Ethics: Code of Professional Conduct

Assurance engagement

An engagement in public practice aims to obtain sufficient and appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users .

Direct Financial Interest

Owns / under control of individual / influence investment decision

Indirect Financial Interest

No control /cannot influence investment decision

Contingent fees

A fee calculated on a predetermined basis relating to the outcome of a transaction or the result of services performed by the firm .

Immediate family

Spouse / equivalent or dependant

Close family

Parent , child , sibling , NOT immediate

Professional Accountant :

-in business

-in public practice

Professional services

For example : Audit , review , tax , advisory services etc.

CPC : Steps

1: Conceptul framework (threats to fundamnetal principles)

2: evaluate the levek of threat

3: implement steps to address threat

Threats

-Self - review

-Intimidation

-Advocacy

-Familiarity

-Self - interest

Advocacy

Promoting of a position of a client to such an extent that objectivity might be compromised

Self - review

Professional Accountant does not properly evaluate the results of a decision previously made or services delivered on which the PA will rely when forming judgement as part of a current service .

Intimidation

Professional Accountant is deterred from acting objectively by real or perceived pressures , including attempts to exercise undue influence over the PA .

Familiarity

Threat that Professional accountants become too sympathetic towards the interests of a client tor or too accepting of their work due to a long or close relationship with them

Self - interest

Financial or other interests of Professional Accountant can influence PA's judgement and / or behaviour improperly .

Type of threat for Fundamental Principle :

-Confidentiality

-Professional Competence and Due Care

-Professional Behaviour

-Integrity

-Objectivity

Think : " Money , Own work , Promote , Friends , Pressure "

-Money → Self - interest

-Own work → Self - review

-Promote →Advocacy

-Friends →Familiarity

-Pressure →Intimidation

INTEGRITY REQUIRES ( S111 )

-Being straightforward

-Being honest

-Fair dealings

-Not knowingly being associated with information which you believe: is materially false or misleading, is provided recklessly, misleadingly omits or obscures required info

-unless you modify your report or

-take steps to disassociate yourself when you become aware

OBJECTIVITY ( S 112 )

-Not compromising professional or business judgements because of : bias, conflict of interest, undue influence of others

-Not undertake a professional activity if your professional judgement might be unduly influenced by a : circumstance, relationship

PROFESSIONAL COMPETENCE & DUE CARE REQURES ... .. ( $ 113 )

-Attain & maintain professional knowledge and skill to ensure competent service , based on technical & professional standards & relevant legislation

-Act diligently ( carefully , thoroughly , timely ) in accordance with applicable technical and professional standards

-Ensuring appropriate training & supervision of those working under you

-Where appropriate , making clients & employers aware of your limitations

-Avoiding engagements that you are not competent to perform

CONFIDENTIALITY ( S114 )

-Professional Accountants required to respect information acquired as result of professional & business relationships and ( 114.1 ) ;

-Avoiding inadvertent disclosure , including in a a social environment , particulary to a close business associate or immediate family

-Inside organisation / firm Information disclosed by prospective clients / employers

-After the end of the relationship

-Not using confidential information to benefit yourself or a third party

-Taking reasonable steps to ensure those advising , or working under , you also respect confidentiality

S 114 REQUIRES / ALLOWS YOU TO BREACH CONFIDENTIALITY

-Circumstances where it may be required to disclose confidential information : ( 114.1 A1 )

-permitted / required by law or authorised by client , for example :

production of documents in legal proceedings or disclosure to public authorities of infringements ( including reportable irregularities : S45 APA )

-professional duty or right to disclose if not prohibited by law :

To comply with the quality review of the Regulatory Board or professional body

To respond to an inquiry or investigation by the Regulatory Board or other regulatory body

To protect the professional interests of a chartered accountant in legal proceedings

To comply with technical standards and the requirements of the Code

CONFIDENTIALITY ( S 114 ) In deciding whether to disclose confidential information , consider

-Interest of any parties harmed if client consents

-All info known & substantiated . If not - use professional judgement to decide on the type of disclosure , if any .

-Type of communication , to whom ?

-Are the recipients to whom the information is communicated to , appropriate ?

PROFESSIONAL BEHAVIOUR ... ( S115 )

-Comply with relevant laws & regulations

-Behave in a manner consistent with the professions responsibility to act in the public interest in all professional activities and business relationships

-Avoid any conduct that the professional accountant knows or should know might discredit the profession .

-Publicity , advertising and solicitation ( 115.2 ) → When marketing shall be:

Honest and truthful

Not make exaggerated claims for services able to offer , qualifications or experience

Not disparaging references or unsubstantiated comparisons to the work of others

Avoid bringing the profession into disrepute

-Multiple Firms ( 115.3-115.4 ) :

Professional Accountants may be members of more than one firm ( firm which is a registered auditor AND provides professional services )

Must be distinction between firms and members

Must comply with S 41 ( 1 ) and / or S 41 ( 2 ) of APA

-Signing convention of reports ( 115.5-115.6 ):

Shall not delegate to any one not his partner / director ( of any assurance reports or services as required by laws and regulations )

If sign reprt, sign:

name , capacity if partner / director

their designation underneath their name

firms name if not set out on letterhead

-Use of electronic signatures ( 115.7 )

Evaluate the level of the threat

-Evaluate : Is threat at an acceptable level ?

A level at which a PA using the RITP test would likely conclude that the PA complies with all fundamental principles .

