Code of professional conduct: CA’s in business

Examples of threats

-Advocacy

-Self - review

-Intimidation

-Familiarity

-Self - interest

Advocacy

Opportunity to manipulate prospective information to obtain favourable financing .

Self - review

Determining appropriate accounting treatment for business combination after performing feasibility study ( e.g. performing the feasibility study on a new joint venture and then deciding on the accounting treatment of the joint venture . )

Intimidation

-Threat of dismissal or replacement over a disagreement about application of an accounting principle or the way in which reporting on financial information is conducted .

-Dominant personality attempting to influence decision- making processes .

Familiarity

-Responsible for financial reporting when family member makes decisions that affect the entity's financial reporting .

-Long association with business contacts influencing business decisions .

Self - interest

-Financial interests , loans or guarantees .

-Incentive compensation arrangements .

-Inappropriate personal use of corporate assets .

-Gift or special treatment offered from supplier .

-Holding shares in the employing company .

Conflict of interest

THREAT:

Conflict of interest creates a threat to objectivity and possibly other fundamental principles .

EXPLANATION:

The CA undertakes a professional activity related to a particular matter for two or more parties whose interests regarding the matter are in conflict .

The interests of the CA regarding a particular matter and the interests of a party for whom the CA undertakes a professional activity related to that matter are in conflict .

DISCLOSURE:

How threats were addressed to relevant parties AND Consent from relevant parties ( also implied ) .

DOCUMENTATION:

Nature of conflict of interest .

FACTORS:

The nature of relevant interests and relationships between involved parties .

The activity and its implication for involved parties .

In general ; more direct connections cause threats to be more likely not at an acceptable level .

SAFEGUARDS:

Withdrawing from decision - making process .

Restructuring / segregating responsibilities and duties .

Obtaining appropriate oversight .

Preparation and Presentation of Information

THREAT:

Preparing misleading information creates self - interest and intimidation threats to objectivity , integrity and professional competence and due care .

EXPLANATION:

Preparing misleading information creates self - interest and intimidation threats to objectivity , integrity and professional competence and due care .

Prepare or present the information in accordance with a relevant reporting framework , where applicable .

Prepare or present the information in a manner that is intended neither to mislead nor influence contractual or regulatory outcomes inappropriately .

FACTORS:

Not omit anything with the intention of rendering the information misleading or of influencing contractual or regulatory outcomes inappropriately

Exercise professional judgment to : Represent facts accurately and completely in all material respects , Describe clearly the true nature of business transactions or activities , and Classify and record information in a timely and proper manner .

SAFEGUARDS:

Discuss concerns with superiors , management or those charged with governance .

Discuss the policies and procedures of the employing organisation on how to address the matter internally ( especially whistle- blowing policies )

Consulting with SAICA ( a relevant professional body ) , the internal or external auditor of the employing organisation and / or legal counsel .

Determining whether any requirements exist to communicate to third parties , including users of the information and regulatory and oversight authorities .

If these safeguards cannot be implemented , the professional accountant shall refuse be or to remain associated with the information .

In such circumstances , it might be appropriate for a professional accountant to resign from the employing organisation .

Acting with sufficient expertise

THREAT:

Acting without sufficient expertise creates a self - interest threat to compliance and due care .

FACTORS:

The extent to which the professional accountant is working with others .

The relative seniority of the professional accountant in the business .

The level of supervision and review applied to work .

SAFEGUARDS:

Obtaining assistance from someone with the necessary expertise , and Ensuring that there is adequate time available for performing the relevant duties .

Inducements , including gifts and hospitality

THREAT:

Offering or accepting inducements might create a self - interest , familiarity or intimidation threat , particularly to integrity , objectivity and professional behaviour .

FACTORS:

The nature , frequency , value and cumulative effect of the inducement

Timing of when the inducement is offered relative to any action or decision that it might influence .

Whether the inducement is customary or cultural practice in the circumstance .

Whether the inducement is an ancillary part of a professional service .

SAFEGUARDS:

Inform senior management or those charged with governance of the employing organisation .

Amend or terminating the business relationship with the offeror .

PART 2 : Chartered Accountants in business

210 Conflict of interest

220 Preparation and Presentation information

230 Acting with sufficient expertise

240 Financial interests

250 Inducements , including gifts and hospitality

270 Pressure to breach fundamental principles