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ACCA Strategic Professional · Advanced Financial Management · The role and responsibility of senior financial executive/advisor

Kappa Ltd's treasurer learns in confidence that a client is about to announce a takeover bid for a listed company, and a close relative asks for investment advice about that company's shares. Which response is correct under the Code of Ethics for professional accountants?

The treasurer must keep the information confidential and must not use it for personal gain or to benefit others, so should decline to advise on those shares. Hinting or trading would breach confidentiality and may constitute insider dealing, even if nothing is written.

  1. AGive a hint that it would be wise to buy, since no written advice is given
  2. BBuy the shares personally but not for the relative
  3. CMaintain confidentiality, do not use the information for personal or others' advantage, and decline to advise on those sharesCorrect
  4. DDisclose the bid to the relative once the board approves it

Explanation

Confidentiality prohibits using or disclosing confidential information acquired professionally for personal advantage or that of third parties. Trading or tipping would also risk insider dealing offences. Board approval to disclose to a relative does not justify selective disclosure.

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