overview of the code

• Confidentiality– To refrain from disclosing confidential information acquired as a result of professional and business relationships without proper and specific authority to disclos

International Federation of Accountants

Code of Ethics for Professional Accountants

Overview

International Federation of Accountants

• Integrity

– To be straight forward and honest in all

professional and business relationships

• Objectivity

– To not allow bias, conflict of interest or undue

influence of others to override professional or business judgments

Fundamental Principles

• Professional Competence and Due Care

– To maintain professional knowledge and skill at

the level required to ensure competent

professional services based on current

developments in practice, legislation and

techniques

– To act diligently in accordance with applicable technical and professional standards

Fundamental Principles

• Confidentiality

– To refrain from disclosing confidential information

acquired as a result of professional and business

relationships without proper and specific authority to

disclose unless there is a legal or professional right or

duty to disclose

– To refrain from using confidential information

acquired as a result of professional and business

relationships for personal advantage or the advantage

of third parties

Fundamental Principles

• Professional behavior

– Obligation to comply with relevant laws and

regulations and avoid any action that discredits the profession

Fundamental Principles

Conceptual Framework Approach – Threats and Safeguards

• Requires active consideration of issues

• Establishes basic principles

• Can be applied to differing circumstances

• Responsive to rapid change

• Requires judgment rather than literal

interpretations encouraged by a pure rules approach

Conceptual Framework Approach

When safeguards are never adequate Prohibitions

• Professional Appointment

• Conflicts of Interest

• Second Opinions

• Fees and Other Types of Remuneration

• Marketing Professional Services

• Gifts and Hospitality

• Custody of Client Assets

• Objectivity – All Services

• Independence – Audit and Review Engagements

• Independence – Other Assurance Engagements

Part B – Professional Accountants in Public Practice

• Firm includes network firm, except where

otherwise stated

• Independence of mind and independence in

appearance

• Public interest entities: additional provisions in

Section 290 that reflect the extent of public

interest in certain entities

Independence for Audit and Review Engagements

• Documentation: conclusions regarding

compliance with independence requirements, and substance of any relevant discussions that support those conclusions

Independence for Audit and Review Engagements – cont’d

• Financial interests

• Loans and guarantees

• Business relationships

• Family and personal relationships

• Employment with an audit client

• Temporary staff assignments

Independence for Audit and Review Engagements – cont’d

• Recent service with an audit client

• Serving as a director or officer of an audit client

• Long association of senior personnel (including

partner rotation) with an audit client

Independence for Audit and Review Engagements – cont’d

• Provision of non-assurance services to audit

– Internal audit services

Independence for Audit and Review Engagements – cont’d

• Provision of non-assurance services to audit

– Corporate finance services

Independence for Audit and Review Engagements – cont’d

• Fees

• Compensation and evaluation policies

• Actual or threatened litigation

• Reports that include a restriction on use or

distribution

Independence for Audit and Review Engagements – cont’d

• Assurance engagements that are not audit or

• Assertion-based assurance engagements

– Independence required from assurance client (party responsible for

the subject matter information, and which may be responsible for the subject matter)

– When client not responsible for subject matter evaluate the threats

firm has reason to believe created by interests and relationships with party responsible for subject matter

• Direct reporting engagements

– Independence required from assurance client (party responsible for

the subject matter)

Independence for Other Assurance Engagements

• Multiple responsible parties

– Firm may take into account whether interest or

relationship with a particular responsible party creates a threat Consider:

• Materiality of subject matter information (or subject matter) for

which the particular responsible party is responsible

• Degree of public interest associated with engagement

Independence for Other Assurance Engagements

• Potential conflicts

• Preparation and reporting of information

• Acting with sufficient expertise

• Financial interests

• Inducements

Part C – Professional Accountants in Business

– Fees – relative size

– Compensation and evaluation policies

Effective Date

International Federation of

Accountants

www.ifac.org