This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice ( for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

IESBA Proposed Changes to the Code of Ethics: Fee-related Provisions in Part 2, Part 3 and Part 4A of the Code (Potential Amendments to Harmonized Rule of Professional Conduct, Rule 204) [Research]

Next steps:

At its December 2019 meeting, IESBA will review a revised set of proposals from the task force with a view to approving an Exposure Draft to be issued in early 2020

Last up­dated:

September 2019


    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.

    This project was approved by the IESBA at its meeting in September 2018, pursuant to the June 2018 final report of the Fees Working Group.

    The objective of the project is to review the provisions in the Code pertaining to fee-related matters within the project scope, and recommend any changes considered necessary for the Code to remain robust and appropriate in enabling professional accountants to meet their responsibility to comply with the fundamental principles and, where applicable, be independent.

    The scope of the project encompasses (a) provisions in Part 3 of the Code relating to the level of fees for individual audit engagements, and in Part 2 relating to the role of professional accountants in business in approving audit fees; (b) provisions in Part 4A of the Code with respect to fee dependency at the firm, office and engagement partner level in relation to all audit clients; and (c) a review of safeguards in the Code pertaining to the areas addressed in (a) and (b) above. Fee-related matters that overlap with non-assurance services (NAS), in particular the ratio of NAS to audit fees, will be dealt with as part of the NAS project.

    For fur­ther de­tails about the pro­ject, re­fer to the IESBA’s pro­ject sum­mary.


    Other developments

    September 2018

    At its meeting on September 17-20, 2018, the IESBA approved the proposal for this project.


    Re­lated dis­cus­sions

    Fee-related Provisions in the Code - IESBA

    September 2019

    • At its meeting on September 16-19, 2019, the IESBA reviewed a second draft of the proposed revisions to the Code with the project task force. Generally, the Board was supportive of the changes made to the material by the task force since the June 2019 meeting. As a result of the discussions at this meeting, the task force will now give more explicit reference to the Conceptual Framework in presenting the material, as well as considering what changes should be made to the text to more fully address the fact that fees can create an important self interest threat, because they are negotiated between the client and the service provider. The task force intends to update the text of the proposed revisions prior to the December 2019 meeting of the IESBA with a view to having the Board approve an Exposure Draft at that meeting which would be issued for comment in early 2020.

    June 17, 2019

    • At its meeting on June 17-19, 2019, the IESBA considered a first-read draft of the proposed changes to the fee-related provisions in the International Independence Standards, Section 410, Fees as well as some of the related conforming amendments to other sections. Among other matters, the IESBA deliberated: (i) how to emphasize that independence might be impacted by the level of fees charged or quoted to an audit client, including the level of audit fees and fees for services other than audit, as well as the ratio of such fees; (ii) whether the Code should include provisions to address threats to independence created by the fees charged or quoted by a firm for the provision of services other than audit to an audit client; (iii) for audit clients that are public interest entities (PIEs), whether the Code should require firms to communicate information about the level of audit fees and fees for services other than audit to: (a) those charged with governance (TCWG) and (b) the public to enhance transparency, and if so, how this might best be achieved; and (iv) how the fee dependency provisions in the Code might be strengthened for audit clients that are PIEs, including through requiring public disclosure about fee dependency and withdrawal from the audit engagement in specific circumstances. The IESBA will undertake a second read of the proposed changes to the Code at its September 2019 meeting with a view to approving an Exposure Draft by December 2019.

    March 11, 2019

    • At its meeting on March 11-13, 2019, the IESBA considered the Fees Task Force’s initial views about possible revisions to the fee-related provisions in the Code, in particular Section 410, Fees in the International Independence Standards. Among other matters, the Board deliberated and provided directional input about whether the Code should: (i) be strengthened with respect to firms’ and engagement partners’ responsibilities regarding the level of fees quoted for audit engagements; (ii) address the responsibilities of professional accountants in business when they are involved in setting audit fees, particularly having regard to the provisions in the Code dealing with pressure to breach the fundamental principles; (iii) include new provisions to enhance transparency about the level of audit fees, including auditor communication with TCWG and public disclosure, and if so, under what circumstances and how; (iv) be strengthened with respect to the issue of fee dependency at the firm level, including through considering whether the existing safeguards in the Code addressing this issue continue to be appropriate, and whether there should be enhanced transparency about fee dependency matters to (i) TCWG; and (ii) the public, and, if so, under what circumstances and how. The IESBA will progress its deliberations and consider a first-read draft of the proposed changes to the Code at its June 2019 meeting.

    December 2018

    • At its meeting on December 3-5, 2018, the IESBA received a brief update on the activities of the Fees Task Force since approving the project proposal at its September 2018 meeting, including the planned approach to and timeline for the project. The IESBA will consider issues and Task Force proposals, including possible revisions to the fee-related provisions in the Code, at its March 2019 meeting. 


    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.