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Review of Part C of the Code – Applicability

This review provides a status update, recap of June 2017 comments, report back on CAG and SMPC meetings, and TF proposed responses and revisions for Part C of the Code.

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Review of Part C of the Code – Applicability

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  1. Review of Part C of the Code – Applicability Helene Agélii – IESBA Member and Task Force Chair IESBA Meeting New York, USA September 19-22, 2017

  2. Overview of the Session • Status update • Recapof June 2017 IESBA comments • Report back – CAG and SMPC • TF proposed responses and revisions

  3. Status Update Milestones

  4. Status Update Overview

  5. Status Update Recap of ED Comments • Received 40 comment letters • Respondents are generally supportive of: • Objective of the proposals • The holistic approach • Only a few respondents expressed general concerns about increasing complexity of Code

  6. Recap of June 2017 IESBA Comments

  7. Report Back Sept 2017 CAG Meeting

  8. Report Back SMPC Response • Acknowledged some respondents might not have considered the consequences of current wordings of the proposed applicability paragraphs • Suggested a further communication piece

  9. Issues and TF Proposals Key issues raised by respondents:

  10. Issue 1 – Clarity and Scope of Requirement (Circumstances) Comment • PAs should be required to consider whole Code and comply with relevant provisions Proposal • TF does not support this suggestion as it may draw focus away from project objective

  11. Issue 1 – Clarity and Scope of Requirement (Circumstances) Comment: • Phrase “facing an ethical issue” implied that PA has already encountered a specific ethical issue that needs to be addressed Proposals • TF has revised first sentence to clarify that ethical issue may or may not have taken place yet

  12. Issue 1 – Clarity and Scope of Requirement (Circumstances) Comment • Proposed text should cover PA who serve as both PAPPs and PAIBs in multiple roles Proposal • TF does not agree with this suggestion • A PA should already be aware of the guidance if working as a PAIB • Suggestion would draws focus away from project objective

  13. Issue 1 – Clarity and Scope of Requirement (Circumstances)

  14. Issue 1 – Clarity and Scope of Requirements (Circumstances)

  15. Issue 1 - Clarity and Scope of Requirement (Circumstances)

  16. Issue 1 - Clarity and Scope of Requirement (Circumstances) Paragraph 220.3 A1 (Agenda Item 8-A) Professional accountants at all levels in an employing organization are involved in the preparation and presentation of information both within and outside the organization.

  17. Issue 1 - Clarity and Scope of Requirement (Circumstances) • Paragraph 270.3 A1 (Agenda Item 8-A) • A professional accountant might face pressure that creates threats to compliance with the fundamental principles, for example intimidation threats, when undertaking a professional activity. Pressure might be explicit or implicit and come from: • Within the organization, for example, from a colleague or superior. • An external individual or organization such as a vendor, customer or lender. • Internal or external targets and expectations.

  18. Issue 1 - Clarity and Scope of Requirement (Circumstances)

  19. Issue 1 - Clarity and Scope of Requirement(Individual PAPPs) Comment • Whether individuals who are not PAs are covered by applicability paragraphs Proposal • IESBA agreed in June that scope of applicability paragraphs should be restricted to those PAPPs who are individuals

  20. Issue 1 – Clarity and Scope of Requirement(Contractor) Comment: • Contractor relationship was not explicitly dealt with in ED and therefore not clear if such relationship is within scope Proposal • TF agrees that PAs working as contractors of a firm should comply with Part C

  21. Issue 1 – Clarity and Scope of Requirement(Contractor)

  22. Issue 1 – Clarity and Scope of Requirement(Applicability of Extant Part B to PAIBs) • In June, Board asked Task Force to consider whether ED should also clarify applicability of Part B provisions to PAIBs Proposal • TF does not recommend revisions and believes that doing so • Is outside the scope of project • Requires more analysis

  23. Matter for IESBA Consideration

  24. Issue 2 – Illustrative Examples Proposal • ED contains a specific example of a situation where a PAPP might face where Part C would be applicable • Comments suggest a need for further enhancement Specific example is replaced with four examples relating to four situations

  25. Matter for IESBA Consideration

  26. Issue 3 – Location of Guidance Material • General support for proposed location of Applicability paragraphs in Sections 120 and 300. Proposal • IESBA agreed in June to remove application material in Section 120 • Other guidance material also updated

  27. Issue 3 – Location of Guidance Material Paragraph 4 of the Guide to the Code (Agenda Item 3-D) Part 2 is also applicable to professional accountants in public practicewhen performing professional activities pursuant to the accountant’s employment, contractor or ownership relationship with the firm.

  28. Issue 4 – Structure Related Matters

  29. Matter for IESBA Consideration

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