CODE OF ETHICS BHAYANDER STUDY CIRCLE OF VASAI BRANCH OF WIRC OF ICAI 29122024
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About This Presentation
The Code of Ethics for Professional Accountants (Including
Independence Standards) (“Code of Ethics” or “the Code”) sets out
fundamental principles of ethics for professional accountants
(hereinafter also called as “accountants”), reflecting the
profession‟s recognition of its public i...
Slide Content
MOTTO
“Ya Aeshu Suptaeshu Jagruti”
Quotation from the Upanishads - Kathopanishad
"A person who is awake in those that sleep"
"Eternal Vigilance"
“Ya Aeshu Suptaeshu Jagruti”
Quotation from the Upanishads - Kathopanishad
"A person who is awake in those that sleep"
"Eternal Vigilance"
Disclaimer
The information provided here is sourced from the Code
of Ethics issued by ICAI in 2019, as revised periodically.
Every effort has been made to present the information
accurately and appropriately.
Any errors or omissions are purely unintentional.
Additionally, a few slides have been adapted from the
ICAI presentation delivered during the Code of Ethics
Webinar to enhance clarity and improve the
dissemination of information.
The information provided here is sourced from the Code
of Ethics issued by ICAI in 2019, as revised periodically.
Every effort has been made to present the information
accurately and appropriately.
Any errors or omissions are purely unintentional.
Additionally, a few slides have been adapted from the
ICAI presentation delivered during the Code of Ethics
Webinar to enhance clarity and improve the
dissemination of information.
PURPOSE ~
FUNDAMENTAL
The Code of Ethics for Professional Accountants (Including,
Independence Standards) (“Code of Ethics” or “the Code”) sets out
fundamental principles of ethics for professional accountants
(hereinafter also called as “accountants”), reflecting the
profession's recognition of its public interest responsibility. These
Y principles establish the standard of behaviour expected ofa
professional accountant.
Le
Dia
Code has been derived from the
International Ethics Standards Board
for Accountants (IESBA) Code of Ethics,
2018 issued by the International
Federation of Accountants (IFAC)
FUNDAMENTAL
The Code of Ethics for Professional Accountants (Including,
Independence Standards) (“Code of Ethics” or “the Code”) sets out
fundamental principles of ethics for professional accountants
(hereinafter also called as “accountants”), reflecting the
profession's recognition of its public interest responsibility. These
Y principles establish the standard of behaviour expected ofa
professional accountant.
Le
Dia
Code has been derived from the
International Ethics Standards Board
for Accountants (IESBA) Code of Ethics,
2018 issued by the International
Federation of Accountants (IFAC)
IESBA
International Ethics Standards Board for Accountants
Parent Body:
International Federation of Accountants
| IESBA
Develops and promotes the International Code of
Ethics for Professional Accountants (including
International Independence Standards)
In 2018, the IESBA issued a revised and restructured Code which came into effect in Jung |
The revised and restructured Code includes many substantive revisions, including in re
non-compliance with laws and regulations (NOCLAR)
International Ethics Standards Board for Accountants
Parent Body:
International Federation of Accountants
| IESBA
Develops and promotes the International Code of
Ethics for Professional Accountants (including
International Independence Standards)
In 2018, the IESBA issued a revised and restructured Code which came into effect in Jung |
The revised and restructured Code includes many substantive revisions, including in re
non-compliance with laws and regulations (NOCLAR)
ETHICS
Moral principles that govern a person's behaviour or
the conducting of an activity
It enables a person to understand how he/she must
reflect to act responsibly
Ethics is derived from the Greek word “ethos”
The morals of an individual refer to his/her personal
feelings and principles, while ethics define rules and
regulations imposed by the external environment,
such as code of conduct defined by employers,
religious groups, government and institutes
Moral principles that govern a person's behaviour or
the conducting of an activity
It enables a person to understand how he/she must
reflect to act responsibly
Ethics is derived from the Greek word “ethos”
The morals of an individual refer to his/her personal
feelings and principles, while ethics define rules and
regulations imposed by the external environment,
such as code of conduct defined by employers,
religious groups, government and institutes
CODE OF ETHICS
Applicable from 1st April 2020
Code provides a conceptual framework that
professional accountants are to apply in order to
identify, evaluate and address threats to
compliance with the fundamental principles.
The Code sets out requirements and application
material on various topics to help accountants
apply the conceptual framework to those topics.
In the case of audits, reviews and other assurance engagements, the Code sets out Inde
Standards, established by the application of the conceptual framework to threat
independence in relation to these engagements.
Applicable from 1st April 2020
Code provides a conceptual framework that
professional accountants are to apply in order to
identify, evaluate and address threats to
compliance with the fundamental principles.
The Code sets out requirements and application
material on various topics to help accountants
apply the conceptual framework to those topics.
In the case of audits, reviews and other assurance engagements, the Code sets out Inde
Standards, established by the application of the conceptual framework to threat
independence in relation to these engagements.
HOW TO USE
“CODE OF ETHICS”
The Code requires professional accountants to
comply with the fundamental principles of ethics.
The Code also requires them to apply the
conceptual framework to identify, evaluate and
address threats to compliance with the
fundamental principles
Applying the conceptual framework requires
exercising professional judgment, remaining alert
for new information and to changes in facts and,
circumstances, and using the reasonable ai
informed third party test.
“CODE OF ETHICS”
The Code requires professional accountants to
comply with the fundamental principles of ethics.
The Code also requires them to apply the
conceptual framework to identify, evaluate and
address threats to compliance with the
fundamental principles
Applying the conceptual framework requires
exercising professional judgment, remaining alert
for new information and to changes in facts and,
circumstances, and using the reasonable ai
informed third party test.
INDIA
PRONOUNCEMENT OF ICAI
While performing our duties as a professional, the
knowledge of laws and other Rules and regulations
affecting a particular assignment is fundamental.
However, apart from the domain knowledge, one also
needs to constantly bear in mind the provisions of CA Act,
Regulations, technical pronouncements of ICAI and also a
few notifications of ICAI.
Violation of these pronouncements, doubtless, is
professional misconduct.
PRONOUNCEMENT OF ICAI
While performing our duties as a professional, the
knowledge of laws and other Rules and regulations
affecting a particular assignment is fundamental.
However, apart from the domain knowledge, one also
needs to constantly bear in mind the provisions of CA Act,
Regulations, technical pronouncements of ICAI and also a
few notifications of ICAI.
Violation of these pronouncements, doubtless, is
professional misconduct.
