Page 1 | Confidential and Proprietary Information Review of Part C Jim Gaa, Chair, Part C Task Force IESBA CAG Meeting New York, USA September 10, 2014

Page 2 | Confidential and Proprietary Information March 2013: Project Proposal approved by IESBA. Sept 2013: CAG reviews s. 370 March 2014: CAG reviews s. 320 July 2014: IESBA reviews s. 320 & s.370 October 2014: Exposure Draft scheduled January 2015: Begin Phase II (issues) Background

Page 3 | Confidential and Proprietary Information Greater emphasis on non statutory information. Intention is to maintain a strong requirement without being overly prescriptive. The overarching requirement is to present information in a fair and honest manner. And to provide guidance of meaning of fair and honest manner. Changes from extant Code

Page 4 | Confidential and Proprietary Information –No intention to mislead –Not omitting information –In accordance with an applicable reporting framework, and –Taking reasonable steps to: Represent facts accurately and completely, Describe clearly the true nature of activities, Classify and record information in a timely and proper manner Meaning of fair and honest manner

Page 5 | Confidential and Proprietary Information Board supported enhanced guidance on misuse of discretion but not too detailed, including a few examples. Proposed categories : –Determining estimates –Selecting a particular accounting method –Determining the timing of transactions –Determining the structuring transactions –Determining disclosures Misuse of discretion

Page 6 | Confidential and Proprietary Information Pressure now addressed in s.370. Guidance on presenting non statutory information added. Guidance on steps to resolve the matter if PAIB is associated with misleading information added. Guidance on how to disassociate if information is still misleading added. Changes from extant Code

Page 7 | Confidential and Proprietary Information Do representatives agree the five categories of misuse of discretion and related examples (320.3) provide useful guidance to PAIBs? Do representatives agree that the proposed approach to materiality and to the guidance relating to disassociation (paragraphs ) is appropriate and helpful? Do representatives agree that materiality is implicit within the term “misleading”? Is the degree of prescription in the proposed revised Section 320 appropriate? Section 320: Matters for Consideration

Page 8 | Confidential and Proprietary Information Users requested more guidance on Pressure. Section addresses pressure that could create threats to compliance with the fundamental principles. Two requirements: –PAIB shall not allow pressure to result in breach of fundamental principles. –PAIB shall not place pressure on others. New Section on Pressure

Page 9 | Confidential and Proprietary Information provides factors a PAIB may consider in determining whether pressure could lead to a breach provides actions a PAIB may consider if PAIB determines the pressure could lead to a breach. The factors and actions may overlap, e.g. constructive challenge. Board proposes a requirement to decline or discontinue activity, when pressure cannot be alleviated. Pressure: Practical Guidance

Page 10 | Confidential and Proprietary Information Diversity of views on Board on whether or not to use language of threats and safeguards in s.370. TF considered merits of both views. Large majority of Board agreed not to use language of threats and safeguards in s370. Pressure: Language of threats and safeguards

Page 11 | Confidential and Proprietary Information Do representatives agree with the Board’s approach to drafting S.370 emphasizing clear guidance rather than in terms of threats and safeguards? Are the actions a PAIB may consider when faced with pressure appropriate? Are there any other actions a PAIB could take? Pressure: Matters for Consideration

Page 12 | Confidential and Proprietary Information Section 350 focuses on receiving offers. –TF plans to provide additional guidance when encountering the making of offers. Without creating a “movable bar”, do Representatives have views about recognizing cultural diversity? –E.g., what is a gift and what does a gift imply or suggest? Do Representatives know of useful sources of information or policy about Inducements? Phase 2: Inducements

The Ethics Board