1. Structure of the Code Phase 1
Don Thomson, Task Force Chair
IESBA Meeting
New York, USA
December 12-16, 2015

2. Key Features of the Restructuring
Structure of the Code
Key Features of the Restructuring
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

3. Other Features of Restructuring
Structure of the Code
Other Features of Restructuring
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

4. Structure of the Code Phases 1 and 2 – Agenda Items 3 and 3-A
Project Status
September 2016, general support and input from Board and CAG
Outreach - SMPC, Forum of Firms and IFIAR
Reflected on Board and CAG and other input; refined proposals
Drafting guidelines revised, oversight and support to other TFs
Presenting Phase 1 revisions today; Phase 2 tomorrow
Staff-prepared compilation Agenda Item 3-F facilitated consistency review – changes reflected as necessary in text
Final documents include Staff-prepared mapping to assist review

5. Meeting Objectives and Approach
Structure of the Code Phases 1 and 2 – Agenda Item 3
Meeting Objectives and Approach
Review and obtain input on the draft restructured Code
Discuss highlights of proposed changes since September set out in 3-B
Discuss highlights of proposed changes arising from advance input
Opportunity for IESBA members to raise any other significant matters
“Wordsmithing” suggestions welcome off-line
Further proposals to be discussed on Thursday
Advance input considered by Task Force on Sunday
Updated draft text and additional particulars of input received will be available on Wednesday

6. Conforming Amendments and Consistency
Structure of the Code Phase 1 – Agenda Item 3-A
Conforming Amendments and Consistency
NOCLAR and Safeguards conforming amendments in text
Consistency review - editorial changes
Compliance with Drafting Guidelines
For example, completeness and consistency of headings
Consistency between Task Forces
For example, between Sections 310 and 210

7. Preface, Guide and Tables of Contents
Structure of the Code Phase 1 – Agenda Item 3-B
Preface, Guide and Tables of Contents
Preface, Change to active voice from consistency review
Paragraph 6, deleted reference to firms to clarify text
Paragraph 10, adjusted language to simplify wording
Paragraph 11, “may” and “might” added in Guide and Glossary to clarify their particular use in the Code denoting possibility and permission respectively
Table of contents paragraph number change; illustrated for Parts in Staff-prepared compilation

8. Preface, Guide and Tables of Contents
Structure of the Code Phase 1 – Agenda Item 3-B
Preface, Guide and Tables of Contents
Advance Feedback
Para. 4, Part 2 – add “performing professional activities”
Para. 4, Glossary – change to “used throughout the Code”
Para. 6 – restore deleted sentence without parentheses
Para. 8 – change to “of which the subsection forms a part”
Para.12 – delete “as noted in paragraph 100.2”

9. Part 1 – Sections 100 to 120 Part 3 – Sections 300 to 350
Agenda Item 3-B
Part 1 – Sections 100 to 120 Part 3 – Sections 300 to 350
Part 1
100.3 A2, clarified whose belief re disproportionate outcome
112.2 A1, reference to familiarity removed as threats are first addressed in Section 120
Part 3
Changes in this Part are those which have occurred throughout the Code from the consistency review, NOCLAR and Safeguards

10. Part 1 – Sections 100 to 120 Part 3 – Sections 300 to 350
Agenda Item 3-B
Part 1 – Sections 100 to 120 Part 3 – Sections 300 to 350
Advance Feedback
Part 1
112.2 A1 – delete premature reference to threats
Part 3
320.3 – delete “changes in”
R320.5 and A1 – relocate continuance consideration

11. Structure of the Code Phase 1 - Agenda Item 3-B
Part 4A – Paragraphs 400 to 430
400.4, used a footnote to set out the complete name for ISQC 1, improving readability
400.10, removed reference to “line items,” now addressed in Section 900.1
R400.52, refined changes to network firm restructuring
A1, change highlighting that if a firm’s objectivity is compromised it will be unable to continue as auditor

12. Structure of the Code Phase 1 - Agenda Item 3-B
Part 4A – Paragraphs 400 to 430
Advance Feedback
A1, etc., – change “members of” to “… members”
A1 – delete duplicate of compromised objectivity
R – change “set out in” to “identified”
400.80(e)(ii) – change “might be possible” to “is possible”
A2 – delete duplicate lead in, “when a …”

13. Structure of the Code Phase 1 – Agenda Item 3-B
Part 4A – Paragraphs 510 to 525
511.6 A1, deleted repetitive text
520.4 A1, and (c)(ii), further clarified the application of materiality or significance test to network firms
R524.8, adjusted the wording to better express the meaning of the paragraph

