Section 250: Inducements, Including Gifts and Hospitality

Section 250: Inducements, Including Gifts and Hospitality · Complied AI

to accept, any inducement that the accountant concludes is made, or considers a reasonable and informed third party would be likely to conclude is made, with the intent to improperly influence the behaviour of the recipient or of another individual. 250.9 A1 An inducement is considered as improperly influencing an individual’s behaviour if it causes the individual to act in an unethical manner. Such improper influence can be directed either towards the recipient or towards another individual who has some relationship with the recipient. The fundamental principles are an appropriate frame of reference for a chartered accountant in considering what constitutes unethical behaviour on the part of the accountant and, if necessary by analogy, other individuals. 250.9 A2 A breach of the fundamental principle of integrity arises when a chartered accountant offers or accepts, or encourages others to offer or accept, an inducement where the intent is to improperly influence the behaviour of the recipient or of another individual. 250.9 A3 The determination of whether there is actual or perceived intent to improperly influence behaviour requires the exercise of professional judgment. Relevant factors to consider might include: • The nature, frequency, value and cumulative effect of the inducement. • Timing of when the inducement is offered relative to any action or decision that it might influence. • Whether the inducement is a customary or cultural practice in the circumstances, for example, offering a gift on the occasion of a religious holiday or wedding. • Whether the inducement is an ancillary part of a professional activity, for example, offering or accepting lunch in connection with a business meeting. • Whether the offer of the inducement is limited to an individual recipient or available to a broader group. The broader group might be internal or external to the employing organization, such as other customers or vendors. • The roles and positions of the individuals offering or being offered the inducement. • Whether the chartered accountant knows, or has reason to believe, that accepting the inducement would breach the policies and procedures of the counterparty’s employing organization. • The degree of transparency with which the inducement is offered. • Whether the inducement was required or requested by the recipient. • The known previous behaviour or reputation of the offeror.

250.11 A1 The requirements and application material set out in the conceptual framework apply when a chartered accountant has concluded there is no actual or perceived intent to improperly influence the behaviour of the recipient or of another individual. 250.11 A2 If such an inducement is trivial and inconsequential, any threats created will be at an acceptable level. 250.11 A3 Examples of circumstances where offering or accepting such an inducement might create threats even if the chartered accountant has concluded there is no actual or perceived intent to improperly influence behaviour include: • Self-interest threats o A chartered accountant is offered part-time employment by a vendor. • Familiarity threats o A chartered accountant regularly takes a customer or supplier to sporting events. • Intimidation threats o A chartered accountant accepts hospitality, the nature of which could be perceived to be inappropriate were it to be publicly disclosed. 250.11 A4 Relevant factors in evaluating the level of such threats created by offering or accepting such an inducement include the same factors set out in paragraph 250.9 A3 for determining intent. 250.11 A5 Examples of actions that might eliminate threats created by offering or accepting such an inducement include: • Declining or not offering the inducement. • Transferring responsibility for any business-related decision involving the counterparty to another individual who the chartered accountant has no reason to believe would be, or would be perceived to be, improperly influenced in making the decision. 250.11 A6 Examples of actions that might be safeguards to address such threats created by offering or accepting such an inducement include: • Being transparent with senior management or those charged with governance of the employing organization of the chartered accountant or of the counterparty about offering or accepting an inducement. • Registering the inducement in a log maintained by the employing organization of the accountant or the counterparty. • Having an appropriate reviewer, who is not otherwise involved in undertaking the professional activity, review any work performed or decisions made by the accountant with respect to the individual or organization from which the accountant accepted the inducement. • Donating the inducement to charity after receipt and appropriately disclosing the donation, for example, to those charged with governance or the individual who offered the inducement. • Reimbursing the cost of the inducement, such as hospitality, received. • As soon as possible, returning the inducement, such as a gift, after it was initially accepted.