Chapter 11

Question 1

In order to receive the protection conferred by the whistleblowing provisions of the Public Interest
Disclosure Act 1998:
Requirements
Does a person need to be an ‘employee’?
A Yes
B No
Does the person need to be of a minimum age?
C Yes
D No

Answer 1

B D

the act applies to ‘workers’ which is wider than employees but does not include the self-employed

Question 2

do you have to prove that ie employer’s working practices are unsafe?

Answer 2

no - just reasonable belief

Question 3

is there a min time length to qualify for statuatory protection?

Answer 3

no

Question 4

W hich of the following criteria does a person not always have to show in order to receive the
protection offered by statute in a case of whistleblowing?
A T hat the disclosure is a qualifying disclosure
B T hat it is made with a reasonable belief in its truth
C T hat they have some documentary evidence of the matter complained of
D T hat it has been made to an appropriate person or recognised regulatory body

Answer 4

C - rumour and suspicion are unlikely to satisfy the need for reasonable belief BUT unnecessary that documentary evidence is required

Question 5

W hich of the following disclosures is or are qualifying disclosure(s)?
(1) T hat a criminal offence is likely to be committed
(2) T hat their employer has been guilty of negligence
(3) T hat the work of their employer is causing damage to the environment
(4) T hat their employer is engaging in unsafe working practices
A (1) and (4) only
B (1), (3) and (4) only
C A ll of the above
D (3) and (4) only

Answer 5

ALL OF THEM - criminal offences and unsafe working practices are qualifying disclosures

Question 6

Raj worked as a junior administrator in the offices of an insurance company Be Sure & Co. He had
been hoping to be promoted to a senior post recently but his colleague was given the job, even
though he was younger than Raj and had not worked in the office as long as Raj had. Raj has also
discovered that his boss was paying the staff in the post room less than the minimum wage. Still
angry about missing out on his promotion, he has passed this information on to the senior partner of
Be Sure & Co.
Requirements
Are the following true or false?
The disclosure is a qualifying disclosure under the Public Interest Disclosure Act 1998 because it
reveals non-compliance with a legal obligation to which the employer is subject.
A True
B False
The disclosure is not protected under the Public Interest Disclosure Act 1998 because the motive
behind it shows a lack of good faith.
C True
D False

Answer 6

A D - there is no longer a requirement for good faith, but the apparent lack of good faith may result in a compensation being reduced by up to 25%. The disclosure must be made in the public interest.

Question 7

sufficient belief or evidence

Answer 7

sufficient belief - but not rumours!

Question 8

who must someone disclose to if they are working for public bodies
ie NHS

Answer 8

Minister of the Crown

Question 9

what is the aim of the Whistleblowing act ie who to disclose to

Answer 9

internally! encourage internal disclosure in the first instance
EXCEPT:
public bodies - Minister

Question 10

is/what is the maximum limit for compensation surrounding any mistreatment following whistleblowing

Answer 10

none - a tribunal may award any amount that it considers just and equitable

Question 11

what are the circumstances in which someone can disclose to the police, social media, non-prescribed regulators etc

Answer 11

-reasonably believed they would be victimised if raised internally/with prescribed person

or

-reasonably believed it would be covered up and there was no prescribed person

or

-had already raised the issue internally/prescribed regulator

ALL CIRCUMSTANCES : the disclosure is not made for personal gain

Question 12

how can you commit fraud?

Answer 12

1. dishonestly making a false representation of fact or law
2. fraud by failing to disclose information
3. fraud by abuse of position

Question 13

fraud - is it necessary to show that the defendant intended to make a gain for themselves or another person?

Answer 13

no - the offence is also committed where the defendant intended to cause another person loss or to expose that person to the risk of making a loss

Question 14

if a director is found guilty of fraudulent trading, will they automatically be disqualified from acting as a director?

Answer 14

no - he faces the possibility of being disqualified for < 15 year

Question 15

director - what could they face if found guilty of fraudulent trading?

