Revised and restructured Code of Ethics – effective 1 March 2020

Feb 13, 2020

The Institute’s Code of Ethics for members has been revised and restructured and this revised Code will take effect from 1 March 2020 replacing the current Code of Ethics (effective September 2016).

The revised Code of Ethics is available to read here.

The Institute’s Code of Ethics has been closely aligned for many years to the Code of Ethics issued by the International Ethics Standards Board for Accountants (‘IESBA’).  In 2018 IESBA finalised a significant project to clarify and restructure its Code of Ethics.  IESBA’s primary intention behind this restructuring of the Code was not to fundamentally change the substance of the Code, but to improve clarity and navigation.  Some key features of the restructuring include:

  • a more consistent approach to each section, including separating out material into requirement paragraphs and related application material;
  • reordering material, dividing larger sections and including more sub headings;
  • simplifying the more complex sentences;
  • changing numbering to clarify the intent of each paragraph, and to allow for further changes without having to renumber existing material; and
  • Introducing a “Guide to the Code” to explain how it works.

The Institute’s Code of Ethics has now been revised to align with the restructured IESBA Code and so the format and layout of the revised Institute Code of Ethics will look completely different to members.  To help members become familiar with the revised Code of Ethics we have made available a table of destinations which shows where each paragraph in the 2016 Code appears in the revised 2020 Code.  This table of destinations can be accessed here.

The new structure, compared to the old structure, is as follows:

Revised Code of Ethics for members of Chartered Accountants Ireland (effective 1 January 2020)

Extant (‘old’) Code of Ethics for members of Chartered Accountants Ireland (effective 30 September 2016)

Guide to the Code

This is a new section in the revised Code of Ethics

Part 1 – Complying with the Code, Fundamental Principles and Conceptual Framework

Sections 100–120

Part A – General application of the Code

Sections 100-150

Part 2 –Professional Accountants in Business

Sections 200-299

Part C – Professional Accountants in Business

Sections 300-350

Part 3 –Professional Accountants in Public Practice

Sections 300-399

Part B– Professional Accountants in Public Practice

Sections 200-280

Part 4A – Independence for Audit and Review Engagements*

Sections 400-800

Part B – Professional Accountants in Public Practice

Sections 290

Part 4B – Independence for Assurance Engagements other than Audit and Review Engagements

Sections 900-990

Part B – Professional Accountants in Public Practice

Sections 291

Part 5** - Applicable to Insolvency Practitioners

Part D – The Practice of Insolvency

Section 400

 *        The Institutes’ Code of Ethics does not apply to the performance of statutory audit work.  Independence and other ethical requirements for auditors are contained in the Ethical Standard for Auditors issued by the FRC and IAASA in the UK and Ireland respectively.

**     The revision of the part of the Code of Ethics applicable to the practice of insolvency is still ongoing and is expected to be published in the first half of 2020. 

Non- IESBA content – ‘add-on’ material

The Institute’s Code of Ethics has historically contained ‘add-on’ material (shown in italics in the Institute’s Code) over and above the provisions of the IESBA Code of Ethics.  Where the revised IESBA Code of Ethics now addresses the matters included in Institute ‘add-on’ material or where the add-on material has been assessed to be descriptive in nature rather than core to the Code of Ethics,  such ‘add-on’ material has been removed as part of the revision project.  The revised Institute Code of Ethics is now closer than ever to the IESBA Code of Ethics.   Removed ‘add-on’ material which is considered useful but not core to the Code has been made available for members in a series of Ethics Releases on the following topics:

  • Code of Ethics and changes in professional appointments;
  • Code of Ethics and confidentiality;
  • Code of Ethics and corporate finance advice;
  • Code of Ethics and marketing.

 These Ethics Releases are available in the Institute’s online Ethics Resource Centre.

Key developments in the revised Code

As well as the significant restructure there have been some enhancements of the content in the revised Code of Ethics although there is no fundamental change to ethical requirements.  These include the following:

  • “Guide to the Code”

    This new introductory section does not form part of the Code but provides some useful information on the purpose of the Code, it’s structure and how it is to be used.

  • Enhanced and overarching conceptual framework

    There is a clear emphasis on the fundamental ethical principles and the use of the conceptual framework for applying those principles underlying every section of the Code.  In this context there is also new guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment and new guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.

  • Safeguards

    Revised ‘safeguards’ provisions better align to threats to compliance with the fundamental principles.  A new definition of ‘safeguards’ clarifies that ‘safeguards’ are specific actions (no longer ‘actions or measures’) to be taken to reduce threats.  Additional guidance is provided in the revised Code of Ethics in relation to example ‘safeguards’.

  • Application of relevant Code provisions to all professional accountants

    Clear guidance that relevant provisions for professional accountants in business are also applicable to professional accountants in practice, in the context of their role other than when providing professional services to clients.  The converse also applies where appropriate.  This is not a change to requirements of the Institute’s 2016 Code of Ethics but rather provides clarification as to how the provisions of the Code apply.

  • Professional accountants in business (‘PAIBs’)

    New and revised sections dedicated to PAIBs relating to:

    • preparing and presenting information (extended new section 220); and
    • dealing with pressure to breach the fundamental principles (new section 270)

      These changes add additional explanation to existing requirements in the Institute’s 2016 Code of Ethics and have, for the most part, been regarded as implicit in the 2016 Code.  

  • Non-compliance with laws and regulations (‘NOCLAR’)

    Dedicated sections on non-compliance with laws and regulations (‘NOCLAR’) (new sections 260 and 360).  The 2016 Code of Ethics includes specific permission to breach confidentiality in the public interest and so the NOCLAR provisions can be seen as a change of detail, rather than of substance.  The new sections provide additional guidance in this area.

  • Inducements
    Additional guidance is provided in relation to the threats posed by gifts and hospitality and more broadly now referred to as inducements.  The revised Code of Ethics introduces an ‘intent’ test.   The acceptance of any inducement which is offered with an intent to influence inappropriately is prohibited whereas there may be possible safeguarding actions to take in relation to inducements where there is no intent to influence inappropriately.