MCQs On PROFESSIONAL ETHICS AND STANDARDS Part - 3

Q.1:- Which of the following statements about the model Code of conduct is most inaccurate misconducts?

• Use of confidential information for valuation assignment.
• Neglecting to perform due diligence when required is an example of misconduct.
• A valuer’s commits misconduct by engaging in any illegal activity.
• Misconduct applies only to a valuer’s professional activities.

Q.2:- A valuer must not violate confidentiality. It is unethical to disclose confidential information or an analysis, opinion or conclusion specific to a service to anyone other than:

• the client and those persons specifically authorized by the client;
• third parties, when and to the extent that there is a legal obligation to do so by statute, ordinance or court or regulatory order;
• legal counsel, as reasonably necessary in the event of actual or threatened legal or regulatory action;
• All of the Above.

Q.3:- Valuer/Valuation firm should specifically should give a…………….. in the report that for the particular task he has taken advice of an expert:

• Views
• Disclaimer
• Suggestions
• Undertaking

Q.4:- In developing an appraisal, a valuer must:

• commit a substantial error of omission or commission that not significantly affects the assignment results; and
• Make a series of errors that, considered individually, may not significantly affect the assignment results but which, when considered in the aggregate, establish that the appraisal is being rendered in a careless or negligent manner.
• Not be aware of and understand methods and techniques that are necessary to producecredible assignment results;
• All the above.

Q.5:- Most important evidence in case of dispute

• Working papers
• Management Representation Letter
• Working papers and Management Representation Letter
• None of the above

Q.6:- The valuation engagement may cover:

• Fairness opinion which involves opining on the fairness of the price at which a transaction has taken place
• Valuation review, where the work of another valuer is reviewed
• Arriving at an estimate of / providing an opinion of value
• All of the above

Q.7:- Which of the 'following is the responsibility of the client?

• The terms of the engagement provide a reasonable framework to perform the valuation accordance with prescribed standards
• The client should keep the valuer informed of any material development relating to business or operations which may have a bearing on the engagement
• A client shall be responsible for the methods and assumptions used in valuation.
• None of the above

Q.8:- A subsequent event is:

• An event that occurs subsequent to the valuation date could affect the value
• Indicative of the conditions that were not known or knowable at the valuation date, including conditions that arose subsequent to the valuation date
• None of the above
• Both (a) and (b)

Q.9:- Which of the following is correct statement?

• The valuer should apply its professional judgment, to consider any of subsequent circumstances/events which are relevant for the valuation
• In the event subsequent circumstances/events are considered by the valuer the same should be explicitly disclosed in the valuation report
• None of the above
• Both (a) and (b)

Q.10:- A valuer should not accept any fees or charges other than those which are disclosed approved by the persons fixing his/ its remuneration, this is covered in code of conduct under …………………..

• Confidentiality
• Remuneration and costs
• Occupation, employability and restrictions
• Independence and disclosure of interest

Q.11:- As an independent valuer, the valuer should not charge success fee - This is covered in code of conduct under………………..

• Independence and disclosure of interest
• Information management
• Gifts and hospitality
• Confidentiality

Q.12:- Valuation date is the date on which,

• The date as on which the value of the asset is sought, in the valuation exercise.
• The date on which the valuation is assigned.
• Investigations relating to valuation assignment are undertaken.
• The valuation report is issued.

Q.13:- While conducting a valuation assignment, the valuer comes to know that a conflict of interests arises due to him being associated to the company's major income generating entity. What should be the course of action for the valuer thereon?

• The valuer shall excuse himself from the assignment, after explaining to the management the conflict of interest arisen.
• The valuer shall carry on the valuation assignment as if the conflict of interest was never discovered.
• The valuer shall disclose the conflict of interest and carry on the valuation assignment without letting it affect his independence.
• None of the above.

Q.14:- Which of the following major components who create threat to a professional valuer's ability to comply with the Fundamental Principles?

• Circumstance
• Relationship
• None of the above
• Both (a) and (b)

Q.15:- The Terms of Engagement, oral or in writing, shall clearly specify the following:

• Nature
• Scope
• Limitations of services to be performed and the responsibilities of the parties
• All of the above

Q.16:- It is ethical for valuer to knowingly:

• act in a manner that is fraudulent;
• use, or fail to take steps to prevent another from using, a misleading Report;
• act in a manner that is misleading;
• None of the above

Q.17:- Where a potential conflict of interest may exist, a Valuer should make the …………………..in the report:

• Disclosures
• Comments
• Note
• Disclaimer,

Q.18:- The Valuer should note in the assumptions and limiting conditions the level of responsibilities. If any, being assumed by the Valuer for the work of:

• Expert
• The third party specialist
• Professional
• The valuer

Q.19:- At the option of the Valuer, the……………….of the third party specialist may be included in the Valuer's report:

• Report
• Written report
• Views
• Findings

Q.20:- A valuer, or his/its relative should not accept gifts or………………which undermines or affects his independence as a valuer:

• Hospitality
• Kind
• Money
• All of the above

Q.21:- A valuer shall endeavour to ensure that he/it provides true and adequate information and shall not misrepresent any …………………..

• Facts or position
• Facts or valuation
• Facts or situations.
• Facts or figures

Q.22:- A valuer should endeavor to ensure that he/it provides…..and adequate information and shall not misrepresent any facts or situations:

• Correct
• True
• Fair
• Honest

Q.23:- A Valuer shall refrain from accepting...................., if he is unlikely to be able to devote adequate time to each of his assignments.

• Handful of assignments
• Too many assignments
• More than one assignment
• More than three assignment

Q.24:- A valuer should render at all times high standards of service, exercise, due diligence, ensure proper care and exercise independent……………….judgment:

• Personal
• Correct
• Self
• Professional

Q.25:- A valuer should provide services for remuneration which is charged in a ……………. manner, is a reasonable reflection of the work necessarily and properly undertaken, and is not inconsistent with the applicable rules.

• Transparent
• Disclosed
• Approved
• Reasonable

Q.26:- A valuer should carry out professional services in accordance with the relevant…….professional standards that may be specified from time to time:

• Regulation
• Provision
• Rule
• Technical

Q.27:- A valuer shall maintain integrity by being ……………., straightforward, and forthright in all professional relationships.

• Faithfull
• Honest
• Trustee
• Fair

Q.28:- A valuer should wherever necessary disclose to the …………..possible sources of conflicts of duties and interests, while providing unbiased services:

• Firm
• Company
• Clients
• Organization

Q.29:- While using the work of an expert the valuer shall evaluate the……..qualification, experience, reputation and competence of the expert:

• Skill
• Professional connections
• Knowledge
• Reviews

Q.30:- The valuer takes…………………….from the management regarding information that the client’s management provides to the valuer for purposes of performing the valuation:

• Letter
• Affidavit
• Representation
• Undertaking

Q.31:- Which of the following point need to be considered to assess the credibility / reliability of such information, if the valuer relies on the information available in public domain?

• The purpose of valuation
• Materiality
• The valuation conclusion of
• All of the above

Q.32:- Which of the following is not included in non - financial information?

• Strategy and 'future plans
• Key customers and suppliers
• Income tax returns for an appropriate number of years
• Products or services, or both