exam part 1 sec 1 (2) Flashcards
Gemma is an AAT member working for Kutchins Ltd, an engineering consultancy. She has
recently started this job, having previously
worked for an accountancy firm where she was
the audit senior for Kirk Ltd, a competitor of Kutchins Ltd.
Required:
Explain whether Gemma is allowed to use knowledge, information and experience gained
from her previous employer in her new job.
Gemma is allowed to use general knowledge and experience from a previous employer but
NOT specific information from that employer that
is covered by the duty of confidentiality.
This means that general accountancy, audit
and management skills and knowledge can all
be used but not specific information concerning Kirk Ltd.
Bevis, an AAT member, has just joined a building company as a management accountant,
after working for some years in a local accountancy practice.
The following situations have arisen
in Bevis’ first week at work.
Matter 1
When he first joined the company the Managing Director invited him out to lunch so that
they could get to know each other. The Managing Director spent most of the time
questioning Bevis about competitors who were clients of the firm Bevis used to work for.
Matter 2
As part of Bevis’ work he needed to find ou
t some information on behalf of the customer.
When Bevis made the necessary phone call Bevis was told that the organisation did not
have authority from the customer to disclose
the information. When Bevis told his boss he
told Bevis to ring back and pretend to be the customer.
Required:
Explain what Bevis should do in respect of the two matters above.
Matter 1
Bevis should NOT tell the Managing Director anything that would be considered ‘private
information’ as this would be
a breach of confidentiality.
Matter 2
Bevis should tell the customer that he has been unable to gain the information.
Pretending to be a customer lacks integrity and would not be acting professional
Bella, a professional accountant, was invited on
a ‘night out’ with others from the accounts
department. This became quite a boisterous evening and it ended with the Finance Director
removing a sign from the front of a shop which he brought into the office the next day as a
reminder of the good evening.
Required:
Indicate which fundamental ethical principle is under threat. Select ONE answer
only.
Indicate what course of
action Bella should take.
Professional behaviour
Bella should suggest to the Finance Director that he should replace the sign, and
possibly discuss the matter with the Managing Director.
Your boss has told you that there are going to
be some redundancies in the company. You
will not be affected, but he has named a number of people who will be, including a good
friend of yours who is in the process of buying a holiday home in Cornwall. You know that
your friend would not be able to afford the property if she were to lose her job and that she
would pull out of the purchase if she knew about the redundancy plans.
The news of the redundancies will not be made public for several weeks.
Required:
(a)
Indicate which fundamental ethical principle is under threat. Select ONE answer
only.
Indicate your best course of action
Confidentiality
You should not tell your friend about the redundancie
Justin is an AAT member in practice at Ti
pling LLP. He is a senior on an assurance
assignment for Brittle plc. He inherits a 10% shareholding in this client
(a)
Which type of threat does this situation represent?
(b)
What would Justin’s best course of action be?
This situation presents a self-interest threat.
The best course of action is to remove Justin from this assurance engagemet
Julie has audited the accounts of Believe It plc as part of the assurance team for the past
five years. She has been approached by Believe It plc with an offer of the Senior Accountant
role.
Required:
(a)
State which type of threat this situation represent.
(b)
Suggest TWO safeguards the assurance firm should have in place concerning such a
threat.
(a) This situation presents a self-interest threat. (b) Two safeguards the assurance fi rm should have in place are:
A policy requiring the immediate disclosure of such an offer of employment
A policy requiring Julie to be removed from the assurance engagement.
M plc is a large UK-based building firm that sp
ecialises in public sect
or contracts such as
schools, hospitals and sports facilities.
Having a strong green and ethical reputation
is vital to M plc’s chances of winning
government contracts. To protect its reputat
ion, M has an internal ethics hotline for
employees to raise any concerns they mi
ght have or evidence of wrongdoing.
Ever since the economic downturn in 2008, M
plc has seen a major decline in its European
business so the Board are keen to expand in other parts of the world.
Matter
In 2013 M plc was successful in winning a major
contract to build new hospitals in Country
H in Africa. However, a month later, the
ethics hotline received a call concerning
Mr Igbinadola, the agent who represented M plc in the negotiations with the government.
The call claimed that Mr Igbinadola is well kn
own for his excessive gifts and hospitality and
paid for the MP involved in the negotiations to
go on a lavish holiday just weeks before the
contract was awarded. The Board of M plc claims no knowledge of such gifts and is
adamant it didn’t authorise this.
Required:
(a)
Outline the four offences described by the UK Bribery Act 2010
The Bribery Act 2010 creates four offences:
1
bribing a person to induce or reward them to perform a relevant function
improperly
2
requesting, accepting or receiving a
bribe as a reward for performing a
relevant function improperly
3
using a bribe to influence a foreign official to gain a business advantage
4
a new form of corporate liability for fa
iling to prevent bribery on behalf of a
commercial organisation.
M plc is a large UK-based building firm that specialises in public sect
or contracts such as
schools, hospitals and sports facilities.
Having a strong green and ethical reputation
is vital to M plc’s chances of winning
government contracts. To protect its reputat
ion, M has an internal ethics hotline for
employees to raise any concerns they mi
ght have or evidence of wrongdoing.
