RESTRICTED
ORGANISATION MONDIALE S/WPPS/W/7/Add.2
28juin1996
DUCOMMERCE(96-2489)
Original: anglais Groupe detravail desservices professionnels
COMMUNICATION DEL'AFRIQUE DUSUD
Réponse auquestionnaire surlesecteur desservices comptables
Lacommunication ci-après estdistribuée àlademande del'Afrique duSud.
_____________
I. GENERALITES
1. Quels sontlestitres professionnels desprofessionnels comptables dans votre pays?
a) Chartered Accountants (SA) -CA(SA) -Membres duSouth African Institute of
Chartered Accountants (SAICA);
b) Registered Accountants andAuditors -Enregistrés auprès duPublic Accountants 'and
Auditors 'Board (PAAB);
c) Commercial andFinancial Accountants -Membres del'Institute ofCommercial and
Financial Accountants ofSouthern Africa (CFA);
d) Chartered Management Accountants -Membres deChartered Institute ofManagement
Accountants (CIMA);
e) Certified Accountants -Membres deChartered Association ofCertified
Accountants (ACCA);
f) Municipal Treasurers -Membres del'Institute ofMunicipal Treasurers and
Accountants (IMTA).
Cestitres professionnels sont-ils protégés? Veuillez préciser comment.
a) Cetitreestprotégé parlaLoin67de1993 surladésignation de"Chartered
Accountants" (annexe 1).
b) Cetitreestprotégé parlaLoin80de1991 (article 10a) surlaprofession
d'expert-comptable etd'auditeur (annexe 2).
c) Cetitren'estpasprotégé actuellement; seulelaLoisurlessociétés àactionnariat limité
protège laprofession.
d) Pasdeprotection locale, maisuneprotection internationale.S/WPPS/W/7/Add.2
Page2
e) Pasdeprotection locale, maisseulement uneprotection internationale.
f) L'Institutestenregistréentantquesociété,maislaloiprotègeuniquementlaprofession,
etnonletitre.
2. Comment lesecteur desservices comptables est-il réglementé dansvotre pays: parlaloi,
pardesrègles propres àlaprofession ouparunecombinaison desdeux?
Parunecombinaison desdeux.
3. Ya-t-il dans votre pays desdispositions visant àprotéger lesnoms dessociétés
professionnelles, qu'ellessoient nationales ouétrangères?
Oui,laLoisurlessociétés (Loin61de1973).
4. Quelles sontlesorganisations professionnelles dansvotre pays? Sont-elles reconnues par
laloicomme desorganismes deréglementation oudediscipline pour laprofession de
comptable dans votre pays, oucesfonctions sont-elles exercées pard'autres institutions
(veuillez préciser)?
Lesorganisations professionnelles sontlessuivantes:
- TheSouth African Institute ofChartered Accountants
- TheChartered Institute ofManagement Accountants
- TheChartered Association ofCertified Accountants
- TheInstitute ofCommercial andFinancial Accountants
- TheInstitute ofMunicipal Treasurers andAccountants
Cesorganisations assurent l'autoréglementation delaprofession.
LePublic Accountants 'andAuditors 'Board, institué parlaLoisurlaprofession
d'expert-comptable etd'auditeur, réglemente lafonction decertification. Ilestchargé desenquêtes
etdesprocédures disciplinaires concernant lespersonnes quiexercent cettefonction (annexe 1).
IlexisteaussiunInstituteofCharteredSecretariesandAdministrators,dontlesmembresexercent
également desactivités comptables.
5. Combien demembres cesorganisations professionnelles comptent-elles? Comment, selon
lesestimations, serépartissent-ils entre lescatégories suivantes:
SAICA:
- professionnels exerçantàtitrelibéral 3965
- personnes employées àtitrelibéral 2358
- personnes exerçantdansdesentreprises
industrielles oucommerciales 7423
- personnes exerçantdanslesecteur public 368
- personnes exerçantdansl'enseignement 305
- personnes sansemploi (retraités, etc.) 1024
- autres 574
Nombre totaldemembres: 16017S/WPPS/W/ 7/Add.2
Page3
PAAB: 4300
CIMA: 928
ACCA: 200 -dont60exercent
CFA: 5000 -dont3500exercent
IMTA: 890
6. Quelle estlagamme desactivités régulièrement exercées parlesprofessionnels comptables
dans votre pays?
Toutes lesactivités citées sontrégulièrement exercées parlesprofessionnels comptables en
Afrique duSud.
7. Lesquelles decesactivités sontréglementées dans votre pays?
Lesaudits dusecteur privé sontréglementés parlePublic Accountants 'andAuditors 'Board.
Ceux dusecteur public lesontparl'Office oftheAuditor General. Lafonction d'expert-comptable
estréglementée parlaLoisurlessociétés àactionnariat limité. Pourlesautres activités, lesstatuts
delaSAICA etleCode deconduite professionnelle (annexe 3)imposent uneautoréglementation.
Certaines activités sontégalement régies parlesloispertinentes -Loissurlesfaillites, surlessociétés
ousurlesbanques.
8. Lesquelles decesactivités sont, dans votre pays, réservées parlaloiauxprofessionnels
comptables, exercées tantpardesprofessionnels comptables quepard'autres personnes
(veuillez préciser), voire interdites auxprofessionnels comptables, parexemple enraison
d'uneprohibition totale oudufaitquelecumul decertaines activités considérées comme
incompatibles ous'excluant réciproquement n'estpasautorisé?
