Published: Sep 04, 2015
SMP Committee Response to the IESBA Exposure Draft: Responding to Non-Compliance with Laws and Regulations
The IFAC SMP Committee acknowledges that the IESBA Exposure Draft: Responding to Non-Compliance with Laws and Regulations is a sensitive and complex topic and commends the Ethics Board on the substantial amount of work and outreach that has been undertaken in moving this project forward. We generally consider that the revised framework has significantly improved.
However, the Committee has significant concerns with the proposals that go beyond the scope of ISA 250 in respect of audits. It is concerned that the criteria are unclear and subjective as to when and what a Professional Accountant (PA) might disclose externally, which may create significant uncertainty. In addition, the potential unintended consequences from how the proposals may, in certain circumstances, create an indirect requirement, which could result in the PA determining that it is necessary to breach client confidentiality and disclose an identified or suspected NOCLAR to an appropriate authority (notwithstanding when there is no legal or regulatory requirement to do so) is also a concern.
In our opinion, the public interest is best served by a strong economy driven by SMEs having access to the best business advice available to grow their business. SMEs will only seek advice from PAs where they can be assured of a trusted advisor relationship in which they are free to share information with their advisor and can trust them to maintain confidentiality in their dealings.
For specific comments, read the full comment letter below.
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