Revised Code of Ethics for Chartered Accountants

On the recommendation of the Professional Standards and Technical Advisory Committee (PS&TAC), the Council of the Institute in its 261st meeting held on January 24, 2015 has adopted the enclosed revised Code of Ethics issued by IFAC in July 2014 with some amendments.


 It may be recalled that the Institute in July 1990 adopted the IFAC Code of Ethics for Professional Accountants for the first time with some amendments. In May 2008, the Institute’ last Code was revised and issued to members. After that in July 2009, the International Ethics Standards Board for Accountants (IESBA) of IFAC issued a revised Code of Ethics for Professional Accountants, clarifying requirements for all professional accountants and significantly strengthening the independence requirements of auditors. Since 2009 to 2014, major structural changes and new requirements were introduced by IESBA in the Code.

 In order to adopt the revised IESBA Code, the relevant Committee of the Institute took up the review of Codes issued by IESBA from 2009 to 2014 and after an exhaustive study, adopted the latest IESBA Code subject to some changes.

 The revised ICAP Code establishes a conceptual framework that requires a chartered accountant to identify, evaluate, and address threats to compliance with the fundamental principles. The conceptual framework assists chartered accountants in complying with the ethical requirements of the Code and meeting their responsibility to act in the public interest. All professional accountants are required to identify threats to these fundamental principles and if there are threats, then to apply safeguards to ensure that the principles are not compromised.

 The revised ICAP Code entails ensuring compliance with the five fundamental principles of professional ethics which are integrity, objectivity, professional competence and due care, confidentiality and professional behavior. It maintains the principles based approach supplemented by detailed requirements where necessary, resulting in a Code that is robust but also sufficiently flexible to address the wide ranging circumstances encountered by Chartered Accountants. The Code applies to all Chartered Accountants, whether in practice or not.

 The revised ICAP Code includes the following key changes:

  • Split of current section 290 ‘Independence’ into two sections:
    • Section 290, dealing with audit and review engagements
    • Section 291, dealing with other assurance engagements
  • New and consistent drafting conventions have been adopted throughout the revised Code i.e. the term ‘should’ has been replaced with ‘shall’;
  • Introducing definition of ‘Public Interest Entities (PIE)’ and a new term ’Key Audit Partner (KAP)’;
  •  Extending independence requirements for audits of listed entities to all PIEs;
  • Cooling off period must be met before a KAP or firm Managing Partner joins PIE audit clients as Director, Officer or employee on important position;
  • Extending partner rotation requirements to all PIEs and to all KAPs;
  • Strengthening some of the provisions related to non-assurance services to audit clients;
  • Requiring a pre or post issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years;
  • Prohibiting key audit partners from being evaluated on or compensated for selling non-assurance services to their audit clients;
  • Provisions relating to conflict of interest situations and addressing breach of a requirement of the Code have been added;
  • In order to avoid duplication, all sections/ clauses related to Companies Ordinance 1984, listing regulations and Code of Corporate Governance reproduced anywhere in the ICAP Code of Ethics have now been deleted.

Please note that on the recommendation of PS&TAC, the revised ICAP Code was exposed to members for comments vide ICAP Circular No. 1 dated September 9, 2011. In addition awareness seminars were also organized in Karachi, Lahore and Islamabad.

The revised ICAP Code of Ethics would replace the entire existing ICAP Code of Ethics for Chartered Accountants. The revised Code is effective for audits of financial statements for periods beginning on or after July 01, 2015.

The revised Code can be downloaded from ICAP website using the following links:

Members are requested to file the revised Code of Ethics in the Members’ Handbook, Part IV, Section 6 Directives & Decisions.

Circular 4 of 2015 – Revised Code of Ethics for Chartered Accountants