• What are the fundamental principles?
- Integrity (section 110) - Objectivity (section 120)
- Professional competence and due care (section 130)
- Confidentiality (section 140) - Professional behaviour
(section150)
Identify threats to compliance with the
fundamental principles
• What are the possible types of threats?
- Self-interest threats - Self-review threats - Advocacy threats
- Familiarity threats - Intimidation threats
Evaluate the significance of the
threat
• What are the possible safeguards?
- Safeguards created by the profession, legislation or
regulation - Safeguards in the work
environment
Apply appropriate safeguards to eliminate or reduce the threat to an appropriate level and ensure
compliance with the fundamental principles is not being
compromised
SUMMARY OF THE PRINCIPLES CONTAINED IN THE SAICA CODE OF PROFESSIONAL CONDUCT (COPC)
REFERENCE: SAICA HANDBOOK 2014/15 IN SAICA CODE OF PROFESSIONAL CONDUCT, JACKSON AND STENT CHAPTER 2, STUDY GUIDE: STUDY UNIT 2.3
COPC
PART A (Section 100-150)
GENERAL APPLICATION OF THE CODE - APPLIES TO CA's AND RA'S
PART B (Section 200-291)
APPLIES TO CA's IN PUBLIC PRACTICE
(CA's IN AUDIT FIRMS CONDUCTING ASSURANCE AND
NON ASSSURANCE ENGAGEMENTS)
PART C (Section 300-350)
APPLIES TO CA's IN BUSINESS (CA's IN COMMERCE AND
INDUSTRY)
STRUCTURE OF THE CODE
REFERENCE: SAICA HANDBOOK 2014/15 IN SAICA CODE OF PROFESSIONAL CONDUCT, JACKSON AND STENT CHAPTER 2, STUDY GUIDE: STUDY UNIT 2.3
INTEGRITY (SECTION 110)
HONEST
FAIR
STRAIGHT FORWARD
TRUTHFUL
INTEGRITY (SECTION 110 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
UNDUE INFLUENCE
CONFLICT OF INTEREST
BIAS
OBJECTIVITY (SECTION 120)
OBJECTIVITY (SECTION 120 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
• ACT DILLIGENTLY IN ACCORDANCE WITH APPLICABLE TECHNICAL AND PROFESSIONAL STANDARDS
• MAINTAIN PROFESSIONAL COMPETENCE • MAINTAIN PROFESSIONAL KNOWLEDGE AND
SKILL • ENSURE THOSE WORKING UNDER HIS
AUTHORITY HAVE APPROPRIATE TRAINING AND SUPERVISION
PROFESSIONAL COMPETENCE AND DUE
CARE (SECTION 130)
PROFESSIONAL COMPETENCE AND DUE CARE (SECTION 130 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
CONFIDENTIALITY (SECTION 140)
•DISCLOSURE OF CONFIDENTIAL INFORMATION IS PERMITTED WHEN: •REQUIRED BY LAW (evidence in legal proceedings, disclosure to public
authorities) •PERMITTED BY LAW AND AUTHORISED BY THE CLIENT OR EMPLOYER •PROFESSIONAL DUTY OR RIGHT TO DISCLOSE (comply with IRBA quality
review, enquiry or investigation by SAICA/IRBA, comply with technical and ethical standards, protect professional interests)
CONFIDENTIALITY (SECTION 140 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
PROFESSIONAL BEHAVIOUR (SECTION 150)
COMPLY WITH RELEVANT LAWS AND REGULATIONS
AVOID ACTION THAT MAY BRING DISCREDIT TO THE
PROFESSION
SECTION 150 DEALS WITH THE FOLLOWING MATTERS:
MEMBERSHIP OF MULTIPLE FIRMS: - Permitted to belong to more than one firm
SIGNING REPORTS OR CERTIFICATES: - Must not delegate to any person who is not a partner/fellow director - Sign off must include full name, capacity, designation, name of firm
RECRUITING: - Should not offer employment directly/indirectly to an employee of another CA without first informing the latter, even if in response to an advert
RESPONSIBILITIES TO COLLEAGUES: - Promote cooperation/good relations with fellow CAs. - CAs should assist each other in complying with the Code
ADVERTISING, PUBLICITY, SOLICITATION: - Adverts must be in "good taste" - Adverts should not state hourly rates/prices - Basis of calculation of fees may be stated
DISCRIMINATION: - Must not discriminate based on race, colour, relegion, sex, marital status, age, origion.
