Page 1 | Proprietary and Copyrighted Information Safeguards Gary Hannaford, Task Force Chair IESBA Meeting New York, USA April , 2015
Page 2 | Proprietary and Copyrighted Information To review the clarity, appropriateness and effectiveness of safeguards in Sections 100 and 200 and those safeguards that pertain to NAS in Section 290 of the Code Re-cap – Key Project Objective
Page 3 | Proprietary and Copyrighted Information Project proposal approved January 2015 Improve existing requirements and guidance Not a complete overhaul of NAS Consider approaches in other jurisdictions Project Background
Page 4 | Proprietary and Copyrighted Information Stimulates consideration of ethical conduct Structure CP respondents strongly support Remains appropriate Accommodates: –Different countries –Different sizes and structures of firms Principles-Based Approach
Page 5 | Proprietary and Copyrighted Information Preliminary Issues
Page 6 | Proprietary and Copyrighted Information Clarify application in s.200 Strengthen links from s.200 to s.100 Further explain differences in application to public interest vs. other entities Consider additional threats that may exist Conceptual Framework - General
Page 7 | Proprietary and Copyrighted Information Materiality used throughout Different meaning in different parts Existing guidance for financial interests, loans and guarantees and business relationships Staff Q&A includes guidance for NAS Consider improving guidance for NAS Materiality
Page 8 | Proprietary and Copyrighted Information Fundamental to assessing “acceptable level” Intended as an objective test Some lack of understanding Benefit from further guidance/explanation Reasonable & Informed Third Party - Matters
Page 9 | Proprietary and Copyrighted Information Initial example characteristics –Independent person –Apply reason –Take advantage of available information –Not limited to other professional accountants Reasonable & Informed Third Party - Response
Page 10 | Proprietary and Copyrighted Information Describe not define Intended to be effective Description could be improved Safeguards - Description
Page 11 | Proprietary and Copyrighted Information –Safeguards are actions or other measures that are appropriate to eliminate threats or reduce them to an acceptable level –Safeguards are actions or other measures that will reasonably eliminate threats or reduce them to an acceptable level –Safeguards are actions or other measures that are designed to eliminate threats or reduce them to an acceptable level Safeguards – Description - Suggestions
Page 12 | Proprietary and Copyrighted Information Continuous process Reassess threats after safeguards applied to determine effectiveness Combination of actions may be necessary Consider clarifying conceptual framework Safeguards – Evaluating effectiveness
Page 13 | Proprietary and Copyrighted Information S.200 lists firm-wide and engagement-specific safeguards Firm-wide safeguards important to ensure effective engagement-specific safeguards Engagement-specific safeguards at a firm-wide level IAASB liaison Safeguards – Firm-wide
Page 14 | Proprietary and Copyrighted Information Consider current requirements and guidance specific to NAS Safeguards – NAS
Page 15 | Proprietary and Copyrighted Information Regular communication between firm and TCWG encouraged Not a safeguard –Consider when evaluating threats –May indicate reasonable and informed third party view Some jurisdictions require specific communication Those Charged With Governance - Matters
Page 16 | Proprietary and Copyrighted Information Maintain current approach or require –Concurrence of TCWG –Pre-approval by TCWG or –Minimum levels of disclosure to TCWG No mandate over TCWG Those Charged With Governance - Response
Page 17 | Proprietary and Copyrighted Information Outside project scope Important issue Further guidance may benefit existing requirements IAASB liaison Documentation
Page 18 | Proprietary and Copyrighted Information Conceptual framework is flexible Consider further examples and guidance SMP Considerations
Page 19 | Proprietary and Copyrighted Information Coordination with Structure Project
Page 20 | Proprietary and Copyrighted Information December 2015 ED approval Separate ED concurrent with Structure Options for presenting changes –Expose in format and language of draft restructured code with table to show extant code with detailed explanations of changes –Expose in structure of extant Code and in format and language of draft restructured code Decision deferred Coordination with Structure Project
Page 21 | Proprietary and Copyrighted Information Next Steps TimingAction AprilForum of Firms reactions to preliminary issues MayDiscussion with NSS JulyConsideration of further issues and task force proposals by IESBA SeptCAG – Reactions to draft proposed changes IESBA – First read ED DecApprove ED
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