Work Effectively in Finance Flashcards

Professional competence and due care requires a finance professional to:

Answer: Maintain knowledge and skills at the level required to ensure clients or employers receive a competent service, and act diligently

This ethical principle requires finance professionals to maintain their professional knowledge and skills through CPD, act carefully and thoroughly in their work, follow applicable standards and regulations, and not undertake work they are not competent to perform.

A conflict of interest in the finance function might arise when:

Answer: A finance team member is asked to authorise payments to a company owned by their relative

A conflict of interest occurs when a professional's personal interests could influence their professional judgement. Authorising payments to a relative's company creates a clear conflict and should be declared and managed according to the organisation's policies.

The purpose of an internal control system is to:

Answer: Safeguard assets, ensure accuracy of records, promote operational efficiency, and encourage compliance with policies

Internal controls are policies and procedures designed to protect business assets, maintain reliable accounting records, promote efficiency, and ensure compliance with laws and management policies. Examples include segregation of duties, authorisation limits, and physical controls.

Segregation of duties means:

Answer: Different stages of a transaction or process are handled by different people to reduce the risk of fraud or error

Segregation of duties is a key internal control. By ensuring no single person controls all stages of a transaction (e.g., ordering, receiving, and paying for goods), the risk of fraud and error is significantly reduced because it would require collusion.

Which of the following is a legal requirement under UK employment law relevant to the finance function?

Answer: Operating PAYE to deduct income tax and National Insurance from employee pay and remitting it to HMRC

Under UK law, employers must operate the Pay As You Earn (PAYE) system to deduct income tax and National Insurance Contributions (NICs) from employee pay and remit these to HMRC. The finance function is responsible for accurate payroll processing.

A whistleblowing policy allows employees to:

Answer: Report concerns about illegal activity, fraud, or unethical behaviour within the organisation, with protection from retaliation

Whistleblowing policies encourage employees to report concerns about wrongdoing (fraud, illegality, health and safety dangers) through proper channels. UK law (Public Interest Disclosure Act 1998) protects whistleblowers from dismissal or detriment.