Transcript Part C – Section 370 Pressure Jim Gaa, Chair, Part C Task Force IESBA Meeting Toronto, Canada April 7, 2014 Page 1 | Confidential and Proprietary.

Part C – Section 370
Pressure
Jim Gaa, Chair, Part C Task Force
IESBA Meeting
Toronto, Canada
April 7, 2014
Page 1 | Confidential and Proprietary Information
Background
• March 2013: Project Proposal approved by IESBA
• September 2013: IESBA and CAG consider Pressure(370)
• December 2013: IESBA considered Section 320
• March 2014: CAG considered Section 320
• April 2014: IESBA considers Section 370
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Description and Examples
• Change description from “engage in unethical or illegal
activities” to “pressure to breach fundamental principles”.
• PAIB shall not yield to pressure.
• PAIB shall not place pressure on others.
• Examples categorized by 310/320/330/340/350/360.
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Determine whether pressure may lead to a breach
of the fundamental principles
• Threats and safeguards approach difficult to use in Part C.
– Safeguards may not be real safeguards
• PAIBs may be unfamiliar with Conceptual Framework.
• Section redrafted to avoid conceptual framework
language.
• Factors the PAIB may consider in determination.
• Actions for PAIB to take in determination.
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Steps to mitigate pressure
• If pressure would result in a breach, PAIB shall take steps
that are available to mitigate pressure.
– Mitigate: reduce to a level that can be resisted
• Mitigate - elimination may not be possible.
• Some steps may not be available to the PAIB.
• Examples: policies & procedures; challenge; restructuring;
obtain oversight; escalation; disclosure; consultation.
• If necessary: decline, discontinue or resign.
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Diversity of ethical norms
• Different opinions on CAG on recognizing diversity of
ethical norms.
• Diversity of ethical norms is a reality.
• But its recognition appears to condone a “movable bar”.
• TF suggests that including “the corporate culture and
leadership of the employing organization” as a factor to
consider recognizes this diversity.
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Creating an Ethics Based Culture
• 300.5 creates expectation of an ethics based-culture.
• This was developed as an important step to address
pressure.
• May be more generally applicable and moved back to 300.
• Further work needed on drafting as references to
fundamental principles apply to the Code and would not
apply in business’s ethics codes.
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Matters for Consideration
• Does the Board have any comments on the draft wording
of proposed Section 370?
• Does the Board have any comments on the way that the
diversity of ethical norms is addressed in the draft
wording?
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The Ethics Board
www.ifac.org