Toutes lesactivités relatives auxaudits dusecteur privé sontréservées parlaloiaux
professionnels enregistrés auprès duPublic Accountants 'andAuditors 'Board. Lesautres activités
nesontpasréglementées. Lesaudits dusecteur public sonteffectués parl'Office oftheAuditor General
oupardescabinets privés sousl'autorité del'Auditor General.
II. PRESCRIPTIONS ENMATIERE DEQUALIFICATIONS
9. Quelles sontlesprescriptions enmatière dequalifications pour l'exercice decesactivités
dansvotre paysencequiconcerne leniveau d'études universitaires/supérieures, lapratique
etlesexamens professionnels? Précisez lenombre d'années requises pourchaque élément
etlesdifférences selon lesactivités visées (audit, liquidation-redressement judiciaire,
fiscalité, etc.).
Pourexercer laprofession d'auditeur, ilfaut:
- êtretitulaire d'undiplôme d'études universitaires (cycle detroisans)etd'undiplôme
d'études supérieures (cycle deunan),avecsoituncertificat enthéorie delacomptabilité
soitundiplôme encomptabilité;S/WPPS/W/7/Add.2
Page4
- avoir effectué troisàcinqannées destage dansunesociété comptable agréée parle
Public Accountants 'andAuditors 'Board;
- avoir passé avecsuccès l'examen d'aptitude professionnelle organisé parlePublic
Accountants 'andAuditors 'Board.
Pourexercerlaprofessioncomptable,ilfautêtremembred'unorganismeprofessionnelreconnu.
Actuellement, lesorganismes reconnus auxtermes delaLoisurlessociétés àactionnariat limité sont:
- TheSouth African Institute ofChartered Accountants
- Experts-comptables etauditeurs agréés envertu delaLoide1951 surlaprofession
d'expert-comptable etd'auditeur
- TheSouthern African Institute ofChartered Secretaries andAdministrators
- TheChartered Institute ofManagement Accountants
- TheInstitute ofCommercial andFinancial Accountants
- TheInstitute ofAdministration andCommerce ofSouthern Africa.
10. Ya-t-ildesconditions préalables àremplir pourcommencer laformation professionnelle:
âgeminimum,diplômeoutitreparticulier,étudesantérieures,affiliationàuneorganisation
professionnelle, acquittement dedroits, autres (veuillez préciser)?
Lesconditions sontlessuivantes: dispense del'examen d'entrée àl'université surlabasedes
notes obtenues enmathématique, anglais ouafrikaans.
11. Quelles sontlesmatières devant figurer auprogramme deformation: comptabilité, audit,
fiscalité, droit commun, économie, déontologie, informatique, autres (veuillez préciser)?
- Comptabilité financière
- Audit
- Fiscalité
- Droit commercial
- Droit desaffaires
- Droit dessociétés
- Economie
- Economie d'entreprise
- Technologie del'information
- Techniques quantitatives
- Comptabilité degestion
- Statistique
- Communication d'entreprise
- Gestion financière desentreprisesS/WPPS/W/ 7/Add.2
Page5
III. NORMES TECHNIQUES ETDEONTOLOGIE
12. Pour quelles activités existe-t-il des normes nationales (audit, comptabilité,
liquidation-redressement judiciaire, autres)? Veuillez préciser leurs principaux objectifs.
Desnormes nationales existent pourlesactivités des"Chartered Accountants" danslesdomaines
suivants:
- Audit }
- Comptabilité } normes déontologiques
- Fiscalité } nationales
- Faillite }
- Conseil engestion -desrecommandations sontpubliées detemps entemps parleSouth
African Institute ofChartered Accountants.
Principaux objectifs:
AUDIT Indiquer lesrègles àobserver pourlaconduite d'un
audit, notamment lesrègles générales etpratiques et
lesrègles deprésentation desrapports.
COMPTABILITE Indiquer lesrègles àobserver pourlaprésentation de
l'information financière, enparticulier desétats
financiers annuels, àlafoisencequiconcerne les
éléments àcommuniquer etlafaçondelesidentifier
etdelesévaluer.
FISCALITE, LIQUIDATION- Aucune norme n'existe danscedomaine.
REDRESSEMENT JUDICIAIRE
GESTION Assurer uneapproche uniforme duconseil engestion.
13. Quelle organisation ouinstitution élabore cesnormes etensurveille l'application? Quelles
sontlesconséquences d'unnon-respect desnormes (pour leprofessionnel, pour les
clients, etc.)?
Audit
Lesnormes d'auditsontétablies parl'Auditing Standards Committee duSouth African Institute
ofChartered Accountants.
Lespratiques desprofessionnels quiexercent lafonction decertification sontsoumises àun
contrôle àlasuiteduquel desmesures sontprises, s'ilyalieu.
Encasdenon-respect desnormes d'audit, l'affaire peutêtreportée devant untribunal ou,si
lafauteestrévélée paruncontrôle despratiques professionnelles, devant unecommission d'enquête
etdediscipline duPublic Accountants 'andAuditors 'Board.
Comptabilité
Lesnormes comptables sontétablies parl'Accounting Practices Board (APB). Actuellement,
leurapplication n'estsoumise àaucune surveillance mais, envertu delaLoisurlessociétés, cesS/WPPS/W/7/Add.2
Page6
dernières doivent établir leursétatsfinanciers conformément auxpratiques comptables généralement
admises, sansêtretenues deseconformer auxcomptables del'Accounting Practices Board.
