Question Tag: Professional Conduct

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AAA – Nov 2024 – L3 – Q1a – Ethical Issues in Audit Engagements

Ethical issues and professional conduct in an audit engagement involving conflict of interest.

Question

You are the Audit Partner of a mid-sized audit firm, Amoah Sonko and Associates. One of your major clients, Kudi LTD (Kudi), has approached you for a significant audit engagement. Kudi has been experiencing rapid growth and plans to get listed on the Ghana Alternative Market within the next year. During preliminary discussions, the Managing Director of Kudi, a friend, promised you a bonus if the audit report is completed quickly and is favourable, highlighting the company’s strengths.

In the course of the audit of Kudi, you came across a series of unusual financial transactions. These included large intercompany loans with its sister companies, other significant related-party transactions with the directors, and an unusually high volume of sales recorded a few days before the end of the financial year. Upon further investigation, your team found discrepancies in inventory records and evidence of potential non-compliance with revenue recognition standards. The Finance Manager insists these transactions are legitimate and necessary for the company’s rapid growth.

Additionally, you noticed that Kudi was involved in a high-profile legal battle with a major competitor, which was not fully disclosed in the financial statements. The lawyer for Kudi insists that you omit this information from the audit report, arguing it would damage the company’s reputation and its plans to get listed on the Ghana Alternative Market.

Required:
i) Identify TWO potential ethical issues in the scenario and explain the potential impact on your professional conduct. ii) Identify the steps you should take to address the conflict of interest presented by the Managing Director’s offer.
iii) Discuss the potential sanctions for accepting the Managing Director’s offer and providing a favourable audit report without proper verification.
iv) Evaluate the impact of the undisclosed legal battle on Kudi LTD’s financial statements and the upcoming initial public offer.

Answer

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Tags: Auditor Independence, Conflict of Interest, Ethics, Professional Conduct
Level: Level 3

Topic: Professional responsibility and liability, Rules of professional conduct
Series: Nov 2024

FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Question

Dahn is a Chartered Accountant who works for a large Pharmaceutical Company, Nimely Company Ltd (Nimely), as an Assistant Financial Controller. The Financial Controller of Nimely is also a Chartered Accountant with more than ten years of experience.

During the year, Nimely received a vehicle worth GH¢800,000 from the government to support its operations. According to the Government Official who presented the vehicle to the management of Nimely, the company has been compliant in filing and paying its taxes.

At the year-end, the Financial Controller passed the following entry in the Tally Software of Nimely Company Ltd:

Dr	Vehicle	GH¢800,000
Cr	Income	GH¢800,000

Dahn explained to the Financial Controller that the grant should be treated in line with the provisions of IAS 20: Accounting for Government Grants and Disclosure of Government Assistance. It is the company’s policy that such grants should be treated as deferred income.

The Financial Controller agreed that the treatment should have been in line with IAS 20, but mentioned that the entries should not be changed since the current treatment may help them meet their profit targets.

It is Nimely’s policy to depreciate its vehicles at a rate of 25% per annum on a straight-line basis.

Required:

i) Identify the ethical issues involved.
ii) Recommend the appropriate actions to be taken by Dahn.

Answer

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Tags: Ethics, Financial Integrity, Government Grants, IAS 20, Professional Conduct
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: Nov 2024

FM – Nov 2024 – L2 – Q1b – Ethical Issues in Financial Management

Discuss four ethical issues in financial management and their impact on decision-making.

Question

Finance Managers often encounter decisions that affect the organisation’s financial health and reflect its commitment to ethical standards. Balancing profitability with ethical considerations can be challenging, yet it is essential for sustaining long-term success and protecting an organisation’s reputation.

Required:
Discuss FOUR ethical issues in financial management.

Answer

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Tags: Corporate Governance, Ethics, Financial management, Professional Conduct
Level: Level 2

Topic: Ethical issues in financial management
Series: Nov 2024

AAA – Nov 2012 – L3 – AII – Q11 – Ethical Issues in Auditing

Identifies the nature of ethical standards in the ICAN Code of Professional Conduct.

Question

Ethical standards as contained in the ICAN Code of Professional Conduct for Members are ………….. principles and statements.

Answer

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Tags: Accounting Ethics, Ethical Standards, ICAN Code, Principles, Professional Conduct
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q8 – Ethical Issues in Auditing

Identifying behaviors not generally applicable as unethical in financial services.

