Section 100Part 1

Complying with the Code

General

100.1 A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. 100.2 Confidence in the accountancy profession is a reason why businesses, governments and other organizations involve chartered accountants in a broad range of areas, including financial and corporate reporting, assurance and other professional activities.

Accountants understand and acknowledge that such confidence is based on the skills and values that accountants bring to the professional activities they undertake, including:

(a)

Adherence to ethical principles and professional standards;

(b)

Use of business acumen;

(c)

Application of expertise on technical and other matters; and

(d)

Exercise of professional judgment.

The application of these skills and values enables accountants to provide advice or other output that meets the purpose for which it was provided, and which can be relied upon by the intended users of such output. 100.3 The Code sets out high quality standards of ethical behaviour expected of chartered accountants. The Code should also be used or adopted by the firms in developing their ethics and independence policies. 100.4 The Code establishes five fundamental principles to be complied with by all chartered accountants. It also includes a conceptual framework that sets out the approach to be taken to identify, evaluate and address threats to compliance with those fundamental principles and, for audits and other assurance engagements, threats to independence. The Code also applies the fundamental principles and the conceptual framework to a range of facts and circumstances that accountants might encounter, whether in service or in practice.

Requirements and Application Material

100.5 A1 The requirements in the Code, designated with the letter “R,” impose obligations. 100.5 A2 Application material, designated with the letter “A,” provides context, explanations, suggestions for actions or matters to consider, illustrations and other guidance relevant to a proper understanding of the Code. In particular, the application material is intended to help a chartered accountant to understand how to apply the conceptual framework to a particular set of circumstances and to understand and comply with a specific requirement. While such application material does not of itself impose a requirement, consideration of the material is necessary to the proper application of the requirements of the Code, including application of the conceptual framework.

R100.6

A chartered accountant shall comply with the Code. 100.6 A1 Upholding the fundamental principles and compliance with the specific requirements of the Code enable chartered accountants to meet their responsibility to act in the public interest. 100.6 A2 Complying with the Code includes giving appropriate regard to the aim and intent of the specific requirements. 100.6 A3 Compliance with the requirements of the Code does not mean that chartered accountants will have always met their responsibility to act in the public interest. There might be unusual or exceptional circumstances in which an accountant believes that complying with a requirement or requirements of the Code might not be in the public interest or would lead to a disproportionate outcome. In those circumstances, the accountant is encouraged to consult with Institute. 100.6 A4 In acting in the public interest, a chartered accountant considers not only the preferences or requirements of an individual client or employing organization, but also the interests of other stakeholders when performing professional activities.

R100.7

If there are circumstances where laws or regulations preclude a chartered accountant from complying with certain parts of the Code, those laws and regulations prevail, and the accountant shall comply with all other parts of the Code. 100.7 A1 The principle of professional behaviour requires a chartered accountant to comply with relevant laws and regulations.

Accountants need to be aware of differences in local regulations from the provisions as set out in the Code, and comply with the more stringent provisions unless prohibited by law or regulation.

Breaches of the Code

R100.8

Paragraphs R400.80 to R400.89 and R900.50 to R900.55 address a breach of Independence Standards. A chartered accountant who identifies a breach of any other provision of the Code shall evaluate the significance of the breach and its impact on the accountant’s ability to comply with the fundamental principles. The accountant shall also:

(a)

Take whatever actions might be available, as soon as possible, to address the consequences of the breach satisfactorily; and

(b)

Determine whether to report the breach to the relevant parties. 100.8 A1 Relevant parties to whom such a breach might be reported include those who might have been affected by it.