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Structure of the Code

Explore recent developments, key principle discussions, and proposal structures from the July 2014 meeting. Review draft consultation papers, general principles, and safeguard responsibilities for professional accountants and firms. Discuss restructuring and responsibilities in the Code. Navigate through examples, impact analysis, and stakeholder input. Detailed timeline for restructuring and expected effectiveness of the Code in January 2018.

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Structure of the Code

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  1. Structure of the Code Don Thomson, Task Force Chair IESBA Meeting New York July 7-9, 2014

  2. Recent developments • Project proposal approved • Additional input received • National Standards-Setters • Forum of Firms and SMP Committee • Consultation Paper drafted, with examples • Matters arising from review noted for Board

  3. Topics for Discussion • Various matters brought to the Board's attention (Informing the Board; discuss in this segment of the meeting only to the extent relevant to the deliverables or timeline of this project) • Draft Consultation Paper – discuss structure and content • Illustrative examples (financial interests later) (In addition to input provided at the Board meeting, please provide any drafting suggestions to the TF afterwards; suggestions for financial interests are also welcome; line-by-line TF review at next TF meeting)

  4. General principles • Concordance (5-D) – where to; where from • No weakening – no requirements deleted • No change in the meaning of the standards • Unless appears warranted; Board agrees appropriate • Inform Board (5-A) – address now or in future • Unclear; gaps; inconsistencies; changes suggested; etc

  5. Safeguards & responsibility (5-A# B,C) • Some regulators have expressed concern • Substantive changes beyond scope of this project • A safeguards project may have pervasive impact • Consider project with sufficient work to assess timetable/alignment • Be mindful of the desire for timely restructuring • Firm policies & procedures to clarify responsibility • Further TF consideration; Consultation Paper will solicit input

  6. Other matters (5-A #D to G) • PA in PP includes firm – consider stating PA or firm • Issues re firms include definition, related firms, non-PAs in firms • Definition of firm in Code differs from IAASB definition • Firm and other definitions – within or outside scope? • Drafting conventions – will use to clarify scope of project • Separation of 290/291 – plan to retain separation

  7. Other matters (5-A #H) • Revised numbering system – more conducive to changes • 100 is Part A • 200 is Part B 200 to 280 • 300 is Part C • 400 is Independence – audit and review engagements (s.290) • 500 is Independence – other assurance engagements (s.291)

  8. Other matters (5-A #I) • “Professional accountant or firm” – a useful term? • Extant 290.14 "generally"– meaning? develop examples? • Revised 110.014 – apply to "PA" rather than "PA or firm"? • Revised 110.021 (extant 100.18) – move to intro? • Revised 400.001 – within scope? suggestions? • Revised 420.004b (extant 290.126) – meaning change?

  9. Consultation Paper • Introduction • Background • Restructuring • Responsibility • Clarity 6. Electronic features & Re-organization 7. Issues re examples 8. Examples 9. Impact Analysis

  10. Consultation Paper • Introduction • Purpose of the project: improve usability of the Code • Background • Basis for the proposals • Restructuring • Purpose / Requirements / Explanatory material

  11. Consultation Paper • Responsibility • Clarification; firm policies; no change in meaning • Clarity of language • Make Code easier to understand, where possible • Electronic Features and Re-organization • Improved navigability / filtering / linkages

  12. Consultation Paper • Issues related to examples • e.g. gaps; inconsistencies; changes contemplated in requirements / guidance; whether address now / later • Examples of restructured Code • From Part A, Part B, Part B (290), Part B (291) • Impact Analysis • Stakeholders asked to provide input

  13. CP – Illustrative Examples • Foreword will provide an overview • For all sections • Purpose, requirements, explanatory material • Clear language, defined terms identified • s.200 introduces networks and network firms • 400.13-.14 identify responsibility for firms

  14. Forward timeline (tentative) • Jun-Jul'15 – IESBA – draft ED • Sep'15 – CAG – draft ED • Oct'15 – IESBA – approve ED • Early 2017 – Finalize and issue a restructured Code • Jan'18 – Code effective • Sep'14 – CAG – draft CP • Oct'14 – IESBA – approve CP • Jan'15 – IESBA – continue review of restructured Code • Mar'15 – CAG – CP responses • Apr'15 – IESBA – CP responses

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

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