Lorsdelavérification desétatsfinanciers d'unesociété, lesauditeurs doivent indiquer s'ils
ontétéétablis conformément auxpratiques comptables généralement admises.
Fiscalité, liquidation-redressement judiciaire etconseil engestion
Lespratiques desmembres duSouth African Institute ofChartered Accountants sontsurveillées
parunorganisme professionnel. Encasdefaute, celui-ci peutprendre lessanctions suivantes:
- avertissement
- blâme
- amende n'excédant pas50000rands
- suspension pourunedurée decinqansmaximum
- exclusion
14. Lesnormes internationales élaborées parl'IFAC (Normes etrecommandations
internationalesenmatièredeformation,Normesinternationalesd'audit)etl'IASC(Normes
comptables internationales) sont-elles reconnues ouutilisées dans votre pays? Dans
l'affirmative, veuillez préciser comment. Dans lanégative, veuillez indiquer pourquoi.
L'Afrique duSudestentraind'harmoniser sesnormes comptables etd'audit aveccelles de
l'IFAC etdel'IASC. Lesnormes sud-africaines sontfondées surcelles del'IASC etdel'IAPC. De
nouvelles normes nesontélaborées quedanslesdomaines oùiln'existe pasdenormes internationales.
Enl'absence denormes nationales, lesnormes internationales peuvent êtreappliquées.
15. Pour quelles activités existe-t-il uncodededéontologie particulier (audit, comptabilité,
liquidation-redressement judiciaire, autres)? Veuillez indiquer sesprincipaux objectifs.
LeCode deconduite professionnelle duSouth African Institute ofChartered Accountants traite
detouslesaspects importants ducomportement professionnel desmembres del'Institut. Ils'inspire
duCode dedéontologie del'IFAC (annexe 3).
LePublic Accountants 'andAuditors 'Board aégalement unCode deconduite professionnel
quis'applique àl'ensemble desprofessionnels comptables agréés (annexe 4).
16. Quelle organisation ouinstitution élabore cecodeetensurveille l'application? Quelles
sontlesconséquences d'uneviolation ducodededéontologie parunprofessionnel ouune
société?
Lecodeestélaboré parleSouth African Institute ofChartered Accountants.
Lesconséquences d'uneviolation ducodededéontologie sonténoncées danslaréponse àla
question 13.
17. Ya-t-il desrestrictions enmatière decommercialisation, dedémarchage oudepublicité?
Non, àcondition quecesactivités neportent pasatteinte àl'honneur delaprofession.
18. Ya-t-il desrestrictions concernant lafixation deshonoraires (niveaux plancher/plafond
imposés, barèmes indicatifs, etc.)?S/WPPS/W/ 7/Add.2
Page7
Non,àcondition quesoient respectées lesrecommandations énoncées dansleCode deconduite
professionnelle concernant lafixation d'honoraires tropbasoudetarifs d'éviction.
IV. PRESCRIPTIONS ETPROCEDURES ENMATIERE D'AGREMENT
19. Outre lesprescriptions enmatière dequalifications, quelles sontdans votre pays les
prescriptions enmatière d'agrément pour lespersonnes physiques?
Pourexercer lafonction d'auditeur, ilfautêtreagréé parlePublic Accountants 'andAuditors '
Board.
20. Ya-t-ildesconditionsàremplirpourpouvoirs'affilieràl'organisationouauxorganisations
professionnelles pertinentes? Veuillez donner desprécisions.
Pourdevenir membre duSouth African Institute ofChartered Accountants, ilfautpasser avec
succès unexamen d'aptitude professionnelle organisé parlePublic Accountants 'andAuditors 'Board
eteffectuer unstage deformation dansunbureau deformation agréé parlePublic Accountants 'and
Auditors 'Board.
21. Ya-t-il desprescriptions spécifiques enmatière d'agrément pour lessociétés
professionnelles?
LePublic Accountants 'andAuditors 'Board donne sonagrément auxsociétés professionnelles
dontlesmembres sonteux-mêmes agréés.
22. Unedemande d'agrément peut-elle êtredéposée àtoutmoment dans l'année ouya-t-il
desdates àrespecter? Combien detemps faut-il pour mener àbien laprocédure
d'agrément? Veuillez donner desprécisions encasdedifférences entre lespersonnes
physiques etlessociétés professionnelles.
Unedemande d'agrément peutêtredéposée àtoutmoment dansl'année.
Ilfautunàtroisjours pourmener àbienlaprocédure etl'agrément estofficialisé àlaréunion
suivante delacommission.
Lessociétés professionnelles doivent êtreagréées parlePublic Accountants 'andAuditors '
Board pourpouvoir accueillir desstagiaires. Lesformalités sontlesmêmes quepourlespersonnes
physiques.
23. Ya-t-ildesdifférences surleplandesprescriptions et/ou procédures enmatière d'agrément
selon lesactivités visées (audit, liquidation-redressement judiciaire, etc.)? Veuillez donner
desprécisions. Quel typededocumentation estnécessaire/accepté? Lesdocuments émis
dans d'autres payssont-ils acceptables? Veuillez donner desprécisions.
Seule l'activité d'audit estassujettie àuneprocédure d'agrément.
L'exercice decetteactivité nécessite unenregistrement spécial auprès duPublic Accountants '
andAuditors 'Board.
