1. Structure of the Code – Phases 1 and 2
Don Thomson, Task Force Chair
IESBA CAG Meeting
New York, USA
September 14, 2016

2. Project Objectives - The Public Interest
Agenda Item B, paragraph 6
Project Objectives - The Public Interest
Enhance understandability
Facilitate compliance & enforcement
Improve usability
Facilitate adoption
Effective implementation
Consistent application

3. Background January 2013 – Working Group began research
Agenda Item B, appendix
Background
January 2013 – Working Group began research
April 2014 – Project approved
November 2014 – Consultation Paper issued
December 2015 – Exposure Draft (Phase 1) issued
April – Comment period ended

4. Overview of the Code Part 1 (All Professional Accountants) Part 2
Complying with the Code, Fundamental Principles and Conceptual Framework
(Sections 100 to 199)
Part 2
Professional Accountants in Business
(Sections 200 to 299)
Part 3
Professional Accountants in Public Practice
(Sections 300 to 399)
International Independence
Standards (Parts 4A & 4B)
Part 4A—Independence for Audits & Reviews
(Sections 400 to 899)
Part 4B—Independence for Other Assurance Engagements
(Sections 900 to 999)
Glossary (All Professional Accountants)

5. Agenda Item B, page 1
Session Objectives
Discuss significant project matters, particularly those arising from feedback on Structure ED-1
Obtain representatives' views about proposed responses
Provide an update on the project, including Phase 2

6. Respondents to Structure ED-1
Agenda Item B-1, paragraph 1
Respondents to Structure ED-1
Category
Number
Regulators and Oversight Authorities 6
National Standards Setters 2
Firms 10
Public Sector Organizations 1
Preparers
IFAC Member Bodies & Other Prof. Orgns. 29
Individuals
Total (including some collective input) 50

7. Agenda Item B-1, paragraph 2 and Appendix
Highlights
Widespread support for the project & its key features
Many helpful wording suggestions, including suggestions to avoid possible inadvertent meaning changes
Many support proposed timetable but some favor a longer time- frame for completion & final review
When ED-2 is issued, the TF will make available a complete proposed restructured Code including final Phase 1 agreed-in- principle & Phase 2 for Structure & Safeguards

8. Clarification of Introductory Language
Agenda Item B-1, paragraphs 3-5
Clarification of Introductory Language
Further clarified in introductory language (and paragraph 7 of the Guide) the need for professional accountants to
Comply with the fundamental principles (FPs)
Maintain independence when required to be independent
Apply the conceptual framework (CF)
Specific requirements and application material support compliance with FPs and, in independence sections, the requirement to be independent (roadmap from S120)

9. Agenda Item B-1, paragraphs 3-5
Recurring Language
With enhanced introductory language increasing the prominence of requirements to comply with the FPs, be independent (where appropriate) and apply the CF
Deleted many recurring requirements to apply the conceptual framework to avoid it being ignored through overuse
Repetition of the requirement to apply the conceptual framework retained in the general sections, Sections 200, 300, 400 and 900
Repetition of the requirement to be independent included in Sections 400 and 900

10. Ordering of Requirements and Application Material
Agenda Item B-1, paragraphs 6-7
Ordering of Requirements and Application Material
Principles-based approach underlies and reinforces specific requirements and application material
Ordering of requirements and application material designed to
Maintain the prominence of the principles-based approach
Recognize the need for scalability
Clearly link application material and any exception to the related requirement

11. Responsibility for Compliance
Agenda Item B-1, paragraphs 8 and 9
Responsibility for Compliance
Firms & PAs within firms each have responsibilities
Retained use of firm for ease of reference
Moved discussion up from to 400.5
Added reference to firm in Section120
More closely aligned Code’s language to ISQC 1
Continued liaison with IAASB WG

12. CF Independence Linkage
Agenda Item B-1, Appendix rows 3, 5 and 6
CF Independence Linkage
Deleted the statement
"Independence is a measure of objectivity"
In Section 120
Clarified the linkage between independence and the fundamental principles using the independence definition
Clarified the application of the CF to independence
Added a roadmap to the independence standards

13. Disproportionate Outcomes and Ethical Conflict Resolution
Agenda Item B-1, Appendix rows 10 and 11
Disproportionate Outcomes and Ethical Conflict Resolution
Disproportionate outcomes
Encourages consultation if applying requirement considered disproportionate or not in public interest
No longer grouped with ethical conflict resolution
Ethical conflict resolution material enhanced from abbreviated text in ED-1 (extant material restored)
Discussion of both returned to the Code from the Guide

14. Audit and Review – Title – Guide
Agenda Item B-1, Appendix rows 13,14,15
Audit and Review – Title – Guide
Many not all supported "audit" for ease of reference
Profile should be raised – not merely a footnote – audit equally applies to reviews
Title
International Code of Ethics for Professional Accountants
(including International Independence Standards)
Guide to the Code – widespread support
With but not part of the Code as it is non-authoritative guidance

15. Highlights of Suggestions - Avoiding Possible Meaning Changes
Agenda Item B-1, paragraphs 10-15
Highlights of Suggestions - Avoiding Possible Meaning Changes
Revised text to address possible inadvertent changes in meaning – amongst others, topics included
Network firms (distinguished from firms in the restructured Code)
Oversight authority (grouped with regulators in ED-1)
Firm (used for ease of reference re independence responsibilities)

16. Update on Structure Phase 2
Agenda Item B, paragraph 3
Update on Structure Phase 2
Restructuring directly by the Structure Task Force
Section 800 (extant ) Reports Including Restrictions on Use and Distribution
Section 900 (extant 291) Independence - Other Assurance
IAASB conforming changes outside project’s remit
Overseeing restructuring by other task forces
Long Association, NOCLAR, Part C and Safeguards
Drafting guidelines help achieve consistency

17. Agenda Item B-1, paragraphs 17-19
Next Steps
September – wording, including changes in meaning
December – Phase 2 with complete restructured Code, including agreement-in-principle on Phase 1
Early consideration of implementation issues encouraged
Matters for Board attention – input on out of scope matters
Electronic enhancements and tools – once Code is final