foundations in professionalism

1. What do you understand by acting in the public interest?

2. Select the FOUR factors below which are particular features of a profession as compared with an occupation.

Qualifications required Continuing professional development Self-regulation Highly skilled

Ethical codes of conduct Highly valued services Training requirement Licensed practice

3. What do you understand by money laundering?

4. Which THREE of the following are examples of bribery and corruption?

a. Accepting a substantial bonus in return for providing above average performance in employment

b. Taking a government official to dinner before she awards a lucrative contract for which a bid has been submitted

c. Accepting a gift from an audit client to overlook a valuation error

d. Offering substantial discounts for prompt payment of accounts receivable

e. Awarding a contract to a bidder on grounds other than cost

f. Offering gifts to an individual in return for large orders from his company

5. What do you understand by the term insider trading?

6. The health and safety in workplace practices of a particular country requires that before an employee is allowed to work from home, the employer must be satisfied about the safety of the employee’s home workplace. This usually involves the employee certifying that the work area at home meets the requirements of a safe working environment, such as having fire exits, safe equipment and appropriate furniture. The human resources department can either take the written undertaking given by the employee as proof of compliance with the law or it can actually check the conditions by visiting the home of the employee concerned.

Which TWO of the following situations would be considered as violations of best practice?

a. A salesman spends most of the time travelling, but on the few days when he is not travelling he works from home. This is known to his line manager, but as he is at home so infrequently no assessment of the salesman’s working environment at home was considered necessary by the company.

b. An employee of a large audit firm makes a request to his line manager to allow him to work from home for a few days during coming months, as his wife was at an advanced stage of pregnancy. The line manager only agreed on condition that the official approval of the human resources department was obtained.

c. An employee of a firm sends an email to his line manager that she would be working from home on each and every Wednesday, but would be in the office on all other days. The line manager replies to the email saying,” Thanks for formally notifying me of this fact and it will be okay.”

7. Why are professional ethics important?

8. Binta is a professional accountant who works in public practice and who is keen to build up business to improve her promotion prospects. During recent negotiations with a new client, she quoted a fee lower than would normally be deemed appropriate for the work to be undertaken. The fee quoted was so low that it will be difficult to perform the engagement in accordance with applicable standards and proficiency for that price.

Which ONE of the following fundamental principles is involved?

a. Professional behaviour

b. Objectivity

c. Professional competence and due care

d. Integrity

9. Ahmed, a senior partner for a firm of accountants, is a member of the long-standing audit team engaged by a local supermarket. Two days into the current engagement, Ahmed and his family were invited to join the owner of the supermarket on his private yacht.

Which ONE of the following fundamental principles is involved?

a. Professional behaviour

b. Objectivity

c. Professional competence and due care

d. Integrity

10. Ella works as a professional accountant at a small accounting practice. One morning she received a telephone call from the managing director of a construction company, asking if she could audit the company’s financial statements. As Ella knew that her employer was already at full capacity taking on other new business, she accepted the new client relationship as a private personal assignment, without telling her employer. However, she overlooked the need to determine whether accepting the assignment would create any threats to compliance with the fundamental principles.

Which TWO of the following fundamental principles is involved?

a. Professional behaviour

b. Professional competence and due care

c. Integrity

d. Objectivity

11. What do you understand by threats to fundamental principles of ethical behaviour?

12. Jo worked in a big publicly traded limited company in the finance department. One day he received an email with an attachment from the Chief Financial Officer (CFO). On opening the email attachment Jo realised that it was a confidential note prepared by the CFO for the Chief Executive Officer (CEO) of the company. The email itself did not indicate anywhere in the subject matter or in any other way that it was a confidential message.

Jo’s email address is J.W.Huse@clipper.com and the CEO’s email address is J.W.Hyse@clipper.com . This was probably the source of the email arriving in Jo’s inbox by mistake. On reading the note, Jo understood that the company’s profitability was likely to increase substantially more than was anticipated by the market. The CEO was expected to report this information to financial analysts and reporters in his next quarterly meeting with them, one month from today. Jo understood that this was sensitive financial information. Within a few minutes of receiving the email, the CFO’s secretary called Jo and told him to delete it.

A couple of days after this event Jo went for dinner with a friend who traded on the stock market. Jo knew that his friend bought and sold shares. During the conversation Jo mentioned being accidentally sent the confidential note which showed that Clipper Company was expected to announce substantially higher profit estimates in the near future. Jo’s friend bought a large number of shares next day.

Which TWO of the following principles is threatened by Jo’s disclosure of information to his friend?

a. Confidentiality

b. Professional behaviour

c. Professional competence and due care

d. Integrity

e. Objectivity

13. Jo worked in a big publicly traded limited company in the finance department. One day he received an email with an attachment from the Chief Financial Officer (CFO). On opening the email attachment Jo realised that it was a confidential note prepared by the CFO for the Chief Executive Officer (CEO) of the company. The email itself did not indicate anywhere in the subject matter or in any other way that it was a confidential message.

