IESBA Proposed Changes to the Code of Ethics: Revisions to the Code Addressing Tax Planning and Related Services (Potential Amendments to Harmonized Rule of Professional Conduct, Rule 204) [ED]
The comment period ends on May 18, 2023 |
|
Next steps: |
The IESBA will review the Exposure Draft feedback in Q2/2023 |
Last updated: |
February 2023 |
Overview
Harmonized provincial Rule 204 sets out the Canadian profession’s standards that ensure Chartered Professional Accountants (CPAs) maintain auditor independence during engagements they undertake or participate in. It sets the standards and requirements CPAs must maintain as part of their professional conduct. Ethics standards adopted by Canadian provincial bodies are created in alignment with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). Hence, changes to the IESBA Code of Ethics will need to be reflected in Rule 204.
On February 17, 2023, the IESBA released for public comment an Exposure Draft in respect of Proposed Revisions to the Code Addressing Tax Planning and Related Services.
The proposed revisions respond to public interest concerns about tax avoidance and the role played by consultants, including professional tax advisers, in light of revelations in recent years such as the Paradise and Pandora Papers. The proposals strengthen the ethical expectations for professional accountants in business and in public practice when performing tax planning activities for employing organizations or providing tax planning services to clients, respectively.
Among other matters, the proposed ethical framework:
- Explains the types of threats to compliance with the fundamental ethics principles of the Code that might be created when professional accountants are involved in tax planning.
- Sets a clear principle that professional accountants recommend or otherwise advise on a tax planning arrangement only if they have determined that there is a credible basis in laws and regulations for it.
- Requires consideration of the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view the tax planning arrangement before determining whether to proceed with the recommendation or advice.
- Provides practical guidance to assist professional accountants in navigating situations of uncertainty when carrying out tax planning.
- Deals with other practical matters, including disagreement with the client or management or those charged with governance, and documentation.
The development of the proposals has been informed by extensive fact finding and outreach to stakeholders, including three global roundtables held in April 2022.
The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the IESBA’s website. Comments are requested by May 18, 2023.
Other developments
February 2023
On February 17, 2023, the IESBA released for public comment an Exposure Draft in respect of Proposed Revisions to the Code Addressing Tax Planning and Related Services.