Association of Accounting Technicians (AAT) Business Awareness, Tax Processes and Ethics (Level 2 & 3) Flashcards

24 sample cards from the Business Awareness, Tax Processes and Ethics (Level 2 & 3) deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is a 'default surcharge' / late payment penalty for VAT?

   A charge for paying VAT late; under the current system late payment interest and penalties accrue based on how many days the payment is overdue.

2. When communicating VAT or payroll information, why must accuracy and confidentiality be maintained?

   Errors can lead to penalties and incorrect tax; payroll/VAT data is sensitive personal/financial information that must be protected and shared only with authorised parties.

3. Name the five fundamental ethical principles of the AAT Code of Professional Ethics.

   Integrity, Objectivity, Professional competence and due care, Confidentiality, and Professional behaviour.

4. Define the ethical principle of 'integrity'.

   Being straightforward and honest in all professional and business relationships.

5. Define the ethical principle of 'objectivity'.

   Not allowing bias, conflict of interest or undue influence of others to override professional or business judgements.

6. What does 'professional competence and due care' require?

   Maintaining professional knowledge and skill at the required level and acting diligently in accordance with applicable technical and professional standards.

7. When may a member disclose confidential information?

   When authorised by the client/employer, when legally required (e.g. money laundering reporting), or when there is a professional duty/right to disclose.

8. Name the five categories of threat to the fundamental ethical principles.

   Self-interest, self-review, advocacy, familiarity and intimidation threats.

9. Give an example of a self-interest threat and a familiarity threat.

   Self-interest: a financial interest in a client. Familiarity: a long or close relationship with a client leading to being too sympathetic to their interests.

10. What is a 'safeguard' in ethics, and give two examples?

    An action that eliminates or reduces a threat to an acceptable level; examples include professional standards/training, supervision, second reviews, rotation of staff, and consulting the AAT.

11. What is money laundering?

    The process of disguising the proceeds of crime so they appear to come from a legitimate source.

12. Name the three stages of money laundering.

    Placement (introducing illegal cash into the financial system), layering (moving/disguising it through transactions), and integration (returning it as apparently legitimate funds).

13. Which UK legislation governs money laundering?

    The Proceeds of Crime Act 2002 (POCA) and the Money Laundering Regulations 2017 (as amended).

14. To whom must an accountant report a suspicion of money laundering, and via what document?

    To the firm's Money Laundering Reporting Officer (MLRO) or directly to the National Crime Agency (NCA) via a Suspicious Activity Report (SAR).

15. What is 'tipping off' and why is it an offence?

    Informing a suspected money launderer (or anyone) that a report has been made or an investigation is underway; it is an offence because it could prejudice an investigation.

16. What is the difference between tax evasion and tax avoidance?

    Tax evasion is illegally not paying tax owed (e.g. hiding income); tax avoidance is using legal means to reduce tax liability, though aggressive avoidance may be unethical.

17. What does Customer Due Diligence (CDD) require under the Money Laundering Regulations?

    Verifying a client's identity, understanding the nature/purpose of the business relationship, and ongoing monitoring of transactions.

18. Define sustainability in a business context.

    Meeting present needs without compromising the ability of future generations to meet their own needs, balancing economic, social and environmental impacts.

19. What is the 'triple bottom line' and its three elements?

    A framework measuring performance across three areas: Profit (economic), People (social), and Planet (environmental).

20. What is Corporate Social Responsibility (CSR)?

    A business's commitment to operate ethically and contribute to economic development while improving the quality of life of employees, the community and society, beyond just legal/profit obligations.

21. How can the finance function support sustainability and CSR?

    By measuring and reporting on environmental/social impacts, integrated reporting, sustainable investment appraisal, reducing waste/costs, and ensuring ethical supply chains.

22. What is the difference between a stakeholder's 'power' and 'interest' in stakeholder analysis?

    Power is the stakeholder's ability to influence the organisation's decisions; interest is how much they care about or are affected by those decisions.

23. What is meant by the 'going concern' assumption that risk management aims to protect?

    The assumption that a business will continue to operate for the foreseeable future; managing risk and controls helps protect the organisation's ability to remain a going concern.

24. What is the purpose of a backup in data protection, and what is best practice?

    To enable recovery of data after loss/corruption; best practice is regular automated backups stored securely off-site or in the cloud, with periodic restore testing.

What this deck covers

Business Awareness, Tax Processes and Ethics (Level 2 & 3) flashcards FAQ