AAT L2 Professional Ethics in Accounting 1 — Questions and Answers
Question 1: Which of the following is one of the five fundamental ethical principles in the AAT Code of Professional Ethics?
- Maximising profit
- Integrity (Correct answer)
- Competitiveness
- Efficiency
Correct answer: Integrity
The AAT's five fundamental ethical principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
Question 2: An accountant who avoids bias and conflicts of interest is demonstrating which fundamental principle?
- Confidentiality
- Professional behaviour
- Objectivity (Correct answer)
- Integrity
Correct answer: Objectivity
Objectivity requires accountants to avoid bias, conflicts of interest, or undue influence that could override professional judgement.
Question 3: Which of the following best describes 'professional behaviour' as an ethical principle?
- Completing all work on time
- Acting in accordance with relevant laws and regulations and avoiding conduct that discredits the profession (Correct answer)
- Keeping all client information confidential
- Charging clients reasonable fees
Correct answer: Acting in accordance with relevant laws and regulations and avoiding conduct that discredits the profession
Professional behaviour requires accountants to comply with relevant laws and regulations and avoid any conduct that would discredit the accounting profession.
Question 4: What is a 'self-interest threat' in the context of professional ethics?
- The desire to only work on interesting tasks
- A threat arising from a financial or other interest of an accountant or a close family member that could inappropriately influence judgement (Correct answer)
- The temptation to copy a colleague's work
- Pressure from a manager to work additional hours
Correct answer: A threat arising from a financial or other interest of an accountant or a close family member that could inappropriately influence judgement
A self-interest threat occurs when an accountant or close family member has a financial or other interest that could improperly influence the accountant's professional judgement.
Question 5: 'Professional competence and due care' as an ethical principle requires an accountant to:
- Only accept work they are fully expert in
- Maintain professional knowledge and skill at the required level and act diligently in accordance with applicable standards (Correct answer)
- Charge clients fairly for all services provided
- Guarantee that no errors will occur in their work
Correct answer: Maintain professional knowledge and skill at the required level and act diligently in accordance with applicable standards
This principle requires accountants to maintain professional knowledge and skill at the level needed to ensure competent service, and to act diligently according to applicable technical and professional standards.
Question 6: Which of the following is an example of a 'familiarity threat' to ethical principles?
- An accountant who is new to a role and lacks experience
- An accountant who has worked with the same client for many years and may have become too sympathetic to their interests (Correct answer)
- An accountant who is given a large workload and may make errors
- An accountant who is offered a higher salary by a rival firm
Correct answer: An accountant who has worked with the same client for many years and may have become too sympathetic to their interests
A familiarity threat arises when an accountant becomes too close to a client or colleague over time, potentially compromising their objectivity.
Question 7: The principle of confidentiality means an accountant should:
- Never share any information about their work with anyone
- Not disclose client information to third parties without proper authority, unless there is a legal or professional duty to do so (Correct answer)
- Keep all business information permanently and absolutely secret
- Only share information with their direct line manager
Correct answer: Not disclose client information to third parties without proper authority, unless there is a legal or professional duty to do so
Confidentiality requires accountants not to disclose client information without proper authority, except where there is a legal or professional right or duty to disclose.