INDIA
CERTIFICATE OF PRACTICE
Member who is not in practice, is precluded
from accepting engagement to render
services of any of the types normally
prescribed for a Chartered Accountant, even
though for doing so, he does not require
special qualifications.
CERTIFICATE OF PRACTICE
Member who is not in practice, is precluded
from accepting engagement to render
services of any of the types normally
prescribed for a Chartered Accountant, even
though for doing so, he does not require
special qualifications.
CERTIFICATE OF PRACTICE
Once the person concerned becomes a member
of the Institute, he is bound by the provisions
of the Chartered Accountants Act and its
Regulations.
| If and when he appears before the “Income-tax
Appellate Tribunal” as an Income-tax
INDIA representative after having become a member
of the Institute, he could so appear only in
capacity as a Chartered Accountant a
member of the Institute.
Once the person concerned becomes a member
of the Institute, he is bound by the provisions
of the Chartered Accountants Act and its
Regulations.
| If and when he appears before the “Income-tax
Appellate Tribunal” as an Income-tax
INDIA representative after having become a member
of the Institute, he could so appear only in
capacity as a Chartered Accountant a
member of the Institute.
CERTIFICATE OF PRACTICE
A member of the Institute can have no other
capacity in which he can take up such practice,
separable from his capacity to practice as a
member of the Institute.
A Chartered Accountant whose name has been
removed from the membership for
professional and/or other misconduct, during
such period of removal, will not appear before
the various tax authorities or other b
before whom he could have appear
capacity as a member of this Institute
A member of the Institute can have no other
capacity in which he can take up such practice,
separable from his capacity to practice as a
member of the Institute.
A Chartered Accountant whose name has been
removed from the membership for
professional and/or other misconduct, during
such period of removal, will not appear before
the various tax authorities or other b
before whom he could have appear
capacity as a member of this Institute
CERTIFICATE OF PRACTICE
A Member in practice is prohibited from using
adesignation other than Chartered Accountant
A Member in practice cannot use any
designation other than that of a Chartered
Accountant, nor can he use any other
description, whether in addition thereto or in
substitution therefore, but a member who is
not in practice and does not use
designation of a Chartered Accountant ma
any other description.
A Member in practice is prohibited from using
adesignation other than Chartered Accountant
A Member in practice cannot use any
designation other than that of a Chartered
Accountant, nor can he use any other
description, whether in addition thereto or in
substitution therefore, but a member who is
not in practice and does not use
designation of a Chartered Accountant ma
any other description.
Five most important structural changes
2009 Code Revised - 2019 Code
Independence for Assurance Independence requirements for Audit and Review
Engagements Engagements and other Assurance engagements
differentiated
No characterization as Standards Independence sections re-characterized as
“International Independence Standards”
Use of “Should” Change in the drafting conventions e.g. “should”
to “shall”
No such restructuring of Sections New pattern of structuring of sections —
Requirements distinguished
Lack of clarity for each entity Increased clarity of responsibility for c IE
Firms, network firms, individuals wi
2009 Code Revised - 2019 Code
Independence for Assurance Independence requirements for Audit and Review
Engagements Engagements and other Assurance engagements
differentiated
No characterization as Standards Independence sections re-characterized as
“International Independence Standards”
Use of “Should” Change in the drafting conventions e.g. “should”
to “shall”
No such restructuring of Sections New pattern of structuring of sections —
Requirements distinguished
Lack of clarity for each entity Increased clarity of responsibility for c IE
Firms, network firms, individuals wi
CODE OF ETHICS
STRUCTURE
Part 1 (Applicable to all Professional Accountants - Sections 100 to 199)
Complying with the Code, Fundamental Principles and Conceptual Framework
Part 2 Part 3
Professional Accountants in Service Professional Accountants in Public Practice
(Sections 200 to 299) (Sections 300 to 399)
(Part 2 is also applicable to individual
professional accountants in public practice Parts 4A & 4B
when performing professional activities International Independence Standards
pursuant to their relationship with the Part 4A: Independence for Audits & Reviews
firm) (Sections 400 to 899)
Part 48: Independence for Other Assurance Engagements
L (Sections 900 to 999)
STRUCTURE
Part 1 (Applicable to all Professional Accountants - Sections 100 to 199)
Complying with the Code, Fundamental Principles and Conceptual Framework
Part 2 Part 3
Professional Accountants in Service Professional Accountants in Public Practice
(Sections 200 to 299) (Sections 300 to 399)
(Part 2 is also applicable to individual
professional accountants in public practice Parts 4A & 4B
when performing professional activities International Independence Standards
pursuant to their relationship with the Part 4A: Independence for Audits & Reviews
firm) (Sections 400 to 899)
Part 48: Independence for Other Assurance Engagements
L (Sections 900 to 999)
Professional Accountant
Defined in the Code of Ethics as “An individual who is a
member of the Institute of Chartered Accountants of
India.”
IESBA Code of Ethics uses the term “professional
accountants in business” implying members who are
employees.
Modified to “professional accountant in
service” in Code in line with usage in CA Act, 1949
Defined in the Code of Ethics as “An individual who is a
member of the Institute of Chartered Accountants of
India.”
IESBA Code of Ethics uses the term “professional
accountants in business” implying members who are
employees.
Modified to “professional accountant in
service” in Code in line with usage in CA Act, 1949
Requirements
Requirements are designated with the letter “R” and, in most
cases, include the word “shall.” The word “shall” in the Code
imposes on a professional accountant or firm to
comply with the specific provision in which “shall” has been used.
In some situations, the Code provides a specific exception to a
requirement. In such a situation, the provision is designated with
the letter “R” but uses “may” or conditional wording
When the word “may” is used in the Code, it denotes permission to
take a particular action in certain circumstances, including as an
exception to a requirement. It is not used to denote possibility.
When the word „might, is used in the Code, it denotes the
possibility of a matter arising, an event occurring or a course of
action being taken. The term does not ascribe any particular level
of possibility or likelihood when used in conjunction with a threat,
as the evaluation of the level of a threat depends on the facts and
circumstances of any particular matter, event or course of action.
Requirements are designated with the letter “R” and, in most
cases, include the word “shall.” The word “shall” in the Code
imposes on a professional accountant or firm to
comply with the specific provision in which “shall” has been used.
In some situations, the Code provides a specific exception to a
requirement. In such a situation, the provision is designated with
the letter “R” but uses “may” or conditional wording
When the word “may” is used in the Code, it denotes permission to
take a particular action in certain circumstances, including as an
exception to a requirement. It is not used to denote possibility.
