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CA Final · Financial Reporting · Professional and Ethical Duty of a Chartered Accountant

CA Nisha, managing partner of a mid-sized firm, wants to strengthen an ethical culture in the firm. She is considering these actions: (i) introducing ethics education and training programmes, (ii) adopting a whistle-blowing policy that encourages and protects those reporting suspected unethical behaviour, (iii) basing performance rewards solely on fee revenue generated, (iv) implementing policies to prevent noncompliance with laws and regulations. Which actions are consistent with the Code's examples of promoting an ethics-based culture?

Actions (i), (ii) and (iv) are consistent. Ethics training, whistle-blowing protection and policies preventing legal noncompliance are listed examples, whereas rewarding staff solely on fee revenue does not qualify as a reward criterion promoting an ethical culture.

  1. A(i), (ii) and (iv) onlyCorrect
  2. B(i) and (iii) only
  3. C(ii), (iii) and (iv) only
  4. D(i), (ii), (iii) and (iv)

Explanation

The Code gives as examples ethics education and training, performance evaluation and reward criteria that promote an ethical culture, ethics and whistle-blowing policies, and policies to prevent noncompliance with laws. Rewards based solely on fee revenue do not promote an ethical culture, so (iii) is not consistent. Hence (i), (ii) and (iv).

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