AAT L2 Professional Ethics in Accounting 4 — Questions and Answers
Question 1: A bookkeeper discovers their employer has been paying cash wages 'off the books' to avoid National Insurance contributions. What is the most appropriate first step?
- Report immediately to HMRC
- Raise the concern internally with a senior manager or director (Correct answer)
- Ignore it as it is not directly their responsibility
- Resign immediately
Correct answer: Raise the concern internally with a senior manager or director
AAT guidance recommends raising concerns internally first before escalating to external authorities, unless internal routes are compromised.
Question 2: Which of the following best describes 'objectivity' as a fundamental principle under the AAT Code of Professional Ethics?
- Keeping client information private at all times
- Not allowing bias, conflicts of interest or undue influence to override professional judgements (Correct answer)
- Being straightforward and honest in all professional relationships
- Maintaining the knowledge and skill required to provide competent service
Correct answer: Not allowing bias, conflicts of interest or undue influence to override professional judgements
Objectivity requires that professional judgements are not compromised by bias, conflict of interest, or undue influence from others.
Question 3: An AAT member is offered free sports tickets by a supplier hoping to win a contract. Accepting the tickets would most likely threaten which fundamental principle?
- Professional competence and due care
- Confidentiality
- Objectivity (Correct answer)
- Professional behaviour
Correct answer: Objectivity
Gifts from suppliers create a self-interest threat to objectivity by potentially influencing the member's professional judgement.
Question 4: Under the UK Money Laundering Regulations, what is a 'suspicious activity report' (SAR)?
- An annual report on anti-money laundering compliance sent to the AAT
- A formal disclosure made to the National Crime Agency when money laundering is known or suspected (Correct answer)
- A report filed with HMRC when a client underpays tax
- A notification sent to a client warning them their account is under review
Correct answer: A formal disclosure made to the National Crime Agency when money laundering is known or suspected
A SAR must be submitted to the National Crime Agency (NCA) when a person knows or suspects money laundering activity.
Question 5: What does 'tipping off' mean in the context of anti-money laundering legislation?
- Providing anonymous information to the police about a criminal
- Alerting a suspect that a SAR has been filed or an investigation is underway (Correct answer)
- Offering inside financial information to a third party for personal gain
- Reporting a colleague's misconduct to a professional body
Correct answer: Alerting a suspect that a SAR has been filed or an investigation is underway
Tipping off is a criminal offence that occurs when someone warns a person under investigation that they have been reported for money laundering.
Question 6: A client asks their accountant to include personal holiday expenses as a business cost in their accounts. The accountant refuses. Which fundamental principle primarily supports this refusal?
- Confidentiality
- Professional competence and due care
- Integrity (Correct answer)
- Professional behaviour
Correct answer: Integrity
Integrity requires accountants to be straightforward and honest, refusing to be party to false or misleading information.
Question 7: Which body is the primary regulator for anti-money laundering supervision of AAT members in practice in the UK?
- The Financial Conduct Authority (FCA)
- HM Revenue & Customs (HMRC)
- The AAT itself (Correct answer)
- The National Crime Agency (NCA)
Correct answer: The AAT itself
The AAT acts as an anti-money laundering supervisory body for its members in practice under the Money Laundering Regulations.
AAT L2 Professional Ethics in Accounting 4
A bookkeeper discovers their employer has been paying cash wages 'off the books' to avoid National Insurance contributions.
What is the most appropriate first step?