MCQs On PROFESSIONAL ETHICS AND STANDARDS Part - 2

Q.1:- Needs of Valuers Code of Professional Ethics to:

• promote and maintain a high level of public trust and confidence of end users of information by reducing their level of risk
• establish straightforward, enforceable and uniform principles-based requirements for ethical and competent practice;
• help valuers meet the evolving needs of clients and facilitate the variety of work that valuers now perform,
• All of the above

Q.2:- A valuer should not take up an assignment under the Act/Rules if he/it or any of his/its relatives or associates is not independent in relation to the……………… and assets being valued:

• Organization
• Company
• Firm
• Clients

Q.3:- A Valuation Report must be clear and …………

• Not misleading,
• Non Fraudulent,
• Not Sufficient information Content,
• Misleading,

Q.4:- A calculation engagement does not include all of the………………….. required for a valuate engagement:

• Procedures
• Methods
• Approaches
• System

Q.5:- Objectivity Means

• To maintain the professional knowledge and skill
• To be straightforward and honest in professional and business relationships
• Not to allow conflict of interest, or undue influence or bias to override professional or business judgement.
• All of the above

Q.6:- Management Representation Letter should betaken:

• at the time of issuance of the final report
• After the issuance of the final report
• prior to the issuance of the final report
• None of the above

Q.7:- As an independent valuers, the valuer shall not charge

• Valuer Fee
• Professional Fee
• Success Fee
• Auditor's Fee

Q.8:- Management Representation Letter should be taken:

• prior to the issuance of the final report
• at the time of issuance of the final report
• After the issuance of the final report
• None of the above

Q.9:- Which of the following is not included in financial information?

• Information on compensation for owners including benefits and personal expenses
• Comparative common size industry financial information for a relevant time period
• Classes of equity ownership interests and rights attached thereto
• Comparative common size financial statements for the subject entity for an appropriate number of years

Q.10:- Valuers shall not make valuations as per

• Valuation standards laying down by a registered valuers’ organization,
• Valuation standards specified by the RBI, SEB or any other statutory regulatory body of India.
• Valuation standards adopted by a registered valuers’ organization,
• Internationally accepted valuation methods,

Q.11:- Which of the following is not covered by the code of conduct for insolvency professionals?

• Taking up corporate insolvency resolution processes of two corporate debtors simultaneously
• Conducting business which in the opinion of the IBBI is inconsistent with the reputation of the profession
• Accepting gifts or hospitality from a creditor
• Negligence while performing his functions and duties

Q.12:- In the preparation of a valuation report, the valuer should not disclaim liability for his/its expertise or deny his/its duty of care, except to the extent that the assumptions are statement, of fact provided by the company and not generated by the valuer, this is covered in code ofconduct under………………………..

• Confidentiality
• Professional competence and due care
• Independence and disclosure of interest
• Occupation, employability and restrictions

Q.13:- The rules by which an individual lives his/her life, is called the......................ethics.

• Applied
• Normative
• Personal
• Professional

Q.14:- The valuer must identify the appraisal problem to be solved at the

• Time of tendering.
• Time of valuation is in process.
• Time of engagement
• Time of Submission of report.

Q.15:- The scope of work for an appraisal is appropriate when it meets:

• What the actions would be of another valuer who possesses competency to prepare the same appraisal,
• The expectations of parties who are regularly intended users of appraisals under similar circumstances.
• The Terms of Engagement, oral or in writing, shall clearly the nature necessary to develop an appraisal that is credible given its intended use.
• All of the above.

Q.16:- A valuer shall maintain integrity by being honest, straight forward, and …………… in all professional relationships.

• Faithfull
• Forthright
• Trustee
• Fair

Q.17:- Ethics indicates the.........................choices made by each person in relationship with other persons.

• Moral
• Personal
• Professional
• All of the above.

Q.18:- A valuer should in the conduct of his/its business follow ………………..standards of integrity and fairness in all his/its dealings with his/its clients and other valuers:

• Reasonable
• International
• Top
• High

Q.19:- The understanding of Terms of engagement with the client reduces the…… that either the Valuer or the client may misinterpret the needs or expectations of the other party:

• Possibility
• Chance
• Eventuality
• Misunderstanding

Q.20:- In the case application of methodology- valuer must not:

• Techniques necessary to produce a credible appraisal.
• Correctly employ methods
• Ensure collective strategic decisions for a company.
• Research and verify data necessary to develop a credible appraisal, and

Q.21:- While engaging the expert, the valuer should also explore the relationship which might give rise to:

• Error in valuation
• Insider trading
• Conflict of interest
• Related party transaction

Q.22:- An engagement letter includes:

• Conditions
• Compensation arrangement
• Terms
• All of the above

Q.23:- As an independent valuer, the valuer …….. not charge success fee.

• Would
• Will
• Should
• Shall

Q.24:- Valuer must not involve any activities which may constitute a violation which does not include:

• Disclosure is required by law,
• Misappropriation of client document
• Misuse of confidential information.
• Misappropriation of valuation secrets.

