Professional Ethics

2.  Time available:
 2.30 hours plus 15 minutes reading time
 The assessment consists of nine tasks – Q 1-4
are individual questions and 5-9 based on a
project scenario
 Methodology:
 Down load assessment book from AAT
 Save book to main computer drive as
instructed by invigilator
 When finished – upload assessment book to
AAT

3.  1) Can anyone call themselves
accountants? – or is it a protective title?
 2) What are the objectives of the
accountancy profession?
 3) Is the ethical code for accountants
voluntary?
 4) Does HMRC oversee the accounting
profession?

4.  1) State why accountants must have up to
date technical knowledge and give
examples of these areas
 2) What does diligence mean - from an
ethical perspective?
 3) Scenario: A client has had accountancy
work undertaken by an trainee accountant,
and the client suffered a loss due to this.
Which legal actions can the client take?
 4) Which circumstances could threaten an
accountant’s ability to act with sufficient
expertise?

5.  1) A client forwards money to his
accountant for payment of Tax. Which
bank account should the accountant use?
 2) For which purpose can an accountant
use client monies?
 3) When must client monies be repaid to
the client?
 4) If a client ask an accountant to hold
monies on its behalf, which response should
the accountant give?

6.  1) Why should an accountancy practice
register with the Information
Commissioner’s Office?
 2) When can an accountancy practice
disclose confidential information about
one of it’s clients?

7.  Scenario: Advertisement for our
accountancy practise: We are all fully
qualified accountants, at 8 hours notice we
can provide any service you require – and
we are better than KPMG!
 1) Threats to fundamental principles?
 2) Will any of these be breached?
 3) Is this advert ethically correct?
 4) How will you (as the trainee accountant)
apply the conceptual framework to this?

8.  Hattrick Ltd makes designer hats. They have a rules
based statutory code of practice for this production
industry and also has its own principles based code
of conduct. One of its customers, WideEye is suing
Hattrick Ltd for supplying faulty and badly fitting hats.
 1) Does Hattrick Ltd need to comply with both
codes?
 2) Will Hattrick Ltd’s codes of conduct benefit its
customers? – and how?
 3) Which of the codes involves a conceptual
framework?
 4) What is the operational risk for Hattrick Ltd due to
WideEye’s action?

9.  Roger, the senior accountant in our practise has
accepted a role as FD for Hotshot Ltd – one of his long
time clients. He starts in 6 months time.
 1) How do the fundamental principle of objectivity
affect this situation?
 2) Which treat does Roger face to his objectivity
within the next 6 months?
 3) Does Roger face any conflict of interests? – if so,
which?
 4) Considering the ethical code for professional
accountants, how should Roger resolve this ethical
conflict?
 5) Which alternative safeguards could Roger attempt
to reduce the conflict?

10.  Knock Ltd’s MD John (client of the practise)
told you, that they had received £500K from
one of his friends, paid into a deposit account
in Knock Ltd’s name at the UK branch of an
overseas bank.
 John want to pay this amount into our client
account, and then after one week transfer this
amount into Knock Ltd’s business bank
account
 You are not told anything else, but you did
learn that the friend of John had just been
released from prison.
 You are a fully qualified accountant in our firm.

11.  1) Do you think John is involved in money
laundering? – and why (or why not)?
 2) Which type of report should you make
and who should receive it
 3) Which information should you include
in this report as a minimum?
 4) Do you breach your duty of
confidentiality to your client, Knock Ltd
by making this report? – and why (or why
not)?

12.  Howitzer Ltd – a client of our practise, used to
make very large yearly profits, but recently
Howitzer Ltd has seen a rapid decline
financially. Some of its polices (which have
appeared in the news) contributed to this:
 Purchasing policy: All based on price,
resulting in quality and delivery issues
 Salary policy: Everyone is paid the minimum
salary, resulting in high staff turnover and low
morale.
 Production policy: Non compliance with
pollution stipulations resulting in regulatory fines

13.  1) How will you define sustainability?
 2) Do you – as a professional accountant
– have a duty to uphold the values of
sustainability?
 3) Which type of operational risk do
Howitzer Ltd face from the news reports?
 4) Explain for each of Howitzer Ltd’s
policies what the effect is on
sustainability (economic and/or
environmental)

14. 