Question

In a recent study involving different users of financial services in Nigeria, various types of unethical behaviour have been identified. Which of the following does NOT have general application in the industry?

A. Any act that does not follow the norms of a profession
B. Any act not in consonance with professional code of conduct
C. A conduct that is morally adjudged wrong, unbecoming, and below expectation
D. Behaviour that is based on moral or pre-modial principles
E. Deviations from standard and known code of conduct guiding an operation

Answer

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Tags: Ethics, Financial Services, Professional Conduct, Unethical Behavior
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2012

AAA – Nov 2011 – L3 – SAII – Q16 – Regulatory Investigations and Disciplinary Actions

Appeal rights for ICAN members indicted by the Disciplinary Tribunal.

Question

A member of The Institute of Chartered Accountants of Nigeria who has been indicted by the Accountants’ Disciplinary Tribunal has a right of appeal to the …………………..

Answer

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Tags: Disciplinary Tribunal, ICAN Member Rights, Professional Conduct, Right of Appeal
Level: Level 3

Topic: Regulatory Investigations and Disciplinary Actions
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards

ICAN's authority to discipline members for ethical breaches.

Question

The power of The Institute of Chartered Accountants of Nigeria to initiate disciplinary action against any member who has run foul of ethical standards rests with……………………….

Answer

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Tags: Disciplinary Action, Ethical Standards, ICAN Authority, Professional Conduct
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

Question

Quality control in audit is maintained by professional accountancy bodies through all the following EXCEPT:

A. Publishing of auditing standards
B. Publishing of accounting standards
C. Encouraging members to be computer literate
D. Publishing code of conduct for members
E. Establishment of public practice sector

Answer

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Tags: Audit Standards, Professional Conduct, Public Practice, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2011

AT – May 2024 – L3 – SB – Q4 – Tax Planning and Management

Addressing ethical threats, safeguards, legal and ethical issues in tax, and ICAN's enforcement powers in professional accounting.

Question

Professional ethics are essential for building trust and credibility with clients, colleagues, and society. The integrity and reputation of the profession are upheld by members who demonstrate ethical and globally accepted professional behavior. A retreat on “Ethics and professionalism in tax management in Nigeria” is to be organized by a reputable professional accounting firm for its newly employed audit officers and tax consultants.

Your professional accounting firm has been invited to send a resource person to present a paper at the workshop.

As the accounting firm’s Senior Manager (Audit), you are mandated to prepare and present the paper at the workshop covering the following areas:

a. Categories of threats that may pose a challenge to compliance with fundamental principles of the accounting profession. (3 Marks)
b. Safeguards that can be used to eliminate or reduce the identified threats. (4 Marks)
c. Identification of specific legal and ethical issues that could arise from tax engagements. (7 Marks)
d. Powers available to The Institute of Chartered Accountants of Nigeria (ICAN) in enforcing the ethical standards of its members. (6 Marks)
(Total 20 Marks)

Answer

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Tags: Ethics, ICAN Powers, Professional Conduct, Tax Engagements
Level: Level 3

Topic: Tax Planning and Management
Series: MAY 2024

AAA – May 2018 – L3 – SB – Q4 – Ethical Issues in Auditing

Educate staff on IFAC’s Code of Ethics principles, types of independence, and general sources of ethical threats in accounting.

Question

You are the HR partner in Ekemode & Company (Chartered Accountants). As part of the continuous training program of your firm, you are to organize an in-house seminar to educate the staff of your firm on Rules of Professional Conduct. You have decided to emphasize the IFAC’s Code of Ethics for Professional Accountants published by the International Ethics Standard Board for Accountants (IESBA), which was recently adopted by ICAN into their localized code called “The Professional Code of Conduct and Guide for Members.”

Required:

a. Explain briefly the FIVE fundamental principles of the IFAC’s Code of Ethics for Professional Accountants. (7½ Marks)

b. Explain independence of mind and independence of appearance to the staff. (5 Marks)

c. Explain briefly THREE general sources of threat to the fundamental principles of the IFAC’s Code of Ethics for Professional Accountants. (7½ Marks)

(Total 20 Marks)

Answer

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Tags: Ethical Threats, Fundamental Principles, ICAN Code, IESBA, IFAC Code of Ethics, Independence, Professional Conduct, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing
Series: MAY 2018

CSME – May 2017 – L2 – SC – Q6 – Ethics in Business

Explain agency problems and Tucker's model to guide ethical decisions for accountants.

