Ethics Ch6 Flashcards
Whistle blowing definition
A person who tells someone in authority about a misconduct, alleged dishonesty or illegal activity that has it may occur in an organisation
What does an employee do if they suspect an employer or client had committed an act which is illegal or unethical
Decide the appropriate reporting procedures to follow. They may decide to whistle blow
Before whistle blowing, make sure there’s plenty of facts to back up the accusation, and evidence. Follow the company’s international procedures for reporting suspected misconduct,
This may involve reporting unethical behaviour to a prescribed internal department within the company
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External whistleblowing- a individual is advised to raise concerns internally before going external. If they feel they cannot they should report to the FRC (financial reporting council)
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The pinkie inerest disclosure act 1998 (PIDA)
They offer the employee some protection in certain circumstances regarding whistleblowing.
A criminal offence, breach of a legal obligation, miscarriage of justice, endangerment of an individuals health, environmental damage.
In order to be protected an employee must show
The disclosure is made in good faith, the employee believes that the information disclosed is true, the employee would otherwise be victimised it the evidence concealed destroyed if the information is not disclosed
The public inerest Disclosure act 1998 makes it easier for an employee to report an unethical behaviour however it cannot offer complete protection form the employer, who is the target
Whistleblowing has resulted in employees being suspended or dismissed.
Several organisations that can provide confidential advise
Citizens advise bureau, public concern at work,
Aat has a free helpline
Advise that before whistleblowing seek advise from Aat helpline
Activity’s relating to money laundering include
Acquiring using or processing cornball property, handing the proceeds of crime such as theft fraud and tax evasion, being knowing involved in anyway with criminal or terrorist property, entering into arrangements to facilitate laundering criminal or terrorist property investigating the proceeds of crime into other financial products, investigating the proceeds of crime into the acquisition of property/assets, transferring criminal property.
Criminal property
Is property which was knowingly obtained as a result of criminal conduct. It may take a number f forms including money, security , tangible or intangible property, terrorist property is money or property likely to be used for terrorist purposes. Or carrying out terrorist attaks
An accountant will be guilty of money laundering if they turn a blind eye to the clients suspect dealings
This would be viewed as facilitating the clients illegal activity’s
There is no min or max limit as to whether an accountant should report money laundering or terrorist financing offences
An accountant must be vigilant in preventing and detecting money laundering
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The proceeds of crime act 2002
Money laundering rules, this sets out the principle money laundering offenders and the requirements to report something suspicious
The terrosim act 2000
Money laundering rules, This sets out the principle terrorist financing and reporting obligations in similar terms to POCA
The money laundering regulations 2007 (the regulations )
These require some traders and firms to establish procedures intended to detect and prevent activities relating to money laundering and terrorist financing
NCA
NCA tackles serious organised crime gay effects the uk, including class A drugs, propel smuggling, human trafficking, major gun crime, fraud, computer crime, money laundering
Money laundering penalties
They can be penalised. Undoing an unlimited fine and it a prison sentence for up to 14 years
If an organisation hides unreasonable terms in the small print of a contract that they later try and enforce this will put customers off trading with that business in the future. Similarly if a business is not clear in its dealings with suppliers these suppliers will be reluctant to deal with the business in the future
Being transparent with colleagues, customers and suppliers
Failure to produce accurate and timely financial information may lead to poor decisions being made by the management of the business. Failure to produce regulatory information such as financial statements on time can lead to businesses being fined
Reporting financial and regularly information clearly and in time
A business that gives gifts or hospitality to customers could be seen as trying to influence the customers decisions or even bribe. Accepting gifts of suppliers could influence descion making of the organisation. The consequence of not hvaung c,ear policies regarding gifts could be adversely affect the image of a business and lead to accusations of unethical dealings
Being open and honest by identifying when is appropriate to accept and give gifts
a business that try’s squeeze the lowest price out of suppliers and delays payments can adversely affect relationships with the suppliers.
