Code of Ethics for Professional Accountants
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Transcript of Code of Ethics for Professional Accountants
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International Federation of Accountants
Code of Ethics for Professional Accountants
Overview
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International Federation of Accountants
Code of Ethics
Part A – Framework applies to all professional accountants
Part B – Professional accountants in public practice
Part C – Professional accountants in business
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• Integrity
– To be straight forward and honest in all professional and business relationships
• Objectivity
– To not allow bias, conflict of interest or undue influence of others to override professional or business judgments
Fundamental Principles
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• Professional Competence and Due Care
– To maintain professional knowledge and skill at the level required to ensure competent professional services based on current developments in practice, legislation and techniques
– To act diligently in accordance with applicable technical and professional standards
Fundamental Principles
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• Confidentiality– To refrain from disclosing confidential information
acquired as a result of professional and business relationships without proper and specific authority to disclose unless there is a legal or professional right or duty to disclose
– To refrain from using confidential information acquired as a result of professional and business relationships for personal advantage or the advantage of third parties
Fundamental Principles
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• Professional behavior
– Obligation to comply with relevant laws and regulations and avoid any action that discredits the profession
Fundamental Principles
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Conceptual Framework Approach – Threats and Safeguards
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• Requires active consideration of issues
• Establishes basic principles
• Can be applied to differing circumstances
• Responsive to rapid change
• Requires judgment rather than literal interpretations encouraged by a pure rules approach
Conceptual Framework Approach
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• Self-interest
• Self-review
• Advocacy
• Familiarity
• Intimidation
Threats
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Two categories:
• Created by the profession, legislation or regulation
• In the work environment
Safeguards
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When safeguards are never adequate
Prohibitions
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• Professional Appointment
• Conflicts of Interest
• Second Opinions
• Fees and Other Types of Remuneration
• Marketing Professional Services
• Gifts and Hospitality
• Custody of Client Assets
• Objectivity – All Services
• Independence – Audit and Review Engagements
• Independence – Other Assurance Engagements
Part B – Professional Accountants in Public Practice
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• Firm includes network firm, except where otherwise stated
• Independence of mind and independence in appearance
• Public interest entities: additional provisions in Section 290 that reflect the extent of public interest in certain entities
Independence for Audit and Review Engagements
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• Documentation: conclusions regarding compliance with independence requirements, and substance of any relevant discussions that support those conclusions
Independence for Audit and Review Engagements – cont’d
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• Financial interests
• Loans and guarantees
• Business relationships
• Family and personal relationships
• Employment with an audit client
• Temporary staff assignments
Independence for Audit and Review Engagements – cont’d
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• Recent service with an audit client
• Serving as a director or officer of an audit client
• Long association of senior personnel (including partner rotation) with an audit client
Independence for Audit and Review Engagements – cont’d
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• Provision of non-assurance services to audit clients
– Management responsibilities
– Preparing accounting records and financial statements
– Valuation services
– Taxation services
– Internal audit services
Independence for Audit and Review Engagements – cont’d
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• Provision of non-assurance services to audit clients
– IT systems services
– Litigation support services
– Legal services
– Recruiting services
– Corporate finance services
Independence for Audit and Review Engagements – cont’d
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• Fees
• Compensation and evaluation policies
• Actual or threatened litigation
• Reports that include a restriction on use or distribution
Independence for Audit and Review Engagements – cont’d
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• Assurance engagements that are not audit or review engagements
• Include related entities when reason to believe relevant to independence
• Include network firms when reason to believe relevant to independence
Independence for Other Assurance Engagements
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• Assertion-based assurance engagements– Independence required from assurance client (party responsible for
the subject matter information, and which may be responsible for the subject matter)
– When client not responsible for subject matter evaluate the threats firm has reason to believe created by interests and relationships with party responsible for subject matter
• Direct reporting engagements– Independence required from assurance client (party responsible for
the subject matter)
Independence for Other Assurance Engagements
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• Multiple responsible parties
– Firm may take into account whether interest or relationship with a particular responsible party creates a threat. Consider:
• Materiality of subject matter information (or subject matter) for which the particular responsible party is responsible
• Degree of public interest associated with engagement
Independence for Other Assurance Engagements
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• Potential conflicts
• Preparation and reporting of information
• Acting with sufficient expertise
• Financial interests
• Inducements
Part C – Professional Accountants in Business
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• January 1, 2011
• Transitional provisions
– Public interest entities
– Partner rotation
– Non-assurance services
– Fees – relative size
– Compensation and evaluation policies
Effective Date
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International Federation of Accountantswww.ifac.org