Page 1 | Proprietary and Copyrighted Information Structure of the Code Don Thomson, Task Force Chair IESBA Meeting New York, USA November 30 – December 4, 2015

Page 2 | Proprietary and Copyrighted Information Review the draft restructured Code and approve the ED Approach: –Discuss the issues identified by the Task Force as significant Issues paper and advance input, with Task Force proposals –Discuss other matters identified by Board members Encourage wordsmithing off-line –Walk through revised text reflecting input received Meeting Objectives and Approach Structure of the Code

Page 3 | Proprietary and Copyrighted Information Enhanced understandability, improved usability Serving the public interest, responsive to stakeholders –Requirements distinguished from guidance –Increased prominence of principles and the conceptual framework –Increased clarity of responsibility IAASB ISQC 1 Task Force considering further clarification –Increased clarity of language, improving readability What the Restructuring Delivers Structure of the Code

Page 4 | Proprietary and Copyrighted Information New title to emphasize key features Guide to the Code More self-contained sections Careful to avoid inadvertent changes in meaning Careful to avoid any weakening of the Code Various matters outside scope noted for Board attention Structure of the Code Other Features of Restructuring

Page 5 | Proprietary and Copyrighted Information Preface: Refers to separate IFAC requirements Para.4, Appendix: Guide incorporated into the Code Para.4: PAIB description unchanged until Part C updated Para.12: Enhanced description of application material Para.14-16: Ethical dilemmas relocated from appendix –Advance input might lead to further revision Structure of the Code Preface and Guide – Revisions

Page 6 | Proprietary and Copyrighted Information Para.2-3: Reduce framework and independence detail Para.4: Don't use "audit" to include reviews Para.5, etc: Include "scope" in “introduction” Para.6: Don't limit compliance to professional activities Para.8: Delete reference to exceptions to compliance Para.11,14-15: Focus on consultation – dilemmas, etc Appendix 1: Add "independence standards" heading Structure of the Code Guide to the Code – Advance Input

Page 7 | Proprietary and Copyrighted Information Part A sets out fundamental principles and framework Code sets out requirements and application material that provide direction on applying the conceptual framework Independence is a measure of objectivity Linkage mentioned in 3 places –Guide, para.3 – Advance input might lead to reduction in detail –Part A, para.112.3A1 – Objectivity –Part C, para – Introduction to independence Structure of the Code Linking independence to the FPs

Page 8 | Proprietary and Copyrighted Information 100.2: Refer to professional ethics in the introduction R100.4: Not limited to a breach by the PA personally –Consistent with extant Code R100.4(d): Cross-reference other assurance independence R112.2: Undue influence might be misconstrued –Consistent with extant Code; discussed by Board in September R115.2: Marketing – in professional behavior vs. integrity Structure of the Code Part A – Advance Input

Page 9 | Proprietary and Copyrighted Information s.325: Second opinions now a separate section R310.7: Separate conflict identification from application of the conceptual framework R310.8: Clearly include changes in circumstances related to existing engagements in conflict identification R310.14: Avoid use of more than one negative R340.3: Extant Code focuses on acceptance of offers Structure of the Code Part C – Revisions and Advance Input

Page 10 | Proprietary and Copyrighted Information Use of PA and firm discussed in Drafting Guideline Flow reviewed and further-refined 400.4: Definition of a PIE moved back to body of Code 400.5: Responsibility paragraph restructured 401,etc: Network references reviewed for appropriateness s.402: Documentation – Might ultimately index using a tool s.410,411: Fees and compensation separated Structure of the Code C1 – Revisions

Page 11 | Proprietary and Copyrighted Information Move independence definition back to body of Code 400.1,etc: PA, not firm, to be responsible –Addressed early on in responsibility discussion –Further input received in response to Consultation Paper –400.5 references ISQC 1 –IAASB ISQC 1 Task Force considering responsibility within firm Structure of the Code C1 – Advance Input

Page 12 | Proprietary and Copyrighted Information Introduction: Move some back to application material : Introduction includes important topics –Include in introduction because of broad relevance R510.10: Breadth of scope questioned –Limited to individuals for whom interests otherwise not permitted R : Further refine Company Secretary wording –Considering "shall only serve as …"; delete reference to services Structure of the Code C1 - Advance Input (Continued)

Page 13 | Proprietary and Copyrighted Information Move "may" and "might" from Guide to Glossary Consider definition of "review engagement team" –"Review team" –"Engagement team" Structure of the Code Glossary – Advance Input

Page 14 | Proprietary and Copyrighted Information Proposed New Title –International Code of Ethics Standards for Professional Accountants Recognizes –Principles-based approach –Code’s specific requirements New Title Structure of the Code

Page 15 | Proprietary and Copyrighted Information 2015 (December) – IESBA – Approve ED 2016 (September) – IESBA – Approve ED (September) – IESBA – Approve final text Forward Timeline (Tentative) Structure of the Code

The Ethics Board