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December 20, 2011

IESBA proposes amendments to code of ethics

The International Ethics Standards Board for Accountants (IESBA) has issued proposals to amend its Code of Ethics for Professional Accountants.

The IESBA proposes to provide more comprehensive guidance in identifying, evaluating, and managing conflicts of interest as well as additional guidance to professional accountants in business and in public practice concerning conflicts of interest.

The standard setter thinks the approach taken by a professional accountant in public practice and a professional accountant in business should be broadly similar. But the proposal recognises that conflicts of interest will typically arise in different circumstances for accountants in public practice, particularly because a conflict of interest may arise from professional services provided by other members of the accountant’s firm.

The proposed guidance also calls for professional accountants in business to be alert to interests and relationships that a reasonable and informed third party would be likely to conclude might compromise compliance with the fundamental principles. The IESBA said the proposal would strengthen the guidance on “threats created by compensation and incentive arrangements”.

IESBA chairman Ken Dakdduk said the changes should assist professional accountants in early identification of a potential conflict of interest and prompt accountants to evaluate their ability to be objective in that situation and meet the other fundamental principles in the IESBA code”.

“From the perspective of the public, timely identification of potential conflicts of interest can provide affected parties with more time to engage an alternative service provider,” Dakdduk explains.

Deadline to comment on the proposals is 31 March 2012.

 

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