1. Review of Part C of the Code – Applicability
Helene Agélii – IESBA Member and Task Force Chair
IESBA Meeting
New York, USA
September 19-22, 2017

2. Overview of the Session
Status update
Recap of June 2017 IESBA comments
Report back – CAG and SMPC
TF proposed responses and revisions

3. Milestones IESBA anticipates approval of proposed text
Status Update
Milestones
ED released with 90 day comment period
JAN 2017
IESBA discussion of comments on ED and TF response JUN 2017
Further consideration of issues and “first read” of revised proposals
SEPT 2017
IESBA anticipates approval of proposed text
DEC 2017

4. Approach adopted by IESBA
Status Update
Overview
Project objective
Approach adopted by IESBA

5. Received 40 comment letters Respondents are generally supportive of:
Status Update
Recap of ED Comments
Received 40 comment letters
Respondents are generally supportive of:
Objective of the proposals
The holistic approach
Only a few respondents expressed general concerns about increasing complexity of Code

6. Recap of June 2017 IESBA Comments
A few questioned clarity of revised text for the requirement
Support to limit scope to individual PAs
Support to replace specific example with a list of examples
Support to remove application material from Part 1 of the Code
Agreed that definition will not impact objective
Recommended TF to consider applicability of Part B to PAIBs

7. Sept 2017 CAG Meeting At the Sept 2017 meeting, the CAG was:
Report Back
Sept 2017 CAG Meeting
At the Sept 2017 meeting, the CAG was:
Given an overview of the project
Explained the key issues and TF proposals
Asked if they agree with the proposed revisions
The CAG did not raise any concerns with the proposed revisions

8. Suggested a further communication piece
Report Back
SMPC Response
Acknowledged some respondents might not have considered the consequences of current wordings of the proposed applicability paragraphs
Suggested a further communication piece

9. Issues and TF Proposals
Key issues raised by respondents:
Clarity and Scope of Requirement
Illustrative Examples
Location of Guidance Material
Structure Related Matters

10. Issue 1 – Clarity and Scope of Requirement (Circumstances)
Comment
PAs should be required to consider whole Code and comply with relevant provisions
Proposal
TF does not support this suggestion as it may draw focus away from project objective

11. Issue 1 – Clarity and Scope of Requirement (Circumstances)
Comment:
Phrase “facing an ethical issue” implied that PA has already encountered a specific ethical issue that needs to be addressed
Proposals
TF has revised first sentence to clarify that ethical issue may or may not have taken place yet

12. Issue 1 – Clarity and Scope of Requirement (Circumstances)
Comment
Proposed text should cover PA who serve as both PAPPs and PAIBs in multiple roles
Proposal
TF does not agree with this suggestion
A PA should already be aware of the guidance if working as a PAIB
Suggestion would draws focus away from project objective

13. Issue 1 – Clarity and Scope of Requirement (Circumstances)
Comment
Unclear about circumstances that may trigger Part C applicability
Because all professional activities (including client services) can be understood to be pursuant to a PA’s employment

14. Issue 1 – Clarity and Scope of Requirements (Circumstances)
TF agrees
A PA’s employment with a firm and client engagement are closely connected
Provision of professional activities in a firm employment context will often be connected to or impact client engagement in some ways
TF’s View
The phrase “pursuant to PA’s employment” is sufficiently broad to cover this aspect and does not require any revision

15. Issue 1 - Clarity and Scope of Requirement (Circumstances)
One matter that requires Board’s deliberations:
Whether Applicability provisions require a PAPP to directly apply Part C when performing professional services for clients or to client relationship
Section 220:
Preparation and presentation of information for outside organization
Section 270:
Pressure on a professional accountant from an external individual or organization
TF Proposal
Sections apply under proposed text

16. Issue 1 - Clarity and Scope of Requirement (Circumstances)
Paragraph A1 (Agenda Item 8-A)
Professional accountants at all levels in an employing organization are involved in the preparation and presentation of information both within and outside the organization.

17. Issue 1 - Clarity and Scope of Requirement (Circumstances)
Paragraph A1 (Agenda Item 8-A)
A professional accountant might face pressure that creates threats to compliance with the fundamental principles, for example intimidation threats, when undertaking a professional activity. Pressure might be explicit or implicit and come from:
Within the organization, for example, from a colleague or superior.
An external individual or organization such as a vendor, customer or lender.
Internal or external targets and expectations.

18. Issue 1 - Clarity and Scope of Requirement (Circumstances)
One matter that requires Board’s deliberations:
Whether Applicability provisions require a PAPP to directly apply Part C when performing professional services for clients or to client relationship
Section 220:
Preparation and presentation of information for outside organization
Section 270:
Pressure on a professional accountant from an external individual or organization
TF Proposal
Sections apply under proposed text

19. Issue 1 - Clarity and Scope of Requirement (Individual PAPPs)
Comment
Whether individuals who are not PAs are covered by applicability paragraphs
Proposal
IESBA agreed in June that scope of applicability paragraphs should be restricted to those PAPPs who are individuals

20. Issue 1 – Clarity and Scope of Requirement (Contractor)
Comment:
Contractor relationship was not explicitly dealt with in ED and therefore not clear if such relationship is within scope
3 options for IESBA consideration
Proposal
TF agrees that PAs working as contractors of a firm should comply with Part C

21. Issue 1 – Clarity and Scope of Requirement (Contractor)
Option 1
Add “contractor” to requirement
Option 2
Add a new application material paragraph
Option 3
Add sentence to paragraph 200.4

22. Issue 1 – Clarity and Scope of Requirement (Applicability of Extant Part B to PAIBs)
In June, Board asked Task Force to consider whether ED should also clarify applicability of Part B provisions to PAIBs
Proposal
TF does not recommend revisions and believes that doing so
Is outside the scope of project
Requires more analysis

23. Matter for IESBA Consideration
1. Direct application of Sections 220 and 270
2. Inclusion of contractor relationship
3. Revisions to the requirement paragraphs

24. Issue 2 – Illustrative Examples
ED contains a specific example of a situation where a PAPP might face where Part C would be applicable
Comments suggest a need for further enhancement
4 Situations
Conflict of interest
Preparing or presenting information
Inducements
Pressure
Proposal
Specific example is replaced with four examples relating to four situations

25. Matter for IESBA Consideration
4. Support for the four examples
Conflict of interest
Preparing information
Inducements
Pressure

26. Issue 3 – Location of Guidance Material
General support for proposed location of Applicability paragraphs in Sections 120 and 300.
Proposal
IESBA agreed in June to remove application material in Section 120
Other guidance material also updated

27. Issue 3 – Location of Guidance Material
Paragraph 4 of the Guide to the Code (Agenda Item 3-D)
Part 2 is also applicable to professional accountants in public practice when performing professional activities pursuant to the accountant’s employment, contractor or ownership relationship with the firm.

28. Issue 4 – Structure Related Matters
Structure of Parts 2 and 3
Some respondents questioned whether Parts 2 and 3 should be retitled to take focus off from PAs role
New titles may reduce prominence of PAIB provisions

29. Matter for IESBA Consideration
5. Revisions to Guide to the Code (Para 4)
6. Any further comments