ETHICAL DILEMMA Advanced 1

Which of the following statements are true?

• A An accountant will not be in breach of the CIMA Code of Ethics where the accountant has inadvertently compromised an ethical principle, so long as he remedies his mistake as soon as possible, following the appropriate safeguards

• B An accountant is not obliged to evaluate threats that might compromise ethical principles if he has no actual knowledge of the problem

• C An accountant should consider non-financial circumstances known about a situation,as well as the financial data presented when considering a threat to ethical standards.

• D An accountant should refuse to work for a client or resign his job if he is unable to apply appropriate ethical safeguards

Which of these correctly outlines the process for addressing ethical problems?

• A Identify the potential for ethical conflict and avoid it, otherwise seeks guidance from CIMA, a manager or a legal adviser.

• B Identify the facts, apply the framework, seek an internal resolution, ask CIMA.

• C Identify any principles involved, follow internal procedures, apply the Code if that does not resolve it and then ask CIMA.

• D Identify the facts, the issues of ethics, principles of the Code involved, use the internal procedures and if all else fails, ask CIMA

Where there is no safeguard provided by professional standards, but an accountant has encountered a threat, should the accountant:

• A weigh up the likelihood of harm and cautiously applying good sense? or

• B take legal advice before proceeding? or

• C avoid the activity altogether?

Under which of these circumstances might it be permissible to disclose client information:

• A when the client has asked you to disclose and you are lawfully entitled to do so?

• B to help a colleague defend a professional misconduct claim?

• C to assist in undertaking a review or audit for professional standards purposes?

• D to help provide an accurate budgetary statement for the employer?

• E to respond to a solicitor's letter, representing someone suing the client?

Your boss approaches you to attend a reception on her behalf to represent the firm to the client. You deal with a competitor firm as your own client. There is nothing you are aware of that makes you think that either firm would have a problem with it, but it makes you a little uneasy. Would you:

• A Ignore the problem and do as your boss asks?

• B Decline on the basis that you have a (fictional) alternative engagement?

• C Accept and not tell the other client on the basis that what they do not know will not hurt them?

• D Consider the facts and the likelihood of a conflict of interests somewhere down the line and go if you can see no likely difficulty?

• E Ask the other client whether they mind you going?

You have failed to make a record of a piece of work on a client's account. It would mean that you would not be able to bill the client for it under the firm's billing procedure. You are pretty sure that you remember sufficient details to put in a realistic guesstimate. Do

you:

• A enter the guesstimate and get on with another job?

• B leave the entry blank, so the firm cannot claim for your time?

• C contact the client and explain the situation at the risk of undermining their confidence in the firm?

• D tell the boss and wait for the explosion?

What is the most important first step when dealing with a potential ethical problem?

• A Tell your boss

• B Read the CIMA Code of Practice

• C Make a thorough and rapid check of the facts

• D Ask a colleague their opinion

E, a trainee management accountant, prepares an annual analysis of the performance of all staff, including her own. The analysis is used by the financial director to calculate staff bonuses each year.

According to the CIMA code of ethics for professional accountants which of the threats listed below would apply to E?

• A Advocacy threat

• B Intimidation threat

• C Familiarity threat

• D Self-interest threat

Maintaining a relevant level of professional knowledge and

skills so that a competent service can be provided.

• A.Confidentiality

• B•Integrity

• C.Professional behaviour

• D•Professional competence and due care

• E•Objectivity

Complying with relevant laws and regulations

• A.Confidentiality

• B•Integrity

• C•Professional behaviour

• D•Professional competence and due care

• E•Objectivity