Chapter 10 - Ethics

• Fundamental principles:

  • Professional competence and due care
  • Objectivity
  • Professional behaviour
  • Integrity
  • Confidentiality
• Professional scepticism:

  Having a questioning mind and being alert to conditions which may indicate possible misstatement due to error or fraud
• Confidentiality:

  members should not disclose to third parities any confidential inomation aquired as a result of professional or business relationships unless:

  • they have proper and specific authority to
  • there is a legal or professional right or duty to disclose
• Self interest threat:

  Result of a member's financial or other interests, or those of an immediate or close family member, influencing behaviours and decisions of members
• Self-review threat:

  may occur when a previous judgment needs to be re-evaluated or reviewed by the same member responsible for that judgement
• Advocacy threat:

  may occur when a member promotes a position of opinion to the point that objectivity may be compromised
• Familiarity threat:

  may occur when, because of a close relationship, a member becomes too sympathetic to the interests of the client
• Intimidation threat:

  may occur when a member is deterred from acting objectively by actual or perceived pressures from others
• Safeguards against threats:

  • education/ training/ experience
  • CPD requirements
  • Corporate governance regulations
  • Professional standards
  • Monitoring/ disciplinary procedures
  • External review
  • Complaints systems
  • Explicitly stated duty to report breaches of ethics
• Conflict resolution considerations:

  • the relevant third parties
  • ethical issues involved
  • fundamental principles relating to the matter in question
  • any established internal procedures
  • possible alternative courses of action

  seek advice internally

  seek legal advice / advice from the ICAEW

  consider withdrawing from the engagement
• Conflict of interest:

  Can arise between the business and the client or two clients
• Safeguarding conflicts of interest:

  • notify relevant pastries
  • obtain consent from parties
  • if no consent, cease acting for one party
  • use seperate engagement teams
  • use procedures to prevent access to information
  • use guidelines
  • confidentiality agreements
  • regular review of safeguards
• Tax avoidance: using legal methods to reduce an entities tax burden
• Tax planning: form of tax avoidance, taxpayer uses the tax legislation legally and as intended to minimise tax bills e.g. allowances
• Tax evasion: illegally seeking to pay less tax than is due by deliberately misleading HMRC.

  • suppressing information
  • submitting false information
• Money laundering is occurring if they:

  • conceal, disguise, convert, transfers of removes criminal property
  • enters into an arrangement they know facilitates the control or acquisition of criminal property
  • acquires uses of has possession of criminal property
• Procedures to promote anti-money laundering:

  • register with an appropriate advisory body
  • appoint a money laundering reporting officer
  • establish internal procedures to reduce risk of being involved
  • verify the identity of new clients and retain relevant documents for 5 years after the termination of client relationship
  • maintain all records for 5 years after completion of the transaction
• Client confidentiality:

  accountants may have to disclose confidential information without client consent if they have knowledge or suspicion that the client has committed a money laundering offence. It is an offence to tip-off a money launderer
• Penalties in regards to money laundering:

  unlimited fines and imprisonment

  • up to 14 years for main money laundering offences
  • up to 5 years for failure to report an offence
  • up to 2 years for tipping off