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Code of Ethics Beefed up for Accountants to Address Conflicts of Interest

 The International Ethics Standards Board for Accountants has released stronger provisions in its Code of Ethics for Professional Accountants to address conflicts of interest and a breach of a requirement of the code.

 

 

The IESB, which operates under the auspices of the International Federation of Accountants, also released amendments to the definition of the term “engagement team” in the code of ethics. The American Institute of CPAs is a member body of IFAC.

Recognizing the ethical questions and challenges that can arise from conflicts of interest, the IESBA has revised the code of ethics to establish more specific requirements and provide more comprehensive guidance to support professional accountants in identifying, evaluating, and managing such conflicts.

The revisions affect professional accountants both in public practice and in business, taking into account the different circumstances in which they work. The changes now provide a clearer explanation of what a conflict of interest means under the code.

The changes also are aimed at better enabling professional accountants to identify potential conflicts of interest early for timely action to be taken by the affected parties. Importantly, the new requirements are intended to stimulate professional accountants to evaluate whether they can remain objective in those circumstances and abide by the other fundamental ethical principles in the code.

The changes will be effective in 2014; see the individual pronouncements for details. Early adoption is permitted. The revised pronouncements will be printed in the 2013 Handbook of the Code of Ethics for Professional Accountants due out in the second quarter.

In conjunction with the International Auditing and Assurance Standards Board’s release Tuesday of its International Standard on Auditing (ISA) 610 (Revised 2013), Using the Work of Internal Auditors, the IESBA is also releasing amendments to the definition of “engagement team” in the code. The IAASB’s revised standard now includes guidance to external auditors when determining whether they can use direct assistance from internal auditors, and if so, in which areas and to what extent. The material addressing direct assistance does not apply if the external auditor is prohibited by law or regulation from obtaining direct assistance. The IESBA amendments clarify the relationship between internal auditors providing direct assistance and the meaning of an engagement team under the IESBA code of ethics.

Source: http://www.accountingtoday.com/news

 



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