Exposure Draft of the Code of Ethics for Chartered Accountants (Revised)

The International Ethics Standards Board for Accountants (IESBA) has issued International Code of Ethics for Professional Accountants (including International Independence Standards), commonly termed as IESBA Restructured Code.

ICAP as a member of the International Federation of Accountants is committed to the adoption of the IESBA issued ethical requirements. In this context, the Auditing Standards & Ethics Committee (the Committee) of the Institute with the objective to align the ICAP’s Code of Ethics for Chartered Accountants with the IESBA Restructured Code has carried out a comprehensive study and detailed discussions on all parts of the Restructured Code.

Consequent to these detailed deliberations, the Committee has developed draft Code of Ethics for Chartered Accountants (Revised), and in its 55th meeting held on March 26, 2019 it approved to issue the Exposure Draft of the Code of Ethics for Chartered Accountants (Revised) to the members for their comments.

IESBA Restructured Code

In April 2018, IESBA issued the Restructured Code. Important to note that IESBA’s intent behind the restructured code is not to change the substance of the ethical requirements but to re-draft and re-structure them to improve navigation and clarity. Accordingly, the IESBA Restructured Code is completely rewritten under a new structure and drafting convention, making it easier to navigate, use and enforce. This Restructured Code would be replacing previous edition of IESBA Code of Ethics, effective June 15, 2019.

ICAP Draft Revised Code of Ethics for Chartered Accountants

ICAP’s existing Code of Ethics titled “Code of Ethics for Chartered Accountants (Revised)” was issued in April 2015. It is based on the IESBA Code of Ethics issued as of July 2014.

Pursuant to issuance of the Restructured Code by IESBA, ICAP will be aligning its code of ethics with the IESBA Restructured Code, while ensuring that revised requirements are not in conflict with the Chartered Accountants Ordinance, 1961 or anyother legal provision applicable in Pakistan.

A study of the IESBA Restructured Code highlights that the fundamental principles of ethics have not changed. It brings together key ethics advances over the past four years, including the NOCLAR and Long Association provisions and includes an enhanced conceptual framework. Key revisions include:

  • An enhanced and more prominently featured conceptual framework;
  • Clearer and more robust provisions pertaining to safeguards that are better aligned with threats to compliance with the fundamental principles;
  • Enhanced independence provisions regarding long association of personnel with audit clients, including increase in cooling off period requirements;
  • New and revised sections dedicated to professional accountants in business relating to preparing and presenting information and pressure to breach the fundamental principles.
  • Strengthened provisions pertaining to the offering or accepting of inducements, including gifts and hospitality;
  • Provisions with respect to responding to Non-Compliance with Laws and Regulations- NOCLAR (These were introduced by IESBA in 2016 with the effective date of July 15, 2017, and are now being considered for adoption by ICAP);
  • New guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment; and
  • Guidance on pressure to breach the fundamental principles.

As mentioned above, the Draft Revised Code contains few changes from the IESBA Restructured Code. These amendments to the IESBA Restructured Code have been made in order to align the ethical requirements with Pakistan regulatory frameworks, notably the Chartered Accountants Ordinance, 1961. In general, these amended requirements are more stringent than those of the Restructured Code.  For your ease of reference and understanding these amendments to the IESBA Restructured Code are attached as Appendix A to this Circular.

Request for comments

You are requested to send your comments on the Draft Revised Code to the Directorate of Technical Services at dtscomments@icap.org.pk by May 03, 2019.
It would be helpful if the comments include specific paragraph or section references; a clear description of the issue(s) being highlighted and provide alternative provisions supported by rationale for the suggested change.

Looking forward to your comments.

Circular 1 -Exposure Draft of the Code of Ethics for Chartered Accountants (Revised)

Appendix A to Circular No.1

Draft Code of Ethics for Chartered Accountants (Revised)