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Enhancing Clarity in Code Structure: IESBA Project Proposal

This project proposal aims to enhance the clarity, organization, and accessibility of the IESBA Code through restructuring, reorganization, and electronic features. Recommendations include distinguishing requirements, clarifying responsibilities, and improving the language for better understanding. The timeline focuses on finalizing the revised Code by 2016 for effective implementation in January 2018.

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Enhancing Clarity in Code Structure: IESBA Project Proposal

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  1. Structure of the Code Don Thomson, Working Group Chair IESBA Meeting Toronto, Canada April 7-9, 2014

  2. Background • 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

  3. 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

  4. Distinguishing requirements (4-A # I) Recommendations: • Distinguish requirements from guidance • enhance understandability & enforceability • Confirm: conceptual framework is a requirement • Guidance adjacent to relevant requirements

  5. 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

  6. 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

  7. Electronic Code (4-A # IV) Recommendations: • Immediate improvements • HTML, hyperlinks, navigation • More extensive electronic features • Coordinate with other restructuring

  8. 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

  9. 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

  10. Project Proposal (4-B and 4-F) • 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?

  11. Forward timeline (tentative) (4) • Apr'15 – IESBA – CP responses • Jul'15 – IESBA – draft ED • Sep'15 – CAG – draft ED • Oct'15 – IESBA – approve ED • 2016 – Finalize and issue a restructured Code • Jan'18 – Code effective • Jul'14 – IESBA – draft CP(input re sample restructuring) • Sep'14 – CAG – draft CP • Oct'14 – IESBA – approve CP • Jan'15 – IESBA – continue review of restructured Code • Mar'15 – CAG – CP responses

  12. 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

  13. 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

  14. 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

  15. 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

  16. Matters for IESBA Consideration Any Other Comments or Questions ?

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