1. Code of Ethics for Professional Accountants
Overview

2. Code of Ethics
Part A – Framework applies to all professional accountants
Part B – Professional accountants in public practice
Part C – Professional accountants in business

3. Fundamental Principles
Integrity
To be straight forward and honest in all professional and business relationships
Objectivity
To not allow bias, conflict of interest or undue influence of others to override professional or business judgments

4. Fundamental Principles
Professional Competence and Due Care
To maintain professional knowledge and skill at the level required to ensure competent professional services based on current developments in practice, legislation and techniques
To act diligently in accordance with applicable technical and professional standards

5. Fundamental Principles
Confidentiality
To refrain from disclosing confidential information acquired as a result of professional and business relationships without proper and specific authority to disclose unless there is a legal or professional right or duty to disclose
To refrain from using confidential information acquired as a result of professional and business relationships for personal advantage or the advantage of third parties

6. Fundamental Principles
Professional behavior
Obligation to comply with relevant laws and regulations and avoid any action that discredits the profession

7. Conceptual Framework Approach – Threats and Safeguards
Threats may be created by a broad range of relationships and circumstances. When a relationship or circumstance creates a threat, such a threat could compromise, or could be perceived to compromise, a professional accountant’s compliance with the fundamental principles. A circumstance or relationship may create more than one threat, and a threat may affect compliance with more than one fundamental principle.
Safeguards are actions or other measures that may eliminate threats or reduce them to an acceptable level.

8. Conceptual Framework Approach
Requires active consideration of issues
Establishes basic principles
Can be applied to differing circumstances
Responsive to rapid change
Requires judgment rather than literal interpretations encouraged by a pure rules approach

9. Threats Self-interest Self-review Advocacy Familiarity Intimidation
Self-interest threat ─ the threat that a financial or other interest will inappropriately influence the professional accountant’s judgment or behavior .
Self-review threat ─ the threat that a professional accountant will not appropriately evaluate the results of a previous judgment made or service performed by the professional accountant, or by another individual within the professional accountant’s firm or employing organization, on which the accountant will rely when forming a judgment as part of providing a current service.
Advocacy threat ─ the threat that a professional accountant will promote a client’s or employer’s position to the point that the professional accountant’s objectivity is compromised.
Familiarity threat ─ the threat that due to a long or close relationship with a client or employer, a professional accountant will be too sympathetic to their interests or too accepting of their work.
Intimidation threat ─ the threat that a professional accountant will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the professional accountant.

10. Safeguards Two categories:
Created by the profession, legislation or regulation
In the work environment
Safeguards created by the profession, legislation or regulation include:
Educational, training and experience requirements for entry into the profession.
Continuing professional development requirements.
Corporate governance regulations.
Professional standards.
Professional or regulatory monitoring and disciplinary procedures.
External review by a legally empowered third party of the reports, returns, communications or information produced by a professional accountant.
For professional accountants in public practice, safeguards in the work environment comprise firm-wide safeguards and engagement-specific safeguards. Examples of firm-wide safeguards in the work environment include (additional safeguards are included in paragraph ):
Policies and procedures that will enable the identification of interests or relationships between the firm or members of engagement teams and clients.
Policies and procedures to monitor and, if necessary, manage the reliance on revenue received from a single client.
Using different partners and engagement teams with separate reporting lines for the provision of non-assurance services to an assurance client
Examples of engagement-specific safeguards include (additional safeguards are included in paragraph ):
Having a professional accountant who was not involved with the non-assurance service review the non-assurance work performed or otherwise advise as necessary.
Having a professional accountant who was not a member of the assurance team review the assurance work performed or otherwise advise as necessary.
Consulting an independent third party, such as a committee of independent directors, a professional regulatory body or another professional accountant.
For professional accountants in business examples of safeguards in the work environment include (additional safeguards are included in paragraph ):
The employing organization’s systems of corporate oversight or other oversight structures.
The employing organization’s ethics and conduct programs.
Recruitment procedures in the employing organization emphasizing the importance of employing high caliber competent staff.
Strong internal controls.
Appropriate disciplinary processes.

11. When safeguards are never adequate
Prohibitions
When safeguards are never adequate
There are some situations where the threat created is so significant no safeguards could eliminate the threat or reduce it to an acceptable level. In such situations the circumstances or relationship creating the threat must be avoided.

12. Part B – Professional Accountants in Public Practice
Professional Appointment
Conflicts of Interest
Second Opinions
Fees and Other Types of Remuneration
Marketing Professional Services
Gifts and Hospitality
Custody of Client Assets
Objectivity – All Services
Independence – Audit and Review Engagements
Independence – Other Assurance Engagements

13. Independence for Audit and Review Engagements
Firm includes network firm, except where otherwise stated
Independence of mind and independence in appearance
Public interest entities: additional provisions in Section 290 that reflect the extent of public interest in certain entities

14. Independence for Audit and Review Engagements – cont’d
Documentation: conclusions regarding compliance with independence requirements, and substance of any relevant discussions that support those conclusions

15. Independence for Audit and Review Engagements – cont’d
Financial interests
Loans and guarantees
Business relationships
Family and personal relationships
Employment with an audit client
Temporary staff assignments

16. Independence for Audit and Review Engagements – cont’d
Recent service with an audit client
Serving as a director or officer of an audit client
Long association of senior personnel (including partner rotation) with an audit client

17. Independence for Audit and Review Engagements – cont’d
Provision of non-assurance services to audit clients
Management responsibilities
Preparing accounting records and financial statements
Valuation services
Taxation services
Internal audit services 17

18. Independence for Audit and Review Engagements – cont’d
Provision of non-assurance services to audit clients
IT systems services
Litigation support services
Legal services
Recruiting services
Corporate finance services

19. Independence for Audit and Review Engagements – cont’d
Fees
Compensation and evaluation policies
Actual or threatened litigation
Reports that include a restriction on use or distribution 19

20. Independence for Other Assurance Engagements
Assurance engagements that are not audit or review engagements
Include related entities when reason to believe relevant to independence
Include network firms when reason to believe relevant to independence 20

21. Independence for Other Assurance Engagements
Assertion-based assurance engagements
Independence required from assurance client (party responsible for the subject matter information, and which may be responsible for the subject matter)
When client not responsible for subject matter evaluate the threats firm has reason to believe created by interests and relationships with party responsible for subject matter
Direct reporting engagements
Independence required from assurance client (party responsible for the subject matter)

22. Independence for Other Assurance Engagements
Multiple responsible parties
Firm may take into account whether interest or relationship with a particular responsible party creates a threat. Consider:
Materiality of subject matter information (or subject matter) for which the particular responsible party is responsible
Degree of public interest associated with engagement

23. Part C – Professional Accountants in Business
Potential conflicts
Preparation and reporting of information
Acting with sufficient expertise
Financial interests
Inducements

24. Effective Date January 1, 2011 Transitional provisions
Public interest entities
Partner rotation
Non-assurance services
Fees – relative size
Compensation and evaluation policies

25. International Federation of Accountants