Answer 15

< 15 yrs disqualification

Question 16

All of the following, except one, are the specified ways in which the statutory offence of fraud may be
committed under the Fraud Act 2006.
Requirement
Which is the exception?
A Fraud by abuse of position
B Fraud by dishonestly appropriating property belonging to another
C Fraud by making false representation
D Fraud by failing to disclose information

Answer 16

B = crime of theft

Question 17

The Public Interest Disclosure Act 1998 offers protection for workers who choose to disclose
wrongdoing at their place of work.
Requirements
Does the Act protect workers who disclose wrongdoing by their fellow workers?
A Yes
B No
To offer protection, must the disclosure be made in the public interest?
C Yes
D No

Answer 17

A + C

Question 18

maximum sanction that can be imposed on an individual for fraud

Answer 18

10 years imprisonment and an unlimited fine

Question 19

J ack has been convicted of fraud under the Fraud Act 2006. What is the maximum sanction that can
be imposed on him?
A 7 years’ imprisonment and an unlimited fine
B 10 years’ imprisonment and a fine of up to £100,000
C 7 years’ imprisonment and a fine of up to £100,000
D 10 years’ imprisonment and an unlimited fine

Answer 19

D

Question 20

fraudulent trading : civil vs criminal

Answer 20

criminal - can or cannot be in liqudiation

civil - can only be in liquidation

Question 21

fraudulent trading - is this offence committed where a business is carried on for any fraudulent purpose?

Answer 21

yes

Question 22

Nigel and Kevin are directors of Go Karts Ltd. Leo, the company’s financial adviser, tells Kevin that the
company is facing mounting debts and that its assets and projected income is not sufficient to pay
them. Notwithstanding this, Kevin orders 20 state-of-the-art go-karts, in the hope that he would be
able to keep at least one of the go-karts once the company was wound up (as he knew it would be).
Three months later, the company goes into compulsory liquidation. Nigel has never been involved
with the day-to-day running of the company as he is much too busy with his other business ventures.
As far as he’s concerned, Go Karts Ltd is doing very well.
Requirement
Which of the following best describes who is and who is not guilty of the criminal offence of
fraudulent trading?
A Kevin and Leo are guilty. Nigel is not guilty because he is unaware of the situation.
B Kevin and Nigel are guilty. Leo is not guilty because he is a financial adviser and not a director.
C Kevin is guilty. Leo and Nigel are not guilty because neglect or lack of positive dishonest action
cannot constitute fraudulent trading.
D Nigel, Kevin and Leo are all guilty because they are all aware or should be aware that insolvency
is likely.

Answer 22

C - Kevin only

no stat definition of ‘fraudulent’ is given, but it seems that some positive act is required

Question 23

T he Criminal Justice Act 1993 governs the criminal offence of insider dealing.
Requirement
Which of the following best describes the offence of insider dealing?
A Making public information relating to price-affected securities in order to influence dealings in
those securities
B Dealing in securities while in possession of inside information as an insider, the securities being
price-affected by the information
C Acquiring securities with the benefit of price-sensitive information obtained as an insider
D Being an insider and in possession of confidential information about the likely effect of dealings
on the price of securities

Answer 23

B

Question 24

Richard is a fund manager with Burrington Fund Managers Ltd. He hears that Ventures plc is about to
announce a successful takeover and that its share price will rise significantly as a result. He texts his
brother-in-law, Jeff, and says “If I were you, I’d buy as many shares as you can in Ventures plc”. Jeff has
mislaid his mobile phone and doesn’t receive the information until after the takeover has been
announced.
Requirements
Is Richard guilty of insider dealing contrary to the Criminal Justice Act 1993?
A Yes
B No
Would it make any difference if Jeff bought shares in Ventures plc?
C Yes
D No

Answer 24

A - guilty of encouraging another person to deal in them

D - it is irrelevant whether any dealing actually takes place

Question 25

Andy is an auditor doing an audit of Sunstar plc. During the course of the audit, he learns that the company has made an unexpected heavy loss in the current financial year. He tells his colleague Zara back in the firm’s office and she sells her shares in Sunstar plc. Requirements Is the information passed to Zara inside information for the purposes of the insider dealing provisions of the Criminal Justice Act 1993? A Yes B No Is Zara an insider for the purposes of those provisions? C Yes D No

