Page 1 | Proprietary and Copyrighted Information Structure of the Code Don Thomson, Task Force Chair IESBA Meeting New York, USA September 15-16, 2015

Page 2 | Proprietary and Copyrighted Information Enhance understandability and improve usability –Facilitate compliance and enforcement –Facilitate adoption, effective implementation, consistent application Draft Restructured Code reflects Consultation Paper input and subsequent input from CAG and the Board, as well as National Standard-setters, Forum of Firms, SMP Committee Liaising with IAASB (re responsibility) and Safeguards TF Background Structure of the Code

Page 3 | Proprietary and Copyrighted Information To consider opportunities for further improvements to the Draft Restructured Code, focusing in particular on: The issues and task force proposals (see Agenda Item) Advance input received Highlights are reflected in the following slides Objectives Structure of the Code

Page 4 | Proprietary and Copyrighted Information A. Navigability Facilitating review of the Draft Restructured Code –Reference to extant Code or identification as new material Preface – consistent with extant Code Guide to the Code –Purpose of the Code, its structure and how to use the Code –An appendix providing guidance on addressing ethical dilemmas Positioning the Code for further navigability enhancements Structure of the Code Issues and Task Force Proposals

Page 5 | Proprietary and Copyrighted Information B. Requirements and Application Material Reverting to the term “application material” Requirements distinguished with "R"; "shall" a requirement Importance of application material explained in the Guide C. Cross-References Reduced cross-references to the conceptual framework New reference to objectivity in C1 (independence) Structure of the Code Issues and Task Force Proposals

Page 6 | Proprietary and Copyrighted Information Revised wording re importance of application material "… context relevant to a proper understanding of the Code. In particular the application material describes how a requirement is to be applied with reference to the conceptual framework and includes examples of relevant facts and circumstances. … The entire text of the Code, therefore, is relevant to understanding and proper application of the Code's requirements. …" (2-A, para 11 revised) Issues and Task Force Proposals Structure of the Code

Page 7 | Proprietary and Copyrighted Information D. Specific References to Network Firms Currently in "firm" except where otherwise stated Application of materiality/significance test E. Relocating Certain Material to Sub-sections Second opinions Documentation – general and cross-references to specific –Location: in independence section v elsewhere Structure of the Code Issues and Task Force Proposals

Page 8 | Proprietary and Copyrighted Information F. Labelling and Terminology Labelling Parts Professional Accountants in Business May (permitted) and might (could occur) Glossary –Including terms used (e.g. "audit" includes "review engagement") Clarity and translatability Structure of the Code Issues and Task Force Proposals

Page 9 | Proprietary and Copyrighted Information Advance input received from –13 members and/or their TAs (including task force) –CAG Working Group, CAG itself and SMP Committee TF met Sunday and made some immediate changes in response to input received – see updated mark-up Highlights in the following slides (or discussion of issues) Some input subject to further TF consideration Highlights of Advance Input Received Structure of the Code

Page 10 | Proprietary and Copyrighted Information (2-F) Guide (in addition to wordsmithing suggestions) 4 – Revised to avoid confusion with application material 5, etc – Professional activities include services 7 – Revised to clarify weight of application material App.1, 1 – Restored reference to resolving a conflict App.1, 5 – Consider returning discussion of disproportionate outcome (100.11) to body of Code Highlights of Advance Input Received Structure of the Code

Page 11 | Proprietary and Copyrighted Information (2-C) Tranche I (in addition to wordsmithing suggestions) s.100 – Consider more of an introduction R112.2 – Might be seen as prohibition – don't think so s.310, 320, etc – Consider impact of agreed order on flow R310.13, etc – Coordinate third party test with Safeguards – Removed new intro material re documentation Structure of the Code Highlights of Advance Input Received

Page 12 | Proprietary and Copyrighted Information (2-D) Tranche II (in addition to wordsmithing suggestions) s.410 – Consider grouping of fees and compensation 410.1, etc – Changed to focus on independence threats s.499 – Will be moved to end of C1; will consider input R522.5 – Consider whether changed – don't think so ss.526 – Consider whether Company Secretary changed Glossary – Consider returning other PIEs to body of Code Structure of the Code Highlights of Advance Input Received

Page 13 | Proprietary and Copyrighted Information Task force has identified the following outside its scope: –Conceptual framework - disclosure considerations –Requirements with little or no application material –Independence standards applicable to audits of line items –Documentation requirements –Definitions and descriptions e.g. alignment with ISAs, "employee", "materiality" and "significance" Structure of the Code Matters for Board Attention

Page 14 | Proprietary and Copyrighted Information 2015 (October) – Forum of Firms– Draft ED 1 tranches I & II 2015 (December) – IESBA – Approve ED 1 tranches I & II Be clear re scope; opportunity for pilot testing throughout (June?) – IESBA – Approve ED 2 ED 2 timing may be impacted by various factors, including input received, status of other projects & timing of CAG discussion 2017– Finalize and issue new Code 2018– Code effective, launch electronic Code phase II Forward timeline (tentative) Structure of the Code

The Ethics Board