Review of Part C Helene Agélii, Task Force Chair IESBA Meeting New York, USA September 29, 2016 Changes made after initial session

Explanatory Paragraph R120.X - When facing an ethical issue, a professional accountant in public practice shall consider the context within which the issue has occurred. Where the accountant is performing professional activities pursuant to the accountant’s employment or ownership relationship with the firm, there might be provisions guidance in Part 2 that is are also applicable to those circumstances. If so, the accountant shall comply with the relevant provisions. Addition of “also” to address Sylvie’s concern that Part 2 is not considered instead of Part 3. Sylvie had concerns about placing paragraph in Section 120. Other changes are from Ken. Addition of “provisions” at the end of the sentence for consistency and also because Part 2 contains requirements with which PAIBs must comply (not just optional guidance).

Explanatory Paragraph 120.X A1 For example, where a professional accountant in public practice is placed under faced with pressure from an engagement partner to perform a task without sufficient skills or training accept a client’s questionable accounting treatment on a specific financial reporting issue in order to retain the client, or with unrealistic deadlines, the requirements and application material set out in Section 260 would might be relevant. Example deleted based on Atsu’s concern. Other possible examples listed in agenda paper considered as alternative. Ken’s suggestion during plenary and received off-line also considered. TF decided on option shown based on Ken’s suggestion. Changed “might” to “would” based on Ken’s suggestion.

Glossary Definition A professional accountant that is an employee, contractor, partner, director (executive or non-executive), owner- manager, trustee or volunteer operating working in areas such areas as commerce, industry, service, the public sector, education, or the not for profit sector, or in regulatory or professional bodies. “Trustee” added as per Ken’s point that trustee not covered. Definition has to be finite list; hence deleted “that”. “Agent” not added, despite Ken suggesting, as an agent would have to be contracted. Ken asked whether “owner-manager” covers self employed individual. No changes were made by TF. Added “or in” based on Ken’s suggestion as professional or regulatory bodies are not areas. Changed “operating” to “working”. Considered “practicing”, as per Liesbet’s suggestion, but considered this related to firms and PAPPs. Added back “commerce” and “service” based on Stavro’s concern over translatabiity of “industry”

A professional accountant’s concern over loss of employment security. Self Interest Threat A professional accountant inappropriately using personal use of corporate assets for personal use. A professional accountant’s concern over loss of employment security. A professional accountant accepting a gift or special treatment from a supplier of the employing organization. , unless the value is trivial and inconsequential. Part C TF reviewed examples on agenda paper 2-B in Section 300. Concluded that these did not seem overly neutral and hence was ok for examples in Part C to follow suit. Part C TF reviewed examples in agenda paper 2-B in Section 300. Professional accountant used several times here, hence happy to go along with this. Deleted 3rd bullet as TF agreed with Stefano and Kim that illegal, hence NOCLAR related, not a threat. Stefano and Kim both indicated that deletion of “inappropriately” would have been sufficient. Chishala’s view that there is always a concern relating to job security, hence clarified by adding “loss off” as concern is over loss of employment. Deleted “unless the value is trivial and inconsequential” as Kim suggested that a person assessing the threat would have already considered whether the gift was trivial and inconsequential before seeking guidance. Brian added that a small gift could be received multiple times, and hence become material in totality.

Advocacy Threat A professional accountant, in order to obtain favorable financing, manipulates includes in, or excludes critical information in from a prospectus in order to obtain favorable financing for the employing organization. Reyaz’s point that rarely does a situation arise where a PA will omit or include information. More than likely the PA will look to massage information. Part C TF considered various alternatives for “massage” and could only agree on “manipulate”. Added “in order to obtain favorable financing for the employing organization” – Liesbet’s point that the actions were for the benefit of the organization and not the PA.

Intimidation Threat An individual attempting to influence the decision making process of the professional accountant, for example with regard to the awarding of contracts or the application of an accounting principle. Added “of the professional accountant”. Part C TF considered that needed to elaborate who’s decision making process was being influenced.

Other Restructuring Changes Will be considered at Part C Task Force meeting in October 2016. Revert to Board in December Board meeting with additional changes.