ACCA Advanced Taxation (ATX) Practice Exam

What should a firm do after discovering an error made by the client?

1. Ignore it if it's not significant

2. Investigate how the error arose

3. Charge the client for extra services

4. Keep the information confidential

The correct answer is: Investigate how the error arose

After discovering an error made by the client, investigating how the error arose is crucial for several reasons. Understanding the origin of the error allows the firm to identify whether it is a recurring issue or if it resulted from unusual circumstances. This knowledge helps in providing the client with proper advice on preventing similar errors in the future. Moreover, a thorough investigation demonstrates professional diligence and care, which are essential in maintaining the integrity of the firm's services. It can also aid in determining the appropriate steps to rectify the error, ensuring compliance with relevant laws and regulations. This proactive approach not only protects the client's interests but also fortifies the relationship between the firm and the client, as it shows commitment to high-quality service and accountability. While ignoring a minor error might seem tempting, it could lead to larger issues down the line. Charging the client for additional services may be seen as taking advantage of the situation rather than fostering a partnership built on trust. Keeping the information confidential, while ethically vital, does not address the need to correct and understand the error, which is essential for the client's financial welfare and the firm’s reputation. Thus, investigating how the error arose represents the most responsible and beneficial course of action.