PROFESSIONAL BEHAVIOUR (SECTION 150 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
PROFESSIONAL APPOINTMENT (SECTION 210)
CLIENT ACCEPTANCE - CONSIDER WHETHER THE ACCEPTING A NEW CLIENT WOULD THREATEN COMPLIANCE WITH THE FUNDAMENTAL PPRINCIPLES - THREATS TO INTEGRITY+PROFESSIONAL BEHAVIOUR+OBJECTIVITY - SAFEGUARDS: SCREENING OF CLIENT+ QUALITY CONTROL PROCEDURES
ENGAGEMENT ACCEPTANCE
- CONSIDER WHETHER THE FIRM IS COMPETENT TO PERFORM THE ENGAGEMENT TO THE REQUIRED STANDARD - THREATS TO PROFESSIONAL COMPETENCE AND DUE CARE - SAFEGUARDS: QUALITY CONTROL POLICIES AND PROCEDURES
CHANGES IN PROFESSIONAL APPOINTMENT - REPLACING AN EXISTING ACCOUNTANT - THREATS TO PROFESSIONAL COMPETENCE+DUE CARE, PROFESSIONAL BEHAVIOUR+INTEGRITY - SAFEGUARDS: REQUEST PERMISSION FROM THE CLIENT TO DISCUSS THE CLIENTS AFFAIRS FULLY WITH THE EXISTING ACCOUNTANT - EXISTING ACCOUNTANTT: THREAT TO CONFIDENTIALITY
PROFESSIONAL APPOINTMENT (SECTION 210 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
CONFLICTS OF INTEREST
(SECTION 220)
THREATS TO OBJECTIVITY,
CONFIDENTIALITY AND PROFESSIONAL
BEHAVIOUR
•EXAMPLES OF CONFLICTS OF INTERESTS: •TWO CLIENTS IN DIRECT
COMPETITION •PROFESSIONAL ACCOUNTANT
COMPETES IN SAME MARKET AS CLIENT
SAFEGUARDS: NOTIFY
ALL PARTIES OF POTENTIAL CONFLICT,
SEPERATE ENGAGEMENT TEAMS, CLEAR
GUIDELINES FOR ENGAGEMENT TEAM
MEMBERS, CONFIDENTIALITY
AGREEMENTS
CONFLICTS OF INTEREST (SECTION 220 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
SECOND OPINIONS
(SECTION 230)
EXAMPLE: - CA IS ASKED TO PROVIDE AN OPINION ON WORK WHICH HAS BEEN CARRIED OUT FOR AN ENTITY WHICH IS NOT AN EXISTING CLIENT
SAFEGUARDS: - OBTAIN WRITTEN EXPLANATION OF WHY THE SECOND OPINION IS REQUIRED - OBTAIN CLIENTS PERMISSION TO CONTACT PROVIDER OF THE FIRST OPINION - SECOND PERSON REVIEW ALL COMMUNICAITON
- SENIOR PERSONNEL
THREATS TO PROFESSIONAL COMPETENCE AND DUE
CARE, PROFESSIONAL BEHAVIOUR, INTEGRITY
SECOND OPINIONS (SECTION 230 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
FEES AND OTHER TYPES OF REMUNERATION (SECTION 240)
NORMAL FEES •THREATS TO PROFESSIONAL COMPETENCE AND DUE CARE, INTEGRITY •SAFEGUARDS: PROVIDE THE CLIENT WITH THE BASIS ON WHICH FEES ARE CHARGED, ALERT THE CLIENT IN WRITING THAT TOTAL TIME BUDGETED TO BE SPENT MAY VARY, DISCUSS TERMS OF ENGAGEMENT WITH CLIENT, ASSIGN APPROPRIATE TIME AND SUITABLY QUALIFIED STAFF
