1. Review of Part C Lisa Snyder, Task Force Member IESBA CAG Meeting
New York, USA
March 6, 2017

2. Part C - Project Status and Timeline
Project approved - March 2013
Project divided into 2 phases:
Phase 1: addresses Secs. 220 (Preparation & Presentation of Information) and 270 (Pressure)
Conforming changes to other Secs
Phase 2: addresses Sec. 250 (Inducements) and applicability of Part C to PAPPs

3. Part C - Project Status and Timeline
Phase 1:
Restructured text approved at December 2016 IESBA meeting and included in Structure ED-2
Phase 2 - Applicability to PAPPs:
Agreed Part C applicable to PAPPs and addition of “applicability paragraphs”
Exposed in separate ED in January Deadline for responses is April 25, 2017

4. Phase 2 – Sec. 250 - Inducements
June 2016 IESBA:
Proposed enhancements to Sec. 250
September 2016 IESBA:
Strawman
December 2016 IESBA:
First read of proposed text
March 2017 IESBA:
Second read with view to exposure

5. Phase 2 – Sec. 250 – Inducements: Approach
Bribery and Corruption
IESBA and CAG suggested should be covered
Task Force Response:
Bribery/corruption covered by legislation is addressed but not primary focus
Proposals require PAs to obtain an understanding of relevant laws and comply
Proposals principles-based. Primary focus on inducements not covered by laws/regulations
Will explain how it is addressed our proposal in a couple of slides

6. Phase 2 – Sec. 250 – Inducements: Approach
Bribery and Corruption
IESBA considered definition for bribery and corruption
Task Force Response:
Global definitions: Difficult to devise
Generic definition: Adverse precedent
Might imply Section 250 aimed at bribery and corruption
No single global definition to reference
Will explain how it is addressed our proposal in a couple of slides

7. IESBA concerns over term “inducements”
Phase 2 – Sec. 250 – Inducements: Use of “Inducements” and Title of Sec. 250
IESBA concerns over term “inducements”
Alternative - “Gifts and Hospitality” – narrows scope
Task Force Response:
Need collective term, hence keep “inducements”
Prefer “Gifts, Hospitality and other Inducements”
Add clarification: “inducements” influence behavior, but not necessarily with inappropriate intent
Will explain how it is addressed our proposal in a couple of slides

8. Phase 2 – Sec. 250 – Inducements: Use of “Inducements” and Title of Sec. 250
Representatives are asked for views on the Task Force’s proposals with respect to:
The use of “inducements” as a neutral term and the title of proposed Section 250.
Will explain how it is addressed our proposal in a couple of slides

9. Phase 2 – Sec. 250 – Inducements: Intent
Consider actual or perceived intent
Adverse intent: decline inducement
Factors to evaluate the intent
Factors same as evaluating level of threats
Will explain how it is addressed our proposal in a couple of slides

10. Phase 2 – Sec. 250 – Inducements: RITP
Reasonable and Informed Third Party test
December 2016: Alternative “anyone” test proposed
IESBA feedback: Maintain RITP test.
“Anyone” test not established.
Task Force Response:
“Anyone” test could forbid any inducements
Difficult to enforce
Revert back to RITP test
Will explain how it is addressed our proposal in a couple of slides

11. Phase 2 – Sec. 250 – Inducements: Intent and RITP
Representatives are asked for views on the Task Force’s proposals with respect to:
The provisions related to the intent test
The use of the RITP test to evaluate the intent behind an inducement
Will explain how it is addressed our proposal in a couple of slides

12. Phase 2 – Sec. 250 – Inducements: Trivial and Inconsequential
Adverse intent: must decline inducement even if trivial and inconsequential
No adverse intent:
Identify and evaluate threats
Unless inducement trivial and inconsequential, individually and in aggregate
Will explain how it is addressed our proposal in a couple of slides

13. Phase 2 – Sec. 250 – Inducements Immediate and Close Family Members
Inducements offered / accepted by family members
Might affect actual or perceived ability of PA to comply with fundamental principles
Code not enforceable to non-PAs
Extant requirement: PA must evaluate threats to fundamental principles
Will explain how it is addressed our proposal in a couple of slides

14. Phase 2 – Sec. 250 – Inducements Immediate and Close Family Members
Proposals: PA must:
Discuss threats with relevant family members
Advise not to offer/accept inducement if threats exist
Evaluate threats if offered/accepted, unless trivial and inconsequential
Use same factors if PA offered/received inducement directly
Additional factor: relationship between 3 parties
Refrain from making any business decisions with CP
Will explain how it is addressed our proposal in a couple of slides

15. Phase 2 – Sec. 250 – Inducements Immediate and Close Family Members
Representatives are asked for views on the Task Force’s proposals with respect to:
The provisions related to immediate and close family members.
Will explain how it is addressed our proposal in a couple of slides

16. Phase 2 – Sec. 250 – Inducements: Conforming Amendments
Sec. 340 – Prof. Accountants in Public Practice (PAPP)
Counterparty is client
Examples: Client / PAPP appropriate
Not applicable to audits, reviews and other assurance engagements
Sec. 420 and 906 (Independence guidance)
Applicable to audits, reviews and other assurance engagements
IESBA to consider conforming amendments in March 2017 meeting
Will explain how it is addressed our proposal in a couple of slides

17. Phase 2 – Sec. 250 – Inducements: Conforming Amendments
Representatives are asked for views on the approach to the proposed conforming amendments arising from the proposed revisions to extant Section 350.
Will explain how it is addressed our proposal in a couple of slides

18. The Way Forward
Second read with intention of obtaining approval: March IESBA meeting
Release ED: April 2017 with 90 day comment period
Finalize Phase 2: With restructured Code