit from a HMRC error a criminal offence?

A

Yes

TC (16 decks)

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