Professional Ethics in Accounting Flashcards

In an accounting context, 'sustainability' is best defined as:

Answer: Meeting the needs of the present without compromising the ability of future generations to meet their own needs

Sustainability refers to conducting business activities in a way that meets current needs without depleting resources or causing harm that would prevent future generations from meeting their needs.

Which of the following is an example of an ethical conflict in the workplace?

Answer: Being asked by a manager to record transactions incorrectly in order to improve the appearance of the financial statements

An ethical conflict arises when an accountant is pressured to act in a way that breaches their professional ethical obligations, such as falsifying financial records.

If you suspect that a colleague is committing fraud, what should you do first?

Answer: Follow your organisation's internal procedures for reporting concerns, such as speaking to a supervisor or using a whistleblowing policy

The appropriate first step when fraud is suspected is to follow internal reporting procedures, such as raising the matter with a line manager or using the organisation's whistleblowing procedure.

In accounting, 'whistleblowing' refers to:

Answer: Reporting misconduct or wrongdoing within an organisation through appropriate internal or external channels

Whistleblowing involves disclosing information about wrongdoing within an organisation to appropriate authorities or through designated reporting channels, and is protected by law.

Under which piece of UK legislation are workers who make protected disclosures (whistleblowing) legally protected?

Answer: The Public Interest Disclosure Act 1998

The Public Interest Disclosure Act 1998 (PIDA) provides legal protection for workers who make qualifying disclosures about wrongdoing in the public interest.

Which of the following best describes 'professional scepticism' as applied in accounting?

Answer: Maintaining an alert and questioning mind, and critically assessing information received rather than accepting it at face value

Professional scepticism requires accountants to maintain a questioning mind, critically assess the reliability of information, and remain alert to conditions that may indicate misstatement or fraud.

The concept of 'public interest' in accounting means that accountants have a responsibility to:

Answer: Act in a way that benefits society as a whole, not solely their employer or individual clients

Accounting professionals have a duty to act in the public interest, meaning their responsibilities extend beyond satisfying the needs of individual employers or clients to benefiting society more broadly.