Ethics Flashcards
(10 cards)
What are the five fundamental principles and what do they mean?
Integrity - Being honest
Objectivity - Not allowing bias, conflict of interest or be influenced
Professional Competence - Maintain professional knowledge and skills
Confidentiality
Professional Behaviour - Comply with laws and regulations
Five threats to fundamental principles of ethics?
Self-interest
Self-review
Advocacy
Familiarity
Intimidation
What are some safeguards to prevent breaches in ethics?
- Training
- Regulations & standards
- Regulatory monitoring
- Disciplinary procedures
- External reviews
- Publicised complaints system
- Report un-ethical actions
Steps for conflict resolution?
1) Make client aware and explain implications.
2) Discuss potential ethical issues + laws impeded.
3) Contact HMRC if authorised in engagement letter, if not offer to client and get engagement letter reworded.
4) Potentially discuss internally with relevant people.
5) Document each step taken.
If all else fails, step down as accountant.
5 standards of tax planning?
Specific to client
Must be lawful
Disclosure all relevant facts to HMRC
Advice should not be abusive in regards to tax planning
Should document the rationale for all judgements
When to disclose information?
- Required by law
- Permitted by law and with authorisation
- Professional duty to comply with standards
Steps when taking on a new client?
1) Confirmation of ID using relevant documents
2) Consider any threats to fundamental principles
3) Issue an engagement letter showing yours and the clients responsibilities, and whether there is authority to disclose to HMRC
What is required by an accountancy firm in order to operate?
- Professional indemnity insurance
- Data protection (appoint DPO and comply with GDPR)
- Appoint MLRO
- Register with appropriate supervisory authority (ICAEW)
Anti-money laundering procedures?
- Register with appropriate supervisory authority (ICAEW)
- Appoint MLRO
- Train staff
- Establish internal procedures
- Carry out due diligence on new client and verify identities
- Report suspicions to the National Crime Agency
What is tax planning, tax avoidance and tax evasion?
Tax planning: legal tax reduction actions (e.g. pension contributions and ISAs)
Tax avoidance: legal tax reduction involving bending the rules, gaining an advantage not as intended (e.g. loss schemes)
Tax evasion: illegal tax reduction (e.g. failing to notify HMRC of income or submitting incorrect figures)