Ilfautprésenter unformulaire dedemande dûment rempli ainsiquelespièces attestant qu'un
stage aétéeffectué etquel'examen d'aptitude professionnelle aétépassé avecsuccès.S/WPPS/W/7/Add.2
Page8
24. Quesepasse-t-il lorsque lapersonne physique oulasociété professionnelle nerespecte
pluslesconditions régissant l'agrément?
Encasdeviolation delaloi,dessanctions pénales peuvent êtreprises.
Desmesures disciplinaires peuvent êtreprises àl'encontre desprofessionnels quiavaient été
agréés parlePublic Accountants 'andAuditors 'Board etquiétaient membres duSouth African Institute
ofChartered Accountants.
V. RECONNAISSANCE DESQUALIFICATIONS
25. Lesqualificationsobtenuesparlesprofessionnelsétrangersdansunautrepayspeuvent-elles
êtreprises encompte? Desaccords bilatéraux ont-ils étéconclus avecd'autres pays à
cesujet?
Oui,ilexiste desaccords deréciprocité.
26. Existe-t-il desaccords dereconnaissance automatique oudereconnaissance mutuelle entre
lesorganisations professionnelles dansvotre paysetleurs homologues dansd'autres pays?
Dans l'affirmative, veuillez indiquer lesprincipales caractéristiques decesaccords; dans
lanégative, veuillez endonner laraison.
Desaccords dereconnaissance mutuelle ontétéconclus avec les"Chartered Institutes"
d'Angleterre etduPaysdeGalles, d'Ecosse, d'Irlande etdeNamibie. Ilexiste aussi desaccords
informels avecles"Chartered Institutes" d'Australie, duCanada etdeNouvelle-Zélande.
27. Lorsque lesqualifications acquises àl'étranger peuvent êtreprises encompte, l'intéressé
doit-il passer unexamen local complet ourecevoir uneformation locale pendant plusde
12mois? Veuillez donner desprécisions. Lapratique d'uneactivité decomptabilité
réglementée est-elle toujours subordonnée àunagrément local? Veuillez préciser lescas
dans lesquels iln'enestpasainsi.
Unagrément localdoitêtreobtenu pourexercer lesfonctions d'auditeur, ainsiquelesfonctions
decomptable etdetrésorier municipal danslesmunicipalités dépassant unecertaine taille. Aucun
agrément n'estnécessaire pourlesautres activités.
Lesconditions d'éducation etdeformation sontlessuivantes:
- Fonction d'auditeur -Lesmembres des"Chartered Institutes" aveclesquels leSouth
African Institute ofChartered Accountants aconclu desaccords dereconnaissance
mutuelle doivent passer untestd'équivalence portant surlafiscalité, ledroit etles
normes comptables, selon lesrègles envigueur enAfrique duSud.
- Lescandidats desautres instituts doivent passer l'examen d'aptitude professionnelle
organiséparlePublicAccountants'andAuditorsBoard.Uneformationcomplémentaire
peutaussi êtreexigée.
- Encequiconcerne lescomptables, chaque institut asespropres prescriptions. Le
South African Institute ofChartered Accountants applique lesmêmes conditions que
pourlesauditeurs.S/WPPS/W/ 7/Add.2
Page9
- Lestrésoriers municipaux doivent êtreaffiliés àl'Institute ofMunicipal Treasurers
etdoivent avoir dixansd'expérience delacomptabilité municipale.
28. Quellessontlesprescriptionsenmatièred'agrémentapplicablesauxprofessionnelsétrangers
autorisésàexercerdansleurpaysd'origine?Certainesactivités(réglementées)peuvent-elles
êtremenées souscouvert d'unagrément étranger?
Aucune activité soumise àautorisation nepeutêtreexercée souscouvert d'unagrément étranger.
Lesprofessionnels étrangers doivent êtreagréés parlePublic Accountants 'andAuditors 'Board. Les
professionnels membres des"Chartered Institutes" d'Australie, deNouvelle-Zélande, duCanada,
d'Irlande, d'Ecosse, etd'Angleterre etduPaysdeGalles doivent passer letestd'équivalence. Les
autres doivent passer l'examen d'aptitude professionnelle duPublic Accountants 'andAuditors 'Board
etuneformation complémentaire peutêtreexigée.
VI. REGLEMENTATIONS REGISSANT L'ETABLISSEMENT D'UNE PRESENCE
COMMERCIALE
29. Ya-t-ildesrestrictionsconcernantlaformequepeutprendrel'établissement("partnership",
société decapitaux, autres)? Veuillez donner desprécisions.
L'article 21delaLoisurlaprofession d'expert-comptable etd'auditeur (annexe 2)autorise
l'établissement decabinets constitués en"partnership" (association) ouensociétés àresponsabilité non
limitée.
30. Ya-t-il desrestrictions concernant l'investissement étranger direct etlaparticipation en
capital social, ycompris desrestrictions s'appliquant auxpersonnes physiques ousociétés
professionnelles n'ayant pasdequalifications locales? Veuillez donner desprécisions.
Oui(voir annexe 2,point 16).
31. Ya-t-il uneobligation derecruter surplace unnombre ouunpourcentage minimum de
directeurs, cadres ouemployés (veuillez donner desprécisions)?
Oui(voir annexe 2,point 16).
32. Ya-t-ildesrestrictionsconcernantlafacultédessociétésprofessionnellesétablieslocalement
d'instaurerdesrelationsinternationales(participationàunréseauinternational,association
avecdessociétés étrangères, etc.)? Veuillez donner desprécisions.
Non, iln'yapasderestrictions.
