Professional Ethics (ICAEW Code) Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Professional Ethics (ICAEW Code) flashcards as text
Independence of mind means the accountant:
Answer: Reaches conclusions without being affected by influences that compromise professional judgement
Independence of mind is the internal state of actually being objective — not allowing biases, conflicts of interest, or undue influence to compromise professional judgement, regardless of whether others perceive it.
A 'cooling-off' period for audit partners of listed companies is required to prevent:
Answer: Familiarity threats developing over long association
Mandatory audit partner rotation and cooling-off periods are safeguards against familiarity threats, which can develop when a partner has a close relationship with client management over many years.
Under the ICAEW Code, professional accountants in business have the same ethical obligations as those in practice. If a finance director is instructed to falsify accounts, they should:
Answer: Refuse and consider whistleblowing through appropriate channels
A finance director (accountant in business) must refuse instructions that would involve preparing misleading financial statements; depending on circumstances they may need to escalate internally or through external whistleblowing channels.
Lowballing in professional fees refers to:
Answer: Setting an artificially low fee to obtain a new audit appointment, creating self-interest threats
Lowballing involves quoting an unrealistically low audit fee to win an appointment, which may create pressure to cut audit work below acceptable standards and creates a self-interest threat.
Under the ICAEW Code, a financial interest in an audit client is identified as which type of threat?
Answer: Self-interest threat
A financial interest (e.g., holding shares in an audit client) creates a self-interest threat to independence and objectivity, as the accountant has a personal financial stake in the client's results.
The concept of 'ethical sensitivity' in professional ethics means:
Answer: Being aware of the ethical dimensions and potential impact of actions and decisions
Ethical sensitivity is the ability to recognise when a situation has ethical implications — identifying potential harms, affected parties, and ethical principles at stake before deciding on a course of action.