Structure of the Code Phases 1 and 2 Revised Texts Don Thomson, Task Force Chair IESBA Meeting New York, USA September 29, 2016

Highlights of Revised Phase 1 & 2 Text Supplements 1 to Agenda Items 3-B and 3-E Highlights of Revised Phase 1 & 2 Text Updated based on CAG and Board input, including advance input received Further updating planned for December, including Updating grayed-out material Re-ordering (this draft reflects re-ordered 310 and 320) Matters arising from concluding procedures, including review of consistency, sub-headings, mapping to 2016 Code, etc

Supplements 1 to Agenda Items 3-B and 3-E Guide Para.4 – Parts 4A and 4B numbers unchanged to promote IIS Para.5 (and 100.2) – Application material description enhanced Para.6 – Reference made to PAPPs/Firms and PAIBs Old Para.10 – Deleted repetition of the reference to situations with no safeguards – not in ED-1, addressed in the Code Para.11 (and Glossary) – “May”/“might” explanation added

Supplements 1 to Agenda Items 3-B and 3-E Part 1 – Section 100 100.2 – “R” and “A” designation explained (already in Guide) Application material description enhanced 100.3 A2 (Disproportionate outcomes) Reverted to extant by adding unusual to circumstances Added might not be in the public interest to better reflect the possibility that consultation helps clarify this Deleted “in order to comply with the fundamental principles” to avoid confusion and align with extant (and ED-1)

Supplements 1 to Agenda Items 3-B and 3-E Part 1 – Section 110 110.2 A2 – Ethical conflict resolution described more concisely, as exposed in ED-1 R112.1 (Objectivity) – Definition unchanged (after reverting to extant from ED-1) to avoid change in meaning Consistent with dictionary definitions 112.2 A2, A3 – Deleted in response to Board input that discussion of safeguards out of place, addressed elsewhere

Part 3 Sections 310 and 320 re-ordered – sample for discussion Supplements 1 to Agenda Items 3-B and 3-E Part 3 Sections 310 and 320 re-ordered – sample for discussion 310.2 (but not 320) includes reference to fundamental principles as in extant Code and ED-1 Not proposed throughout the Code as threats discussed in the Code in many cases could refer to at least 4 of the 5 fundamental principles (integrity, objectivity, professional competence and due care, and professional behavior; confidentiality less often) Other sections will be re-ordered after Board input

Supplements 1 to Agenda Items 3-B and 3-E Part 4A – Sections 400 to 430 400.8 (PIEs) – Consider moving “member bodies” to Preface as member bodies are addressed in the Preface 400.10 – Added cross-reference to audits of “line items” 400.40 – Added cross-reference to communication with TCWG (general) 400.50-400.52 A1 – Network firms summary illustrated (Supplement 2 to Agenda Item 3-B) 400.83 A1 – Added cross-reference to general material dealing with communication with TCWG

Supplements 1 to Agenda Items 3-B and 3-E Part 4A – Sections 510-525 R510.10, etc – Retained ED-1's use of "member" after "audit team", “close family” and "immediate family" rather than a longer alternative such as "member of …" R510.10(d) – Considered Board member's concern, Task Force remains of the view that the text is consistent with extant and requirement to apply the conceptual framework R520.5 – Sub-divided in response to Board input

Section 800 and Part 4B Sections 800 and 999 – Supplements 1 to Agenda Items 3-B and 3-E Section 800 and Part 4B Sections 800 and 999 – Changed "eligible restricted use audit report" to "eligible audit engagement" Changed "eligible restricted use assurance report" to "eligible assurance engagement" 900.1 – Location for reference to audits of “line items”

Glossary “May” and “Might” Supplements 1 to Agenda Items 3-B and 3-E Glossary “May” and “Might” Non-Compliance with Laws and Regulations (NOCLAR) Reasonable and Informed Third Party – Awaiting Final Senior Professional Accountant in Business (NOCLAR) Substantial harm (NOCLAR)

Other Significant Matters Supplements 1 to Agenda Items 3-B and 3-E Other Significant Matters Do IESBA Members wish to raise any other significant matters that have not already been discussed? Guide Part 1 Part 3 Parts 4A and 4B Glossary The Task Force welcomes wordsmithing input off-line