2015 Edition of Code of Ethics for Professional Accountants

The IESBA has published the 2015 IESBA Handbook which contains the entire Code of Ethics for Professional Accountants. This handbook replaces the 2014 edition of the Handbook of the Code of Ethics for Professional Accountants.

The 2015 edition of the handbook contains the following changes to the Code addressing certain non-assurance services provisions for audit clients in Section 290 :

• The exception provisions (paragraphs 290.171 and 290.183) that permit an audit firm to provide certain bookkeeping and taxation services to public interest entity audit clients in emergency or other unusual situations have been withdrawn
• The provision addressing management responsibility have been strengthened, with additional guidance and clarification provided regarding what constitutes management responsibility
• The guidance regarding the concept of “routine or mechanical” services relating to the preparation of accounting records and financial statements for audit clients that are not public interest entities has been enhanced and clarified

Corresponding and conforming changes have been made to Section 291 of the Code with respect to assurance clients.

The changes will be effective on April 15, 2016, except for the changes to Section 290, which will be effective for audits of financial statements for periods commencing on or after April 15, 2016. Early adoption is permitted.

Click here to access the Code.

2014 Handbook of the Code of Ethics for Professional Accountants

On 17 July 2014, IESBA published the 2014 edition of the Handbook of the Code of Ethics for Professional Accountants. This handbook replaces the 2013 edition. It contains the following changes to the Code :

• Definition of “Those Charged with Governance”. The IESBA has revised the definition of the term “those charged with governance” to more closely align it with that in the International Auditing and Assurance Standards Board (IAASB)’s International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance. The IESBA also added a new paragraph 100.25 and made a change to paragraph 290.28 to clarify that a subgroup of those charged with governance of an entity, such as an audit committee, may assist the governing body in meeting its responsibilities. The revised definition of “those charged with governance” and related changes to the Code are effective on July 1, 2014. The changes were published on the IESBA website in September 2013.
• Conforming Changes to Part A of the Code Based on Newly Defined Term “Professional Activity”. Conforming changes have been made to paragraphs 100.5 (c), 100.9, 100.12 (b), 120.2, 130.1 (b), and 130.6 based on the newly defined term “professional activity” arising from changes to the Code addressing conflicts of interest, which the IESBA issued in March 2013.

The Code of Ethics for Professional Accountants contains three parts. PART A – GENERAL APPLICATION OF THE CODE, establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that professional accountants shall apply to :

1. Indentify threats to compliance with the fundamental principles;
2. Evaluate the significance of the threats identified; and
3. Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level.

A professional accountant shall use professional judgment in applying this conceptual framework.

PART B – PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE and PART C – PROFESSIONAL ACCOUNTANTS IN BUSINESS, these two parts of the Code describe how the conceptual framework applies in certain situations. They provide examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles. They also describe situations where safeguards are not available to address the threats, and consequently, the circumstance or relationship creating the threats shall be avoided.

Part B applies to professional accountants in public practice. While Part C applies to professional accountants in business. Professional accountants in public practice may also find Part C relevant to their particular circumstances.

The use of the world “shall” in this Code imposes a requirement on the professional accountant or firm to comply with the specific provision in which “shall” has been used. Compliance is required unless an exception is permitted by this Code.

The handbook is available at : IFAC webpage

2012 Handbook of the CODE of ETHICS for PROFESSIONAL ACCOUNTANTS

On July 31, 2012, the International Ethics Standards Board for Accountants (IESBA) of IFAC has issued the 2012 Handbook of the Code of Ethics for Professional Accountants (the Code).

The 2012 Handbook which effective since January 1, 2011 replaces the 2010 edition of the Handbook of the Code of Ethics for Professional Accountants. No changes of substance of the 2012 edition of the handbook from the previous version. However, editorial amendments have been made.

The issuance of the Code by IESBA is aimed for use by professional accountants around the world. As stated within the Section 100.1 of the Code :

A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest, a professional accountant shall observe and comply with the Code. If a professional accountant is prohibited from complying with certain parts of this Code by law or regulation, the professional accountant shall comply with all other parts of this Code.

The Code contains three parts. PART A establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that professional accountants shall apply to :

1. Identify threats to compliance with the fundamental principles;
2. Evaluate the significance of the threats identified; and
3. Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level. Safeguards are necessary when the professional accountant determines that the threats are not at a level at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances available to the professional accountant at that time, that compliance with the fundamental principles is not compromised.

A professional accountant shall use professional judgment in applying this conceptual framework.

PART B and C describe how the conceptual framework applies in certain situations. They provide examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles. They also describe situations where safeguards are not available to address the threats, and consequently, the circumstance or relationship creating the threats shall be avoided.

Part B applies to professional accountants in public practice. While Part C applies to professional accountants in business. Nevertheless, professional accountants in public practice may also find Part C relevant to their particular circumstances.

Download the Code from here : The 2012 Handbook of the Code of Ethics for Professional Accountants

Code of Ethics for Professional Accountants (revised July 2009)

On July 10, 2009, the International Ethics Standards Board for Accountants (IESBA) has issued a revised Code of Ethics for Professional Accountants (the Code), clarifying requirements for all professional accountants and significantly strengthening the independence requirements of auditors. The revised Code has been released following the consideration and approval by the Public Interest Oversight Board (PIOB) of due process and extensive public interest consultation.

"Strong and clear independence standards are vital to investor trust in financial reporting," emphasizes IESBA Chair Richard George. "The increase in trust and certainty that flow from familiarity with standards, including a common understanding of what it means to be independent when providing assurance services, will contribute immeasurably to a reduction in barriers to international capital flows."

The revised Code, which is effective on January 1, 2011, includes the following changes to strengthen independence requirements:

(a)  Extending the independence requirements for audits of listed entities to all public interest entities;

(b)  Requiring a cooling off period before certain members of the firm can join public interest audit clients in certain specified positions;

(c)  Extending partner rotation requirements to all key audit partners;

(d)  Strengthening some of the provisions related to the provision of non-assurance services to audit clients;

(e)  Requiring a pre- or post-issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years; 

(f)  Prohibiting key audit partners from being evaluated on or compensated for selling non-assurance services to their audit clients.

The revised Code maintains the principles-based approach supplemented by detailed requirements where necessary, resulting in a Code that is robust but also sufficiently flexible to address the wide-ranging circumstances encountered by professional accountants.

"This approach should also help to facilitate global convergence," points out Mr. George.

The International Federation of Accountants' Statements of Membership Obligations have as a central objective the convergence of a country's national code with the Code of Ethics for Professional Accountants. Further, the requirements specify that member bodies should not apply less stringent standards than those stated in the Code.

"It is especially critical that member bodies focus on the implementation of the revised Code as soon as possible," emphasizes Mr. George. "To help them in this process, the IESBA plans to provide them with some additional support and guidance in the coming months." 

Source of this article : IFAC.org

Download the Code of Ethics from here