AAT L3 Ethics for Accountants 6

Question 1

When a conflict of interest exists between two clients, the accountant should:

Accepted Answer

Disclose the conflict to both parties, obtain informed consent, and implement safeguards such as separate teams

Answer

Continue acting for both without disclosure

Answer

Only act for the more profitable client

Answer

Immediately cease acting for both clients

Question 2

The purpose of an engagement letter when taking on a new client is to:

Accepted Answer

Set out the agreed terms, scope of work, responsibilities, and fee basis to avoid misunderstandings

Answer

Collect the first invoice payment

Answer

Confirm the client's identity only

Answer

Transfer legal liability to the client

Question 3

Which of the following is a 'predicate offence' for money laundering purposes under UK law?

Accepted Answer

Tax evasion, fraud, drug trafficking, or any serious criminal conduct generating financial proceeds

Answer

A minor parking fine

Answer

Failure to file accounts on time

Answer

An accounting error on a tax return

Question 4

AAT members are required to report a change of employment status to the AAT because:

Accepted Answer

Employment status affects the member's CPD obligations and the level of supervision required by the Code

Answer

AAT charges different membership fees depending on employer

Answer

AAT approves all employers of members

Answer

Employment changes affect the member's voting rights

Question 5

Under UK law, the maximum prison sentence for money laundering offences is:

Accepted Answer

14 years

Answer

2 years

Answer

5 years

Answer

10 years

Question 6

An accountant who is unsure whether a transaction constitutes money laundering should:

Accepted Answer

Seek guidance from the firm's MLRO before proceeding

Answer

Ignore the suspicion and continue

Answer

Ask the client directly if the transaction is legal

Answer

Complete the transaction but note the concern in the files