Ever since the economic downturn in 2008, M
plc has seen a major decline in its European
business so the Board are keen to expand in other parts of the world.
Matter
In 2013 M plc was successful in winning a major
contract to build new hospitals in Country
H in Africa. However, a month later, the
ethics hotline received a call concerning
Mr Igbinadola, the agent who represented M plc in the negotiations with the government.
The call claimed that Mr Igbinadola is well kn
own for his excessive gifts and hospitality and
paid for the MP involved in the negotiations to
go on a lavish holiday just weeks before the
contract was awarded. The Board of M plc claims no knowledge of such gifts and is
adamant it didn’t authorise this.
Required:
Explain the defences a commercial organisation could offer to a charge of briber
For a commercial organisation, it is a defence to have in place ‘adequate procedures’
to prevent bribery.
This may include implementing anti-bribery procedures.
It is important that firms consider what procedures are ‘adequate’ for their firm given
the risks they face and the way they run their business. The procedures should be
proportionate to the risk posed.
For some firms there will be no need to put
bribery prevention procedures in place as
there is no risk of bribery on their behalf. Other firms may need to put measures in
place in key areas, such as gifts and hospita
lity, as this is the area where they have
identified a risk.
Corporate ignorance of individual wrongdoi
ng will provide no protection against
prosecution.
M plc is a large UK-based building firm that specialises in public sect
or contracts such as
schools, hospitals and sports facilities.
Having a strong green and ethical reputation
is vital to M plc’s chances of winning
government contracts. To protect its reputat
ion, M has an internal ethics hotline for
employees to raise any concerns they mi
ght have or evidence of wrongdoing.
Ever since the economic downturn in 2008, M
plc has seen a major decline in its European
business so the Board are keen to expand in other parts of the world.
Matter
In 2013 M plc was successful in winning a major
contract to build new hospitals in Country
H in Africa. However, a month later, the
ethics hotline received a call concerning
Mr Igbinadola, the agent who represented M plc in the negotiations with the government.
The call claimed that Mr Igbinadola is well kn
own for his excessive gifts and hospitality and
paid for the MP involved in the negotiations to
go on a lavish holiday just weeks before the
contract was awarded. The Board of M plc claims no knowledge of such gifts and is
adamant it didn’t authorise this.
Required:
Discuss whether M plc could be guilty of
an offence under the UK Bribery Act 2010.
(c)
Certainly the excessive nature of the hospitality would mean that it would be viewed
as an attempt to bribe the MP concerned.
While M plc could argue that they are not guilty of 1, 2 and 3 above, they are likely to
be found guilty under offence 4.
Even though Mr Igbinadola was an agent and not an employee and even though the
Board claim ignorance, the company could
still be found guilty of failing to prevent
bribery.
The only possible defence would be to demonstrate that they had adequate
procedures in place to prevent bribery, but in
this case it looks difficult to prove thi
L PLC
Andre, an AAT member, works for L plc, a UK
company that exports a range of seed and
other agricultural products to growers around the globe.
Recently Andre accompanied other representative
s from L to go to a foreign country (‘M’)
to discuss with a local farming cooperative the
possible supply of a new strain of wheat that
is resistant to a disease which recently swept the region.
In the meeting, the head of the cooperative told them about the problems which the
relative unavailability of antiretroviral drugs cause locally in the face of a high HIV infection
rate.
AAT:
ADVANCED DIPLOMA SYNOPTIC ASSESSMENT
6
KAPLAN PUBLISHING
In a subsequent meeting with an official of M to discuss the approval of L’s new wheat
strain for import, the official suggests that L
could pay for the necessary antiretroviral drugs
and that this will be a very positive factor in
the Government’s consideration of the licence
to import the new seed strain.
In a further meeting, the same official stat
es that L should donate money to a certain
charity suggested by the official which, the o
fficial assures, will then take the necessary
steps to purchase and distribute the drugs.
Andre has raised concerns regarding potentia
l bribery risks if L goes ahead with the
suggestions made. However, the government
official concerned has assured Andre that
such payments comply with local laws
and are standard custom and practice.
Required: Advise the Directors of L plc, from the perspective of bribery risk.
Arguing that an activity complies with ‘local la
w’ or ‘customs and practices’ is no defence
under the Bribery Act.
If L plc goes ahead with the request, then two offences under the Act will have been
committed:
1
Using a bribe (the donations) to influe
nce a foreign official to gain a business
advantage.
2
Failing to prevent bribery on behalf of a commercial organisation.
L plc should thus refuse the request for ‘donations’.
The directors of John Groom Ltd, a small manufacturing company, have drafted an ethical
code for use within the organisation, based on ones used by competitors and the industry
trade organisation. The Board also plan to encourage suppliers to adopt the code.
Required:
Explain the legal status of this code.
The code is a voluntary one prepared by John Grooms Ltd for its own use.
It cannot insist on suppliers adopting it.
The code cannot be statutory since that woul
d be created under legislation/regulation/
case law and used by many companies.