When the word „might, is used in the Code, it denotes the
possibility of a matter arising, an event occurring or a course of
action being taken. The term does not ascribe any particular level
of possibility or likelihood when used in conjunction with a threat,
as the evaluation of the level of a threat depends on the facts and
circumstances of any particular matter, event or course of action.
FUNDAMENTAL
PRINCIPLES
The International Code of Ethics for Professional
Accountants (including International Independence
Standards) (“the Code”) sets out fundamental
principles of ethics for professional accountants,
reflecting the
. These principles establish
the expected of a professional
accountant.
PRINCIPLES
The International Code of Ethics for Professional
Accountants (including International Independence
Standards) (“the Code”) sets out fundamental
principles of ethics for professional accountants,
reflecting the
. These principles establish
the expected of a professional
accountant.
FIVE
FUNDAMENTALS
+ Integrity
+ Objectivity
+ Professional Competence and Due Care
« Confidentiality
+ Professional Behaviour
FUNDAMENTALS
+ Integrity
+ Objectivity
+ Professional Competence and Due Care
« Confidentiality
+ Professional Behaviour
THREATS
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Self-interest threat - the threat that a
financial or other interest will
inappropriately influence a
professional accountant’s judgment or
behavior
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Self-interest threat - the threat that a
financial or other interest will
inappropriately influence a
professional accountant’s judgment or
behavior
THREATS
Threats to compliance with the fundamental
principles fall into one or more of the
following categories :
Self-review threat - the threat that a
professional accountant will not appropriately
evaluate the results of a previous judgment
made, or an activity performed by the
accountant or by another individual within the
accountant's firm or employing organization, on
which the accountant will rely when forming a
judgment as part of performing a current
activity
Threats to compliance with the fundamental
principles fall into one or more of the
following categories :
Self-review threat - the threat that a
professional accountant will not appropriately
evaluate the results of a previous judgment
made, or an activity performed by the
accountant or by another individual within the
accountant's firm or employing organization, on
which the accountant will rely when forming a
judgment as part of performing a current
activity
THREATS
Threats to compliance with the fundamental
principles fall into one or more of the
following categories :
Advocacy threat - the threat that a professional FR
accountant will g + OO eo
to the point that the
accountant’s objectivity is compromised;
Threats to compliance with the fundamental
principles fall into one or more of the
following categories :
Advocacy threat - the threat that a professional FR
accountant will g + OO eo
to the point that the
accountant’s objectivity is compromised;
THREATS
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Familiarity threat - the threat that due
to a long or close relationship with a
client, or employing organization, a
professional accountant will be too
sympathetic to their interests or too
accepting of their work;
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Familiarity threat - the threat that due
to a long or close relationship with a
client, or employing organization, a
professional accountant will be too
sympathetic to their interests or too
accepting of their work;
THREATS
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Intimidation threat - the threat that a
professional accountant will be
deterred from acting objectively
because of
, including attempts to
exercise undue influence over the
accountant.
Threats to compliance with the
fundamental principles fall into one or
more of the following categories :
Intimidation threat - the threat that a
professional accountant will be
deterred from acting objectively
because of
, including attempts to
exercise undue influence over the
accountant.
THREATS
A circumstance might create
more than one threat, anda
threat might affect
compliance with more than
one fundamental principle
A circumstance might create
more than one threat, anda
threat might affect
compliance with more than
one fundamental principle
THREATS
A circumstance might create
more than one threat, anda
threat might affect
compliance with more than
one fundamental principle
A circumstance might create
more than one threat, anda
threat might affect
compliance with more than
one fundamental principle
Safeguards
In the Code of Ethics, 2009, safeguards to be considered for
threats other than “clearly insignificant” (defined as ‘trivial or
inconsequential’)
In the revised 2019 Code, the application of safeguards required
to eliminate threats or to reduce them to ‘an acceptable level’
“Acceptable level” defined as a level as the reasonable and
informed third party knowing facts would likely conclude that the
accountant complies with the fundamental principles.
In the Code of Ethics, 2009, safeguards to be considered for
threats other than “clearly insignificant” (defined as ‘trivial or
inconsequential’)
In the revised 2019 Code, the application of safeguards required
to eliminate threats or to reduce them to ‘an acceptable level’
“Acceptable level” defined as a level as the reasonable and
informed third party knowing facts would likely conclude that the
accountant complies with the fundamental principles.
Safeguards
New Introductions in 2019 Code
Identified threats must be addressed in one of three ways:-
Eliminate circumstances creating the threats;
Apply safeguards; or
Decline or end the service
New “step back” requirement for an overall conclusion (R 120.11 : The PA shall
form an overall conclusion about whether the actions that the accountant takes,
or intends to take, to address the threats created will eliminate those threats or
reduce them to an acceptable level)
Emphasis that if threats cannot be addressed, must decline or end the
come an)
New Introductions in 2019 Code
Identified threats must be addressed in one of three ways:-
Eliminate circumstances creating the threats;
Apply safeguards; or
Decline or end the service
New “step back” requirement for an overall conclusion (R 120.11 : The PA shall
form an overall conclusion about whether the actions that the accountant takes,
or intends to take, to address the threats created will eliminate those threats or
reduce them to an acceptable level)
Emphasis that if threats cannot be addressed, must decline or end the
come an)
SAFEGUARDS FOR THE THREATS
Safeguards created by the profession, legislation or regulation include, but are not
restricted to:
. Educational, training and experience requirements for entry into the profession.
o Op»
. Continuing professional development requirements.
. Corporate governance regulations.
a o
. Professional standards.
®
. Professional or regulatory monitoring and disciplinary procedures.
f. External review by a legally empowered third party of the reports, returns,
communications or information produced by a professional accountant.
Safeguards created by the profession, legislation or regulation include, but are not
restricted to:
. Educational, training and experience requirements for entry into the profession.
o Op»
. Continuing professional development requirements.
. Corporate governance regulations.
a o
. Professional standards.
®
. Professional or regulatory monitoring and disciplinary procedures.
f. External review by a legally empowered third party of the reports, returns,
communications or information produced by a professional accountant.
Conceptual Framework
D
Threat
Evaulation
Apply
Safeguards Will u be able to
reduce the
impact of threat NO $
=
The fundamental principles of ethics establish the standard of behaviour
expected of a professional accountant. The conceptual framework
establishes the approach which an accountant is required to apply to assist in
complying with those fundamental principles.
