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Enhancing Clarity and Responsiveness: IESBA Restructuring Recommendations

This document outlines recommendations from the IESBA Meeting in December 2013 for restructuring the Code to improve clarity, enforceability, and individual responsibilities in the context of independence requirements. Recommendations touch on distinguishing requirements from guidance, improving language clarity, and enhancing the electronic Code's usability. The restructuring examples provided aim to gather feedback on specific changes proposed.

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Enhancing Clarity and Responsiveness: IESBA Restructuring Recommendations

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  1. Structure of the Code Don Thomson Working Group Chair IESBA Member IESBA Meeting December 4-6, 2013 New York

  2. Background • Prior years – Concerns expressed • May - October 2013 – Research supports change – CAG & NSS input received • September 2013 – Findings • December 2013 – Recommendations

  3. Distinguishing requirements Recommendations: • Distinguish requirements from guidance • enhance understandability & enforceability • Confirm: conceptual framework is a requirement • Guidance adjacent to relevant requirements

  4. Responsibility of individuals Recommendations: • Firms' policies & procedures shall enable identification of the individual responsible for independence in a particular circumstance • Change passive clauses to active where the change would not change the meaning

  5. Clarity of language Recommendations: • Reduce the reading age • Extend drafting conventions • Avoid stock phrases & linguistic nuances • Use more sub-headings • Use an editor • Consider translatability of changes

  6. Electronic Code Recommendations: • Coordinate changes with other recommendations • Filter content by: user / service / client • Enhance search functionality • Develop hyperlinks • Improve navigation

  7. Repackaging Recommendations: • Coordinate changes with electronic Code • Separate independence • Rebrand independence • International Standards on Independence

  8. ComplementaryMaterials Recommendations: • Work with others to develop materials • Examples: • Short summaries, FAQs and case studies • Bases for conclusions • Address these after restructuring the Code

  9. Restructuringexample (2-C) • Three segments of Section 290 reworked • Stage one of a process to explore the practical challenges of addressing visibility & responsibility • These are not proposals • Presented to obtain IESBA views on 7 questions

  10. Restructuring example (2-C) • Would changes (IN BOLD) prescribing specific responsibility make the Code more enforceable? • Any comments on the changes (IN BOLD) where rewording may change the meaning of the Code? • Are direct statements (audit may not be performed unless….) clearer than passive statements?

  11. Restructuring example (2-C) • Do changes so far enhance clarity of language? • Any comments on the order of the requirements? • e.g. Whether “threats” should precede or follow matters “specifically not permitted” • Is “compliance with conceptual framework” language too broad or not broad enough? • Do “purpose” paragraphs assist as introductions?

  12. Restructuring example (2-C) • Any other questions arising from this approach? • Does the IESBA support further work on the application of the recommendations to Section 290? • Separating requirements from guidance • Strengthening 290.12

  13. Other matters Comments or Questions?

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