Conflict of Interest

AAA – L3 – SA – Q3.2 – Conflict of Interest

Incorrect statement about conflict of interest.

Question

Which of the following statements is INCORRECT?

A A conflict of interest between two clients may be resolved for the auditor by segregating certain responsibilities and duties.

B In taking on a new client, an audit firm shall consider the potential conflict of interests with providing service to an existing client.

C In a takeover bid, an audit firm can act as the sole adviser to both companies involved in the bid.

D If a potential conflict of interest exists between a potential new client and an existing client, the audit firm may need to either decline the engagement with the new client or withdraw from the engagement from the existing client.

Answer

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Tags: Client Engagements, Conflict of Interest, ICAG, Professional Ethics
Level: Level 3

Topic: Rules of Professional Conduct

BMIS – L1 – SA – Q13.5 – Professional ethics in accounting and business

Identifies what is not a key element of an ethical code.

Question

Which of the following is NOT a key element of an ethical code?

A Adhering to the highest standards of honesty, integrity and fairness

B Seeking or accepting favours which are beneficial to the business

C Avoiding involvement in any decisions that could bring about conflict of interest

D Avoiding any financial interest in contracts awarded by the company

Answer

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Tags: Conflict of Interest, Ethical code, Ethics, Fairness, Integrity
Level: Level 1

Topic: Professional ethics in accounting and business

BCL – L1 – Q88 – Company directors and other officers

List three civil liabilities for a director breaching fiduciary duties and conflict of interest rules.

Question

As part of the duty, a director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in a transaction with it or on its behalf. He or She shall always act in what the director believes to be the best interests of the company as a whole to preserve its assets, further its business, and promote the purposes for which it was formed, and in a manner that a faithful, diligent, careful and skilful that ordinarily a Director would act in the circumstances. Besides, a director is not to use for his own advantage the money or property of the company or a confidential information or special knowledge obtained in his capacity.

Required:

List THREE (3) civil liabilities that are to be brought against a director who commits a breach of duty and violates the rules regarding conflict of interest.

Answer

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Tags: Breach of Duty, Civil Liabilities, Company Law, Conflict of Interest, Corporate Governance, Directors, Fiduciary Duties
Level: Level 1

Topic: Company directors and other officers

SCS – L3 – Q39 – Ethics and social responsibility

Identify ethical principles breached in a scenario involving a takeover and confidentiality request.

Question

(a) You have been recently employed as a Finance Manager of a large manufacturing company. At its first management meeting, the Director of Finance presented information on management’s intention to takeover one of the company’s key suppliers. An old school friend of yours works as an accountant for the targeted company. The Finance Director knows and has asked you to try and find out anything that might help the takeover, but it must remain confidential.

Required:
Identify and explain THREE fundamental ethical principles that could be breached in the above scenario. (b) Corporate social responsibility (CSR) requires that organizations give back to the society by way of investing part of their profits in socio-economic activities of their host communities. Companies adopt different strategies to realizing their CSR obligations to the host communities.

Required:
Identify and explain FOUR strategies for managing Corporate Social Responsibility in organizations.

Answer

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Tags: Conflict of Interest, Corporate Social Responsibility, Ethics, Manufacturing, Professional conduct
Level: Level 3

Topic: Ethics and social responsibility

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

Question

(a) Impact of the three pieces of information

Major service provider to your firm
Acrimonious parting with the previous auditors
The firm already represents the Tarkwa Investigations Group (TIG), a company involved in a hostile take-over of Vega. (b) Other factors to consider in making a decision as to whether to accept Vega as a client (c) Steps to take in accepting nomination

Answer

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Tags: Audit Risk, Auditor Independence, Client Acceptance, Confidentiality, Conflict of Interest, Fee Dependence, Professional Ethics
Level: Level 3

Topic: Rules of Professional Conduct

AAA – L3 – Q1 – Regulatory Environment

Assess integrity and independence issues for accepting Farrow Pharmaceuticals as an audit client.

Question

Farrow Pharmaceuticals

(a) Discuss the factors to consider regarding the integrity of the client when deciding whether to accept the nomination as auditors of Farrow Pharmaceuticals.

(b) Evaluate the considerations related to auditor independence that should be addressed before accepting the nomination as auditors of Farrow Pharmaceuticals.

Answer

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Tags: Auditor Independence, Client Integrity, Conflict of Interest, Ethical Standards, Fee Dependence
Level: Level 3

Topic: Regulatory and professional Environment

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AAA – L3 – SA – Q3.2 – Conflict of Interest

Incorrect statement about conflict of interest.

BMIS – L1 – SA – Q13.5 – Professional ethics in accounting and business

Identifies what is not a key element of an ethical code.

BCL – L1 – Q88 – Company directors and other officers

List three civil liabilities for a director breaching fiduciary duties and conflict of interest rules.

SCS – L3 – Q39 – Ethics and social responsibility

Identify ethical principles breached in a scenario involving a takeover and confidentiality request.

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

AAA – L3 – Q1 – Regulatory Environment

Assess integrity and independence issues for accepting Farrow Pharmaceuticals as an audit client.

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AAA – L3 – SA – Q3.2 – Conflict of Interest

Incorrect statement about conflict of interest.

You're reporting an error for "AAA – L3 – SA – Q3.2 – Conflict of Interest"

BMIS – L1 – SA – Q13.5 – Professional ethics in accounting and business

Identifies what is not a key element of an ethical code.

You're reporting an error for "BMIS – L1 – SA – Q13.5 – Professional ethics in accounting and business"

BCL – L1 – Q88 – Company directors and other officers

List three civil liabilities for a director breaching fiduciary duties and conflict of interest rules.

You're reporting an error for "BCL – L1 – Q88 – Company directors and other officers"

SCS – L3 – Q39 – Ethics and social responsibility

Identify ethical principles breached in a scenario involving a takeover and confidentiality request.

You're reporting an error for "SCS – L3 – Q39 – Ethics and social responsibility"

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

You're reporting an error for "AAA-L3 – Q6- Rules of Professional Conduct"

AAA – L3 – Q1 – Regulatory Environment

Assess integrity and independence issues for accepting Farrow Pharmaceuticals as an audit client.

You're reporting an error for "AAA – L3 – Q1 – Regulatory Environment"

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