D
Threat
Evaulation
Apply
Safeguards Will u be able to
reduce the
impact of threat NO $
=
The fundamental principles of ethics establish the standard of behaviour
expected of a professional accountant. The conceptual framework
establishes the approach which an accountant is required to apply to assist in
complying with those fundamental principles.
NoCLAR
Section 360 - Non-Compliance with Laws
and Regulations
Refers to any act of omission or commission, committed by a client or
employer contrary to prevailing laws or regulations.
Recognizing that such a situation can often be a difficult and stressful one
for the PA, and accepting that he has a prima facie ethical responsibility
not to turn a blind eye to the matter, NOCLAR was introduced to help guide
the PA in dealing with the situation and in deciding how best to serve the
public interest in these circumstances.
16
Section 360 - Non-Compliance with Laws
and Regulations
Refers to any act of omission or commission, committed by a client or
employer contrary to prevailing laws or regulations.
Recognizing that such a situation can often be a difficult and stressful one
for the PA, and accepting that he has a prima facie ethical responsibility
not to turn a blind eye to the matter, NOCLAR was introduced to help guide
the PA in dealing with the situation and in deciding how best to serve the
public interest in these circumstances.
16
NoCLAR
For now, limited application of NOCLAR has been prescribed in Code
of Ethics as against comprehensive application of NOCLAR to all
assignments/employees in the IESBA Code.
Applicable only to listed entities.
Applicable to only audit assignments.
In case of PAs in service, applicable to employees of listed entities
For now, limited application of NOCLAR has been prescribed in Code
of Ethics as against comprehensive application of NOCLAR to all
assignments/employees in the IESBA Code.
Applicable only to listed entities.
Applicable to only audit assignments.
In case of PAs in service, applicable to employees of listed entities
NoCLAR
For now, limited application of NOCLAR has been prescribed in Code
of Ethics as against comprehensive application of NOCLAR to all
assignments/employees in the IESBA Code.
Applicable only to listed entities.
Applicable to only audit assignments.
In case of PAs in service, applicable to employees of listed entities
For now, limited application of NOCLAR has been prescribed in Code
of Ethics as against comprehensive application of NOCLAR to all
assignments/employees in the IESBA Code.
Applicable only to listed entities.
Applicable to only audit assignments.
In case of PAs in service, applicable to employees of listed entities
RESPONDING TO NON-COMPLIANCE WITH LAWS AND
REGULATIONS (NOCLAR) SECTIONS 260 AND 360 - NEW
PROVISION
+ Refers to any act of omission or commission, committed by a client or employer contrary
to prevailing laws or regulations
+ Recognizing that such a situation can often be a difficult and stressful one for the PA, and
accepting that he has a prima facie ethical responsibility not to turn a blind eye to the
matter, NOCLAR was introduced to help guide the PA in dealing with the situation and in
deciding how best to serve the public interest in these circumstances
REGULATIONS (NOCLAR) SECTIONS 260 AND 360 - NEW
PROVISION
+ Refers to any act of omission or commission, committed by a client or employer contrary
to prevailing laws or regulations
+ Recognizing that such a situation can often be a difficult and stressful one for the PA, and
accepting that he has a prima facie ethical responsibility not to turn a blind eye to the
matter, NOCLAR was introduced to help guide the PA in dealing with the situation and in
deciding how best to serve the public interest in these circumstances
NOCLAR - SCOPE OF LAWS AND REGULATIONS
+ Laws and regulations that have a nexus to PAs’ professional training and expertise, i.e.:
o Laws and regulations that have a direct effect on the determination of material
amounts and disclosures in the financial statements
© Other laws and regulations, compliance with which may be fundamental to the
entity’s business and operations or to avoid material penalties
+ Examples of laws and regulations required to be addressed are Fraud, corruption and
bribery, Money laundering, terrorist financing and proceeds of crime, Securities markets
and trading, etc.
+ Laws and regulations that have a nexus to PAs’ professional training and expertise, i.e.:
o Laws and regulations that have a direct effect on the determination of material
amounts and disclosures in the financial statements
© Other laws and regulations, compliance with which may be fundamental to the
entity’s business and operations or to avoid material penalties
+ Examples of laws and regulations required to be addressed are Fraud, corruption and
bribery, Money laundering, terrorist financing and proceeds of crime, Securities markets
and trading, etc.
NON- COMPLIANCE OF LAWS AND REGULATIONS
(NOCLAR)
+ Part of ICAI Code of Ethics, 2019 Section 260 (Members in Service), and Section 360 (Members
in Practice)
+ Examples of laws and regulations to be complied already provided in Section 360.5 A2 of ICAI
code of Ethics, 2019 e.g.:
Fraud, Corruption and bribery,
Money Laundering, Terrorist financing and proceeds of crime
o Securities Market and Trading
Banking and other Financial products & Services
Data Protection
Tax & Pension liabilities & Payments
o Environmental Protection
Public Health and Safety
(NOCLAR)
+ Part of ICAI Code of Ethics, 2019 Section 260 (Members in Service), and Section 360 (Members
in Practice)
+ Examples of laws and regulations to be complied already provided in Section 360.5 A2 of ICAI
code of Ethics, 2019 e.g.:
Fraud, Corruption and bribery,
Money Laundering, Terrorist financing and proceeds of crime
o Securities Market and Trading
Banking and other Financial products & Services
Data Protection
Tax & Pension liabilities & Payments
o Environmental Protection
Public Health and Safety
NOCLAR - OTHER SALIENT POINTS
+ Following matters are not in scope of NOCLAR:
1. Matters clearly inconsequential
2. Personal misconduct unrelated to the business activities of the client or employer
3. Non-compliance other than by the client or employer, or those charged with
governance, management or other individuals working for or under the direction of the
client or employer
+ PA required to address NOCLAR only when, and if, he encounters the same in the course of
providing a professional service
+ Appropriate authority for the purpose of disclosure will depend on the nature of the matter.
For example, the appropriate authority would be SEBI in the case of fraudulent financial
reporting
+ Following matters are not in scope of NOCLAR:
1. Matters clearly inconsequential
2. Personal misconduct unrelated to the business activities of the client or employer
3. Non-compliance other than by the client or employer, or those charged with
governance, management or other individuals working for or under the direction of the
client or employer
+ PA required to address NOCLAR only when, and if, he encounters the same in the course of
providing a professional service
+ Appropriate authority for the purpose of disclosure will depend on the nature of the matter.
