Part C Helene Agélii, Chair Part C Task Force IESBA Meeting March 15, 2016 New York

Short Recap 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

Short Recap Restructuring text of Part C Phase 1 into new format Phase 2: The applicability of Part C to PAPPs Section 350/Section 260

March 2016: First read of restructured Phase I 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

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

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

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?

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

General comments from the Board

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

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

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

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

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

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

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

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.

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

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?

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: The Task Force’s suggested introductory paragraph Where to position the introductory paragraph within the Code