Part C – Section 320

1. Part C – Section 320 Jim Gaa, Task Force Chair and IESBA Member IESBA Meeting December 4-6, 2013 New York

2. Background • March 2013: Project Proposal approved by IESBA: - Issues: Pressure; Section 320; Inducements • June 2013: Application of Part C to PAPPs • September 2013: Pressure to engage in unethical or illegal acts • December 2013: Section 320

3. Conceptual Framework in Part C • Is the Conceptual Framework appropriate in Part C? • Use of safeguards in Section 370 (Pressure) questioned • TF view: • Complies with definition in 100.13 • Consistent with usage in part B • Conceptual framework does not fit easily into Part C but necessary to use it for the integrity of the Code • Calling safeguards “steps” just avoids the issue • TF proposal: Use of safeguards in Section 370

4. Section 320.1 • Changes proposed: • Non financial as well as financial information • Management as well as external information • Change “report” to “present”

5. Section 320.2: Preparing and presenting • Does the IESBA support the TF proposal to strengthen the requirement in 320.2 for management and external information? • “shall prepare or present information completely, fairly and honestly, without bias and in a manner that faithfully represents what the information purports to represent having regard to the purpose for which the information is to be used, the context in which it is provided and the audience to whom it is addressed”

6. Section 320.3 • Does the IESBA support the TF proposal to strengthen the requirement in 320.3 from “reasonable steps” to “shall”? • Requirement: “….shallrecord, maintain and present information” • More detailed description of the manner of recording and maintaining information

7. Section 320.4-6: Separating Standards • Extant Code combines standards applicable to management and external information • TF proposes to have separate standards: • Management information: “in accordance with the fundamental principles and are appropriate for their context” • Does separating the requirements clarify the Section? • Is the management information standard appropriate?

8. Section 320: Misleading information • States what a PAIB shall notdo • Includes unethical/misleading information but does not define it • Recognizes that reporting frameworks allow discretion which can still be misleading • Should the Code prohibit misleading financial statements which are compliant with the applicable financial reporting framework?

9. Section 320.9 Dissociation • Dissociation creates practical problems for PAIBs • TF suggests practical steps • Internally: through next higher level of authority • Externally, but without permission, is a breach of confidentiality. Suggest process be no more onerous than 360 • The IESBA is asked for comments on Dissociation

10. Section 320: Link to Section 370 (Pressure) • Paragraph 320.8 links closely with Sections 340, 360, 370 • IESBA drafting conventions avoid cross referencing • TF propose cross referencing Section 370 to avoid repetition, and to be more usable • The IESBA is asked to consider whether cross referencing other sections should be employed to avoid repetition and to make the Code more easily usable

11. Questions? • Comments or questions on the revised Section 320?