Ethics and Network Definition
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Ethics and Network Definition

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Ethics and Network Definition Ethics and Network Definition Document Transcript

  • Ethics and Network Definition Michael Niehues Federation of European Accountants Fédération des Experts Comptables Européens www.fee.be Ethics and Network Definition Issues for SMPs Relevance of the IFAC Code of Ethics Capacity to implement and comply Lokal laws/regulations and the Code The challenge: Network Definition Federation of European Accountants – Fédération des Experts Comptables Européens 1
  • IFAC Code of Ethics Relevance commitment of IFAC member bodies high quality ethical standards for professional accountants SME vs. PIE audits (independence) compare Code with Statutory Audit Directive and EU Recommendation SMPs and the global dimension Federation of European Accountants – Fédération des Experts Comptables Européens IFAC Code of Ethics The case for convergence (1) Trends Globalization: Companies to comply with multiple sets of regulations and requirements Substantial progress made in convergence of accounting and auditing standards Convergence of independence standards less advanced – even within the Internal Market Situation Inconsistent understanding of independence among preparers, auditors, investors and regulators Reputation at risk: differences and complexity of detail may lead to minor violations that don’t impact independence in substance Higher cost to preparers, auditors and regulators Somewhat reduced auditor choice Federation of European Accountants – Fédération des Experts Comptables Européens 2
  • IFAC Code of Ethics The case for convergence (2) Benefits of convergence: Clearer understanding of independence Facilitates more efficient operation by preparers, auditors and regulators Reduces duplication in compliance processes How to achieve convergence: Recognize: difficult and time consuming to change national requirements of law and regulation globally and in short term Short term objectives • Profession to take into account IESBA Code when considering independence matters • Regulators to accept independence requirements in the IESBA Code for extraterritorial application from an Internal Market perspective the EU should take the lead Federation of European Accountants – Fédération des Experts Comptables Européens IFAC Network Definition IFAC Code of Ethics Definition “A larger structure: a) That is aimed at co-operation; and b) That is • clearly aimed at profit or cost sharing or • shares common ownership, control or management, [or] • [shares] common quality control policies and procedures, [or] • [shares a] common business strategy, [or] • [shares] the use of a common brand name, [or] • [shares] a significant part of professional resources.” + Guidance (290.14 – 290.26) Federation of European Accountants – Fédération des Experts Comptables Européens 3
  • IFAC Network Definition Consequences The Code’s auditor independence provisions apply to all member firms of the auditor’s network Statutory Audit Directive • Auditor independence (Art. 22.2) • Registration of audit firms (Art. 17.1 (h)) • For auditors of PIEs: Transparency Reports (Art. 40.1 (b)) Consequences for your Practice Federation of European Accountants – Fédération des Experts Comptables Européens Ethics and Network Definition Questions & Answers Federation of European Accountants – Fédération des Experts Comptables Européens 4