-Consider :

Qualitative factors

Quantitative factors

Combined effect of multiple threats

Conditions , policies and procedures ( e.g. corporate governance requirements , requirements for the profession , etc )

-Remain alert to new information / changes in facts & circumstances that Impact the level of the threat or Affect the PA's conclusions about safeguards . Re - evaluate and address threat

Identified threat NOT at acceptable level

-Eliminate circumstances

-Apply safeguards

-Decline / end professional activity

-In forming a conclusion → whether the threat is eliminated / reduced to acceptable level , the PA shall : > Review any significant judgements made / conclusions reached > Use the RITP test

Professional accountant must :

-having an inquiry mind

-exercise professional judgement

-remain alert to new information and changes

-use reasonable and informed third party test ( RITP )

exercise professional judgement

-Application of relevant training , professional knowledge , skill and experience

-Considerations :

concern that information is missing

inconsistencies between facts and circumstances , and expectations

if professional accountant's expertise and experience is sufficient further consultation required

information provides reasonable basis for conclusion

preconceptions or bias

other possible reasonable conclusions

use reasonable and informed third party test ( RITP )

-Would the same conclusions be reached by reasonable and informed third party ?

-weighs all relevant facts and circumstances available at the time ( or expected to know ) does not have to be professional accountant BUT relevant knowledge and experience

-evaluates appropriateness of conclusions in an impartial manner

Associate

Satisfied the requirements pursuant to the By - Laws ( By - Laws Part A par 1.1 )

Trainee Accountant

Person / Learner who is in the permanent employ of a training office and who is serving under a training contract .

Membership , associateship and designations ( par 5 )

-Only a member who is in good standing is entitled to use the designations reserved for members of the Institute . ( Chartered Accountants Designation ( Private ) Act , 1993 )

-Associate:

College of General Accountants →Associate General Accountant South Africa

-College of Accounting Technicians → Accounting Technician

-Trainee accountants and Associates do not have any rights to use any of the designations reserved for the members of the Institute .

Purpose and Objects of SAICA ( par 4 )

-Promote the interests of members and associates of the Institute and support the economic and social development of South Africa through the following ancillary objects :

4.1.1 : act in public interest and safeguard values of the Profession

4.1.2 : promote common interests of members and associates

4.1.3 : support and encourage the advancement of skills and knowledge and ensure that members and associates have appropriate competencies

4.1.4 : grow and transform the Profession

SAICA -By - Laws Appendix 4 , Part 4 : Punishable Conduct

4.1.1 Contravening provisions of the Chartered Accountants ' Designation Act

4.1.2 Directly paying , in monetary or other consideration , an individual a commission for bringing the member work or inducing persons to give the member work .

4.1.3 Accepting commission , brokerage or remuneration ( directly or indirectly ) for professional or commercial business referred to others for the member's service unless the client consents and is aware .

4.1.4 Improperly obtaining or trying to obtain work .

4.1.5 Soliciting / Advertising in any manner that is not permitted by the Rules or Code of Professional Conduct ( CPC )

4.1.6 Unlawfully failing or delaying to account for money / property received on behalf of a client when called to do so

4.1.7 . Failing to comply with any regulation , By - law or the CPC .

4.1.8 . Seeking to impose restraint on a trainee accountant ( which applies either before or during the period of training and after the termination of the training period ) or threatening or attempting to enforce restraint .

4.1.9 Stipulating payment from / for a trainee accountant who has been serving under a training contract for consideration / remuneration to agreeing to cancellation of the training contract . It will not be considered a breach of the By - law if a member or former member , requires reimbursements for disbursements from SAICA made in connection with a training contract subsequently cancelled .

4.1.10 . Failing to resign from an engagement when requested by the client , without reasonable cause to do so .

4.1.11 . Failing after demand to pay any subscription , fee or levy payable to SAICA

4.2.1 . Contravention of sections 44 , 52 , 53 or 54 of the APA , 26 of 2005 or any rules and regulations created by IRBA

4.2.2 Conducting himself or herself with gross negligence in connection of any work or

SAICA By - Laws Appendix 4 Disciplinary process

Part 8 : Complaint receipt and Initial Assessment

Part 9 : Process of dealing with offences under the SAICA By - Laws ( referred to PCC )

Part 10 : Process of dealing with punishable conduct outside of the By - Laws referred to DC )

Part 11 : Complaints arising from Media Reports

SAICA - By - Laws Appendix 4 Professional Conduct Committee ( Part 12 )

-Powers and duties of the Professional Conduct Committee

-Consider a complaint brought against a member , associate , trainee accountant or former member ( respondent / accused that may have committed an offence under the By - Laws if the respondent / accused is not member of IRBA also

-Fit and proper enquiries related to applicants ( part 13 )

SAICA -By - Laws Appendix 4 Disciplinary Committee ( Part 14 )

-Powers and duties of the Disciplinary Committee ( Part 14 )

-On receipt of a formal complaint , give notice to respondent / accused

-Accused is given opportunity of being heard before the Committee

-Settlement Orders ( part 15 )

SAICA By - Laws Appendix 4 Record and Publication of Findings and Decisions ( part 18 )

-All findings and decisions of the PCC and DC shall take effect when made and shall be reported to the Board ( 18.1 )

-Offences published to SAICA website , in member communications or in Accountancy SA magazine : Name of respondent, Description of offence, Penalty imposed

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