For example, the appropriate authority would be SEBI in the case of fraudulent financial
reporting
SECTION 400
INDEPENDENCE FOR AUDIT
AND REVIEW ENGAGEMENTS
It is in the public interest and required by the Code that professional
accountants in public practice be independent when performing audit or
review engagements in accordance with the requirements of the Code
along with any additional requirements. Such requirements may be
prescribed from time to time under
+ The Chartered Accountants Act, 1949,
+ The Chartered Accountants Regulations, 1988,
+ Council guidelines,
+ Companies Act 2013, or by other Regulators such as the
Reserve Bank of India (RBI), Securities and Exchange Board of
India (SEBI), Insurance Regulatory Development Authority
(IRDA) etc.
INDEPENDENCE FOR AUDIT
AND REVIEW ENGAGEMENTS
It is in the public interest and required by the Code that professional
accountants in public practice be independent when performing audit or
review engagements in accordance with the requirements of the Code
along with any additional requirements. Such requirements may be
prescribed from time to time under
+ The Chartered Accountants Act, 1949,
+ The Chartered Accountants Regulations, 1988,
+ Council guidelines,
+ Companies Act 2013, or by other Regulators such as the
Reserve Bank of India (RBI), Securities and Exchange Board of
India (SEBI), Insurance Regulatory Development Authority
(IRDA) etc.
SECTION 400,5
INDEPENDENCE
Independence is linked to the principles of objectivity and
integrity. It comprises:
+ Independence of mind - the state of mind that permits the
expression of a conclusion without being affected by influences
that compromise professional judgment, thereby allowing an
individual to act with integrity, and exercise objectivity and
professional skepticism.
Independence in appearance - the avoidance of facts and
circumstances that are so significant that a reasonable and
informed third party would be likely to conclude that a firm's, or
an audit team member's, integrity, objectivity or professional
skepticism has been compromised.
INDEPENDENCE
Independence is linked to the principles of objectivity and
integrity. It comprises:
+ Independence of mind - the state of mind that permits the
expression of a conclusion without being affected by influences
that compromise professional judgment, thereby allowing an
individual to act with integrity, and exercise objectivity and
professional skepticism.
Independence in appearance - the avoidance of facts and
circumstances that are so significant that a reasonable and
informed third party would be likely to conclude that a firm's, or
an audit team member's, integrity, objectivity or professional
skepticism has been compromised.
Feature - Breaches of the Code (Section 400.80 -
400.89) - New Provision
Mechanism of self-correction prescribed in the Code in case the PA on his ow
discovers an unintentional violation
Mentions steps to be taken in case of breach of Independence Standards i.e.
Parts 4A and 4B. APA who identifies a breach shall evaluate significance of
breach and its impact on PA's ability to comply with the fundamental principles.
If a firm concludes that a breach of a requirement in this Part has occurred, it
shall take prescribed steps therein e.g.:-
End, suspend or eliminate the interest that created breach
Consider applicable legal or regulatory requirements and apply them
400.89) - New Provision
Mechanism of self-correction prescribed in the Code in case the PA on his ow
discovers an unintentional violation
Mentions steps to be taken in case of breach of Independence Standards i.e.
Parts 4A and 4B. APA who identifies a breach shall evaluate significance of
breach and its impact on PA's ability to comply with the fundamental principles.
If a firm concludes that a breach of a requirement in this Part has occurred, it
shall take prescribed steps therein e.g.:-
End, suspend or eliminate the interest that created breach
Consider applicable legal or regulatory requirements and apply them
Pad
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENC HAS os
HAPPEND
End, suspend or eliminate the interest or relationship
that created the breach and address the
consequences of the breach;
Consider whether any legal or regulatory
requirements
apply to the breach and, if so: Comply with those
requirements; and
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENC HAS os
HAPPEND
End, suspend or eliminate the interest or relationship
that created the breach and address the
consequences of the breach;
Consider whether any legal or regulatory
requirements
apply to the breach and, if so: Comply with those
requirements; and
Pad
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ©
HAPPEND ©
Promptly communicate the breach in accordance with
its policies and procedures to:
(i) The engagement partner:
(ii) Those with responsibility for the policies and
procedures relating to independence;
(iii) Other relevant personnel in the firm and, where
appropriate, the network; and
(iv) Those subject to the independence requirements
in Part 4A who need to take appropriate action;
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ©
HAPPEND ©
Promptly communicate the breach in accordance with
its policies and procedures to:
(i) The engagement partner:
(ii) Those with responsibility for the policies and
procedures relating to independence;
(iii) Other relevant personnel in the firm and, where
appropriate, the network; and
(iv) Those subject to the independence requirements
in Part 4A who need to take appropriate action;
Pad
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
Evaluate the significance of the breach and its
impact on the firm"s objectivity and ability to issue
an audit report; and
Depending on the significance of the breach, determine
+ Whether to end the audit engagement; or
+ Whether it is possible to take action
thatsatisfactorily addresses the consequences of
the breach and whether such action can be taken
and is appropriate in the circumstances.
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
Evaluate the significance of the breach and its
impact on the firm"s objectivity and ability to issue
an audit report; and
Depending on the significance of the breach, determine
+ Whether to end the audit engagement; or
+ Whether it is possible to take action
thatsatisfactorily addresses the consequences of
the breach and whether such action can be taken
and is appropriate in the circumstances.
Pad
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
In making this determination, the firm shall exercise
professional judgment and take into account
whether a reasonable and informed third party
would be likely to conclude that the firm's objectivity
would be compromised, and therefore, the firm
would be unable to issue an audit report
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
In making this determination, the firm shall exercise
professional judgment and take into account
whether a reasonable and informed third party
would be likely to conclude that the firm's objectivity
would be compromised, and therefore, the firm
would be unable to issue an audit report
Pad
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
A breach of a provision of this Part might occur
despite the firm having policies and procedures
designed to provide it withreasonable assurance
that independence is maintained. It might be
necessary to end the audit engagement because of
the breach.
if a firm
concludes that a
breach of a
requirement in this
Part has
occurred,
IF BREACH OF INDEPENDENCHAS = @ ®
HAPPEND ©
A breach of a provision of this Part might occur
despite the firm having policies and procedures
designed to provide it withreasonable assurance
that independence is maintained. It might be
necessary to end the audit engagement because of
the breach.
Problem
Breach of Independence
Goal
Maintain Independence.
Solutions
+ Removing the relevant individual from the audit team
+ Using different individuals to conduct an additional
review of the affected audit work or to re-perform that
work to the extent necessary
+ Recommending that the audit client engage another
firm to review or re-perform the affected audit work to
the extent necessary.
