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.

This project was approved by the IESBA at its meeting in September 2018. The objective of the project is to ensure that all of the Non-Assurance Services (NAS) provisions in the Code of Ethics are robust and of high quality for global application, thereby increasing confidence in the independence of audit firms.

The overall purpose of the project will involve the development of provisions in the Code that provide a clear and principles based approach, consistent with the conceptual framework, to the circumstances in which firms and network firms may be permitted to provide NAS to audit clients. This includes reconsidering the use of the terms “materiality” and “trivial and inconsequential”. It will also consider (i) new and emerging services; (ii) whether to include the IAASB’s requirements for auditor communication with those charged with governance in the Code; (iii) NAS disclosure requirements; and (iv) other factors.

On January 21, 2020, the IESBA released its Exposure Draft: "Proposed Revisions to the Non-Assurance Services Provisions of the Code". The ED’s proposals are aimed at strengthening the NAS provisions in IESBA’s Code of Ethics.  Among the key changes proposed to the NAS provisions are: (i) a prohibition on providing NAS to an audit client that is a public interest entity (PIE) if a self-review threat to independence will be created; (ii) further tightening of the circumstances in which materiality may be considered in determining the permissibility of a NAS; (iii) strengthened provisions regarding auditor communication with those charged with governance (TCWG), including, for PIEs, a requirement for NAS pre-approval by TCWG; and (iv) stricter requirements regarding the provision of some NAS, including certain tax and corporate finance advice. The ED also includes enhanced guidance to assist firms in evaluating the level of threats to independence when providing NAS to audit clients.  Comments are requested by May 4, 2020.

At its meeting on November 30 and December 4, 8 and 9, 2020, the IESBA unanimously ap-proved revisions to the Non-Assurance Services (NAS) provisions of the Code. Subject to Pub-lic Interest Oversight Board (PIOB) approval, the final NAS pronouncement is expected to be released by late April 2021 and will be effective for audits of financial statements for periods beginning on or after December 15, 2022.

On April 28, 2021, the IESBA released the revisions to the Non-Assurance Services (NAS) and fee-related provisions of the "International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code)".

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

Other developments

April 2021

On April 28, 2021, the IESBA released the revisions to the Non-Assurance Services (NAS) and fee-related provisions of the "International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code)".

April 2020

On April 7, 2020, the IESBA announced that it is extending by one month the comment period on the Exposure Drafts (EDs). The new comment deadline is June 4, 2020. Stakeholders who are able to submit their feedback by May 4, 2020, the original comment deadline, are encouraged to do so. 

January 2020

On January 21, 2020, the IESBA released its Exposure Draft: "Proposed Revisions to the Non-Assurance Services Provisions of the Code". Comments are requested by May 4, 2020.

September 2018

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

Re­lated dis­cus­sions

Section 600, Non-Assurance Services – IESBA

September 2021

• At its meetings on September 13-17 & 27, 2021, the IESBA received an update from the Non-Assurance Services (NAS) and Fees Rollout Working Group and the senior staff of IFAC Communications on Q3 activities to promote awareness, adoption and implementation of the revised NAS and fee-related provisions following the release of the final pronouncements in April 2021. In particular, the IESBA was briefed on the two global webinars held in June, and the status of two sets of IESBA Staff-prepared FAQs which are expected to be finalized and released in Q4 2021. The IESBA was also briefed on other NAS and Fees regional and national webinars and other outreach events held in Q3 2021, as well as those being planned for Q4 2021 and beyond.

March 15, 2021

• At its meetings on 15-17, 23 & 31, 2021 the IESBA received its first briefing from the Non-Assurance Services (NAS) & Fees Rollout Working Group on proposed rollout initiatives to promote awareness and support the global adoption and implementation of the revisions to the NAS and fee-related provisions of the Code. Subject to the Public Interest Oversight Board’s (PIOB’s) approval, the final pronouncements will be released by the end of April 2021 and will be effective for audits of financial statements for periods beginning on or after December 15, 2022. The IESBA noted the Working Group’s plan to coordinate its rollout activities with IFAC and to develop tools and other resources as part of the rollout. The IESBA was also briefed on the Working Group’s proposal to transition its activities to IFAC once the pronouncements come into effect in December 2022. The IESBA will receive an update from the Working Group in June 2021.