Question

a. Agency problems and conflicts are common in all organisations.
Required:
Explain the concept of agency problems and discuss FIVE types of agency conflicts that might exist in an organisation. (8 Marks)

b. Tucker‟s Five Question Model can be employed in training new professional accountants in ethics.
Required:
Explain the issues covered by the Tucker‟s Five Question Model. (7 Marks)

Answer

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Tags: Agency Conflicts, Ethics, Professional Conduct, Tucker’s Five-Question Model
Level: Level 2

Topic: Ethics in Business
Series: MAY 2017

BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

Question

Accountants, like most professionals, are guided by the code of ethics of their profession when dealing with clients.

Required:
Explain:
i. Ethical codes
ii. The purpose of ethical codes for a professional accountant.

Answer

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Tags: Accounting Standards, Ethical Guidelines, Ethics, Professional Conduct
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: NOV 2020

AA – May 2017 – L2 – SA – Q3 – Professional Ethics and Code of Conduct for Auditors

Identification of threats to ethical principles and safeguards for accountants.

Question

There are a variety of circumstances that could give rise to the threats of self-interest, advocacy, familiarity, and intimidation against the five fundamental principles of integrity, objectivity, personal competence and due care, confidentiality, and professional behaviour as enunciated in the Code of Ethics. There are, however, safeguards created to help the Professional Accountant in such circumstances.

You are required to:

(a) List FIVE safeguards created by the profession and legislation. (5 Marks)
(b) Identify and explain FIVE safeguards that could be created by firms of Chartered Accountants. (10 Marks)
(c) List FIVE possible safeguards that an individual Chartered Accountant could apply. (5 Marks)

Answer

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Tags: Code of Ethics, Familiarity Threat, Professional Conduct, Safeguards, Self-Interest Threat
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2017

CSME – Nov 2015 – L2 – Q1c – Corporate Governance

Discusses the difference between rules-based and principles-based professional ethics in accountancy.

Question

What is the main difference between a rules-based and a principles-based code of professional ethics for accountants?

Answer

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Tags: Accountancy Ethics, Principles-Based Ethics, Professional Conduct, Rules-Based Ethics
Level: Level 2

Topic: Corporate Governance
Series: NOV 2015

BMF – Nov 2020 – L1 – SA – Q11 – The Role of Professional Accountants in Business and Society

Identify the term for reporting suspicions of illegal or improper behavior.

Question

Reporting suspicions of illegal or improper behavior to a person in authority is termed:
A. Business ethics
B.
C.
D.
E. Whistle blowing

Answer

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Tags: Ethics, Professional Conduct, Whistleblowing
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2020

AA – May 2022 – L2 – SC – Q6 – Auditor’s Liability

Discuss three types of threats auditors face and the safeguards to mitigate those threats.

Question

In the course of carrying out their assignments, the auditors are usually faced with threats created by a broad range of circumstances.

a. Explain THREE types of threats usually faced by auditors. (6 Marks)
b. Explain the circumstances that may give rise to the threats in (a) above. (6 Marks)
c. Highlight THREE major categories of safeguards which may mitigate or reduce threats to auditors. (3 Marks)

Answer

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Tags: Auditor Independence, Auditor Threats, Ethical Issues, Professional Conduct
Level: Level 2

Topic: Auditor’s Liability
Series: MAY 2022

CSME – Nov 2020 – L2 – Q6C – Corporate Social Responsibility (CSR)

Discuss briefly the concept of 'acting in the public interest'.

Question

The ICAN Professional Code of Conduct and Guide for Members requires every member or student of the Institute to always “act professionally” and in “the public interest” in the discharge of their responsibilities.

Required:

Discuss briefly „acting in the public interest‟.

Answer

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Tags: Ethics, Professional Conduct, Public Interest
Level: Level 2

Topic: Corporate social responsibility
Series: NOV 2020

CSME – Nov 2020 – L2 – Q6a – Ethics in Business

Explain the term "act professionally" in accordance with the ICAN code.

Question

Required:
a. Explain “act professionally” in relation to the ICAN code. (1 Mark)

Answer

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Tags: Ethics, ICAN Code, Professional Conduct
Level: Level 2

Series: NOV 2020

AA – Nov 2021 – L2 – Q6 – Ethical Issues in Auditing

Explains reasons for auditor resignation, resignation procedures, and ethical position for successor auditors.