+ If the breach relates to a non-assurance service that
affects the accounting records or an amount recorded
in the financial statements, engaging another firm to
evaluate the results of the non-assurance service or
having another firm re-perform the non- assurance
service to the extent necessary to enable the other firm
to take responsibility for the service.
Breach of Independence
Goal
Maintain Independence.
Solutions
+ Removing the relevant individual from the audit team
+ Using different individuals to conduct an additional
review of the affected audit work or to re-perform that
work to the extent necessary
+ Recommending that the audit client engage another
firm to review or re-perform the affected audit work to
the extent necessary.
+ If the breach relates to a non-assurance service that
affects the accounting records or an amount recorded
in the financial statements, engaging another firm to
evaluate the results of the non-assurance service or
having another firm re-perform the non- assurance
service to the extent necessary to enable the other firm
to take responsibility for the service.
Design
If Action cannot be taken
If the firm determines that action cannot be taken
to address the consequences of the breach
satisfactorily, the firm shall inform those charged
with governance as soon as possible and take
the steps necessary to end the audit engagement
in compliance with any applicable legal or
regulatory requirements.
If Action cannot be taken
If the firm determines that action cannot be taken
to address the consequences of the breach
satisfactorily, the firm shall inform those charged
with governance as soon as possible and take
the steps necessary to end the audit engagement
in compliance with any applicable legal or
regulatory requirements.
SECTION 410
FEES
Where for two consecutive years, total gross annual
professional fees from the audit client and its related
entities represent more than 15% of the total fees, firm
shall disclose to those charged with Governance
No such ceiling on total fees of the Firm would be
applicable where such fees does not exceed Rs. 5 lakhs
Further no such ceiling on the total fees of a Firm would
be applicable in the case of audit of government
2 Companies, public undertakings, nationalized banks,
public financial institutions or where appointments
of auditors are made by the Government
Restriction on more than 40% Fees from a single client in Self Regulatory Measures con
Part-B of Code of Ethics, 2009 repealed
FEES
Where for two consecutive years, total gross annual
professional fees from the audit client and its related
entities represent more than 15% of the total fees, firm
shall disclose to those charged with Governance
No such ceiling on total fees of the Firm would be
applicable where such fees does not exceed Rs. 5 lakhs
Further no such ceiling on the total fees of a Firm would
be applicable in the case of audit of government
2 Companies, public undertakings, nationalized banks,
public financial institutions or where appointments
of auditors are made by the Government
Restriction on more than 40% Fees from a single client in Self Regulatory Measures con
Part-B of Code of Ethics, 2009 repealed
KEY AUDIT PARTNER
“The Engagement partner, the individual responsible for
the engagement quality control review, and other audit
partners, if any, on the engagement team who make key
decisions or judgments on significant matters with
respect to the audit of the financial statements on which
the firm will express an opinion.
Depending upon the circumstances and the role of the
individuals on the audit, “other audit partners” might
include, for example, audit partners responsible for
significant subsidiaries or divisions.”
Didn’t had mention in 2009 COE
“The Engagement partner, the individual responsible for
the engagement quality control review, and other audit
partners, if any, on the engagement team who make key
decisions or judgments on significant matters with
respect to the audit of the financial statements on which
the firm will express an opinion.
Depending upon the circumstances and the role of the
individuals on the audit, “other audit partners” might
include, for example, audit partners responsible for
significant subsidiaries or divisions.”
Didn’t had mention in 2009 COE
ROTATION OF PARTNERS
When an individual is involved in an audit engagement
over a long period of time, familiarity and self-interest
threats might be created.
Aa familiarity threat might be created as a result of an
individual's long association as an audit team member
Aself-interest threat might be created as a result of an
individuals concern about losing a longstanding client
Other threats as well
When an individual is involved in an audit engagement
over a long period of time, familiarity and self-interest
threats might be created.
Aa familiarity threat might be created as a result of an
individual's long association as an audit team member
Aself-interest threat might be created as a result of an
individuals concern about losing a longstanding client
Other threats as well
ROTATION OF PARTNERS
Cooling-off Period
R540.11
R540.12
R540.13
If the individual acted as the engagement partner for seven
cumulative years, the cooling-off period shall be five
consecutive years.
Where the individual has been appointed as responsible for the
engagement quality control review and has acted in that
capacity for seven cumulative years, the cooling-off period shall
be three consecutive years.
If the individual has acted as a key audit partner other than in
the capacities set out in paragraphs R540.11 and R540.12 for
seven cumulative years, the cooling-off period shall be two
consecutive years.
Cooling-off Period
R540.11
R540.12
R540.13
If the individual acted as the engagement partner for seven
cumulative years, the cooling-off period shall be five
consecutive years.
Where the individual has been appointed as responsible for the
engagement quality control review and has acted in that
capacity for seven cumulative years, the cooling-off period shall
be three consecutive years.
If the individual has acted as a key audit partner other than in
the capacities set out in paragraphs R540.11 and R540.12 for
seven cumulative years, the cooling-off period shall be two
consecutive years.
ROTATION OF PARTNERS
Changes in partner rotation (Section R 540.5 - R 540.23)
2009 Code Revised - 2019 Code
7-year time-on No change
2-years cooling-off 5-years cooling-off: EP
3-years cooling-off: EQCR
2-years cooling-off: all other KAPs
GU
Changes in partner rotation (Section R 540.5 - R 540.23)
2009 Code Revised - 2019 Code
7-year time-on No change
2-years cooling-off 5-years cooling-off: EP
3-years cooling-off: EQCR
2-years cooling-off: all other KAPs
GU
ROTATION OF PARTNERS
Changes in partner rotation (Section R 540.5 - R 540.23)
2009 Code Revised - 2019 Code
7-year time-on No change
2-years cooling-off 5-years cooling-off: EP
3-years cooling-off: EQCR
2-years cooling-off: all other KAPs
GU
Changes in partner rotation (Section R 540.5 - R 540.23)
2009 Code Revised - 2019 Code
7-year time-on No change
2-years cooling-off 5-years cooling-off: EP
3-years cooling-off: EQCR
2-years cooling-off: all other KAPs
GU
>
Companies Act, 2018 has stipulated Firm rotation.
Under the revised code, partner rotation will co-exist along with
Audit Firm rotation (wherever prescribed by a statute).
2019 Code incorporates Firm rotation requirements vide a
separate section (550) to make the guidance comprehensive for
members
Companies Act, 2018 has stipulated Firm rotation.
Under the revised code, partner rotation will co-exist along with
Audit Firm rotation (wherever prescribed by a statute).
