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Review of Part C of the Code – Inducements & Applicability

Review of Part C of the Code – Inducements & Applicability. Helene Agélii – IESBA Member and Task Force Chair IESBA CAG Meeting Madrid, Spain September 13, 2017. Overview of the Session. Inducements Provisions Update and report back on March 2017 CAG Applicability ED

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Review of Part C of the Code – Inducements & Applicability

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  1. Review of Part C of the Code – Inducements & Applicability Helene Agélii – IESBA Member and Task Force Chair IESBA CAG Meeting Madrid, Spain September 13, 2017

  2. Overview of the Session • Inducements Provisions • Update and report back on March 2017 CAG • Applicability ED • Highlight significant issues raised by respondents to ED • Discuss TF proposed response • Obtain CAG’s views in advance of Board meeting

  3. Inducements – Overview

  4. Inducements – Report Back • TF/IESBA responses to key matters raised by CAG • Definition of bribery and corruption not necessary • ED establishes description of inducement; clarifies term as being neutral • Use of RITP test in enhanced conceptual framework • ED clarifies general approach to dealing with inducements • Terms “trivial and inconsequential”, “immediate family” and “close family” not new terms

  5. Inducements – ED Key Features

  6. Inducements – Matter for CAG Consideration

  7. Applicability – Overview

  8. Applicability – Overview

  9. Applicability – ED Comment Overview • 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

  10. Applicability – Issues and TF Proposals Key issues raised by respondents:

  11. 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

  12. 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

  13. 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

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

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

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

  17. 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

  18. 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

  19. 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

  20. Issue 1 - Clarity and Scope of Requirement(Revised Requirement R120.4) Whenfacing dealingwith an ethical issue, a thePA shall consider the contextwithin in which the issue hasoccurred arisen or might arise. Where an individual who is a PAPP is performing professional activities pursuant to the accountant’s employment, contractor or ownership relationship with the firm, the individual shall comply with the there might be requirements and application material provisions in Part 2 that are also applicable tothose these circumstances. If so, the professional accountant in public practice shall comply with the relevant provisions

  21. 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

  22. 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

  23. Issue 4 – Structure Related Matters

  24. Applicability – Matters for CAG Consideration

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