Question

Ade, Chika, Idris and company is an independent firm of Chartered Accountants. The firm intends to resign its appointment for non-payment of professional fees to it for some time by the management of Tisco Ventures Limited.

Required:

a. Explain other reasons that may cause a professional firm to resign from an audit engagement. (3 Marks)

b. Explain the procedures for the resignation of current auditors as per provision of company legislations. (10 Marks)

c. State the ethical position as stated in the ICAN code on another auditor taking up the appointment after the resignation of the current auditor applicable to this type of situation. (2 Marks)

Answer

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Tags: Audit Engagement, Auditor Resignation, Ethical Requirements, ICAN Code, Legislation, Professional Conduct
Level: Level 2

Topic: Ethical Issues in Auditing
Series: NOV 2021

CSME – Nov 2018 – L2 – Q5 – Ethics in Business

Discuss the six stages in handling ethical conflicts based on ICAN's professional code of conduct.

Question

You have been invited to facilitate a session on how to deal with ethical conflicts based on the Institute of Chartered Accountants of Nigeria code of professional conduct. Discuss the six stages in handling ethical conflicts.

Answer

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Tags: Ethical Conflicts, Ethics Management, ICAN, Professional Conduct
Level: Level 2

Topic: Ethics in Business
Series: NOV 2018

Question Tag: Professional Conduct

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AAA – Nov 2024 – L3 – Q1a – Ethical Issues in Audit Engagements

Ethical issues and professional conduct in an audit engagement involving conflict of interest.

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FR – Nov 2024 – L2 – Q5b – Ethical Issues in Government Grants

Identification of ethical issues in recording a government grant and recommended corrective actions.

Required:

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FM – Nov 2024 – L2 – Q1b – Ethical Issues in Financial Management

Discuss four ethical issues in financial management and their impact on decision-making.

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AAA – Nov 2012 – L3 – AII – Q11 – Ethical Issues in Auditing

Identifies the nature of ethical standards in the ICAN Code of Professional Conduct.

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AAA – Nov 2012 – L3 – SA – Q8 – Ethical Issues in Auditing

Identifying behaviors not generally applicable as unethical in financial services.

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AAA – Nov 2011 – L3 – SAII – Q16 – Regulatory Investigations and Disciplinary Actions

Appeal rights for ICAN members indicted by the Disciplinary Tribunal.

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AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards

ICAN's authority to discipline members for ethical breaches.

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AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

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AT – May 2024 – L3 – SB – Q4 – Tax Planning and Management

Addressing ethical threats, safeguards, legal and ethical issues in tax, and ICAN's enforcement powers in professional accounting.

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AAA – May 2018 – L3 – SB – Q4 – Ethical Issues in Auditing

Educate staff on IFAC’s Code of Ethics principles, types of independence, and general sources of ethical threats in accounting.

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CSME – May 2017 – L2 – SC – Q6 – Ethics in Business

Explain agency problems and Tucker's model to guide ethical decisions for accountants.

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BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

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AA – May 2017 – L2 – SA – Q3 – Professional Ethics and Code of Conduct for Auditors

Identification of threats to ethical principles and safeguards for accountants.

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CSME – Nov 2015 – L2 – Q1c – Corporate Governance

Discusses the difference between rules-based and principles-based professional ethics in accountancy.

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BMF – Nov 2020 – L1 – SA – Q11 – The Role of Professional Accountants in Business and Society

Identify the term for reporting suspicions of illegal or improper behavior.

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AA – May 2022 – L2 – SC – Q6 – Auditor’s Liability

Discuss three types of threats auditors face and the safeguards to mitigate those threats.

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CSME – Nov 2020 – L2 – Q6C – Corporate Social Responsibility (CSR)

Discuss briefly the concept of 'acting in the public interest'.

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CSME – Nov 2020 – L2 – Q6a – Ethics in Business

Explain the term "act professionally" in accordance with the ICAN code.

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AA – Nov 2021 – L2 – Q6 – Ethical Issues in Auditing

Explains reasons for auditor resignation, resignation procedures, and ethical position for successor auditors.

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CSME – Nov 2018 – L2 – Q5 – Ethics in Business

Discuss the six stages in handling ethical conflicts based on ICAN's professional code of conduct.

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