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IFAC Code of Ethics PowerPoint Presentation
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IFAC Code of Ethics

IFAC Code of Ethics

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IFAC Code of Ethics

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Presentation Transcript

  1. 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

  2. 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)

  3. 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

  4. 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

  5. Proposed Revised Section 290/291 • Conceptual Framework • Idea of principle-based Code • Cost-Benefit • Compliance costs • Public interest perspective • Differential approach (e.g. safeguards)

  6. Proposed Revised Section 290/291 • Some Concerns are picked up • Absolute prohibitions vs. safeguard approach • Stricter independence rules for Entities of Significant Public Interest

  7. 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)

  8. 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

  9. 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

  10. 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)

  11. Thank You! • www.ifac.org/smp • Contact Details: • Jens Poll • j.poll@roeverbroenner.de