1. Technical headlines
BUSINESS TECHNICAL
RECENTLY WE LOOKED
at the changes made by the
International Ethics Standards
Board for Accountants (IESBA) to
the Code of Ethics for Professional
Accountants relating to responding
to non-compliance with laws and
regulations. As an accredited body
under the Auditor Regulation Act 2011,
the New Zealand Institute of Chartered
Accountants (NZICA) is required to
have an ethical code that is at least as
stringent as the international code. In
keeping with this, the New Zealand
Regulatory Board has recently issued
an Invitation to Comment proposing
amendments to the NZICA Code of
Ethics which applies to all members
resident in New Zealand.
Theproposedamendmentssetouta
frameworktoguidemembersinwhat
actionstotakeinthepublicinterestwhen
theyencounternon-compliancewithlaws
andregulations(NOCLAR)intheordinary
courseofperforminganengagement
orundertakingtheirrole.Itdoesnot
contemplatemembersproactively
“looking”foractsofnon-compliance,
andmembersarenotexpectedtohavea
levelofknowledgeoflawsandregulations
thatisgreaterthanthatwhichisrequired
toundertaketheprofessionalservice
theyhavebeenengagedtoperform.
Furthermoreitisrestrictedtolawsand
regulationsthatmay:
• have a material effect on the financial
statements
• impact on the operating aspects of
the client’s business or its ability to
continue as a going concern, or to
avoid material penalties.
Matters that are clearly
inconsequential, financial or
otherwise, are not in scope. Personal
misconduct unrelated to the
business activities of the client or
employer are also out of scope.
The framework provides formembers to:
1. discuss the matter with the
appropriate level of management
and, where appropriate, those
charged with governance (TCWG).
The appropriate level of management
is generally at least one level above
the person(s) believed to be involved
in the matter
2. assess the appropriateness of the
response, and determine if further
action is needed in the public
interest.
Further action, unless prohibited by law
or regulation, may include:
• disclosing the matter to an
appropriate authority, even when
there is no legal or regulatory
requirement to do so
• withdrawing from the engagement
and the professional relationship.
An important point to note is that this
framework gives members the right,
Responding to NOCLAR
in New Zealand
Changes to the Code of Ethics that will affect all members
are on the horizon. BY ZOWIE MURRAY CA
but not a duty, to disclose the matter to
an appropriate authority. This does not
override circumstances where members
have a legal or regulatory duty to report
to an appropriate authority.
In deciding whether to disclose the
matter, it depends on whether there
is credible evidence that the act may
result in serious adverse consequences
to investors, creditors, employees
or the general public in financial or
non-financial terms. The appropriate
authority will depend on the nature
of the matter, for example, a financial
markets regulator in the case of
fraudulent financial reporting.
If it is determined that disclosure
to an appropriate authority is an
appropriate course of action in
the circumstances, this will not be
considered a breach of the member’s
ethical duty of confidentiality. The duty
of confidentiality under the extant code
currently acts as a barrier to disclosure,
so this conflict is now addressed.
The New Zealand Auditing and
Assurance Standards Board (NZAuASB)
has already issued the equivalent
amendments to PES 1 Code of Ethics for
Assurance Practitioners which are also
effective from 15 July 2017. This only
applies to assurance practitioners,
whereas the NZICA Code of Ethics
applies to all New Zealand resident
members. The closing date for feedback
on the Invitation to Comment is Friday
31 March 2017. The New Zealand
Regulatory Board plans to issue the
revised Code of Ethics after its April
2017 meeting resulting in the NOCLAR
provisions applying to all New Zealand
members.
•
ZOWIE MURRAY CA is a senior policy adviser in
CA ANZ’s Thought Leadership and Policy Team.
66
acuity | DECEMBER 2016

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