CIA2006 BUSINESS
CIA2006 BusinessAND CORPORATION
and Corporate Taxation TAXATION
TUTORIAL 2 ETHICS AND
Tutorial 2 Ethics and LAW
Law
Question 1
You have prepared tax returns for Grimco Sdn Bhd for the last two years. LHDN makes an informal
request for certain information you hold about your client, over and above what was in the last tax
return. You ask Grimco Sdn Bhd’s directors for permission to forward this information to LHDN, but
they refuse. A few weeks later, LHDN issues a statutory demand for the information. You inform
Grimco Sdn Bhd’s directors and again they ask you not to disclose the information.
Requirement
Explain how confidentiality applies at each stage in this scenario.
Information relating to Grimco Sdn Bhd may not be disclosed without the director’s consent unless
there is an expenses legal or professional right or duty to disclose.
An informal request from LHDN does not give rise to a legal right to disclose. You must therefore
respect the director’s instructions to keep the information confidential.
The statutory demand, assuming it is validly issued, does impose a legal obligation. The information
must be disclosed to LHDN despite your client’s request that it be withheld.
It is possible to include in client engagement letters authorisation to disclose information in this type
of situation.
Question 2
Jasmine is a professional accountant working in the tax department of a large accounting firm. An
ethical issue has arisen regarding one particular client, an ongoing personal disagreement which
Jasmine considers threatens her objectivity and possibly her professional behaviour. Jasmine has
followed the suggested procedure for conflict resolution including speaking to her line manager. She
has been advised to see how the relationship with the client goes over the next few months, a
particularly busy time for the firm, and take care to be polite to the client. Jasmine is concerned that
the conflict remains.
Requirement
Outline five options open to Jasmine in this situation.
Jasmine’s options include:
Waiting a while as her line manager suggests
Speaking to someone else in her firm
Contacting ICAEW’s confidential ethics helpline service
Asking to withdraw from acting for the client in question
Resigning her employment altogether
This study source was downloaded by 100000842568006 from CourseHero.com on 04-29-2022 04:04:35 GMT -05:00
https://www.coursehero.com/file/86587043/Ethics-and-Law-W3docx/
, Question 3
LHDN have issued a repayment of RM2,000 in error to your client Mr Nott. You have asked Mr Nott’s
permission to alert LHDN to this and advised him to return the repayment, but Mr Nott is
determined to keep the payment and will not authorise you to contact LHDN regarding it.
Unfortunately, the engagement letter is silent on the matter of LHDN errors. Mr Nott is keen to forget
about the repayment and would like you to begin work on his next tax return.
Requirement
Outline the steps you would take next as a professional accountant.
It would be necessary to cease to act for Mr Nott. He should be given written notice of this. LHDN
should also be notified that you are ceasing to act, but not informed of the reason.
Full records should be kept of your contact regarding the repayment and your decision to terminate
the engagement.
It may be necessary to consider making a report under anti-money laundering regulations. See
section 8.
Question 4
Peter is a junior accountant working at Figg & Co. He joined last year and underwent anti-money
laundering training when he started his job, a one-day course organised for him by the Compliance
Officer, Milo. Despite this, Peter failed to notice a significant money-laundering cash transaction
carried out by a client whose tax return he was working on. Peter therefore made no report.
Requirement
Explain whether Peter and/or Milo have committed an offence here and if so, whether there is any
defence available
The relevant offence here is failure to report.
Peter failed to make an internal report when he should reasonably have suspected money
laundering. He has therefore committed the offence of failure to report. There is a defence where
there has been insufficient training to enable the person to spot actual or suspected money
laundering. The course taken within the last two years is likely to have been sufficient to enable Peter
to recognise the money laundering activities.
Milo will not have committed any offence in regard to the transaction as he had no knowledge of this
from any internal report. If Figg & Co’s anti-money laundering procedures were found to be
inadequate, then Milo as MLRO could potentially be charged.
