Jens Poll, Deputy Chair, SMP Committee Ethics Jens Poll, Deputy Chair, SMP Committee IFAC SMP Forum Beijing, China October 28, 2009

Implementation guidance Ethics Overview IESBA Code What’s new? Effective date Transitional provisions Implementation guidance Planned toolkit Under consideration Other suggestions? Future projects

What’s New – Drafting Conventions? Ethics What’s New – Drafting Conventions? Sharpening of language Requirements designated by use of “shall” Consistency of language “consider”, “evaluate” and “determine” Clarification that situations discussed in the Code are requirements No change to the structure of the Code Exception clause in the ED replaced by targeted guidance on mergers and acquisitions

What’s New – Independence? Ethics What’s New – Independence? Replacing “clearly insignificant” in favor of “acceptable level” Changing documentation requirements Public interest entities (PIEs) New definition All listed entity provisions to apply to PIEs Split into two sections – section 290 applies to audit & review, section 291 to other assurance engagements

What’s New – Independence? Ethics What’s New – Independence? Majority of changes apply to PIEs: Cooling-off period before audit partner or senior partner joins client Partner rotation Extended to all key audit partners No rotation if regulator exemption Some tightening of non-assurance services Pre- or post-issuance review if total fees exceed 15% firm fees

What’s New – Independence? Ethics What’s New – Independence? Non PIE changes Management functions Tax services Calculation of current and deferred tax liabilities for purpose of preparation of accounting entries creates a threat Tax planning not allowed if material, and depends on doubtful accounting treatment Cannot act as advocate in public tribunal or court if matters are material Partner compensation

Effective Date and Transitional Provisions Ethics Effective Date and Transitional Provisions Effective January 1, 2011 Transitional provisions Partner rotation Public interest entities Non- audit services Partner compensation

Implementation Guidance - Available Ethics Implementation Guidance - Available Toolkit Slide decks and speaking notes Templates Short paper providing overview of requirements of revised Code Comparison of revised Code to previous Code Paper outlining the implications of the Code in an SMP environment See http://www.ifac.org/ethics/Resources.php

Implementation Guidance – Possible Ethics Implementation Guidance – Possible Web-based modules Short paper on applying code to SMPs “Plain English” guide Questions and answers Other (e.g. implementation monitoring)

Remaining projects on current strategic plan Ethics What’s Next? Strategy 2010-2012 Remaining projects on current strategic plan Accountants’ ethical responsibilities when encountering fraud or illegal acts Conflicts of interest Accountants in Government Possible future projects – Survey stakeholders Second opinions Provision of financial advisory services Provision of taxation services Possible additional independence issues