For example large supermarkets received bad publicity in the press for their control over small farmers and demanding very low prices
Paying suppliers a fair price and on time
If a business does. It treat its employees well they will leave the organisations which will lead to high staff turnover also poor working conditions will affect staff morale (enthusiasm) and affect quality of work
Providing fair treatment, decent wage and good working conditions
Code of practice implemented in the work p,ace are not legally enforceable but if a business fails to comp,y with regulations it could be subject to fines. Eg if they are found to have breached the health and safety at work act, the court can impose significant penalties
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Internal disciplinary procedures by an employer
These disciplinary procedures should be forms,Kay documented but will include the following stages
A verbal warning, a written warning, disciplinary hearing, opportunity to appeal,suspension from work, dismissal
Depending on the seriousness of the breach
Disciplinary action by the professional accounting bodies.
Failure to complete,y with applicable regulations, and codes of practice, may result in the accountant being disciplined
Disciplinary action if misconduct can be taken by the individual accounting bodies and also by the financial reporting council (FRC) which is the independence disciplinary body for accountants
The independent disciplinary body for accountants? In the uk
Financial reporting council (FRC)
Misconduct falls into two main categories ?
Bringing the accounting profession into disrepute
Acting in breach of rules an regulations of the accountants professional body
Individual accountanting body’s in the uk have published disciplinary regulations which sets out the process and sanctions an accounting body will carry out if a member is guilty of conduct.
The disciplinary investigation followed by a decision as to whether they are guilty of misconduct
What if an accountant is thought to be guilty of breaching
The disciplinary investigation followed by a decision as to whether they are guilty of misconduct
If an accountant is found guilty they could be liable of the following penalties..
Be required to give a written undertdrtaking to refrain from continuing the misconduct in question
Be fined a sum of money not exceeding the Mac figure set my professional accounting bodies
Be reprimanded (formal expression of disciplinary)
Practice licence withdrawn
Membership suspended
Expelled from the professional accounting body
The accountants duty to report money laundering
Which body requires an accountant to report any suspicion that their client, employer is involved in criminal property to the NCA in a suspicion activity report (SAP)
Proceeds if crime act 2002 (POCA) and the terrorism act 2000
SAR to the NCA
Suspicious activity report to the national crime agency regarding money laundering
MLRO
Money laundering reporting officer
If an accountant is working within a large organisation where should they report money laundering suspicion to?
Should be reported to the MLRO (money laundering reporting officer) in an internal report, the MLRO will then review and decide if it needs reporting the the NCA
One an officer from the MLRO desired there are reasonable grounds to suspect money laundering what must they do?
Tell the NCA at the earliest possible opportunity. The nominated officer should get consent from the NCA to complete the transaction. If it’s not possible to delay the transaction to the consent, the nominated officer should inform NCA of this when they send their report
What is terrorism financing
The provision or collection of funds from legitimate or illegitimate sources with the intention or in knowledge that they should be used in order to carry out an act of terrorism
Will a sole practitioner have a MLRO
No
What should a sole practitioner do if they suspect money laundering
She will not have a money laundering reporting officer, therefor should report her concerns to the NCA in a SAR. Failure to do this could result in Julia Being charged with terrorist financing offences. She should not inform the person in question of her suspicions
The SAR should include
Identity of the person if known (name, address, number, dob)
Information on which the suspicion of money laundering is based
Where about the money laundering is taking place
Details of the person making the report, eg MLRO or sole practitioner
Despite advice from their accountant and. A client has failed to disclose an omission or error in tax affairs where should this be reported?
To the firms MLRO or NCA if a sole practitioner
Fraud should be reported to the?
Police
Accountants and students should ensure they are familiar with their employees internal procedures for reporting suspicions of money laundering. Employers must ensure there staff have adequate training on their legal obligations
True or false?
True
Protected and authorised disclosure
This means the person is protected against allegations of breach of confidentiality regardless of how restriction on the disclosure of confidentiality information was originally imposed
Exceptions to the duty to report money laundering
When the information that forms the basis knowledge was obtained other than that in the course of the accountants business eg a social occasion
Threats to safety etc
Failure to disclose under the POCA. If an accountant fairs to report their suspicion this can carry up to imprisonment of up to how long?
5 years and or a fine
Maximum penalty for tipping off (warning the person committing the money laundering that they have been reported)
- Years and or a fine
If a customer attempts to make a purchase with large amounts of cash, what should you do?
Identity the customer and verify the source of the cash before accepting it
If the client ignores your advise, you should report it to the NCA
