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Structure of the Code

Structure of the Code. Don Thomson, Working Group Chair IESBA Meeting Toronto, Canada April 7-9, 2014. Background. Prior years – Concerns expressed May-October 2013 – Research supports change December 2013 – Prelim. recommendations February 2014 – Additional IOSCO input

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Structure of the Code

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  1. Structure of the Code Don Thomson, Working Group Chair IESBA Meeting Toronto, Canada April 7-9, 2014

  2. Background • Prior years – Concerns expressed • May-October 2013 – Research supports change • December 2013 – Prelim. recommendations • February 2014 – Additional IOSCO input • March 2014 – Additional CAG input • April 2014 – Final report, project proposal

  3. Since December • Changes from preliminary report (details to follow) • Responsibility – "firm" in most cases • Clarity – inform the Board of inconsistencies etc • Reorganization – less prescriptive re s.290 • Electronic Code – some immediate action • Examples – more on Parts A and B; in process

  4. Distinguishing requirements (4-A # I) Recommendations: • Distinguish requirements from guidance • enhance understandability & enforceability • Confirm: conceptual framework is a requirement • Guidance adjacent to relevant requirements

  5. Clarifying responsibility (4-A # II) Recommendations: • Clarify audit firm's responsibility for independence except where clearly beyond firm’s control • Firms' policies & procedures shall enable identification of the individual responsible for independence in a particular circumstance • Include in project as no change to Code's meaning

  6. Clarity of language (4-A # III) Recommendations: • Increase clarity, using drafting conventions / editor • Aspirational reading grade – university level • Consider identified inconsistencies • e.g. Any issues re safeguards / documentation • Inform Board if warranted; may be out of scope

  7. Electronic Code (4-A # IV) Recommendations: • Immediate improvements • HTML, hyperlinks, navigation • More extensive electronic features • Coordinate with other restructuring

  8. Reorganization (4-A # V) Recommendations: • Coordinate changes with electronic Code • Raise the profile of the independence standards • e.g. International Standards on Independence • Distinguish the independence standards but clearly retain their integration in the Code

  9. Complementary Materials (4-A # VI) • Examples: • Short summaries, FAQs, case studies • Bases for conclusions Recommendations: • Address these after restructuring the Code • Work with others to develop materials

  10. Project Proposal (4-B and 4-F) • Proposal consistent with recommendations • Timing reflects importance and urgency • Consultation paper to test support for approach • Exposure Draft will be in process at same time • Aim for finalization of revised Code in 2016 • Does the Board approve the project proposal?

  11. Forward timeline (tentative) (4) • Apr'15 – IESBA – CP responses • Jul'15 – IESBA – draft ED • Sep'15 – CAG – draft ED • Oct'15 – IESBA – approve ED • 2016 – Finalize and issue a restructured Code • Jan'18 – Code effective • Jul'14 – IESBA – draft CP(input re sample restructuring) • Sep'14 – CAG – draft CP • Oct'14 – IESBA – approve CP • Jan'15 – IESBA – continue review of restructured Code • Mar'15 – CAG – CP responses

  12. Structure & drafting conventions (4-D) • Guidance for Task Forces / Board; it will evolve • Section structure • Purpose, with linkage to fundamental principles and conceptual framework • Requirements – shall; cross references • Application and other explanatory material

  13. Structure & drafting conventions (4-D) • Mandatory Drafting Conventions • Shall, consider, evaluate, determine etc. • Discretionary Drafting Conventions • Do use short sentences, active voice • Don’t use nuances that aren't clear, repeat definitions, use superfluous adjectives etc

  14. Structure & drafting examples (4-C) • Examples of portions of Parts A and B are presented as a restructuring work in progress – not a final proposal as further work is still required • Purpose / Requirements / Application material • Cross references • Principles / Framework closely linked to Part B

  15. Electronic Code (4-E) • Developing electronic features for the extant Code • HTML • Contents list with ability to jump to section • Drill down to individual paragraphs • Hyperlinks to defined terms • To be located on IESBA website – landing page

  16. Matters for IESBA Consideration Any Other Comments or Questions ?

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