Experience with Adopting the Code

1. Experience with Adopting the Code CA Canada – Gary Hannaford AICPA US – Lisa Snyder ICAEW – Tony Bromell

2. CA Canada • Code uses the threats and safeguards (“T&S”)approach more extensively throughout; Rules only use T&S when dealing with independence • Rules approach based on same five fundamental principles as Code, but specific requirements are “rules” in relation to all five principles instead of being framed in terms of T&S

3. CA Canada • Rules set out specifics of what “must” and what “cannot” be done - Explanatory language as to why something “must” or “cannot” be done is segregated in “Council Interpretations” (“CIs”) • CIs provide guidance on how Rule is applied; occasionally provide some “relief” from a Rule • Rules are what we enforce, so requirements are precise, not explanatory • Legal advice - combining precise requirement with interpretative language reduces strength of requirement

4. CA Canada • Rules contain some specific detailed provisions not included in Code - But Code T&S approach may create the same result without specifically detailing a requirement • Examples – borrowing from clients, co-operation on client succession, reporting criminal offences, fee quotations

5. CA Canada • Code is divided into 3 parts - general provisions, professional accountants in public practice, professional accountants in business • Rules divided into 5 parts - general provisions, conduct affecting public interest, conduct between members in public accounting, organization of a professional practice, and firms (as opposed to members/students)

6. CA Canada • Code applies to “professional accountants” • Rules apply to “members”, “students” and “firms” (where permitted by legislation)

7. CA Canada • Independence Update • Rules originally based (in 2003) on substance of Code for private enterprises and SEC for public interest entities • In adopting the recent changes to the independence provisions, regulators expressed concern that adopting Code would reduce rigour of existing SEC-based provisions for PIEs • Further complicated by process that requires approval of amendments by members in many individual Canadian jurisdictions

8. ICAEW approach to adopting IESBA code of ethics Use IESBA verbatim apart from • - Add-on sections (corporate finance, agencies and referrals, insolvency) • - Add-ons to existing sections • - Diversion of UK and Irish audits to APB material • - Spelling • - Links to other material

9. ICAEW add-ons to existing sections • A few additional definitions (mostly scope of coverage but including ‘shall’) • Additional discussion, largely from previous code (eg. the public interest, the fundamental principles, disclosure in the public interest, ethical conflict resolution) • Additional requirements (eg. contacting existing accountant, communicating fee basis in writing, ‘accounting’ for commissions) • Relevant legal commentaries (eg. qualified privilege, tipping off, fiduciary relationships)

10. ICAEW issues with potential reformatting? s290/291 • General issues with IESBA/ local requirement overlap • Specific reformatting? Other sections • General issues with any changes to IESBA code (own add-ons, process, links and website, publicity) • Bringing in others on joint projects • Specific reformatting?