Presentation on theme: "Page 1 Part C - Pressure Jim Gaa, Task Force Chair and IESBA Member IESBA Meeting September 16-18, 2013 Sydney."— Presentation transcript:
Page 1 Part C - Pressure Jim Gaa, Task Force Chair and IESBA Member IESBA Meeting September 16-18, 2013 Sydney
Page 2 March 2013: Project Proposal approved by IESBA: - Issues: Pressure; Faithful Representation; Inducements June 2013: IESBA considered application of Part C to PAPPs September 2013: TF proposes straw man on Pressure to engage in unethical or illegal acts Background
Page 3 Should Pressure be addressed as a new Section 3x0 in addition to Section 340, rather than replacing it? Section 3x0 –Directly addresses primary concern of PAIBs (in surveys done by working group) – pressure from others –Provides general guidance on pressure to support PAIBs –Provides additional guidance to support 310, 320, 330, 340, 350 –Retains specific guidance in 340 Self-interest threats in financial reporting New Section addressing Pressure
Page 4 Address “unethical and illegal activities” rather than “undue or inappropriate pressure” “Undue influence” occurs in the Code – (Objectivity) –“Undue” and “influence” appear subjective and imprecise. The issue revealed in the surveys was pressure. Pressure is not unethical per se. A PAIB needs to evaluate the threat that may lead to unethical and illegal activities. Type of Activities vs. Type of Pressure
Page 5 Whether an activity is illegal is a matter for legal determination by a court of law. (SIA June 2013) An unethical activity is one that breaches any of the fundamental principles contained in Part A of the Code or the interpretative guidance contained in Part C. The PAIB shall not yield to pressure to engage in activities that the professional accountant knows or has reason to believe are unethical or illegal. Description of unethical and illegal activities
Page 6 Consideration of the effect that the culture of the organization, or subset thereof, the industry and the country may have on ethical norms may assist the professional accountant when evaluating such threats. The culture of some organizations may slowly erode the professional accountant’s awareness of unethical activities. Recognition of diversity of ethical norms?
Page 7 1.Description of pressure and linkage to fundamental principle(s) 2.Examples of pressure 3.Identification of threats to compliance 4.Evaluation of threats 5.Application of safeguards Straw Man: New Section 3x0
Page 8 Q1. Support for an additional Section 3x0 Q2. Unethical or illegal activities may be connected to pressure. They are not an either/or choice Q3. Amend descriptions. Illegal to SIA. Narrow unethical Q4. Alerting PAIB to high risk environments is understood but need to avoid different standards in different cultures September CAG input included:
Page 9 Comments or questions on the straw man Section 3x0? Questions?