Ethics for Accountants Flashcards
6 cards from real AAT L3 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Ethics for Accountants flashcards as text
When a conflict of interest exists between two clients, the accountant should:
Answer: Disclose the conflict to both parties, obtain informed consent, and implement safeguards such as separate teams
The AAT Code requires disclosure of conflicts, consent from affected parties, and implementation of safeguards (such as information barriers and separate teams) to manage the conflict. Withdrawal is necessary if the conflict cannot be managed.
The purpose of an engagement letter when taking on a new client is to:
Answer: Set out the agreed terms, scope of work, responsibilities, and fee basis to avoid misunderstandings
An engagement letter establishes the contractual basis of the professional relationship, defining what work will be done, who is responsible for what, the fee arrangement, and other important terms.
Which of the following is a 'predicate offence' for money laundering purposes under UK law?
Answer: Tax evasion, fraud, drug trafficking, or any serious criminal conduct generating financial proceeds
A predicate offence is the underlying criminal activity that generates the proceeds which are then laundered. UK anti-money laundering law (POCA 2002) covers any criminal conduct generating a benefit, including tax evasion and fraud.
AAT members are required to report a change of employment status to the AAT because:
Answer: Employment status affects the member's CPD obligations and the level of supervision required by the Code
The AAT Code applies different requirements depending on whether a member is in practice (providing services directly to clients) or in business (employed); reporting employment changes ensures appropriate oversight and compliance obligations.
Under UK law, the maximum prison sentence for money laundering offences is:
Answer: 14 years
Under the Proceeds of Crime Act 2002, the principal money laundering offences (concealing, arranging, acquisition/use/possession of criminal property) carry a maximum sentence of 14 years' imprisonment.
An accountant who is unsure whether a transaction constitutes money laundering should:
Answer: Seek guidance from the firm's MLRO before proceeding
Where a transaction raises suspicion, the accountant should consult the firm's Money Laundering Reporting Officer before proceeding. The MLRO will assess whether a SAR needs to be filed and advise on whether the work can continue.