ACCA Advanced Taxation (ATX) Practice Exam

In order to comply with the principle of professional ethics, what obligation do we have regarding our clients?

1. We must ensure their financial growth

2. We must ensure they are not involved in money laundering

3. We must ensure they follow tax laws

4. We must ensure they are properly registered

The correct answer is: We must ensure they are not involved in money laundering

In the context of professional ethics, particularly for those in the field of taxation and accounting, the obligation regarding clients encompasses a commitment to uphold legal standards and prevent unlawful activities. One crucial ethical responsibility is to ensure that clients are not involved in money laundering. Money laundering poses serious legal and ethical risks not only to the clients involved but also to the professionals who may inadvertently facilitate such activities if they do not exercise due diligence. Professionals are expected to have systems in place to identify and report suspicious transactions, ensuring compliance with anti-money laundering regulations. This imperative stems from the broader ethical duty to act with integrity, avoid complicity in illegal activities, and protect the reputation of the profession. The other options, while they address important aspects of client relationships and compliance, do not encapsulate the specific ethical obligation highlighted in this context. Ensuring financial growth, compliance with tax laws, or proper registration are all important aspects of a professional’s role, but they do not reflect the critical preventative measure against illegal activities like money laundering, which carries significant consequences for both the client and the advisor.