Review of Part C of the Code

  • Review of Part C of the Code

    Project Status

    This is an active project


    Chris Jackson

    Task Force

    Jim Gaa (Chair)

    Claire Ighodaro

    Alice McCleary

    Ian Rushby

    Lisa Snyder

    Objective(s) of project

    The objective of the project is to review Part C to ensure that its provisions remain appropriate and are robust.


    The scope of the project encompasses Part C and its relationship with other parts of the Code.


    In February 2012, the IESBA established a Working Group to study reported accounting irregularities at certain companies and determine whether Part C should be strengthened to better promote ethical behavior by PAIBs. In addition, Part C had received less attention than other parts of the Code in recent years and, therefore, the IESBA considered that a review of the Part C provisions would be timely. 

    To understand the ethical issues about which PAIBs contact their member bodies, the Working Group undertook in Q2 2012 a survey of a number of IFAC member bodies with large proportions of PAIBs in their memberships. This survey identified a list of issues for the IESBA’s potential consideration. To prioritize the issues identified, the Working Group undertook in Q3 2012 a broader survey of IFAC member bodies. 

    On the basis of the input from those surveys as well as from the IESBA CAG, the Working Group identified a number of key recommendations for a review of Part C that were presented at the December 2012 IESBA meeting. The IESBA agreed to the recommendations and commissioned the working group to develop a project proposal.


    Task Force progress / Board discussions to date

    At its March 2013 meeting, the IESBA approved a project to review Part C of the Code. Phase I of the project will review Sections 300, 320, 330 and 340 of the Code. This phase will, in particular, address pressure by superiors and others to engage in unethical or illegal acts, the responsibility of PAIBs to produce financial reports that are faithful representations of the economics of transactions, and associated matters. Phase II of the project will address Section 350, which is related to facilitation payments and bribes. 

    The IESBA CAG considered the project proposal at its April 2013 meeting.

    At its June 2013 meeting the IESBA considered issues in the project to review Part C of the Code addressing professional accountants in business (PAIBs). Topics discussed included: the application of Part C to all professional accountants and pressure. The IESBA agreed to defer consideration of matters relevant to professional accountants in public practice in this project until after PAIB-specific issues have been addressed by the board.

    At its September 2013 meeting the IESBA discussed a straw man of a proposed new section to the Code to address the topic of pressure from superiors and others to engage in unethical or illegal acts, and related issues. Amongst other matters, the IESBA discussed the scope of the guidance and the application of the threats and safeguards approach to the topic.

    At its December 2013 the IESBA considered issues and Task Force proposals regarding a revised Section 320 of the Code addressing the preparation and reporting of information. Among other matters, the IESBA discussed a proposal to strengthen the requirement to prepare or present information fairly, honestly and in accordance with relevant professional standards; whether to deal separately with management and external information in Section 320; and whether to prohibit professional accountants in business from preparing or presenting misleading financial information that complies with the applicable reporting framework.

    Next Steps

    The IESBA will further discuss issues and Task Force proposals with respect to Section 320, as well as with respect to proposed Section 370 addressing pressure from superiors and others to engage in unethical or illegal acts, at its April 2014 meeting

  • Ethics Board on