14. Structure of the Code Phase 1 – Agenda Item 3-B
Part 4A – Paragraphs 510 to 525
Advance Feedback
510.7 A1, etc. – change “members of” to “… members”
511.6 A1 – change “home mortgages” to “mortgages”
R511.8, etc. – change “respectively” to “as applicable”
520.4 A1 – delete “such a relationship is significant”
R520.6, etc. – revise insignificant network firms wording
R521.9 – delete “network firm” from title

15. Structure of the Code Phase 1 – Agenda Item 3-B
Glossary
New definitions
May and might in Guide and Glossary
Predecessor accountant (NOCLAR)
Proposed accountant (NOCLAR)
PAIB definition adjusted (Part C); RITP adjusted (Safeguards)
Described terms
Cooling-off – added
Materiality deleted, matter for Board attention

16. Structure of the Code Phase 1 – Agenda Item 3-B
Glossary
Advance Feedback
“Cooling-off” – add “period”
“Eligible audit engagement” add description

17. Highlights of changes from ED 1 and Basis for Agreement-in-Principle
Unintended changes of meaning
Network firm, necessary adjustments made
Guide to the Code
No longer part of the Code; Some material moved back to the Code
Prominence of the fundamental principles and need to be independent highlighted
Linkage between independence and objectivity clarified
Generally necessary retained in Sections 310 and 210

18. Other Significant Matters
Structure of the Code Phase 1 – Agenda Item 3-B
Other Significant Matters
Do IESBA Members wish to raise any other significant matters that have not already been discussed?
Preface and Guide
Part 1
Part 3
Part 4A
The Task Force welcomes “wordsmithing” input off-line

19. Agenda Item 3-A
Next Steps
Proposed ED-2 with complete restructured Code, including agreement-in-principle on Phase 1
Early consideration of implementation issues encouraged
Important for users of the Code to consider these issues
CAG emphasized the importance of IESBA also considering issues
Matters for Board attention – input on out of scope matters
Electronic enhancements further work in 2017 and tools – once Code is final

20. Forward Timeline (Tentative)
Structure of the Code Phases 1 and 2
Forward Timeline (Tentative)
DECEMBER 16
JUNE 2017
SEPT 2017
DEC 2017
Structure Phase 1
Agree-in-principle
Approve Final
Structure Phase 2
Approve ED 2
Update
Full review
Safeguards Phase 1
Safeguards Phase 2
First-read
LA/NOCLAR/ Part C
Phase 1
Approve ED
restructured text

21. Structure of the Code Phase 2
Don Thomson, Task Force Chair
IESBA Meeting
New York, USA
December 13, 2016

22. Structure of the Code Phase 2 – Agenda Items 3-A and 3-H
Phase 2 Status
Staff-prepared compilation facilitated consistency review
Phase 2 consistent with Phase 1
3-D includes TF’s revised proposals – reflects ED-2 “Chapters”
Section 800 and Part 4-B reflect the Drafting Guidelines and include Safeguards conforming amendments (gray text)
The Task Force welcomes “wordsmithing” input off-line
Final consideration of Phases 1 and 2 on Thursday

23. Structure of the Code Phase 2 – Agenda Item 3-D
Part of Part 4-A Section 800
Introductory text reordered to conform to drafting conventions
R – text modified from “prepares” to “performs” an eligible audit engagement

24. Structure of the Code Phase 2 – Agenda Item 3-D
Part of Part 4-A Section 800
Advance Feedback
R800.8 – delete the first “interests and relationships”

25. Structure of the Code Phase 2 – Agenda Item 3-D
Part 4-B
Introductory text reordered to conform to drafting conventions
900.1 – added a second example
910.4 A1 – reinstated reference to “directly” and “indirectly” (also paragraph A1)

26. Structure of the Code Phase 2 – Agenda Item 3-D
Part 4-B
Advance Feedback
900.1 – change second example to performance assurance
900.13, etc. – remove references to unused section numbers
R900.17, line 1 – change “any threat” to “a threat”
R – delete “as appropriate”
907.2 – add reference to types of threats
R911.5, etc. – change “respectively” to “as applicable”

27. Other Significant Matters and Explanatory Memorandum
Structure of the Code Phase 2 – Agenda Item 3-D
Other Significant Matters and Explanatory Memorandum
Do IESBA Members wish to raise any other significant matters that have not already been discussed?
Section 800
Part 4B
Explanatory Memorandum