Structure of the Code Don Thomson, Task Force Chair IESBA CAG Meeting New York, USA September 14, 2015

Background Enhance understandability and improve usability Structure of the Code Background Enhance understandability and improve usability Facilitate compliance and enforcement Facilitate adoption, effective implementation, consistent application Draft Restructured Code reflects Consultation Paper input and subsequent input from CAG and the Board, as well as National Standard-setters, Forum of Firms, SMP Committee Liaising with IAASB (re responsibility) and Safeguards TF

Structure of the Code Objectives To consider opportunities for further improvements to the Draft Restructured Code, focusing in particular on: The issues and task force proposals (see Agenda Item) Advance input received Highlights are reflected in the following slides

Issues and Task Force Proposals Structure of the Code Issues and Task Force Proposals A. Navigability Facilitating review of the Draft Restructured Code Reference to extant Code or identification as new material Preface – consistent with extant Code Guide to the Code Purpose of the Code, its structure and how to use the Code An appendix providing guidance on addressing ethical dilemmas Positioning the Code for further navigability enhancements

Issues and Task Force Proposals Structure of the Code Issues and Task Force Proposals B. Requirements and Application Material Reverting to the term “application material” Requirements distinguished with "R"; "shall" a requirement Importance of application material explained in the Guide C. Cross-References Reduced cross-references to the conceptual framework New reference to objectivity in C1 (independence)

Issues and Task Force Proposals Structure of the Code Issues and Task Force Proposals Revised wording re importance of application material "… context relevant to a proper understanding of the Code. In particular the application  material describes how a requirement is to be applied with reference to the conceptual framework and includes examples of relevant facts and circumstances. … The entire text of the Code, therefore, is relevant to understanding and proper application of the Code's requirements. …" (D-1, para 11 revised)

Issues and Task Force Proposals Structure of the Code Issues and Task Force Proposals D. Specific References to Network Firms Currently in "firm" except where otherwise stated Application of materiality/significance test E. Relocating Certain Material to Sub-sections Second opinions Documentation – general and cross-references to specific Location: in independence section v elsewhere

Issues and Task Force Proposals Structure of the Code Issues and Task Force Proposals F. Labelling and Terminology Labelling Parts Professional Accountants in Business May (permitted) and might (could occur) Glossary Including terms used (e.g. "audit" includes "review engagement") Clarity and translatability

Matters for Board Attention Structure of the Code Matters for Board Attention Task force has identified the following outside its scope: Conceptual framework - disclosure considerations Requirements with little or no application material Independence standards applicable to audits of line items Documentation requirements Definitions and descriptions e.g. alignment with ISAs, "employee", "materiality" and "significance"

Forward timeline (tentative) Structure of the Code Forward timeline (tentative) 2015 (October) – Forum of Firms – Draft ED 1 tranches I & II 2015 (December) – IESBA – Approve ED 1 tranches I & II Opportunity for pilot testing throughout 2016 2016 (June?) – IESBA – Approve ED 2 ED 2 timing may be impacted by various factors, including input received, status of other projects & timing of CAG discussion 2017 – Finalize and issue new Code 2018 – Code effective, launch electronic Code phase II