2019 Code incorporates Firm rotation requirements vide a
separate section (550) to make the guidance comprehensive for
members
MANAGEMENT RESPONSIBILITIES
SECTION 607-608
>
In 2019 edition (Volume-I), there is a new section dealing with
‘Management Responsibilities’.
As per the same, the firm shall not assume a management
responsibility for an audit client.
However, providing advice and recommendations to assist the
management of an audit client in discharging its responsibilities is
not assuming a management responsibility.
wu una wem
>
sk,
La Y ey
ain honn ua
ALL
SECTION 607-608
>
In 2019 edition (Volume-I), there is a new section dealing with
‘Management Responsibilities’.
As per the same, the firm shall not assume a management
responsibility for an audit client.
However, providing advice and recommendations to assist the
management of an audit client in discharging its responsibilities is
not assuming a management responsibility.
wu una wem
>
sk,
La Y ey
ain honn ua
ALL
MANAGEMENT RESPONSIBILITIES
SECTION 607-608
>
In 2019 edition (Volume-I), there is a new section dealing with
‘Management Responsibilities’.
As per the same, the firm shall not assume a management
responsibility for an audit client.
However, providing advice and recommendations to assist the
management of an audit client in discharging its responsibilities is
not assuming a management responsibility.
wu una wem
>
sk,
La Y ey
ain honn ua
ALL
SECTION 607-608
>
In 2019 edition (Volume-I), there is a new section dealing with
‘Management Responsibilities’.
As per the same, the firm shall not assume a management
responsibility for an audit client.
However, providing advice and recommendations to assist the
management of an audit client in discharging its responsibilities is
not assuming a management responsibility.
wu una wem
>
sk,
La Y ey
ain honn ua
ALL
Taxation services to the Audit clients (Section 640)
Code Ethics, 2009 :
Taxation to Audit client include compliance, planning, provision
of formal taxation opinions and assistance in the resolution of
tax disputes. Such assignments are generally not seen to
create threats to independence
Code of Ethics, 2019 (Volume-l) :
Further guidance on Taxation matters provided. Generally, it
states that providing tax services to an audit client might create
a self review or advocacy threat ...see next slide
Code Ethics, 2009 :
Taxation to Audit client include compliance, planning, provision
of formal taxation opinions and assistance in the resolution of
tax disputes. Such assignments are generally not seen to
create threats to independence
Code of Ethics, 2019 (Volume-l) :
Further guidance on Taxation matters provided. Generally, it
states that providing tax services to an audit client might create
a self review or advocacy threat ...see next slide
Taxation services to the Audit clients......... y
Section 640
Tax Return preparation - Usually no threat
Tax Calculations for the Purpose of Preparing Accounting Entries
(that will subsequently be audited by the Firm) - Creates a self-
review threat
Tax Planning /Other Tax Advisory Services - Might create self-
review/advocacy threat- appropriate safeguards to be adopted e.g.
Using professionals who are not audit team members to perform
the service; having an appropriate reviewer, not involved in providing
the service, review the audit work, etc.
Section 640
Tax Return preparation - Usually no threat
Tax Calculations for the Purpose of Preparing Accounting Entries
(that will subsequently be audited by the Firm) - Creates a self-
review threat
Tax Planning /Other Tax Advisory Services - Might create self-
review/advocacy threat- appropriate safeguards to be adopted e.g.
Using professionals who are not audit team members to perform
the service; having an appropriate reviewer, not involved in providing
the service, review the audit work, etc.
Taxation services to the Audit clients ...contd.
(Section 640)
Tax Services Involving Valuations- Might perform only where the
result of the valuation will not have a direct effect on the financial
statements
Assistance in the Resolution of Tax Disputes - Might create a self-
review or advocacy threat - appropriate safeguards to be adopted
- Not to provide if involves acting as advocate for the audit client
OR amounts involved are material to the financial statements on
which the firm will express an opinion
(Section 640)
Tax Services Involving Valuations- Might perform only where the
result of the valuation will not have a direct effect on the financial
statements
Assistance in the Resolution of Tax Disputes - Might create a self-
review or advocacy threat - appropriate safeguards to be adopted
- Not to provide if involves acting as advocate for the audit client
OR amounts involved are material to the financial statements on
which the firm will express an opinion
FACTORS THAT ARE RELEVANT IN EVALUATING
THE LEVEL OF THREATS
+ Factors that are relevant in evaluating the level of threats created by providing any tax
service to an audit client include:
The particular characteristics of the engagement.
The level of tax expertise of the client’s employees.
The system by which the tax authorities assess and administer the tax in question and the role
of the firm or network firm in that process.
The complexity of the relevant tax regime and the degree of judgment necessary in applying
it.
THE LEVEL OF THREATS
+ Factors that are relevant in evaluating the level of threats created by providing any tax
service to an audit client include:
The particular characteristics of the engagement.
The level of tax expertise of the client’s employees.
The system by which the tax authorities assess and administer the tax in question and the role
of the firm or network firm in that process.
The complexity of the relevant tax regime and the degree of judgment necessary in applying
it.
Inducements, Including Gifts and Hospitality
(Sections 250 and 340)
Code of Ethics, 2009
Offer of gifts/hospitality ordinarily gives rise
to threats to fundamental principles
Significance of such threats depend on the
nature, value and intent behind the offer.
Reasonable and Informed Third Party Test -
If its within normal course of business
without the specific intent to influence
decision
making or to obtain information, may
conclude that itis acceptable
If threats other than significant, must take
safeguards
Total prohibition in case of Assurance clients
except if inconsequential)
Code of Ethics, 2019 (Volume =)
Inducements elaborated
To first see whether prohibited by Laws and Regulations
Offering also prohibited
Reasonable and Informed Third Party Test - To see
whether itis with the intent to improperly influence the
behaviour of the recipient or of another individual.
Clarifications about appropriate boundaries for offering
and accepting of inducements
Extended to PAs in service also
Total prohibition in case of Audit/Assurance clients to
continue
(Sections 250 and 340)
Code of Ethics, 2009
Offer of gifts/hospitality ordinarily gives rise
to threats to fundamental principles
Significance of such threats depend on the
nature, value and intent behind the offer.
Reasonable and Informed Third Party Test -
If its within normal course of business
without the specific intent to influence
decision
making or to obtain information, may
conclude that itis acceptable
If threats other than significant, must take
safeguards
Total prohibition in case of Assurance clients
except if inconsequential)
Code of Ethics, 2019 (Volume =)
Inducements elaborated
To first see whether prohibited by Laws and Regulations
Offering also prohibited
Reasonable and Informed Third Party Test - To see
whether itis with the intent to improperly influence the
behaviour of the recipient or of another individual.
