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International Federation of Accountants Code of Ethics for Professional Accountants Overview.

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Presentation on theme: "International Federation of Accountants Code of Ethics for Professional Accountants Overview."— Presentation transcript:

1 International Federation of Accountants Code of Ethics for Professional Accountants Overview

2 International Federation of Accountants Code of Ethics Part A – Framework applies to all professional accountants Part B – Professional accountants in public practice Part C – Professional accountants in business

3 Integrity –To be straight forward and honest in all professional and business relationships Objectivity –To not allow bias, conflict of interest or undue influence of others to override professional or business judgments Fundamental Principles

4 Professional Competence and Due Care –To maintain professional knowledge and skill at the level required to ensure competent professional services based on current developments in practice, legislation and techniques –To act diligently in accordance with applicable technical and professional standards Fundamental Principles

5 Confidentiality –To refrain from disclosing confidential information acquired as a result of professional and business relationships without proper and specific authority to disclose unless there is a legal or professional right or duty to disclose –To refrain from using confidential information acquired as a result of professional and business relationships for personal advantage or the advantage of third parties Fundamental Principles

6 Professional behavior –Obligation to comply with relevant laws and regulations and avoid any action that discredits the profession Fundamental Principles

7 Conceptual Framework Approach – Threats and Safeguards

8 Requires active consideration of issues Establishes basic principles Can be applied to differing circumstances Responsive to rapid change Requires judgment rather than literal interpretations encouraged by a pure rules approach Conceptual Framework Approach

9 Self-interest Self-review Advocacy Familiarity Intimidation Threats

10 Two categories: Created by the profession, legislation or regulation In the work environment Safeguards

11 When safeguards are never adequate Prohibitions

12 Professional Appointment Conflicts of Interest Second Opinions Fees and Other Types of Remuneration Marketing Professional Services Gifts and Hospitality Custody of Client Assets Objectivity – All Services Independence – Audit and Review Engagements Independence – Other Assurance Engagements Part B – Professional Accountants in Public Practice

13 Firm includes network firm, except where otherwise stated Independence of mind and independence in appearance Public interest entities: additional provisions in Section 290 that reflect the extent of public interest in certain entities Independence for Audit and Review Engagements

14 Documentation: conclusions regarding compliance with independence requirements, and substance of any relevant discussions that support those conclusions Independence for Audit and Review Engagements – cont’d

15 Financial interests Loans and guarantees Business relationships Family and personal relationships Employment with an audit client Temporary staff assignments Independence for Audit and Review Engagements – cont’d

16 Recent service with an audit client Serving as a director or officer of an audit client Long association of senior personnel (including partner rotation) with an audit client Independence for Audit and Review Engagements – cont’d

17 Provision of non-assurance services to audit clients –Management responsibilities –Preparing accounting records and financial statements –Valuation services –Taxation services –Internal audit services Independence for Audit and Review Engagements – cont’d

18 Provision of non-assurance services to audit clients –IT systems services –Litigation support services –Legal services –Recruiting services –Corporate finance services Independence for Audit and Review Engagements – cont’d

19 Fees Compensation and evaluation policies Actual or threatened litigation Reports that include a restriction on use or distribution Independence for Audit and Review Engagements – cont’d

20 Assurance engagements that are not audit or review engagements Include related entities when reason to believe relevant to independence Include network firms when reason to believe relevant to independence Independence for Other Assurance Engagements

21 Assertion-based assurance engagements –Independence required from assurance client (party responsible for the subject matter information, and which may be responsible for the subject matter) –When client not responsible for subject matter evaluate the threats firm has reason to believe created by interests and relationships with party responsible for subject matter Direct reporting engagements –Independence required from assurance client (party responsible for the subject matter) Independence for Other Assurance Engagements

22 Multiple responsible parties –Firm may take into account whether interest or relationship with a particular responsible party creates a threat. Consider: Materiality of subject matter information (or subject matter) for which the particular responsible party is responsible Degree of public interest associated with engagement Independence for Other Assurance Engagements

23 Potential conflicts Preparation and reporting of information Acting with sufficient expertise Financial interests Inducements Part C – Professional Accountants in Business

24 January 1, 2011 Transitional provisions –Public interest entities –Partner rotation –Non-assurance services –Fees – relative size –Compensation and evaluation policies Effective Date

25 International Federation of Accountants


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