CONTINGENT FEES (FEES THAT ARE CALCULATED ON A PREDETERMINED BASIS RELATING TO THE OUTCOME OF THE WORK PERFORMED/RESULT OF A TRANSACTION WHICH ARISES FROM THE TRANSACTION) •CONTINGENT FEES FOR ASSURANCE ENGAGEMENTS ARE NOT PERMITTED •SELF INTEREST THREAT •THREAT TO OBJECTIVITY, INTEGRITY AND PROFESSIONAL BEHAVIOUR •SAFEGUARDS: WRITTEN AGREEMENT IN ADVANCE DETAILING FEES, COMMITTEE WITHIN THE FIRM TO AUTHORISE ENGAGEMENTS GIVING RISE TO CONTINGENT FEES PRIOR TO ACCEPTANCE, DISCLOSURE TO INTENDED USERS OF WORK PERFORMED OF CONTINGENT REMUNERATION, REVIEW BY THIRD PARTY
REFERRAL FEES/COMMISSION •THREATS TO OBJECTIVITY, PROFESSIONAL COMPETENCE AND DUE CARE AND INTEGRITY •SAFEGUARDS: DISCLOSURE TO CLIENT TO PAY OR RECEIVE REFERRAL FEES, DISCLOSE IN ADVANCE THE BASIS AND EXTENT OF COMMISSION TO BE PAID, COMMITTEE WITHIN THE FIRM TO AUTHORISE REFERRALS
FEES AND OTHER TYPES OF REMUNERATION (SECTION 240 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
MARKETING PROFESSIONAL SERVICES (SECTION 250)
NB: LINK TO SECTION 150 PUBLICITY, ADVERTISING AND SOLICITATION
• THREATS: INTEGRITY, PROFESSIONAL BEHAVIOUR • SAFEGUARDS: QUALITY CONTROL PROCEDURES THAT ALL ADVERTISING BE REVIEWED
AND AUTHORISED BY A SUITABLE COMMITTEE, WRITTEN COMMUNICATION WITH PARTNERS AND EMPLOYEES AS TO WHAT IS ACCEPTABLE IN RESPECT OF PROMOTING THE FIRM
MARKETING PROFESSIONAL SERVICES (SECTION 250 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
KEY WORDS AND CONCEPTS:
- DUE SENSE OF RESPONSIBILITY TO THE PROFESSION AND PUBLIC - CONTENT, PRESENTATION AND MEDIUM SHOULD BE INFORMATIVE,
OBJECTIVE AND IN GOOD TASTE - LEGAL, DECENT, HONEST, TRUTHFUL
GIFTS AND HOSPITALITY
(SECTION 260)
THREATS TO OBJECTIVITY
SELF INTEREST, INTIMIDATION,
FAMILIARTY THREATS
SAFEGUARDS: POLICY PROHIBITING ACCEPTING GIFTS/HOSPITALITY FROM
CLIENTS, QUALITY CONTROL COMMITTEE MUST APPROVE
GIFTS/HOSPITALITY FROM CLIENTS, NOTIFICATION TO
CLIENTS THAT EMPLOYEES AND PARTNERS ARE NOT ALLOWED TO
ACCEPT GIFTS/HOSPITALITY
GIFTS AND HOSPITALITY (SECTION 260 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
NB: CA’s ARE ALLOWED TO RECEIVE GIFTS AND HOSPITALITY FROM A CLIENT PROVIDED IT IS CLEARLY INSIGNIFICANT (EG. A TUB OF YOGHURT DURING THE AUDIT OF A DAIRY). CA’s MUST DECLINE GIFTS AND HOSPITALITY WHICH MAY ALTER THE RELATIONSHIP BETWEEN ACCOUNTANT AND CLIENT (EG. A FREE HOLIDAY PAID BY THE CLIENT)