Clarifications about appropriate boundaries for offering
and accepting of inducements
Extended to PAs in service also
Total prohibition in case of Audit/Assurance clients to
continue
Criteria of Indebtedness (Section 511.3 A1)
No concept of materiality of Loans and Guarantee in the IESBA Code
of Ethics, 2005 and in ICAI Code of Ethics,2009
‘The IESBA Code of Ethics, 2018 introduces the concept of materiality
of Loans and Guarantees. In determining whether such a loan or
guarantee is material to an individual, the combined net worth of the
individual and the individual's immediate family members may be
taken into account.
Concept adopted in Code of Ethics, 2019 (Volume - 1)
GA
SECTION 511
LOANS AND GUARANTEES
Introduction
511.1. Firms are required to comply with the fundamental principles, be
independent and apply the conceptual framework set out in
Section 120 to identify, evaluate and address threats to
independence.
5112 A loan or a guarantee of a loan with an audit client might create
a self-interest threat. This section sets out specific requirements
and application material relevant to applying the conceptual
framework in such circumstances,
No concept of materiality of Loans and Guarantee in the IESBA Code
of Ethics, 2005 and in ICAI Code of Ethics,2009
‘The IESBA Code of Ethics, 2018 introduces the concept of materiality
of Loans and Guarantees. In determining whether such a loan or
guarantee is material to an individual, the combined net worth of the
individual and the individual's immediate family members may be
taken into account.
Concept adopted in Code of Ethics, 2019 (Volume - 1)
GA
SECTION 511
LOANS AND GUARANTEES
Introduction
511.1. Firms are required to comply with the fundamental principles, be
independent and apply the conceptual framework set out in
Section 120 to identify, evaluate and address threats to
independence.
5112 A loan or a guarantee of a loan with an audit client might create
a self-interest threat. This section sets out specific requirements
and application material relevant to applying the conceptual
framework in such circumstances,
Professional Appointment
Section 320
ICAI “Know Your Client” (KYC) Mandatory 01.01.2017
In case of change of appointment, if unable to communicate
with the predecessor accountant, the proposed accountant
shall take other reasonable steps to obtain information
about any possible threats.
Section 320
ICAI “Know Your Client” (KYC) Mandatory 01.01.2017
In case of change of appointment, if unable to communicate
with the predecessor accountant, the proposed accountant
shall take other reasonable steps to obtain information
about any possible threats.
On visiting cards
New Incorporations in the Revised Code
Prohibitions - Members being Directors in Companies, members of
Political parties or CA Cells in the political parties , holding different
Positions in clubs or other organizations not permitted to mention these
Positions as they would be violative of Section 7 of the Act
Permissible - “Insolvency Professional”, “Registered Valuer”
For Council / Regional council members - Last highest position held in
ICAI (as an elected representative) on his visiting card, provided it is
without ICAI emblem and the visiting card is of individual member only,
and not of CA Firm, wherein he may be the partner
New Incorporations in the Revised Code
Prohibitions - Members being Directors in Companies, members of
Political parties or CA Cells in the political parties , holding different
Positions in clubs or other organizations not permitted to mention these
Positions as they would be violative of Section 7 of the Act
Permissible - “Insolvency Professional”, “Registered Valuer”
For Council / Regional council members - Last highest position held in
ICAI (as an elected representative) on his visiting card, provided it is
without ICAI emblem and the visiting card is of individual member only,
and not of CA Firm, wherein he may be the partner
Referral Fees or Commissions
330.5 At A self-interest threat to compliance with the principles of
objectivity and professional competence and due care is created
if a professional accountant pays or receives a referral fee
relating to a client. Such referral fees include, for example
+ A fee paid to another professional accountant for the
purposes of obtaining new client work when the client
continues as a client of the existing accountant but
requires specialist services not offered by that
accountant
+ Afee received for referring a continuing client to another
professional accountant or other expert where the
existing accountant does not provide the specific
professional service required by the client.
330.5 At A self-interest threat to compliance with the principles of
objectivity and professional competence and due care is created
if a professional accountant pays or receives a referral fee
relating to a client. Such referral fees include, for example
+ A fee paid to another professional accountant for the
purposes of obtaining new client work when the client
continues as a client of the existing accountant but
requires specialist services not offered by that
accountant
+ Afee received for referring a continuing client to another
professional accountant or other expert where the
existing accountant does not provide the specific
professional service required by the client.
Commentary under Clauses (3) and (4) - Part - I,
First Schedule
Referral fees amongst members
Existing - Silent
New - Permitted under commentary to Clause (3)
MDPs
Despite Regulations 53 A(3) and 53B, MDPs not allowed till Regulators of other professions also
allow , and ICAI issues modalities
No equivalent of Director Simplicitor in partnerships
A member in practice cannot become a partner/ designated partner (non-working and non-
remuneration drawing) in an LLP not carrying out professional work.
First Schedule
Referral fees amongst members
Existing - Silent
New - Permitted under commentary to Clause (3)
MDPs
Despite Regulations 53 A(3) and 53B, MDPs not allowed till Regulators of other professions also
allow , and ICAI issues modalities
No equivalent of Director Simplicitor in partnerships
A member in practice cannot become a partner/ designated partner (non-working and non-
remuneration drawing) in an LLP not carrying out professional work.
Advertisement Guidelines
Changes in the Revised Code
“Write-up” to include Social Networking Websites also
Changes in permissible details in a write-up :-
(a)"Web” replaced with “Website”
(b) “Name ..
“CA.
(c) “Passport size” replaced with “Passport style” (photograph)
(d)In case of individual members, allowing mentioning “Position held as Director or
Managing Director in a Management Consultancy Company registered with the Institute’
Chartered Accountant” to be replaced with
(e) In case of Firms, to also allow mentioning “Affiliation with a Network registered with
Changes in the Revised Code
“Write-up” to include Social Networking Websites also
Changes in permissible details in a write-up :-
(a)"Web” replaced with “Website”
(b) “Name ..
“CA.
(c) “Passport size” replaced with “Passport style” (photograph)
(d)In case of individual members, allowing mentioning “Position held as Director or
Managing Director in a Management Consultancy Company registered with the Institute’
Chartered Accountant” to be replaced with
(e) In case of Firms, to also allow mentioning “Affiliation with a Network registered with
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