Answer 25

A - the info relates to particular securities and is price-sensitive as it would be likely to have a significant effect on the price of the securities if made public C - because she obtained the info from an insider who had info by virtue of his profession as an auditor

Question 26

maximum penalties for insider dealing

Answer 26

7 years imprisonment and/or an unlimited fine

Question 27

maximum penalties for bribery

Answer 27

criminal offence - 10 years imprisonment and/or unlimited fine

Question 28

t/f - bribery is a criminal offence and is governed by statute

Answer 28

true

Question 29

W hich of the following best describes the offence of money laundering, which is governed by the Proceeds of Crime Act 2002? A It is the process by which the proceeds of illegal activity are disposed of into apparently legitimate business activities. B It is the process by which monies are transferred from business to business or place to place in order to conceal their original source. C It is the process by which property illegally obtained is converted into cash in order to facilitate its disposal. D It is the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin.

Answer 29

C

Question 30

W hat is the maximum length of imprisonment that can be imposed under the Proceeds of Crime Act 2002 for failing to report a suspicion of money laundering? A 5 years B 7 years C 10 years D 14 years

Answer 30

A - plus an unlimited fine

Question 31

prison, fine : bribery, insider dealing, fraud, failing to report ML suspicion, tipping off ML, ML, non-compliance with ML regulations

Answer 31

bribery = 10 yrs max + unlimited insider dealing = 7 yrs max + unlimited fraud/fraudulent trading = 10 yrs max + unlimited failing to report ML suspicion = 5 yrs max + unlimited fine tipping off ML = 2 yrs max + unlimited fine ML = 14 yrs max + unlimited fine non-compliance with ML regulations = 2 yrs max + unlimited fine

Question 32

Nathan works as an accountant with Moneyneeds Ltd, a financial services company. He is asked to prepare some accounts which he strongly suspects are going to be used to enable the company to evade some of its tax liability. He makes a report to the MLRO nominated by his employer but, in fear of losing his job if he does not do as he is asked, he also prepares the accounts as required. Requirements Is he guilty of money laundering under the Proceeds of Crime Act 2002? A Yes B No Is he guilty of tipping off under the Proceeds of Crime Act 2002? C Yes D No LO

Answer 32

B - no - although he has been concerned in an arrangement suspecting that it will facilitate use of criminal property, he has a defence : he has reported the matter to the MLRO D

Question 33

Gary owns a large estate agency business and has recently become aware that he is required by law to establish some internal systems and procedures designed to prevent the possibility of money laundering. He comes to you for advice in respect of the Money Laundering Regulations 2017 and in particular as to whether the following are true or false. Requirements The appointment of a Money Laundering Reporting Officer is recommended but not compulsory. A True B False Failure to implement measures required by the Regulations is punishable by an unlimited fine and up to two years’ imprisonment. C True D False

Answer 33

B - a business must appoint a MLRO

Question 34

There is no defence to a charge of bribery. A True B False

Answer 34

false - there is a general defence if the person can show that the bribery was committed as part of the intelligence service or armed services on active service

Question 35

t/f - Whenever an employee commits an offence of bribery, the commercial organisation for which they work is also guilty of an offence under the Bribery Act 2010 for failing to prevent the commission of the offence.

Answer 35

false - defence is the organisation can show that it has adequate procedures in place to prevent persons associated with it from committing bribery - not guilty

Question 36

Are the following statements true or false in relation to the provisions relating to fraudulent trading contained in the Companies Act 2006? They do not apply unless the business was carried on with intent to defraud or for any fraudulent purpose. A True B False A successful conviction for fraudulent trading could be secured against an officer of a company who had secured further credit for the company, at a time when they suspected that there was no reasonable prospect of the company being able to repay the debt. C True D False

Answer 36

A D - fraudulent trading is a criminal offence and it is not sufficient to show the officer 'suspected' the company might not be able to pay its' debts