CUSTODY OF CLIENT ASSETS (SECTION 270)
MONEY LAUNDERING, MISUSE OF CLIENT ASSETS
THREATS TO INTEGRITY, PROFESSIONAL BEHAVIOUR,
OBJECTIVITY
SAFEGUARDS: CLIENT ASSETS MUST BE KEPT SEPERATE FROM FIRM ASSETS, CLIENT MONEY SHOULD NOT BE PUT IN CAS
OWN BANK ACCOUNT, THE FIRM SHOULD AGREE IN WRITING PRIOR TO ACCEPTING THE ASSET, ON WHAT PURPOSE THE
ASSET CAN BE USED, KEEP UP TO DATE RECORDS ON MOVEMENT IN VALUE OF ASSETS, FICA COMPLIANT BANK
ACCOUNTS, ENSURE THAT MONEY IS NOT FROM AN ILLEGAL SOURCE, ADEQUATE PHYSICAL SAFEGUARDS ARE IN PLACE
CUSTODY OF CLIENT ASSETS (SECTION 270 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
EXAMPLE: DEPOSITS HELD IN TRUST BY THE CA FIRM ON BEHALF OF A FIRM OF ATTORNEYS.
OBJ
ECTI
VITY
- AL
L SE
RVIC
ES
(SEC
TIO
N 2
80) CA's MUST NOT COMPROMISE THEIR PROFESSIONAL JUDGEMENT
BECAUSE OF: - BIAS
CONFLICT OF INTEREST - UNDUE INFLUENCE
LINK TO SECTION 290 - INDEPENDENCE LINK TO SECTION 120 - OBJECTIVITY
OBJECTIVITY (SECTION 280 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
INDEPENDENCE (SECTION 290)
WORK THROUGH ALL EXAMPLES IN JACKSON AND STENT (2/27-2/45)
FINANCIAL INTEREST (INTEREST IN EQUITY,
SECURITY, DEBENTURE, LOAN, OTHER DEBT
INSTRUMENT, RIGHTS AND OBLIGATIONS TO PURCHASE
INTEREST)
DIRECT FINANCIAL INTEREST (FINANCIAL INTEREST OWNED
DIRECTLY AND UNDER THE CONTROL OF THE
INDIVIDUAL/ENTITY)
INDIRECT FINANCIAL INTEREST
(FINANCIAL INTEREST BENEFICIALLY OWNED
THROUGH A COLLECTIVE INVESTMENT VEHICLE,
ESTATE, TRUST OVER WHICH THE ENTITY/INDIVIDUAL HAS
NO CONTROL)
IMMEDIATE FAMILY MEMBER (SPOUSE, DEPENDANT)
INDEPENDENCE OF
APPEARANCE
CLOSE FAMILY (PARENT, CHILD, SIBLING)
INDEPENDENCE OF MIND
INDEPENDENCE (SECTION 290 OF THE SAICA CODE OF PROFESSIONAL CONDUCT)
TL 101 ASSIGNMENT 1, QUESTION 7, 8, 18 AND 19 ASSIGNMENT 2 QUESTION 3
TL 102 QUESTIONS 3.4, 3.9 AND 3.12 IN GRADED QUESTIONS 2015 BY GOWAR AND JACKSON
STUDY GUIDE COMPLETE THE ACTIVITIES IN STUDY UNIT 2.3
JACKSON AND STENT ENSURE YOU UNDERSTAND THE PRINCIPLES IN 2/14-2/16 AND 2/27-2/45
PAST EXAMS
MAY/JUNE 2012 QUESTION 1.3 OCT/NOV 2012 QUESTION 2.4
MAY/JUNE 2013 QUESTION 1.2 AND 1.3 OCT/NOV 2013 QUESTION 1.5 AND 1.6
QUESTIONS AND EXAMPLES FOR YOU TO PRACTICE