Professional and technical competence

Question 1

State the three main ways that a professional accountant can keep up-to-date with technical changes.

Answer 1

1) Reading professional journals
2) Enrolling on updating courses
3) Complying with CPD requirements for qualified professional accountants

Question 2

What safeguards should you consider to reduce threats to professional competence and due care?

Answer 2

Get additional advice or training
Ensure that there is adequate time
Obtain assistance from someone with the necessary expertise
Consult with a more experienced member, independent experts or AAT

Question 3

You have provided specific expertise without having the correct knowledge. This lack of knowledge can be proved and the client has incurred significant costs because of it. On what two grounds could the client sue?

Answer 3

Professional negligence

Breach of contract

Question 4

For an accountant who mainly deals with sole traders and partnerships, who prepares accounts and tax returns, what 4 things must they keep up to date with their knowledge?

Answer 4

Tax legislation
Money laundering
Accounting regulations
Financial reporting standards

Question 5

What type of insurance should an accountant have to cover against legal liability to compensate a client who has lost through a breach of an accountants duty to care?

Answer 5

Professional indemnity insurance

Question 6

What do you have to do to be professionally competent?

Answer 6

Attain, maintain and keep up-to-date

Question 7

What are the critical areas to keep up to date with?

Answer 7

Changes in financial reporting
Changes in ethical code
Changes in tax and companies legislation
Changes in relevant criminal law including bribery, fraud, money laundering
Any additional changes in regulation of accounting, reporting, tax compliance, audit and the accounting and finance profession.

Question 8

What does CPD stand for?

Answer 8

Continuing Professional Development

Question 9

Why do accountants need to carry out CPD?

Answer 9

To stay competent

Question 10

How is CPD measured?

Answer 10

By the outcomes and benefits to the members

Question 11

What does ICAEW stand for?

Answer 11

Institute of Chartered Accountants in England and Wales

Question 12

What is the ICAEW’s process for CPD?

Answer 12

Reflect - consider development needs, how you can meet them and create a plan
Act - carry out activity
Impact - evaluate the effectiveness
Declare - you must declare your compliance each year between 1/11 and 31/01

Question 13

What does AAT stand for?

Answer 13

Association of Accounting Technicians

Question 14

What is the AAT’s process for CPD?

Answer 14

Assess - What are your goals and how are you going to achieve them?
Plan - What do you need to do?
Action - Complete the plan
Evaluate - If it was useful/ have you achieved your goals?

(You must complete this CPD process once a year or twice if you are in practise)

Question 15

How is CPD for AAT members monitored?

Answer 15

Must keep CPD records which could be requested at any time by AAT

Question 16

If you are subject to disciplinary procedures but AAT do you have to submit you CPD?

Answer 16

Yes

Question 17

What principles do you break when you take on an assignment you know you are not capable of doing?

Answer 17

Integrity

Professional competence and due care

Question 18

Safeguards to eliminate threats to professional competence and due care

Answer 18

Obtain additional advice or training
Ensuring that there is adequate time available for performing the relevant duties
Obtaining assistance from someone with necessary expertise
Where appropriate consulting with a more senior member of staff, usually a manager, independent experts or relevant professional body

If threats can’t be eliminated then the work should be refused

Question 19

Define professional negligence

Answer 19

This may occur where a client, to whom an accountant owes a duty of care, suffers a financial loss that can be proved to be the fault of the accountant

Question 20

Define CPD

Answer 20

The way in which accountants maintain their knowledge and skills to ensure that they remain professionally competent

Question 21

Define professional competence

Answer 21

Having the necessary skills and expertise to carry out existing and new work to the required professional standard

Question 22

Define professional journals

Answer 22

Magazines published by the professional accounting bodies in the UK which include up-to-date information on current accounting practice

Question 23

Define professional indemnity insurance

Answer 23

Insurance that an accountant takes out to cover any damages he/she may have to pay a client due to professional negligence

Question 24

What are appropriate CPD?

Answer 24

Workshops, training courses, conferences
AAT social meetings
Planned coaching from colleagues
Structured discussion groups
Studying for further qualification
Online/CD-rom courses
Planned reading/research
Using audio, video, or IT resources
Special project work or job secondment 
Hands-on development of skills 
Memberships of local or professional groups
Voluntary work