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Page 1 | Confidential and Proprietary Information Responding to Non-Compliance with Laws and Regulations Robert Franchini IESBA Meeting December 2013.

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Presentation on theme: "Page 1 | Confidential and Proprietary Information Responding to Non-Compliance with Laws and Regulations Robert Franchini IESBA Meeting December 2013."— Presentation transcript:

1 Page 1 | Confidential and Proprietary Information Responding to Non-Compliance with Laws and Regulations Robert Franchini IESBA Meeting December 2013

2 Page 2 | Confidential and Proprietary Information Proposed changes to section 225 from “straw-man” discussed in Sydney: Removed “rebuttable presumption” Comply with any regulatory provisions (225.19) Refer to “reporting” rather than “disclosing” to an appropriate authority Replaced “permitted to override” with “would not be a breach of the duty of confidentiality” Re-positioned the consideration of existence of whistle-blowing protection Responding to Non-Compliance with Laws and Regulations Disclosure to an appropriate authority

3 Page 3 | Confidential and Proprietary Information Matters to consider: Should we retain a specific reference to the public interest threshold as a factor in determining whether to report rather than simply the degree of gravity of the matter Is existence of whistle-blowing protection appropriate as a factor to consider in determining whether to report Responding to Non-Compliance with Laws and Regulations Disclosure to an appropriate authority

4 Page 4 | Confidential and Proprietary Information PA should seek to gain an understanding of a matter where the matter is other than clearly inconsequential (225.5) The PA shall evaluate the response of the client, management and TCWG when the matter could have “significant consequences for the client or others” Responding to Non-Compliance with Laws and Regulations Materiality filter

5 Page 5 | Confidential and Proprietary Information Under existing Code there is no requirement for successor auditors to communicate with a predecessor auditor Mandating communication may act as a deterrent to the commission of acts of non-compliance The TF proposes: –Successor auditor shall request the existing auditor if there any facts or circumstances that the PA needs to be aware of before deciding whether to accept appointment –If client fails to give consent for the predecessor to communicate the predecessor shall communicate this fact to the successor –The successor should carefully consider the reason for such failure to provide consent Responding to Non-Compliance with Laws and Regulations Successor and predecessor auditors

6 Page 6 | Confidential and Proprietary Information Proposed changes from “straw-man” discussed in Sydney: Removed requirement to document why rebuttable presumption does not apply Documentation should be prepared in careful and thoughtful manner and with appropriate diligence as may be subject to legal discovery Responding to Non-Compliance with Laws and Regulations Documentation

7 Page 7 | Confidential and Proprietary Information Conforming changes to section 225 More guidance and less emphasis on requirements Replaced the public interest as threshold for being overriding duty of confidentiality with consideration of the gravity of the matter Responding to Non-Compliance with Laws and Regulations Professional accountants in business

8 The Ethics Board


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