Page 1 | Confidential and Proprietary Information Responding to Suspected Illegal Acts Dublin,...
-
Upload
lynne-nicholson -
Category
Documents
-
view
215 -
download
3
Transcript of Page 1 | Confidential and Proprietary Information Responding to Suspected Illegal Acts Dublin,...
Page 1 | Confidential and Proprietary Information
Responding to Suspected Illegal Acts
Dublin, February 2012
Page 2 | Confidential and Proprietary Information
• Task Force Proposal in October Meeting– Report internally and escalate if response not appropriate– Responsibility to report to appropriate authority if entity has not
appropriately addressed the matter and, in the judgment of the professional accountant it is in the public interest to disclose to an authority
– Matters reportable to an appropriate authority are those that (i) affect financial reporting or (ii) are within the expertise of the professional accountant
– In determining whether disclosure is in the public interest the professional accountant shall consider “whether a reasonable and informed third party, weighing all the specific facts and circumstances, would be likely to conclude that the suspected illegal act is of such consequence that disclosure would be in the public interest”
Recap of October 2011 MeetingResponding to Suspected Illegal Acts
Page 3 | Confidential and Proprietary Information
• General support expressed for the approach adopted• However, the Board unable to reach a consensus on
“responsibility” versus “right”• Task Force was asked to develop wording to convey a
“robust right”
Recap of October 2011 MeetingResponding to Suspected Illegal Acts
Page 4 | Confidential and Proprietary Information
• Develop two alternative approaches:– Robust right to disclose– Responsibility to disclose with right to override the requirement if the
personal safety is threatened
Revised Task Force ProposalResponding to Suspected Illegal Acts
Page 5 | Confidential and Proprietary Information
• Robust right– “A professional accountant is expected to exercise this right in order to
fulfill the accountant’s responsibility to act in the public interest. If the professional accountant does not exercise this right the accountant shall terminate all professional relationships with the client (or resign from the employing organization).” (Sections 225.10, 225.19 and 360.9)
• Requirement with right to override:– “In exceptional circumstances a professional accountant in public practice
is not required, under this section, to disclose the suspected illegal act if a reasonable and informed third party would conclude that the probable threats, harassment or reprisals to the professional accountant are sufficiently severe to outweigh the public interest in disclosure. In such cases, if the professional accountant determines not to disclose the suspected illegal act, the accountant shall document the rationale for not disclosing.” (Sections 225.13, 225.22 and 360.12)
Revised Task Force ProposalResponding to Suspected Illegal Acts
Page 6 | Confidential and Proprietary Information
• Majority position in the task force:
Revised Task Force ProposalResponding to Suspected Illegal Acts
Category Level of duty
Auditor or professional accountant performing non-assurance services to an audit client
Responsibility to disclose
Professional accountant performing non-assurance services to a non-audit client
Robust duty
Professional accountant in business Robust duty
Page 7 | Confidential and Proprietary Information
• Other changes to Sections 225 and 360:– Requirement for professional accountant performing NAS to audit client to
consult with audit partner– Expertise of the professional accountant – deleted fraud, bribery and
insider trading– Responsibility for professional accountant performing NAS to non-audit
client to disclose to external auditor only where unable to escalate internally to the entity
– When disclosure is not made, the rationale for disclosure shall be documented
Revised Task Force ProposalResponding to Suspected Illegal Acts
Page 8 | Confidential and Proprietary Information
• Professional accountant shall refuse to be associated with unethical behavior (100.22)
• Disclosure to external auditor is not a breach of confidentiality (140.4)
• Responding to unethical behavior and fee pressure (section 210):– Use safeguards to reduce to acceptable level or resign
• Reference to ethics policies and whistle-blowing procedures (300.5)
• Inclusion of example of behavior that impairs integrity (300.6)• Responsibility to discuss unethical behavior within organization
and escalate (300.15)
Proposed changes to existing sections of CodeResponding to Suspected Illegal Acts
Page 9 | Confidential and Proprietary Information
• The Board is asked to consider the two alternatives:– Robust right– Responsibility
• In considering the two alternatives the Board is asked to consider whether different levels of responsibility should be assigned to each of the three categories of accountant
• The Board is asked to consider the other changes to Sections 225 and 360 and the changes to the existing sections of the Code
DiscussionResponding to Suspected Illegal Acts