Question 37

Brisco LLP, a firm of ICAEW Chartered Accountants, is the auditor of Spelt plc. At a meeting in April with Spelt plc’s directors, Abel Brisco, Brisco’s senior partner, signed the auditor’s report in respect of the financial statements for the year ended 31 January. At that meeting Spelt plc’s finance director mentioned a forthcoming takeover bid for a majority of the shares of Spelt plc by Wyman plc, and said that Wyman plc would be using the most recent set of financial statements in fixing a price for the shares of Spelt plc. A few months later, in October, following its successful takeover bid for Spelt plc, Wyman plc sued Brisco LLP for negligence in auditing Spelt’s financial statements which, Wyman plc claimed, significantly overstated the value of revenue. In a private meeting about the case with the Brisco partners, Abel Brisco said that because there had been no written notification of Wyman plc’s reliance on the financial statements, he would deny having received any verbal notification. Requirements Are the following statements true or false? Brisco is likely to owe a duty of care to Wyman which was a known bidder, even though the firm had not been informed in writing. A True B False Abel Brisco is likely to be in breach of the ICAEW Code of Ethics in respect of professional behaviour. C True D False

Answer 37

A - a third party can be owed a duty of care where auditors know their identity, the use to which the info would be put and that the third party intends to rely on it C - lying, dishonest

Question 38

report to NCA - does this breach client confidentiality? can legal action be taken? does this breach ICAEW Code of Ethics?

Answer 38

making reports to NCA takes precedence over considerations of client confidentiality. therefore client cannot take legal action does not breach ICAEW - where an accountant is required by law or regulations to disclose confidential info, they shall always disclose that info in compliance with relevant legal requirements

Question 39

W hich of the following would be offences under the Computer Misuse Act 1990? (1) T he creation of ransomware (2) A ccidentally spreading a computer virus (3) Hacking a private computer network (4) A ccessing a colleague’s email account by guessing their username and password A (1) and (4) only B (1), (3) and (4) only C A ll of the above D (3) and (4) only

Answer 39

B - accidentally spreading a virus is not an offence! ethical hacking is an offence

Question 39

It is an offence to supply or obtain articles that another individual can use to access a computer system. T/F

Answer 39

true - ie supplying stolen logins, viruses, malware

Question 40

Roger is guilty of dealing and encouraging another to deal in price affected securities, contrary to the Criminal Justice Act 1993 and has four possible arguments in defence of his guilt. All except one of these defences are valid. Requirement Which is the exception? A He did not expect there to be a profit. B He had reasonable grounds to believe that the information had been disclosed widely. C He would have done what he did even without the information. D He passed the information on in the course of his employment.

Answer 40

passing on info in the course of employment is only relevant to the offence of disclosing inside information (this is encouraging dealing)

Question 41

The penalty for failing to prevent bribery is a fine. A True B False Bribing a public official whilst outside of the UK is an offence under the Bribery Act 2010. C True D False

Answer 41

a + c = it is an offence to bribe foreign public officials as well as those in the UK

Question 42

How does pharming differ from phishing? A Phishing is a virus; pharming is an online scam. B Pharming is based on legitimate looking websites; phishing is based on legitimate looking emails. C Phishing for an individual is a long-term activity, pharming is instant. D Pharming is a targeted version of phishing.

Answer 42

B

Question 43

spear phishing

Answer 43

targeted phishing in order to increase the success rate

Question 44

pharming

Answer 44

fake websites

Question 45

Fraudulent card payments may be prevented by cardholders keeping their bank cards in a safe location at all times. A True B False

Answer 45

b

Question 46

Marcus is auditing the accounts of Zonefest plc. He is aware that the company is about to announce huge profits. He tells Amy what he knows, as he knows that she already owns shares in Zonefest plc. Amy buys a further 100 shares but later says that she had been planning to buy more shares anyway. Marcus also includes the information in a report to his senior partner, Karl, who quickly buys 200 shares in Zonefest plc. Requirements Is Amy guilty of insider dealing, contrary to the Criminal Justice Act 1993? A Yes B No Is Marcus guilty of insider dealing, contrary to the Criminal Justice Act 1993 in relation to his report to Karl? C Yes D No

Answer 46

b - provided she can demonstrate that she would have purchased the shares in any event d - disclosing information in the course of employment is not an offence under the 1993 Act. Assuming he did not also encourage Karl to buy, he has committed no offence.