Ethics and Law

Question 1

What are the 4 defenses against failing to report money laundering?

Answer 1

• Lack of training (but offence for employer)
• Privilege reporting exemption
• Reasonable excuse
• Outside UK and not illegal where occurring

Question 2

What amount of professional indemnity insurance is required?

Answer 2

If gross fee income in beneath £600,000 then minimum is 2.5x gross fee income with a minimum £100,000.
If over £600,000 then minimum is £1,500,000

Question 3

What are the 3 steps you must take when dealing with a HMRC error?

Answer 3

1. Advise client to disclose the error to HMRC and pay back the error.
2. Check if the engagement letter gives you the authority to disclose.
3. Warn client of the legal consequences of refusal to allow you to disclose the error, including interest and penalties.

Question 4

What is the accountant’s duty of confidentiality to their client?

Answer 4

It prevents you from disclosing confidential information acquired as a result of professional or business relationship.

Question 5

What should you do if the client refuses to let you disclose an error to HMRC? (2)

Answer 5

1. Advise them that you’ll have to resign.

2. Document the advice given to the client.

Question 6

In what situation can you disclose client information without the consent of the client?

Answer 6

If there is an express legal or professional right it duty to disclose.

Question 7

What 4 consequences could a chartered accountant face by “failing to disclose”?

Answer 7

1. Unlimited fine.
2. Custodial Sentence up to 5 years.
3. Disciplinary action by the ICAEW.
4. Striking off.

Question 8

What are the 4 possible defences available when you are charged with failure to disclose?

Answer 8

1. The accountant did not know or suspect that money laundering had occurred.
2. The accountant has a suspicion or reasonable grounds for knowing/suspecting money laundering but the information came to you in privileged circumstances.
3. There is a reasonable excuse for not making a report.
4. The money laundering is occurring outside of the UK and isn’t unlawful under UK criminal law.

Question 9

How can you avoid a charge for failure to disclose?

Answer 9

As the money laundering officer (automatic if they’re a sole practitioner) you should submit a suspicious activity report (SAR) to the national crime agency (NCA).

Question 10

What does “acting as an agent” mean?

Answer 10

The client is still responsible for the accuracy.

Question 11

What does “acting as a principle” mean?

Answer 11

The accountant is responsible for the accuracy.

Question 12

When preparing a VAT return for a client are you acting as a principle or an agent for the client?

Answer 12

Agent.

Question 13

What is key when holding discussions about an issue?

Answer 13

DOCUMENTING THEM.

Question 14

What should you do if you can’t solve an issue?

Answer 14

Consider resigning.