1. 10 MARCH 2013
Latest
THE PROFESSIONAL STANDARDS Board (PSB) of NZICA is intending to issue an
exposure draft of the Code of Ethics (Revised).This will result in the withdrawal
of the Code of Ethics: Independence in Assurance Engagements, which will be
incorporated into the Code of Ethics (Revised).At the time of writing the PSB was
ensuring the final amendments discussed at the 7 February meeting are made in
preparation for a March exposure.
PURPOSE OF REVISION
The proposed standard will enable international and national alignment with the
International Ethics Standards Board for Accountants (IESBA) and the New Zealand
Auditing and Assurance Standards Board (NZAuASB) respectively.This alignment
is necessary when International Federation of Accountants (IFAC) member
obligations are considered.
Further to the case for international alignment are the requirements imposed
by the NZICA Act 1996.The Act requires that NZICA always has “a Code of Ethics
that governs the professional conduct of its members”.The Code of Ethics sets
out fundamental principles and provides guidance on professional conduct.These
principles sustain public confidence in the accounting profession and are positive
points of difference between our members and other accountants. Compliance
with the Code of Ethics is mandatory for our members, regardless of the nature of
their work.
BACKGROUND: INTERNATIONAL CONVERGENCE
In July 2009, the IESBA of IFAC released a revised Code of Ethics for Professional
Accountants, effective from 1 January 2011.This release was significant because,
in NZICA’s capacity as an IFAC member body, a requirement to “apply no less
stringent standards than those stated in the IFAC Code” exists, unless prohibited
by law or regulation.
Subsequent to the IESBA release, the External Reporting Board’s (XRB) NZAuASB
issued a Professional and Ethical Standard directly aligned with Parts A and B
of the IFAC Code .The NZAuASB Professional and Ethical Standards have direct
relevance for NZICA members providing assurance services. In September 2011,
a pronouncement was approved by NZICA’s Council that made it a requirement
for all NZICA members to adhere to the auditing and assurance standards issued
by the NZAuASB, and indirectly with their Professional and Ethical Standards.
Therefore, the IESBA release simultaneously imposes the requirement for NZICA
to revisit the COE and COE: Independence and to ensure consistency with the
NZAuASB’s relevant Professional and Ethical Standards.
The adoption of an IFAC-based approach to the Code of Ethics by the NZAuASB,
combined with IFAC member obligations, signals change to the current Code as the
proposed IFAC structure is inherently different.The consequences of not revisiting
the COE and COE: Independence would be twofold. First, failure to change may
mean a breach of IFAC membership obligations. Second, the requirements for
audit practitioners who would have to abide by two materially different Codes (the
NZAuASB and NZICA) would create an environment giving rise to uncertainty.
RevisionofNZICA’sCodeofEthics
Proposed changes to the Code of Ethics will affect all
members.
ByZowieMurrayCAandDrMichaelFraser
AN IFAC-BASED CODE
In the NZICA Code all the rules and requirements are
directly linked to a fundamental principle, whereas
in the IFAC Code the fundamental principles stand
alone in Part A. Professional accountants are required
to comply with the fundamental principles.There are
minimal additional requirements in this Part.
The fundamental principles are similar, but not
identical.
IFAC NZICA
Integrity Integrity
Objectivity
Objectivity and
Independence
(independence
is only required
when performing
certain types of
engagements)
Professional
Competence and Due
Care
Competence
Quality Performance
(includes due care
and diligence,
timeliness,
compliance with
technical and
professional
standards)
Confidentiality Professional
Behaviour
(includes
confidentiality)
Professional
Behaviour
The IFAC Code has a much fuller description of
the conceptual framework with identification and
description of the categories of threats and categories
of safeguards.
INVITATION TO COMMENT – COMING SOON
An Invitation to Comment will be made upon the
release of the exposure draft and will summarise
key differences between the exposure draft and
the current NZICA Code.The PSB anticipate a three
month comment period, during this time submissions
from members will be invited.The PSB will be
proposing that the Code of Ethics becomes effective
from 1 January 2014. This date is the same as the
effective date for the NZAuASB Professional and
Ethical Standards.
Once released, the exposure draft will be available
on nzica.com along with a summary of the proposed
changes.The PSB will be interested in hearing your
views.This feedback can be emailed to submission.
feedback@nzica.com.
Zowie Murray CA and Dr Michael Fraser are
members of NZICA’s Technical Services Team.

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