Jo’s email address is J.W.Huse@clipper.com and the CEO’s email address is J.W.Hyse@clipper.com . This was probably the source of the email arriving in Jo’s inbox by mistake. On reading the note, Jo understood that the company’s profitability was likely to increase substantially more than was anticipated by the market. The CEO was expected to report this information to financial analysts and reporters in his next quarterly meeting with them, one month from today. Jo understood that this was sensitive financial information. Within a few minutes of receiving the email, the CFO’s secretary called Jo and told him to delete it.

A couple of days after this event Jo went for dinner with a friend who traded on the stock market. Jo knew that his friend bought and sold shares. During the conversation Jo mentioned being accidentally sent the confidential note which showed that Clipper Company was expected to announce substantially higher profit estimates in the near future. Jo’s friend bought a large number of shares next day.

Which TWO of the following measures should be put in place in Clipper company to prevent a recurrence of a situation such as described in the above scenario with respect to professional staff.

a. Requiring all confidential information to be sent through internal post only

b. Avoiding the creation of email addresses that are similar

c. Ensuring that relevant staff are familiar with, and can apply, the five fundamental principles of the IESBA (IFAC) code of ethics

d. Formalising company policy to require all employees to mark emails containing confidential messages as “confidential”

14. What do you understand by the term personal effectiveness?

15. b) You are a team leader. Your manager wants your staff to gain competence in using a newly developed computerised accounting package. Most of your staff are virtual workers who operate from various geographical locations. You are personally familiar with the software and know how to use it.

You have the choice of several ways to communicate this information. The task is to do it in the most economical and effective way.

Below are choices given to you to achieve this.

Drag and drop the options below to rank them according to suitability, where 1 is most suitable and 5 is least suitable:

Answers:

C. Hold a face-to-face instructional workshop at head office where all the staff can use the software under your supervision

E. Register all your staff on a formal taught course to be delivered on location at a centrally located college

D. Host a virtual internet meeting using the software online to facilitate hands-on use of the accounting software, under specialist instruction from a supplier consultant

A. Send an email attaching detailed instructions on how to use the software

B. Use the suppliers’ consultants at their own cost, to give personal on the job training at employees' work places

16. Outline the main benefit of a spreadsheet package to an accountant at work.

17. Match different the tasks listed in Column A with the most appropriate medium of communication in Column B.

∙ The Production Director wants to circulate quarterly detailed production figures to all factory supervisors in advance of the next departmental budgetary meeting.

∙ A manager is required to ensure that a commercially sensitive and confidential and formal paper based tender submission is delivered to a potential international client.

∙ A line manager has asked one of his staff to go through a technical report he has written about a project and to prepare a short presentation. After carefully reading the report several times, the staff member found that there was one technical aspect which is not clear to him.

∙ A line manager is working at home and has asked a team member at the office to urgently send him a sample of a colleague’s handwriting from the office. He needs to compare it with an anonymous letter containing inappropriate language which he suspects is from a team member whom he has recently warned for unprofessional behaviour. The manager has indicated that some hand-written notes by this person are in the top drawer of his desk.

……………………………………………………………………………………………………………………………………………………….

∙ Telephone call

∙ Fax

∙ Email spreadsheet attachment

∙ Secure courier service

Next

18. How do personal values differ from professional ethics?

19. Eric is a junior partner at a firm of auditors, and his duties include the mentoring of junior staff. Pat is one of those staff, and she has recently expressed a concern to Eric regarding a recent audit. Whilst on the audit, Pat noticed a number of expenses being paid by the company which seemed to relate to a property owned by one of its directors. Unable to get a satisfactory explanation from the client herself, Pat raised the issue with Sam, the partner responsible for the audit. Sam was of the opinion that the matter was probably unimportant, but agreed to raise it with the director concerned, prior to signing off the audit. When Pat asked about the issue after Sam’s meeting with the director, she was told firmly that the matter was now closed.

Eric is concerned about what action he should now take, particularly as Sam is not only a more senior partner, but a good friend.

Drag and drop the options below to rank them on a 1–6 basis; in order of their suitability as Eric’s initial course of action, with 1 being the most suitable - taking into account business effectiveness and relevant personal ethics considerations.
Answers:

∙ Invite both Sam and Pat to an informal meeting with you to discuss the issue

∙ Report the matter formally at the next partners’ meeting

∙ Consult with another partner, equally or more senior to Sam, to discuss possible options

∙ Interview Pat to clarify details of the issue and get her opinion on what has or should have happened

∙ Speak with Sam informally, and try to resolve the matter professionally between themselves

∙ Let the matter drop, telling Pat she should not question the decisions of a partner

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