Section 600, Non-Assurance Services – IESBA

November 30, 2020

• At its meeting on November 30 and December 4, 8 and 9, 2020, the IESBA unanimously approved revisions to the Non-Assurance Services (NAS) provisions of the Code. Subject to Public Interest Oversight Board (PIOB) approval, the final NAS pronouncement is expected to be released by late April 2021 and will be effective for audits of financial statements for periods beginning on or after December 15, 2022.

September 30, 2020

• At its meeting on September 14-21, 29 and October 1, 2020, the IESBA considered a full analysis of the significant comments received from respondents to the Exposure Draft (ED), Proposed Revisions to the Non-Assurance Services Provisions of the Code, and a first read of the Task Force’s revisions to the ED text in response to the main issues raised by respondents. Among other matters, the IESBA considered the Task Force’s proposed revisions to the ED text and other proposals on the topics of: the self-review threat prohibition; providing advice and recommendations, particularly the threshold for which there would be no deemed self-review threat in relation to tax advice; materiality; communication with those charged with governance; safeguards; technology-related NAS; and various subsections within the NAS section of the International Independence Standards (IIS). The IESBA will consider a revised draft of the provisions with a view to approving the final pronouncement at its December 2020 meeting.

Section 600, Non-Assurance Services – IESBA

December 3, 2019

• At its meeting on December 3-6, 2019, the IESBA the IESBA approved an Exposure Draft of proposed revisions to the non-assurance services provisions in the Code. The Exposure Draft will be released on January 21, 2020 and will be open for public comment until May 4, 2020.

September 2019

• At its meeting on September 16-19, 2019, the IESBA continued its discussion of the proposed revisions to Section 600 of the Code and this took up a significant amount of time over the course of the four days. After reviewing the principles that underlie the project proposals, the Board then comprehensively and carefully reviewed the draft text of the proposed changes with the project task force. The task force will 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 proposed revisions to Section 600, Provision of Non Assurance Services to an Audit Client, including the subsections. Among other matters, the IESBA deliberated: (i) the proposed provisions relating to prohibiting firms and network firms from providing NAS to audit clients that are PIEs when those NAS might create self-review threats; (ii) the proposed provisions addressing communication with TCWG about specific NAS matters, including pre-approval of NAS by TCWG for audit clients that are PIEs; (iii) the ordering and flow of the material in the subsections; and (iv) proposed refinements and other clarifications to subsection 604 relating to tax. At its September 2019 meeting, the IESBA will consider a revised set of proposals with a view to approving an exposure draft.

March 11, 2019

• At its meeting on March 11-13, 2019, the IESBA provided input on key policy decisions and the indicative direction to the Task Force in relation to its proposed revisions to Section 600. Among other matters, the Board deliberated the following topics: (i) whether the Code should prohibit firms and network firms from providing NAS to audit clients that are public interest entities (PIEs) if the outcome of that service might be included directly or indirectly in the financial statements, and the service creates or might create a self-review threat; (ii) whether the Code should explicitly address communication with those charged with governance (TCWG) about NAS matters, including, for PIEs, a requirement for firms and network firms to obtain pre-approval of the NAS from TCWG; (iii) whether the Code should establish a particular threshold for NAS fees vs. audit fees that would require firms and network firms to re-evaluate threats to independence; (iv) whether and, if so, how and under what circumstances there should be enhanced transparency by firms regarding the ratio of NAS fees and audit fees to: (a) TCWG; and (b) the public (the IESBA noted the need for coordination with the Fees Task Force on this particular matter). 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 considered the NAS Task Force’s initial views about possible revisions to Section 600. Among other matters, the Board deliberated the following topics: (i) whether the revised and restructured Code should prohibit firms from providing NAS to audit clients that are public interest entities (PIEs) when such NAS create or might create self-review threats; (ii) whether there should continue to be a distinction in the NAS provisions in the Code for audit clients that are PIEs and audit clients that are not PIEs; (iii) whether there should be clarifications to explain the application of the concept of materiality in the NAS provisions in the Code; (iv) whether the Code should include more explicit provisions regarding auditor communication with those charged with governance about NAS matters, including, for example, whether pre-approval should be obtained for the provision of NAS to audit clients. The IESBA will progress its deliberations, including proposed changes to Section 600 of the Code, at its March 2019 meeting.