33. Ya-t-il desrestrictions concernant l'utilisation denoms internationaux ouétrangers par
lessociétés professionnelles?
Non,n'importe quelnompeutêtreutilisé àcondition qu'aucune autresociété nesoitenregistrée
souslemême nomenAfrique duSud.S/WPPS/W/7/Add.2
Page10
VII. REGLEMENTATIONS REGISSANT L'ADMISSION ETLESEJOUR TEMPORAIRE DES
PERSONNESPHYSIQUESAUXFINSDELAFOURNITUREDESERVICESCOMPTABLES
34. L'admission etleséjour desprofessionnels sont-ils subordonnés àuneanalyse desbesoins
dumarché dutravail ousoumis àtoute autre restriction? Veuillez donner desprécisions.
IlfautavoiruncertificatduDépartementdel'immigrationet,normalement,unpermisdetravail.
35. Ya-t-il uneprocédure facilitant l'admission etleséjour temporaires desprofessionnels
auxfinsdelafourniture deservices comptables? Veuillez donner desprécisions.
Oui,ilexiste uneprocédure quiestétablie parleMinistère del'intérieur.
36. Ya-t-il desrestrictions concernant l'embauche deprofessionnels locaux pardessociétés
etdesprofessionnels étrangers? Veuillez donner desprécisions.
Non, iln'yapasderestrictions.
VIII. PRESCRIPTIONS ENMATIERE DENATIONALITE/RESIDENCE
37. Unecondition concernant lanationalité/résidence est-elle imposée pour exercer certaines
activités,commenceruneformation,obtenirl'agrément,devenirmembred'uneorganisation
professionnelle, etc.? Veuillez donner desprécisions.
Laseule restriction estque,pourexercer laprofession d'auditeur, ilfautêtredomicilié en
Afrique duSud.
38. Unecondition concernant l'établissement, larésidence préalable oularésidence est-elle
imposée pour exercer certaines activités, obtenir l'agrément, devenir membre d'une
organisation professionnelle, etc.? Veuillez indiquer lesconditions applicables etcequ'il
faut entendre parétablissement, résidence, etc.lecaséchéant. L'établissement
professionnel dans plusieurs paysest-il possible?
Toute personne honorable quiasubiavecsuccès l'examen d'aptitude professionnelle etqui
aeffectué unstage deformation enAfrique duSudpeutêtreagréée parlePublic Accountants 'and
Auditors 'Board.
Lesmembres des"Chartered Institutes" d'Australie, duCanada, d'Angleterre etduPaysde
Galles etdeNouvelle-Zélande peuvent êtreobligés depasser untestd'équivalence portant surledroit
sud-africain. Pourobtenir l'agrément duPublic Accountants 'andAuditors 'Board, ilsdoivent jouir
d'unebonne réputation auprès del'institut deleurpaysetêtretitulaires d'uncertificat depratique
professionnelle délivré parcetinstitut.S/WPPS/W/ 7/Add.2
Page11
ATTACHMENT 1
CHARTERED ACCOUNTANTS DESIGNATION (PRIVATE) ACT, 67OF1993
Useofdesignation "Chartered Accountant" andrelated designations
1. (1) Every member ofTheSouth African Institute ofChartered Accountants orofany
successor intitletothatInstitute andevery member ofTheCape Society ofChartered
Accountants orTheNatal Society ofChartered Accountants orTheOrange FreeState of
Chartered Accountants orTheTransvaal Society ofChartered Accountants, orofanysuccessor
intitletoanyoftheaforementioned Societies, shallbeentitled tousethedesignation "Chartered
Accountant", "Geoktrooieerde Rekenmeester", "Chartered Accountant (South Africa)",
"GeoktrooieerdeRekenmeester(Suid-Afrika)","CharteredAccountant(SA)"or"Geoktrooieerde
Rekenmeester (SA)", ortheinitials "FCA (SA)", "ACA (SA)", "CA", "GR", "CA(SA)" or
"GR(SA)".
(2) Anycompany, close corporation orother body, firmorpartnership which engages
inpublic practice asaccountants andauditors andofwhich every shareholder, every director,
every member orevery partner, asthecasemaybe,isamember oftheInstitute orofone
oftheSocieties referred toinsubsection (1),shallbeentitled tousethedesignations orinitials
referred tointhatsubsection.
Member ofabody ofchartered accountants established outside theRepublic
2. Amember ofabodyofchartered accountants established outside theRepublic ofSouth Africa
mayusethedesignation orinitials which heisentitled tousebyvirtue ofhismembership of
thatbody, provided thecountry where thequalification wasobtained isclearly indicated in
orafterthedesignation orinitials.
Prohibition relating toname orbusiness styleofcompany, close corporation orother body
3. Noperson, whether ornotheisentitled touseanydesignation orinitials referred toinsection
1(1)or2,mayuse,orpermit theuseof,suchdesignation orinitials inthename orbusiness
styleofanycompany, close corporation orother body, firmorpartnership which doesnot
engage inpublic practice asaccountants andauditors.
Penalties
4. (1) Anyperson whousesanydesignation orinitials referred toinsection 1(1),either alone
orincombination withanyother words orinitials oranyname, titleordescription, shallbe
guilty ofanoffence andliable onconviction toafinenotexceeding R20000unless heproves
thatheisamember oftheInstitute oroneoftheSocieties referred tointhatsection.S/WPPS/W/7/Add.2
Page12
(2) Anypersonwhopermitsacompany,closecorporationorotherbody,firmorpartnership
touseanydesignation orinitials referred toinsection 1(1), either alone orincombination
withanyotherwordsorinitialsoranyname,titleordescription,whenanyshareholder,director,
member orpartner ofsuchcompany, close corporation orother body, firmorpartnership is
notentitled tousesuchdesignation orinitials, shall beguilty ofanoffence andliable on
conviction toafinenotexceeding R20000.
