Ethics

Question 1

What are the fundamental principles of the ICAEW Code of Ethics and Conduct?

Answer 1

1. Integrity
2. Objectivity
3. Professional competence and care
4. Professional behaviour
5. Confidentiality

Question 2

Define integrity

Answer 2

Members should act in a straightforward and honest manner

Question 3

Define objectivity

Answer 3

Members should not allow prejudice or bias, or the influence of others, to override objectivity

Question 4

Define professional competence and due care

Answer 4

Members must exercise sound judgement in applying professional knowledge and skill

Question 5

Define professional behaviour

Answer 5

Members should refrain from any conduct that might bring discredit to the profession

Question 6

Define confidentiality

Answer 6

Members should respect the confidentiality of information acquired as a result of professional and business relationships

Question 7

Define safeguards

Answer 7

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

Question 8

Which factors should a member consider when initiating an ethical conflict resolution process?

Answer 8

1. Relevant facts
2. The ethical issues involved
3. The fundamental principles relating to the matter
4. Any established internal procedures
5. Possible alternative courses of action

Question 9

What actions should a member take if an ethical conflict remains unresolved?

Answer 9

1. Seek advice within his or her own firm and document the advice given
2. Seek legal advice or advice from a professional body
3. Consider withdrawing from the engagement

Question 10

What steps should a member take if a conflict of interest is identified?

Answer 10

1. Notify relevant parties of any actual or potential conflicts
2. Obtain consent from relevant parties to act
3. If consent is refused, cease acting for one party
4. If consent is granted, apply safeguards

Question 11

Which safeguards should be applied in a conflict of interest situation?

Answer 11

1. Use seperate engagement teams
2. Impose procedures to prevent access to information
3. Issue guidelines to team members in relation to security and confidentiality
4. Use confidentiality agreements
5. Regular review of safeguards by senior staff members not involved with the conflicting engagements

Question 12

Define tax planning

Answer 12

Using tax legislation legally and as intended to minimise tax bills but pay the correct amount of tax

Question 13

Define tax avoidance

Answer 13

Using any legal method to reduce an entity’s tax burden, even if the method is not following the intent of the law

Question 14

Define tax evasion

Answer 14

Illegally seeking to pay less tax than is due by deliberately misleading HMRC

Question 15

What are the main forms of tax evasion?

Answer 15

1. Suppressing information

2. Submitting false information

Question 16

Define money laundering

Answer 16

1. Concealment, disguise, conversion, transfer, or removal of criminal property
2. Enter into or become concerned about an arrangement which a person knows or suspects facilitates the acquisition, retention, use or control of criminal property
3. Acquire, use, or have possession of criminal property

Question 17

What are examples of criminal property?

Answer 17

1. Proceeds of tax evasion
2. Benefits obtained through bribery and corruption
3. Benefits obtained through operation of a criminal cartel
4. Benefits from failure to comply with regulatory requirements

Question 18

How many years in prison for money laundering offences?

Answer 18

Up to 14 years

Question 19

How many years in prison for failure to report money laundering offences?

Answer 19

Up to 5 years

Question 20

How many years in prison for tipping off a suspected money launderer?

Answer 20

Up to 2 years