1. Review of Part C Helene Agélii, Task Force Chair IESBA Meeting
New York, USA
December 13, 2016
Objectives of this session:
The restructuring of Part C
The applicability paragraph
Inducements

2. Proposed Restructuring
History
Part C Phase 1 – extant format and drafting conventions
Restructured drafts presented at earlier IESBA meetings
This draft addresses
Comments from Sept 2016; and
Conforming amendments to Structure and Safeguards
In between the September Board meeting and this meeting – a lot of work communication between the Part C TF and the Structure and Safeguards TF
Agenda Item 5 B is the result of that
Also, received a number of comments from Board members and TFs prior to this meeting.
Go through the new main structure issues and the glossary and then we’ll go through the entire 5-B

3. Proposed Restructuring
Key changes:
Deletion of:
Last example in para A3 - Consulting another party
Reference to familiarity threats in para
Guidance on consultation and education in para A4
Focus on earlier meetings has been on the examples in s200 – no further changes after the September Board meeting. Any comments on this I recommend that we leave for now.
Questions regarding these issues?

4. Proposed Restructuring
Glossary
Reclassify as description
Clarify that positions are not finite
Restructure – areas before positions
Do IESBA members agree to revised glossary definition?

5. Proposed Restructuring
Professional Accountant in Business:
A professional accountant operating working in areas such areas as commerce, industry, service, the public sector, education, the not for profit sector or in regulatory or professional bodies, who might be that is an employee, contractor, partner, director (executive or non-executive), owner-manager or volunteer
AFTER THIS GO THROUGH THE ENTIRE 5-B WITH THE HELP OF SAFEGUARD AND STRUCTURE TF!

6. Applicability of Part C to PAPPs
March 2016:
Board agreed Part C applicable to PAPPs and addition of “applicability paragraphs”
First read of “applicability paragraphs”
June / September 2016:
Review of “applicability paragraphs”

7. Applicability of Part C to PAPPs
R When facing an ethical issue, a professional accountant in public practice shall consider the context within which the issue has occurred. Where the accountant is performing professional activities pursuant to the accountant’s employment or ownership relationship with the firm, there might be requirements and application material guidance in Part 2 that is are also applicable to those circumstances. If so, the accountant shall comply with the relevant provisions.

8. Applicability of Part C to PAPPs
120.4 A1 For example, where a professional accountant in public practice is placed under faced with pressure by from an engagement partner to perform a task without sufficient skills or training accept a client’s questionable accounting treatment in a specific financial reporting issue in order to retain the client, or with unrealistic deadlines the requirements and application material set out in Section 270 would might be relevant.
Still doubts about the example; the TF has provided additional examples.

9. Applicability of Part C to PAPPs
Alternative 1: A1 For example, where a professional accountant in public practice is placed under faced with pressure byfrom an engagement partner to approve expenses for a colleague that the accountant believes are inappropriate, perform a task without sufficient skills or training, or with unrealistic deadlines the requirements and application material set out in Section 270 wouldmight be relevant.

10. Applicability of Part C to PAPPs
Alternative A1 For example, where a professional accountant in public practice is placed under faced with pressure by from a partner to accept a client’s questionable taxation position in order to retain the client, perform a task without sufficient skills or training, or with unrealistic deadlines the requirements and application material set out in Section 270 wouldmight be relevant.

11. Applicability of Part C to PAPPs
IESBA members are asked for views on the proposed revisions to the “applicability paragraphs”

12. Applicability of Part C to PAPPs
Title of Part C
“Applicability paragraphs” render current title inconsistent with broadened scope
Change title: Might have to change Part 3
Clarify that scope is PAPPs and clients.
Solution: Include subheading under the title of both Parts
No proposal yet, just highlighting our concern.

13. Phase 2 – Sec. 250 - Inducements
History:
Sept 2016 IESBA considered strawman
IESBA members generally approved revised structure

14. Phase 2 – Sec. 250 - Inducements
Key changes to strawman:
Positioning of guidance on bribery and corruption:
Clarify that focus on inducements that might breach FPs
Illegal inducements covered by laws and regulations
Reminder: understand legal and regulatory provisions

15. Phase 2 – Sec. 250 - Inducements
Definition of bribery & corruption:
Difficult to devise global definition
Might conflict with local definitions
Generic definition could set adverse precedent
Could imply Sec. 250 addresses illegal bribery & corruption
External definition:
Widely accepted definition - Does one exist
External references outside guidelines

16. Phase 2 – Sec. 250 - Inducements
Title of revised section 250
Clarify inducement is neutral
Additional clarification on what is an inducement
Counterparties
For PAIB not apparent
Could exclude category
QUESTIONS SO FAR?

17. Phase 2 – Sec. 250 - Inducements
Intent behind an inducement
How an inducement might be perceived
Motivation behind an action already in extant Code
Addition of factors for assessing the intent
RITP test to evaluate perceptions?

18. Phase 2 – Sec. 250 - Inducements
Trivial and inconsequential inducements
Adverse intent – cannot accept
No adverse intent – can accept
QUESTIONS
ALSO REMIND THEM THAT THIS WILL HAVE IMPLICATIONS ON S340

19. Phase 2 – Sec. 250 - Inducements
Evaluating and addressing threats:
CP requires use of RITP test hence not necessary
Recusing is valid action
Cultural differences:
Principle-based approach intent test and evaluation of threats to FPs

20. Phase 2 – Sec. 250 - Inducements
Immediate or close family members
Guidance added
Conforming amendments to section 340
The basis for proposals in Sec. 250 also applicable to PAPPs
Tailor examples of inducements and threats for PAPPs

21. The Way Forward Phase 1: Phase 2:
December 2016: Approve ED Phase 1 restructured text
Phase 2:
March 2017: Second read and approval of ED Phase 2