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Proposed Revised Section 290 - PowerPoint PPT Presentation


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IFAC Code of Ethics. Relevance to SMPs Abuja, Nigeria October 13, 2008. Prof. Dr. Jens Poll Deputy Chair IFAC SMP Committee Partner RöverBrönner & Moore Stephens Berlin, Germany. Proposed Revised Section 290/291. New Code of Ethics effective June 30, 2006

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IFAC Code of Ethics

Relevance to SMPs

Abuja, Nigeria

October 13, 2008

Prof. Dr. Jens Poll

Deputy Chair IFAC SMP Committee

Partner RöverBrönner & Moore Stephens Berlin, Germany

proposed revised section 290 291
Proposed Revised Section 290/291
  • New Code of Ethics effective June 30, 2006
  • Revision of Section 290 issued July 2006, effective December 31, 2008 (Network definition 290.14-290.26)
  • Revision of Section 290/291 (“Independence I”): Exposure Draft December 2006 (approved by the board in the unclarified version)
  • Revision of Section 290/291 (“Independence II”): Exposure Draft July 2007, Re-Exposure Draft May 2008 (board will decide on the December 2008 meeting of the board)
  • Revision of Code of Ethics (“Clarity”): Exposure Draft July 2008 (comment period October 15, 2008)
proposed revised section 290 2913
Proposed Revised Section 290/291
  • Public Interest
      • Improving the Code of Ethics to strengthen the independence
      • Wong Report identified concern as to relevancy and appropriateness of international standards of accounting, auditing and ethics to SMEs and SMPs
      • Overregulation for SMPs
proposed revised section 290 2914
Proposed Revised Section 290/291
  • Research
      • How best to serve the public interest in the revision of the Code
  • Applicability
      • Providing an optimal solution for larger firms and engagements
      • SMP input in to the drafting process
proposed revised section 290 2915
Proposed Revised Section 290/291
  • Conceptual Framework
      • Idea of principle-based Code
  • Cost-Benefit
      • Compliance costs
      • Public interest perspective
      • Differential approach (e.g. safeguards)
proposed revised section 290 2916
Proposed Revised Section 290/291
  • Some Concerns are picked up
    • Absolute prohibitions vs. safeguard approach
    • Stricter independence rules for Entities of Significant Public Interest
proposed revised section 290 2917
Proposed Revised Section 290/291
  • Timetable
      • High degree of urgency
      • Driven by regulators for large listed companies
  • Entities of Significant Public Interest (ESPI)
      • Fundamental differences between ESPI and other entities
      • But: The principles are relevant for all Audits and Auditors (independence in mind, independence in appearance)
proposed revised section 290 2918
Proposed Revised Section 290/291
  • Independence of Appearance and in Mind
      • Auditor must be independent in mind on all audits
      • Independence in appearance differ on the special circumstances; in a SME-environment fewer shareholders, more closely connected, direct access to the auditor
      • Identification of threats in a more direct way
proposed revised section 290 2919
Proposed Revised Section 290/291
  • Independence and Audit Quality
  • Clarification very much needed and welcomed
  • Specific Issues
      • Tax Services: Extension of differential rules
      • Mandatory Partner Rotation
      • Cooling-Off
      • Provision of Non-Assurance Services
      • Valuation Services
proposed revised section 290 29110
Proposed Revised Section 290/291
  • Specific Issues (contd.)
      • IT System Services
      • MDPs
      • Compensation and Evaluation Policies
      • Experts Definition
      • Network Definition
  • No further relevant changes to be expected
  • The clarified Code (including Independence I + II should become effective December 15, 2010)
thank you
Thank You!
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