IESBA proposes changes to the Code of Ethics for Professional Accountants to address conflicts of interest
Dec 28, 2011
The International Ethics Standards Board for Accountants (IESBA) is proposing changes to its Code of Ethics for Professional Accountants to provide additional guidance to professional accountants in business and in public practice concerning conflicts of interest, and to make revisions to provide more comprehensive guidance in identifying, evaluating, and managing conflicts of interest.
Among other requirements, the proposals would:
- include a description of circumstances that might create a conflict of interest for the professional accountant, together with examples of such circumstances
- require the professional accountant to take into account whether a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at that time, would be likely to conclude that compliance with the fundamental principles is compromised
- requires the professional accountant to understand the nature of the relationships and services in identifying whether a conflict of interest exists or may be created
- require conflicts of interest within a network of firms to be evaluated when the professional accountant has reason to believe that a conflict of interest exists because of interests or relationships that another firm in the network has with a client
- expand on the guidance in the Code regarding the nature of safeguards that may be available to manage conflicts of interest within firms
- replace existing guidance for professional accountants in business, addressing circumstances in which conflicts of interest might arise when performing professional activities that compromise compliance with the fundamental principles and requiring the professional accountant in business to take steps to identify, evaluate, and manage those situations.
Click for IESBA press release (link to IFAC website).