Part C Helene Aglii Chair Part C Task

Part C Helene Agélii, Chair Part C Task Force IESBA Meeting March 15, 2016 New York Page 1 | Proprietary and Copyrighted Information

Short Recap Ø Phase 1 of the project: • Focus on Sections 320 and 370 • Conforming changes in Sections 300, 310, 330 and 340 • Board approval of close-off document for Phase 1 at the November/December 2015 meeting Page 2 | Proprietary and Copyrighted Information

Short Recap Ø Restructuring text of Part C Phase 1 into new format Ø Phase 2: • The applicability of Part C to PAPPs • Section 350/Section 260 Page 3 | Proprietary and Copyrighted Information

Timeline • March 2016: First read of restructured Phase I • June 2016: IESBA to approve close-off Phase I document – Recommendations to Board re. applicability of Part C to PAPPs • Sept 2016: First read of Section 350/260 ED • Dec 2016: Approve Section 350/260 ED Page 4 | Proprietary and Copyrighted Information

Restructuring Phase 1 - Process • Part C final pronouncements amended based on the drafting guidelines • Guidance in extant Part B & Part C same/similar: – Followed Structure ED – Liaised with Structure Task Force to obtain feedback Page 5 | Proprietary and Copyrighted Information

Restructuring Phase 1 – General Changes • May/Might – highlighted in yellow • Threats and safeguards paragraphs: – Shaded in gray and potentially subject to further revisions – Safeguards-specific revisions will form part of the second Safeguards ED • Explanations of key changes in Agenda Item 5 -B Comments column Page 6 | Proprietary and Copyrighted Information

Restructuring Phase 1 – Specific Changes • Question 1 (p. 1): Footnote of definition of a PAIB – repeating definition of a PAIB • Question 2 (p. 17): Application placed before requirement • Question 3 (p. 24): No reference to CF as no mention of threats and safeguards in the section • Question 4 (p. 26): Removal of “who are responsible” – scope increased? Page 7 | Proprietary and Copyrighted Information

Restructuring Phase 1 – Specific Changes • Question 5 (p. 26): Guidance in bullet points – Include as requirement or separate application paragraph? • Question 6 (p. 28): Restructuring of extant 320. 3 – Create new requirement paragraph? • Question 7 (p. 46): No reference to CF as no mention of threats and safeguards in the Section Page 8 | Proprietary and Copyrighted Information

• General comments from the Board Page 9 | Proprietary and Copyrighted Information

Phase 2 – Applicability of Part C to PAPPs • Extant 200. 1 / 300. 1: - Two distinct parts of the Code, each focusing on a specific category of PAs and ethical issues related to that specific category of PA • Extant 100. 3 / 100. 12: – Indicate Part C is applicable to PAPPs Page 10 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Part C addresses internal and external situations for PAIBs • Part B addresses issues between PAPPs and their clients • Appears PAPPs might find Part C relevant. Otherwise could imply higher standard on PAIBs than on PAPPs Page 11 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Application of Part C to all accountants – Conflicts of Interest – Pressure – Inducements • Conclusion – Part C applicable to PAPPs at least in certain situations Page 12 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Option I: Duplicate applicable guidance in Part B: • Pro: No doubt which paragraphs applicable to PAPPs • Con: Requires time and resources to determine: – Which guidance is relevant – To which Section of Part B, if any, it corresponds to Page 13 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Option II: Amend/Clarify Definition of PAIB: • Pro: Requires minimal time and resources • Con: Blurs distinction between a PAPP and a PAIB Page 14 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Option III: Holistic Approach to the Code – change approach from a categorized perspective to a holistic one • Consider context of ethical issue and then consult relevant guidance, irrespective of which part of the Code that this falls within Page 15 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Holistic approach to the Code is the Task Force’s preference as it: – Ensures PAPPs consider guidance within Part C whenever necessary – Does not involve excessive amount of time and resources to implement – Not create an unwieldy Code due to the duplication of guidance Page 16 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • Add introductory paragraph: Where a professional accountant in public practice is performing professional activities pursuant to the accountant’s employment or ownership relationship with the employing organization, for example a firm, there might be guidance in Part C that is applicable to those circumstances. If so, the accountant shall consult those provisions and comply with them. Page 17 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • IESBA members are asked for their views about whether guidance in Part C, in certain circumstances, should be applicable to PAPPs Page 18 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs • If IESBA members feel that certain provisions in Part C should be applicable to PAPPs, do IESBA members agree with the Task Force’s planned approach for moving forward? • If not, why? Is there an alternate approach that the Task Force should consider? Page 19 | Proprietary and Copyrighted Information

Applicability of Part C to PAPPs If the IESBA members agree with the Task Force’s planned approach for moving forward, IESBA members are asked for their views on: (a) The Task Force’s suggested introductory paragraph (b) Where to position the introductory paragraph within the Code Page 20 | Proprietary and Copyrighted Information

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