ACA Professional Ethics (ICAEW Code) 4

Question 1

Which of the following is an example of an acceptable contingent fee arrangement for an audit client?

Accepted Answer

No contingent fees are acceptable for audit engagements

Answer

Contingent fees for audit engagements are prohibited under ethical standards as they create an unacceptable self-interest threat to independence; the auditor's remuneration must not depend on the outcome.

Question 2

Professional accountants must comply with the spirit and letter of ethical requirements. 'Spirit' means:

Accepted Answer

Looking beyond the technical wording to the underlying purpose and intent of the requirement

Answer

Compliance with the spirit of ethical requirements means understanding and acting in accordance with the underlying purpose of the rules, not merely finding technical compliance while violating their intent.

Question 3

Under UK anti-bribery legislation (Bribery Act 2010), the corporate offence of failing to prevent bribery:

Accepted Answer

Is committed by a commercial organisation that fails to prevent bribery by an associated person

Answer

Section 7 of the Bribery Act 2010 creates strict liability for commercial organisations that fail to prevent bribery by associated persons acting on their behalf; the only defence is adequate anti-bribery procedures.

Question 4

When preparing tax returns, a professional accountant should:

Accepted Answer

Present the client's tax affairs honestly, claiming only legitimate reliefs and deductions

Answer

Integrity requires honest presentation of tax returns. Accountants should claim legitimate reliefs but must not assist in tax evasion or make false statements; they must also comply with HMRC disclosure obligations.

Question 5

The ICAEW's disciplinary process can result in which of the following sanctions for a member?

Accepted Answer

Reprimand, fines, suspension, or exclusion from membership

Answer

ICAEW's disciplinary process can impose a range of sanctions including reprimands, fines, conditions on practice, suspension, or exclusion (striking off) from membership for serious misconduct.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Professional Ethics (ICAEW Code) 4