Transcript Structure of the Code Don Thomson, Working Group Chair IESBA Meeting Toronto, Canada April 7-9, 2014 Page 1 | Confidential and Proprietary Information.

Structure of the Code
Don Thomson, Working Group Chair
IESBA Meeting
Toronto, Canada
April 7-9, 2014
Page 1 | Confidential and Proprietary Information
Background
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Prior years
– Concerns expressed
May-October 2013 – Research supports change
December 2013
– Prelim. recommendations
February 2014 – Additional IOSCO input
March 2014 – Additional CAG input
April 2014
– Final report, project proposal
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Since December
• Changes from preliminary report (details to follow)
– Responsibility – "firm" in most cases
– Clarity – inform the Board of inconsistencies etc
– Reorganization – less prescriptive re s.290
• Electronic Code – some immediate action
• Examples – more on Parts A and B; in process
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Distinguishing requirements (4-A # I)
Recommendations:
• Distinguish requirements from guidance
– enhance understandability & enforceability
• Confirm: conceptual framework is a requirement
• Guidance adjacent to relevant requirements
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Clarifying responsibility (4-A # II)
Recommendations:
• Clarify audit firm's responsibility for independence
except where clearly beyond firm’s control
• Firms' policies & procedures shall enable
identification of the individual responsible for
independence in a particular circumstance
• Include in project as no change to Code's meaning
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Clarity of language (4-A # III)
Recommendations:
• Increase clarity, using drafting conventions / editor
– Aspirational reading grade – university level
• Consider identified inconsistencies
– e.g. Any issues re safeguards / documentation
– Inform Board if warranted; may be out of scope
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Electronic Code (4-A # IV)
Recommendations:
• Immediate improvements
– HTML, hyperlinks, navigation
• More extensive electronic features
– Coordinate with other restructuring
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Reorganization (4-A # V)
Recommendations:
• Coordinate changes with electronic Code
• Raise the profile of the independence standards
– e.g. International Standards on Independence
– Distinguish the independence standards but
clearly retain their integration in the Code
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Complementary Materials (4-A # VI)
• Examples:
– Short summaries, FAQs, case studies
– Bases for conclusions
Recommendations:
• Address these after restructuring the Code
• Work with others to develop materials
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Project Proposal (4-B and 4-F)
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Proposal consistent with recommendations
Timing reflects importance and urgency
Consultation paper to test support for approach
Exposure Draft will be in process at same time
Aim for finalization of revised Code in 2016
Does the Board approve the project proposal?
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Forward timeline (tentative) (4)
• Jul'14 – IESBA – draft CP
(input re sample restructuring)
• Apr'15 – IESBA – CP responses
• Sep'14 – CAG – draft CP
• Sep'15 – CAG – draft ED
• Oct'14 – IESBA – approve CP
• Oct'15 – IESBA – approve ED
• Jan'15 – IESBA – continue
review of restructured Code
• 2016 – Finalize and issue a
restructured Code
• Mar'15 – CAG – CP responses
• Jan'18 – Code effective
• Jul'15 – IESBA – draft ED
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Structure & drafting conventions (4-D)
• Guidance for Task Forces / Board; it will evolve
• Section structure
– Purpose, with linkage to fundamental principles
and conceptual framework
– Requirements – shall; cross references
– Application and other explanatory material
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Structure & drafting conventions (4-D)
• Mandatory Drafting Conventions
– Shall, consider, evaluate, determine etc.
• Discretionary Drafting Conventions
– Do use short sentences, active voice
– Don’t use nuances that aren't clear, repeat
definitions, use superfluous adjectives etc
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Structure & drafting examples (4-C)
• Examples of portions of Parts A and B are
presented as a restructuring work in progress –
not a final proposal as further work is still required
– Purpose / Requirements / Application material
– Cross references
– Principles / Framework closely linked to Part B
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Electronic Code (4-E)
• Developing electronic features for the extant Code
– HTML
– Contents list with ability to jump to section
– Drill down to individual paragraphs
– Hyperlinks to defined terms
• To be located on IESBA website – landing page
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Matters for IESBA Consideration
Any Other Comments or Questions ?
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The Ethics Board
www.ifac.org