(3) Anyperson whocontravenes theprovisions ofsection 2or3shallbeguilty ofanoffence
andliable onconviction toafinenotexceeding R20000.
Repeal oflaws, andsaving
5. (1) TheChartered Accountants Designation (Private) Act,1927 (ActNo.13of1927),
andtheChartered Accountants Designation Amendment (Private) Act,1971 (ActNo.97of
1971), arehereby repealed.
(2) Nothing inthisActcontained shall beconstrued asprohibiting anyperson who,
immediately prior toitscommencement, lawfully usedanydesignation orinitials referred to
insection 1(1)or2,from sousing suchdesignation orinitials.
Short title
6. ThisActshallbecalled theChartered Accountants Designation (Private) Act,1993.S/WPPS/W/ 7/Add.2
Page13
OBJECTS OFTHE CHARTERED ACCOUNTANTS
DESIGNATION (PRIVATE) ACT, 1993
01. The1927 Actprovided thatonlypersons whowere admitted asmembers ofTheCape Society of
Chartered Accountants, TheNatal Society ofChartered Accountants, TheOrange FreeStateSociety
ofChartered Accountants andTheTransvaal Society ofChartered Accountants were entitled touse
thedesignation "Chartered Accountant (SA)" andrelated designations. Itisenvisaged thatsome of
these Societies maydecide todelegate toTheSouth Africa Institute ofChartered Accountants their
power toadmit persons tomembership andthereby toallow suchpersons tousethese designations.
Furthermore, itisenvisaged thatanational designation should beconferred byanational body and
accordingly theSocieties agreed thatthenational body aswellasthefourprovincial bodies should
beabletoconfer thenational designation. Ithastherefore beenprovided inthe1993Actthatmembers
oftheInstitute aswellasmembers ofSocieties areentitled tousethedesignations "Chartered
Accountant" or"Chartered Accountant (SA)" andrelated designations.
02. The1927Actprohibited afirmofchartered accountants inpublic practice fromusing thedesignation
"Chartered Accountants" or"Chartered Accountants (SA)". There seems tobenovalid reason for
thisrestriction. Firms inpublic practice havebeenusing thedesignations inthismanner formany
years, which, intheviewoftheInstitute andtheSocieties, wasnotmisleading tothepublic. Provision
hasbeenmade inthe1993 Acttoregularise thisposition andalsotopermit incorporated practices
tousesuchdesignations.
03. Aperson whowasentitled tousethedesignations orinitials referred toinsection 1(2)ofthe1927
Actbyvirtue ofhismembership ofabody ofchartered accountants established outside South Africa
wasnotrequired toindicate thecountry where thedesignation concerned wasobtained. Inorder that
thepublic isnotconfused ormisled, the1993 Actprovides thatwhen aperson whoisamember of
abodyofcharteredaccountantsestablishedoutsideSouthAfrica,usesthedesignationsorinitialsreferred
toinsection 1(2)heisrequired toindicate where thequalification wasobtained.
04. The1927 Actprovided specifically thatpersons whoweremembers ofoneoftheSocieties mayuse
thedesignation "Chartered Accountant (SA)" andtheinitials "CA(SA)". Itdidnotspecify thatsuch
designations maybeusedonlyinconnection withprofessional practice andinparticular didnotprohibit
theiruseinthename orbusiness styleofacompany, close corporation orother body orfirmwhich
didnotengage inpublic practice asaccountants orauditors, forexample, "Chartered Accountant
Placement Services" or"Chartered Accountant Booksellers". Theuseofthedesignations "Chartered
Accountant" and"Chartered Accountant (SA)"and theinitials "CA" and"CA(SA)" inthename or
business styleofanentity which doesnotengage inpublic practice asaccountants orauditors, may
bemisleading tothepublic because itmayinfersome kindofrecognition, approval orendorsement
bytheInstitute ortheProvincial Societies. Itmayevenmislead thepublic intothinking thatthatentity
isanofficial armoftheInstitute. Provision hasbeenmade inthe1993 Acttoclarify theissue by
restricting theuseofthese designations andinitials inthename ofanentity.
05. Themaximum fineofR500 provided forinthe1927 Actwasfixed many years agoandbecame
substantially devalued withthepassage oftime. Thepenalty wasregarded asinadequate considering
theserious lightinwhich thechartered accountancy profession views misuse ofitsprotected designation,
andthepotential prejudice tothepublic when persons whoarenotentitled todosousethedesignations
andinitials permitted bytheActorusesuchdesignations, orpermit them tobeused, inthename or
business styleofanycompany, closecorporation orother bodyorfirmwhich doesnotengage inpublic
practice asaccountants orauditors. Provision hasbeenmade forapenalty commensurate withthe
seriousness oftheoffence andofsuchanamount astobeadeterrent topersons considering using
thedesignations whoarenotsoentitled.S/WPPS/W/7/Add.2
Page14
06. The1927Actprovided thataperson whowasamember ofabodyofchartered accountants established
outside theRepublic ofSouth Africa andwasentitled toregistration asanaccountant andauditor under
thePublic Accountants 'andAuditors 'Act,1991, without being required topassanyexamination in
theRepublic, wasentitled tousethedesignation "Chartered Accountant (SA)" andtheinitials "CA
(SA)". Thisprovision wasobsolete andhasbeendeleted inthe1993 Actasevery person whoisa
member ofabodyofchartered accountants established outside theRepublic ofSouth Africa isrequired
topassatleast anexamination inthelawoftheRepublic interms ofsection 19ofthePublic
Accountants 'andAuditors 'Act,1991, before being entitled toregistration asanaccountant andauditor.
