Lisa Snyder Task Force Member IESBA CAG Meeting New York USA September 14 2016 Project approved March 2013 Project divided into 2 phases Phase 1 addresses Secs 320 Preparation amp Presentation of Information and 370 Pressure ID: 578019
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Slide1
Review of Part C
Lisa Snyder, Task Force Member
IESBA CAG Meeting
New York, USA
September 14, 2016Slide2
Project approved - March 2013
Project divided
into 2 phases:Phase 1: addresses Secs. 320 (Preparation & Presentation of Information) and 370 (Pressure)Conforming changes to other Secs.Phase 2: addresses Sec 350 (Inducements) and applicability of Part C to PAPPs
Part C - Project Status and TimelineSlide3
Phase 1:
Completed Dec 2015
under current drafting conventions Close-off document being restructuredRestructured text to be included in the second Structure ED
Part C - Project Status and TimelineSlide4
March 2016 IESBA:
Agreed Part C applicable to PAPPs
Support for “explanatory paragraph”June 2016 IEBSA:Agreed “explanatory paragraph” location key Support inclusion in: Parts 1, Sec. 120 and Part 3, Sec. 300June 2016 NSS: Concern over additional requirements on PAPPs
Phase 2 – Applicability of Part C to PAPPsSlide5
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 guidance in Part C that is applicable to those circumstances. If so, the accountant shall comply with relevant provisions. For example, where a PAPP is faced with pressure from an engagement partner to perform a task without sufficient skills or training or with unrealistic deadlines, the guidance is Section
XXX
would be relevant.Phase 2 – Applicability of Part C to PAPPsSlide6
Jan 2015 IESBA:
Transparency
International UK (TI) presentationProposed revisions to Sec. 350April 2015 IESBA: GAP analysis presented
Phase 2 deferred to complete Phase 1June
2016 IESBA:
Proposed enhancements to Sec. 350
Initial strawman
Phase 2 – Sec. 350 - InducementsSlide7
IESBA views:
Bribery and Corruption
Sec. 350 should address Bribery and CorruptionLegislation might not exist or inadequateTask Force response: Strawman not intended to exclude Bribery and Corruption
Revised principles-based direction to consider all types of inducements
Phase 2 – Sec. 350 - InducementsSlide8
Revised
Title /
Scope“Inducements” not ideal“Gifts and Hospitality” could narrow scope“Inducements” should be considered neutralAmended title: “Gifts, Hospitality and Other Inducements”
Phase 2 – Sec. 350 - InducementsSlide9
Introduction
Acknowledge Bribery
and Corruption are significant problems in many jurisdictions and are unacceptable behaviors for all PAsApplication and RequirementsRequirement to understand laws and regulations and comply with them (consistent with NOCLAR standard)Prominent position in revised standard
Structure of Revised
Sec.
350Slide10
Representatives
are asked for views on:
The suggestions received on how a revised Section 350 should address Bribery and CorruptionThe Task Force’s responsesPhase 2 – Sec. 350 - InducementsSlide11
Examples of Inducements
Gifts
, hospitality, entertainment, etc. Some forms could be illegal (bribery); Others might not be illegal but could still be unethicalRepresentatives are asked for their views on the need to have examples within the revised Section 350 and the Task Force’s proposed examples
Structure of Revised
Sec.
350Slide12
Assess intent of Inducement
Intention to
improperly influence behaviorConsider how inducement perceived by others Identify and evaluate threatsTrivial and inconsequential inducements not a threat to compliance
with FPsList of factors provided to evaluate threatsValue
, frequency and
nature
Significance or materiality
Structure
of Revised
Sec.
350Slide13
Address threats - safeguards provided to reduce threats to acceptable level
Register
in log Consult with senior management or TCWGRecuse from business-related decisions to individual/orgSecondary reviewsIf cannot reduce threat to
acceptable level, PA shall not offer or accept inducement
Structure
of Revised
Sec.
350Slide14
Requirements of PA:
Cannot offer
inducement with intention of improperly influencing anotherCannot accept inducement if made with intent to improperly influence behaviorDecline inducement if threats not reduced to acceptable level
Phase 2 – Sec. 350 - InducementsSlide15
Representatives
are asked for their views
on:Proposed requirementsRelated Task Force proposalsPhase 2 – Sec. 350 - InducementsSlide16
IESBA view: Cultural
Differences
Consider but not account for every cultural differenceTask Force response:Acceptable inducement can vary by culture. However, ethical concerns the sameThird party test to assess perceived intent would
consider cultureCultural differences not cover for unethical inducements
Phase 2 – Sec. 350 - InducementsSlide17
Representatives
are asked for their views
on:Whether cultural differences should be explicitly addressed in the revised Section 350Any other views or suggestions on matters that should be addressed in revision of Section 350
Phase 2 – Sec. 350 - InducementsSlide18
F
irst read of proposed revisions: Dec 2016 IESBA meeting
Second read with intention of obtaining approval: March 2017 IESBA meetingThe Way ForwardSlide19