Q.25:- A valuer should Endeavor to ensure that he/it provides true and adequate information and shallnot misrepresent any facts or situations, this is covered in code of conduct under:

• Integrity and fairness
• Independence and disclosure of interest
• Confidentiality
• Professional competence and due care

Q.26:- A valuer should act with objectivity in his/its professional dealings by ensuring that his/its decisions are made without the presence of any bias, conflict of interest, coercion, or undue influence of any party, whether directly connected to the valuation assignment or not, this is covered in code of conduct under…………………….:

• Confidentiality
• Independence and disclosure of interest
• Occupation, employability and restrictions
• Professional competence and due care

Q.27:- Avaluer shall conduct valuation required under the Act as per these rules and he may conduct valuation as per these rules if required under any other law or by any other ……………….

• Regulatory authority
• Local body
• Statutory Authority
• Statutory body

Q.28:- Which of the following is included in financial information?

• Prospective financial information such as budgets, forecasts, and projections
• Comparative summaries of financial statements or information covering a relevant period
• Historical financial information for an appropriate number of years
• All of the above

Q.29:- A Mediation or Arbitration clause in engagement letter provide guidance regarding:

• Specific tasks to be completed and provides a timeline for the completion of the work
• How to manage any disputes arising between the parties involved
• None of the above
• Both (a) and (b)

Q.30:- Which of the following is included in non-financial information?

• Nature, background, and history of the business
• Organizational structure
• Management team
• All of the above

Q.31:- A valuer should not use or ………………………..to other clients or any other party any confidential information about the subject company:

• Divulge
• Provide
• Disclose
• Share

Q.32:- A valuer shall act with objectivity in his/its professional dealings by ensuring that his/its decisions are made without the presence of ………, conflict of interest, coercion, or undue influence of any party, whether directly connected to the valuation assignment or not.

• Any Pressure
• Any Favour and pressure
• Any Bias
• Any Favour

Q.33:- An engagement letter must include a clause that ensures the client is responsible for providing all the …… information on time to complete the valuation exercise:

• Requisite
• Necessary
• Required
• Desired

Q.34:- Valuer may hesitate to break confidentiality when confronted with a suspected abuse. The reasons for this hesitation may be that,

• a desire to complicate matters
• there is not a possible conflict of interest
• there is uncertainty over course of action to be taken
• the legal violation is quite clear

Q.35:- A valuer should not deal in securities of any subject company after any time when he/it first becomes aware of the possibility of his/its …………………..with the valuation, and in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015:

• Association
• Involvement
• Interest
• Relation

Q.36:- A valuer shall not be consider Professional Competence and Due Care if

• Update professional knowledge and skill to provide competent professional service
• Carry out professional services in accordance with the relevant technical and professional standards.
• Ensure high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment.
• None of the above.

Q.37:- A valuer should maintain integrity by being honest, straightforward, and forthright in all…….. relationships:

• Business
• Legal
• Professional
• Personal

Q.38:- There are broadly two types of engagements to estimate value a valuation engagement and a ………………engagement:

• Professional
• Business
• Calculation
• Estimation

Q.39:- Which of the following is not a conduct most people associate with ethical behavior?

• Pursuit of excellence
• Bargaining
• Loyalty
• Respects for others

Q.40:- Which of the following type of information available in public domain?

• Ownership details
• Financial information
• Non-financial information
• All of the above

Q.41:- A………………….shall be responsible for the methods and assumptions used by him:

• Valuer
• Client
• Chartered Accountant
• All of the above

Q.42:- Generally, a valuer would consider only circumstances existing at the valuation date and events occurring up to valuation to the date. However, events and circumstances occurring subsequent to the valuation date, may be relevant to the valuation depends on which of the following factor:

• Basis of valuation
• Premise of valuation
• Purpose of valuation
• All of the above

Q.43:- Information management ensures …………….for taking decisions:

• Relevant information
• Timely information
• Relevant and timely information
• Availability of information

Q.44:- A valuer should refrain from being involved in any action that would bring disreputeto theprofession, this is covered in code of conduct under…………………

• Occupation, employability and restrictions
• Independence and disclosure of interest
• Integrity and fairness
• Confidentiality

Q.45:- Valuer must make reasonable efforts to detect and prevent

• Misappropriation of Provision of model Code of conduct.
• Non-Disclosure of Provision of Company Act 2013.
• Violations of applicable laws, rules, regulations.
• All of the above.

Q.46:- The understanding of terms of engagement with the client reduces the possibility that either the Valuer or the client may…………………………the needs or expectations of the other party:

• Misinterpret
• Not understand
• Not understand
• Distort

Q.47:- The analyst valuing a subject shall act independently, free from all bias. He shall have no financial or other interest in the …………………being valued:

• Company
• Subject
• Company
• Business

Q.48:- Purpose of valuation shall be identified in the scope of work, so that,

• Helps determine the bases of value to be used.
• The valuation advice is not used out of context
• None of the above.
• Both a. and b.

Q.49:- According to fundamental ethical and professional principles applicable to the investment industry, which group should have its interests ranked first?

• Vendor
• Co-workers
• Clients
• Employers

Q.50:- Valuer shall not ……… in “mandate snatching” or offering “convenience valuations” in order to cater to a company or client’s needs.

• Divulge
• Indulge
• Involve
• Evolve