07. The1927 Actprovided thataperson whoproved thathewasamember ofabody ofchartered
accountants established outside theRepublic ofSouth Africa andSouth West Africa andwasentitled
toregistration asanaccountant andauditor under thePublic Accountants 'andAuditors 'Act,1991,
without being required topassanyexamination intheRepublic orSouth West Africa other thansuch
examination inthelawoftheRepublic asthePublic Accountants 'andAuditors 'Board maydetermine,
mayusethedesignations orinitials setoutintheAct. TheInstitute andtheSocieties considered that
itwasinappropriate fortheuseofsuchdesignations orinitials tobesubject totherequirements of
thePublic Accountants 'andAuditors 'Act. Itwasalsoinappropriate forthedesignations andinitials
tobeusedbypersons whowerenotmembers oftheInstitute orofanyoftheSocieties andwhowere
accordingly notsubject todisciplinary action bytheInstitute oranyoftheSocieties. Section 1(2)(c)
ofthe1927 Acthasbeenomitted from the1993 Act.
08. The1927Actstated that"nothing inthissection contained shallbeconstrued asprohibiting anyperson
who, immediately priortothecommencement oftheChartered Accountants Designation Amendment
(Private) Act,1971, practised intheRepublic asachartered accountant .....frompractising assuch".
TheActdoesnotgiveaperson therighttopractise. Itonlydealswiththerighttousethedesignations
andinitials setoutintheAct. Thisreference hasbeenomitted from the1993 Act.S/WPPS/W/ 7/Add.2
Page15
ATTACHMENT 2
PUBLIC ACCOUNTANTS ’AND AUDITORS ’ACT, ACT 80OF1991
(EXTRACT)
(10) Aperson whoisregistered interms ofthissection asanaccountant andauditor, maydescribe
himself asaregistered accountant andauditor, andshall, ifhehaspaidtheannual fees(or
portion thereof) prescribed ordetermined bytheboard under section 13(1)(e) attherate
applicable toaregistered accountant andauditor whoisengaged inpublic practice, beentitled
todescribe himself asapublic accountant orapublic accountant andauditor andtoengage
inpublic practice inanypartoftheRepublic.
(10A) Anyperson whoisregistered interms ofthissection asanaccountant andauditor mayaffix
theabbreviation "RAA"afterhisorhername.
Restrictions inconnection withnon-resident accountants andauditors
16. (1) Noperson:
(a) whoisregistered under thisActasanon-resident accountant andauditor shall
become amember ofafirmofwhich more thanhalfofthemembers are
persons registered asnon-resident accountants andauditors orofwhich more
thanhalfofthemembers would besuchpersons ifhebecame amember thereof;
(b) whoisamember ofafirmreferred toinparagraph (a)shallpermit aperson
registered asanon-resident accountant andauditor tobecome amember of
thatfirm;
(c) shall beamember ofafirmofwhich more thanhalfofthemembers are
persons registered asnon-resident accountants andauditors.
(2) Noperson registered interms ofthisActasanon-resident accountant andauditor may,
inthecapacity ofanaccountant orauditor, inhisownname orinthename ofthefirm
ofwhich heisamember, certify, orfurnish areport oranopinion on,anyfinancial
statement (including anyannexure thereto) orother document relating totheoperations
intheRepublic ofanundertaking registered orestablished intheRepublic under any
laworcarrying onbusiness intheRepublic.
Carrying onofbusiness
21. (1) Apublic accountant mayengage inpublic practice byhimself ofinpartnership with
other public accountants.
(2) Persons registered interms ofthisActasaccountants andauditors andengaged inpublic
practice mayinterms oftheCompanies Act,1973 (ActNo.61of1973) form a
company toengage inpublic practice through itsmembers, provided:S/WPPS/W/7/Add.2
Page16
(a) thecompany isincorporated andregistered asacompany interms ofthe
Companies Act,1973, withashare capital, anditsmemorandum ofassociation
provides thatitsdirectors andpastdirectors shallbeliable jointly andseverally,
together withthecompany, foritsdebts andliabilities contracted during their
periods ofoffice;
(b) onlynatural persons whoarepublic accountants andauditors aremembers
orshareholders ofthecompany orhaveanyinterest initsshares;
(c) every shareholder ofthecompany isapublic accountant anddirector thereof
andonlysuchashareholder maybeadirector thereof;
(d) inthecasewhere ashareholder ofthecompany oraperson having anyinterest
initsshares diesorceases toconform toanyrequirement ofparagraph (b),
hisestate orhe,asthecasemaybe,maycontinue toholdtherelevant shares
orinterest foraperiod ofsixmonths asfromthedateofthedeath oronwhich
heceases tosoconform orforsuchlonger period astheboard mayapprove;
(e) novoting rights attach toanyshare contemplated inparagraph (d),anda
shareholder therein mentioned doesnotactasadirector ofthecompany or
receive, directly orindirectly, anydirector 'sfeesorremuneration orparticipate
intheincome oforprofits earned bythecompany initsbusiness;
(f) thecompany may, ifitsarticles ofassociation soprovide andwithout
confirmation byacourt, purchase onsuchconditions asitmaydeem expedient
anyshares heldinitwithout itsauthorised share capital being reduced thereby;
(g) shares purchased under paragraph (f)areavailable forallotment interms of
thecompany 'sarticles ofassociation;
(h) thecompany 'sarticles ofassociation provide, notwithstanding anything tothe
contrary contained inanyother law,thatamember ofthecompany shallnot
appoint aperson whoisnotamember ofthecompany toattend, orspeak or
vote, inhisstead atanymeeting ofthecompany;
(i) thecompany ceases sotoengage inpublic practice immediately when itceases
toconform toparagraphs (a)and(b):provided thattheprovisions ofthis
paragraph shallnot,during theperiod referred toorcontemplated inparagraph
(d),apply tothecompany byreason onlyofthefactthatashareholder ofthe
company oraperson having aninterest intheshares ofthecompany hasceased
tobeapublic accountant.
