107672 IRBA NEWSLETTER

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ETHICS
Committee for Auditor Ethics (CFAE)
Proposed Revised and Restructured IRBA Code of
Professional Conduct
The Committee for Auditor Ethics approved the issuing of the
proposed Revised and Restructured IRBA Code of Professional
Conduct for Registered Auditors (the IRBA Code) in May 2018 for
public comment by 2 July 2018.
Background
The IRBA adopted Parts A and B and the Definitions of the
International Ethics Standards Board’s (IESBA) Code of Ethics for
Professional Accountants (July 2009) published by the International
Federation of Accountants with effect from 1 January 2011.
Subsequently, additional South African requirements were issued.
The IESBA has been working on the restructured IESBA Code and
its related projects for the past three years. The CFAE has followed
this project closely, commented on all proposed amendments
and considered final amendments to the IESBA Code for possible
amendments to the IRBA Code.
Proposed amendments
The CFAE has incorporated recently approved amendments to the
IESBA Code in the IRBA Code and will be recommending these
amendments to the IRBA Board for adoption in November 2018.
Proposed amendments to the IRBA Code are as follows:
IESBA projects
1. Restructure of the IESBA Code of Ethics for
Professional Accountants (IESBA Code)
Some features of the restructuring are:
• Increasing the prominence of the requirements to comply
with the fundamental principles, being independent, where
applicable, and applying the conceptual framework;
• Emphasising that compliance with the fundamental
principles and, where applicable, being independent are the
overarching ethical outcomes for the IESBA Code;
• Distinguishing requirements (paragraphs identified with
an “R”) and numbering in bold from application material
(paragraphs identified with an “A”);
• Increasing clarity of responsibility, particularly in relation to
independence; and
• Increasing clarity of language to improve readability and
understandability, including simpler and shorter sentences;
simplifying complex grammar; and avoiding legalistic and
archaic terms.
2. Safeguards
The approach and details regarding safeguards (as a response
to the threats) have been revised:
• Clarifying safeguards in the extant IESBA Code that were
perceived as unclear and, where warranted, eliminating
those that are inappropriate or ineffective;
• Better correlation between each safeguard and the threat it
is intended to address; and
• Clarifying that not every threat can be addressed by a
safeguard.
• The following new South African paragraphs relating to
safeguards have been incorporated into the Exposure Draft:
• Application material paragraph 120.9 A2 has been moved
to a requirement, i.e. R120.9 A2 SA; and
• A South African application material paragraph (600.4 A3
SA) has been introduced to detail the consideration of
threats to objectivity relating to non-assurance services
provided.
3. Professional Scepticism and Professional Judgement
• Describing how compliance with the fundamental principles
in the IESBA Code supports the exercise of professional
scepticism in the context of audit and other assurance
engagements; and
• Emphasising the importance of professional accountants
obtaining a sufficient understanding of the facts and
circumstances known to them when exercising professional
judgement in applying the conceptual framework to comply
with the fundamental principles and, where applicable,
being independent.
South African projects
4. Restructure of South African Paragraphs
• In line with the IESBA drafting conventions, the extant South
African paragraphs have been redrafted and included in
the proposed IRBA Revised and Restructured Code; and
to assist with easy identification, this text is underlined and
in italics. For the purposes of the exposure draft, there
are comments indicating that these refer to South African
amendments.
• In line with the extant IRBA Code, the IRBA will not be
adopting Part 2 (previous Part C) of the IESBA Code as it is
related to Professional Accountants in Business.
• A is available to facilitate the tracking of
changes from the extant IRBA Code to the proposed
Revised and Restructured IRBA Code. In addition, to assist
with the review of the Proposed Revised and Restructured
IRBA Code, the Exposure Draft includes comments on each
paragraph to explain the derivation, i.e. whether it is from
a particular paragraph in the extant Code or new material.
Proposed effective date
It is proposed that the Revised and Restructured IRBA Code be
in line with the effective date of the IESBA Code. The proposed
effective dates will be as follows:
• Parts 1 and 3 of the Revised and Restructured Code will be
effective as of 15 June 2019.
• Part 4A relating to independence for audit and review
engagements will be effective for audits and reviews of financial
statements for periods beginning on or after 15 June 2019.
• Part 4B relating to independence for assurance engagements
with respect to subject matter covering periods will be effective
for periods beginning on or after 15 June 2019; otherwise, it
will be effective as of 15 June 2019.
Issue 42 | April - June 2018 6