CAT CAT Business Ethics & Professional Standards 2 — Questions and Answers
Question 1: Which of the following is an example of a 'self-interest threat' to objectivity for an accounting technician?
- Owning shares in a client's company (Correct answer)
- Reviewing a colleague's work
- Preparing a tax return for a family member at no charge
- Using accounting software provided by the employer
Correct answer: Owning shares in a client's company
Holding a financial interest in a client creates a self-interest threat because the technician may bias work to protect that investment.
Question 2: When a CAT realizes they lack the expertise to complete an assigned task competently, they should:
- Disclose the limitation and seek additional training or expert assistance (Correct answer)
- Complete the task to the best of their ability without disclosure
- Charge a reduced fee for the work
- Delegate the task to a junior employee
Correct answer: Disclose the limitation and seek additional training or expert assistance
Professional competence requires acknowledging skill gaps and obtaining necessary guidance before proceeding.
Question 3: What is the purpose of a whistleblower protection policy in an accounting firm?
- To encourage employees to report unethical conduct without fear of retaliation (Correct answer)
- To protect the firm from client lawsuits
- To prevent employees from discussing salaries
- To ensure confidentiality of client records
Correct answer: To encourage employees to report unethical conduct without fear of retaliation
Whistleblower policies protect staff who report violations from adverse employment actions, supporting an ethical workplace culture.
Question 4: Which of the following best describes 'professional skepticism'?
- Questioning and critically assessing evidence rather than accepting it at face value (Correct answer)
- Doubting every client statement to avoid all risk
- Performing additional work beyond the scope of the engagement
- Refusing to rely on any management representations
Correct answer: Questioning and critically assessing evidence rather than accepting it at face value
Professional skepticism means maintaining a questioning mind and rigorously evaluating evidence during accounting and audit work.
Question 5: A CAT is offered a gift worth $500 by a client after completing their annual accounts. According to ethical standards, the technician should:
- Decline the gift to avoid compromising independence (Correct answer)
- Accept it since the engagement is complete
- Accept it if it is disclosed to the employer
- Accept gifts only up to $250 in value
Correct answer: Decline the gift to avoid compromising independence
Accepting significant gifts from clients can create a self-interest threat and undermine the technician's objectivity.
Question 6: What does 'professional competence and due care' require an accounting technician to do on an ongoing basis?
- Maintain up-to-date knowledge of accounting standards and regulations (Correct answer)
- Obtain a new certification every two years
- Attend a minimum of 10 client meetings per year
- Subscribe to all major accounting journals
Correct answer: Maintain up-to-date knowledge of accounting standards and regulations
Continuing professional development keeps technicians current with evolving standards, ensuring they serve clients competently.
CAT CAT Business Ethics & Professional Standards 2
Which of the following is an example of a 'self-interest threat' to objectivity for an accounting technician?