SAICA members, associates and trainees can look forward to the introduction of a new, restructured Code of Professional Conduct by the end of 2017. Among other things, the code will use simple and shorter sentences and will be easier to navigate. By Juanita Steenekamp
SAICA has adopted the International Ethics Standards Board for Accountants’ (IESBA) Code of Ethics for Professional Accountants as amended in 2015, with some additional guidance included. The code is applicable to all SAICA members, associates and trainees. A contravention of, or failure to comply with any requirements of the code may be regarded as an offence in terms of section 34.10 of the SAICA by-laws and may be investigated. If appropriate, the member/associate may be found guilty and may be liable for penalties as described in the by-laws.
The IESBA has started a process to update and restructure the code based on research findings, outreach programmes and stakeholder input.
SOME OF THE PROPOSED CHANGES
The structure of the code is being amended, including the name being changed from Code of Ethics for Professional Accountants to the Code of Ethics Standards for Professional Accountants. The code will include a guide to the code to assist readers. There is also greater awareness of the prominence of the conceptual framework. The code will also distinguish between requirements and application material. (Refer to the diagram on the next page for a draft of the proposed structure.)
The IESBA is considering amendments to the code dealing with safeguards and to improve the clarity, appropriateness and effectiveness of the safeguards. The conceptual framework is being amended and includes a new requirement for the professional accountant to perform an overall assessment by reviewing the judgements made and overall conclusions reached.
Non-compliance with laws and regulations
The IESBA believes that the basic ethical principles should be the same for all professional accountants and that they should all respond to ethical issues and not turn a blind eye.
The implementation of those principles will differ depending on their roles, levels of seniority and spheres of influence.
The IESBA is therefore proposing a different approach in responding to identified or suspected non-compliance with laws and regulations (NOCLAR) for the following categories of professional accountants:
- Senior professional accountants in business
- Professional accountants in public practice providing services other than audits
- Other professional accountants in business
Long association of personnel with an audit client
It is in the public interest for the registered auditor to be independent of mind and in appearance. A long association of an audit partner could adversely impact objectivity and professional scepticism, which are both important contributors to audit quality.
The IESBA is therefore proposing the following with regard to cooling off for certain auditors auditing public interest entities, as defined.
Engagement partners (EP) for listed and non-listed public interest entities can be engaged for seven years and are then required to cool off for five years
Engagement quality control reviewers (EQCR) for listed public interest entities can be engaged for seven years and are then required to cool off for five years
Engagement quality control reviewers (EQCR) for non-listed public interest entities can be engaged for seven years and are then required to cool off for three years
Other key audit partners (KAP) for listed and non-listed public interest entities can be engaged for seven years and are then required to cool off for two years
In certain circumstances, if the jurisdiction’s rules require the EP or the EQCR to rotate after a shorter time-on period and the country has an independent regulatory regime, then the five-year cooling-off period may be reduced to three years.
Section 92 of the Companies Act 2008 states that the auditor must be rotated off the audit after five years, and thereafter the auditor will apply a reduced cooling-off period for three years.
EXPOSURE DRAFT: PROPOSED RESTRUCTURED CODE (PHASE 1)
AUTHOR |Juanita Steenekamp CA(SA), Project Director: Governance and Non-IFRS Reporting at SAICA