Question 5
Your firm has recently started acting for a client XYZ Sdn Bhd, preparing their sales tax returns. You
notice that in the previous sales tax return prepared by the financial controller of XYZ Sdn Bhd, there
is a small mistake understating the sales tax due to Royal Customs. When you explain this to the
financial controller, she understands the problem. However, she says that because she did not know
This study source was downloaded by 100000842568006 from CourseHero.com on 04-29-2022 04:04:35 GMT -05:00
https://www.coursehero.com/file/86587043/Ethics-and-Law-W3docx/
CIA2006 BusinessAND CORPORATION
and Corporate Taxation TAXATION
TUTORIAL 2 ETHICS AND
Tutorial 2 Ethics and LAW
Law
Question 1
You have prepared tax returns for Grimco Sdn Bhd for the last two years. LHDN makes an informal
request for certain information you hold about your client, over and above what was in the last tax
return. You ask Grimco Sdn Bhd’s directors for permission to forward this information to LHDN, but
they refuse. A few weeks later, LHDN issues a statutory demand for the information. You inform
Grimco Sdn Bhd’s directors and again they ask you not to disclose the information.
Requirement
Explain how confidentiality applies at each stage in this scenario.
Information relating to Grimco Sdn Bhd may not be disclosed without the director’s consent unless
there is an expenses legal or professional right or duty to disclose.
An informal request from LHDN does not give rise to a legal right to disclose. You must therefore
respect the director’s instructions to keep the information confidential.
The statutory demand, assuming it is validly issued, does impose a legal obligation. The information
must be disclosed to LHDN despite your client’s request that it be withheld.
It is possible to include in client engagement letters authorisation to disclose information in this type
of situation.
Question 2
Jasmine is a professional accountant working in the tax department of a large accounting firm. An
ethical issue has arisen regarding one particular client, an ongoing personal disagreement which
Jasmine considers threatens her objectivity and possibly her professional behaviour. Jasmine has
followed the suggested procedure for conflict resolution including speaking to her line manager. She
has been advised to see how the relationship with the client goes over the next few months, a
particularly busy time for the firm, and take care to be polite to the client. Jasmine is concerned that
the conflict remains.
Requirement
Outline five options open to Jasmine in this situation.
Jasmine’s options include:
Waiting a while as her line manager suggests
Speaking to someone else in her firm
Contacting ICAEW’s confidential ethics helpline service
Asking to withdraw from acting for the client in question
Resigning her employment altogether
This study source was downloaded by 100000842568006 from CourseHero.com on 04-29-2022 04:04:35 GMT -05:00
https://www.coursehero.com/file/86587043/Ethics-and-Law-W3docx/
, Question 3
LHDN have issued a repayment of RM2,000 in error to your client Mr Nott. You have asked Mr Nott’s
permission to alert LHDN to this and advised him to return the repayment, but Mr Nott is
determined to keep the payment and will not authorise you to contact LHDN regarding it.
Unfortunately, the engagement letter is silent on the matter of LHDN errors. Mr Nott is keen to forget
about the repayment and would like you to begin work on his next tax return.
Requirement
Outline the steps you would take next as a professional accountant.
It would be necessary to cease to act for Mr Nott. He should be given written notice of this. LHDN
should also be notified that you are ceasing to act, but not informed of the reason.
Full records should be kept of your contact regarding the repayment and your decision to terminate
the engagement.
It may be necessary to consider making a report under anti-money laundering regulations. See
section 8.
Question 4
Peter is a junior accountant working at Figg & Co. He joined last year and underwent anti-money
laundering training when he started his job, a one-day course organised for him by the Compliance
Officer, Milo. Despite this, Peter failed to notice a significant money-laundering cash transaction
carried out by a client whose tax return he was working on. Peter therefore made no report.
Requirement
Explain whether Peter and/or Milo have committed an offence here and if so, whether there is any
defence available
The relevant offence here is failure to report.
Peter failed to make an internal report when he should reasonably have suspected money
laundering. He has therefore committed the offence of failure to report. There is a defence where
there has been insufficient training to enable the person to spot actual or suspected money
laundering. The course taken within the last two years is likely to have been sufficient to enable Peter
to recognise the money laundering activities.
Milo will not have committed any offence in regard to the transaction as he had no knowledge of this
from any internal report. If Figg & Co’s anti-money laundering procedures were found to be
inadequate, then Milo as MLRO could potentially be charged.
Question 5
Your firm has recently started acting for a client XYZ Sdn Bhd, preparing their sales tax returns. You
notice that in the previous sales tax return prepared by the financial controller of XYZ Sdn Bhd, there
is a small mistake understating the sales tax due to Royal Customs. When you explain this to the
financial controller, she understands the problem. However, she says that because she did not know
This study source was downloaded by 100000842568006 from CourseHero.com on 04-29-2022 04:04:35 GMT -05:00
https://www.coursehero.com/file/86587043/Ethics-and-Law-W3docx/