(3) Theprovisions ofsection 20(1)(b)oftheCompanies Act,1973(ActNo.61of1973),
shallnotapply inrespect ofacompany referred toinsubsection (2)ofthissection
ofthisAct,ifitisaprivate company.S/WPPS/W/ 7/Add.2
Page17
ATTACHMENT 3
THE SOUTH AFRICAN INSTITUTE OFCHARTERED ACCOUNTANTS
CODE OFPROFESSIONAL CONDUCT
CONTENTS
page
Introduction ....................................................19
Definitions .....................................................19
Thepublic interest ................................................21
Objectives .....................................................22
Fundamental principles .............................................22
Status oftheCode ................................................23
PART A-APPLICABLE TOALL MEMBERS
Section
1. Joint andvicarious liability ......................................24
2. Integrity andobjectivity ........................................25
3. Conflicts ofinterest ...........................................25
4. Professional competence ........................................26
5. Confidentiality ..............................................27
6. Taxpractice ...............................................28
7. Discrimination ..............................................30
8. Cross border activities .........................................30
9. Publicity, advertising andsolicitation ................................30
10. Responsibilities tocolleagues .....................................31S/WPPS/W/7/Add.2
Page18
PART B-APPLICABLE TOMEMBERS INPUBLIC PRACTICE
11. Independence ...............................................32
12. Feesforprofessional services ....................................37
13. Signing ofreports orcertificates ...................................40
14. Stationery andletterheads .......................................40
15. Activities incompatible withthepractice
ofpublic accountancy .........................................41
16. Relations withother members inpublic
practice ..................................................41
17. Recruiting ................................................45
18. Inclusion ofthename ofamember inpublic
practice inadocument issued byaclient .............................46S/WPPS/W/ 7/Add.2
Page19
CODE OFPROFESSIONAL CONDUCT
INTRODUCTION
01. Council oftheInstitute hasidentified skills andintegrity asthepre-eminent professional attributes of
Chartered Accountants (South Africa). Council iscommitted, intheinterests oftheprofession asa
whole, toenhancing thesequalities inallmembers byproviding appropriate guidance. ThisCode deals
withprofessional attitudes.
02. Guidance ontheother aspects ofprofessionalism relating toknowledge andskills isgiven inother
documents issued bytheInstitute, thePublic Accountants 'andAuditors 'Board (theBoard) andthe
Accounting Practices Board. TheBoard alsoissues aCode ofProfessional Conduct andrules and
regulations dealing withtheconduct ofthose members whoareregistered interms ofthePublic
Accountants 'andAuditors 'Act(theAct). Inaddition, theProvincial Societies ofChartered Accountants
issue localrules concerning theconduct ofmembers intheirprovinces.
03. ThisCode isconsistent inallmaterial respects withtheCode ofEthics issued bytheInternational
Federation ofAccountants.
04. TheCode isestablished onthebasis thatunless alimitation isspecifically stated theobjectives and
fundamental principles areequally validforallmembers, whether theybeinpublic practice, industry,
commerce, thepublic sector oreducation.
05. Aprofession isdistinguished bycertain characteristics including:
(a) Mastery ofaparticular intellectual skill, acquired bytraining andeducation;
(b) Acceptance ofduties tosociety asawhole inaddition toduties totheclient oremployer;
(c) Anoutlook which isessentially objective;
(d) Rendering personal services toahighstandard ofconduct andperformance.
DEFINITIONS
06. Forthepurposes ofthisCode thefollowing terms havethefollowing meanings assigned tothem.
These definitions areforguidance onlyandarenotintended tobecomplete orexhaustive.
(a) Advertising-Thecommunicationtothepublicofinformationastotheservicesorskillsprovided
byamember withaviewtoprocuring professional business.
(b) Client -Aperson oranundertaking withwhom amember hasorcanreasonably expect to
haveacontinuing professional relationship. Aclient forwhom amember carries outasingle
professional taskwhich hasbeen completed, orwhohasterminated apreviously existing
professional relationship, willnotberegarded asaclient forthepurposes ofthisCode.
(c) Client account -Anybankaccount which isusedsolely forthebanking ofclients 'monies.S/WPPS/W/7/Add.2
Page20
(d) Clients 'monies -Anymonies, including documents oftitletomoney e.g.billsofexchange,
promissory notes, anddocuments oftitlewhich canbeconverted intomoney e.g.,bearer bonds,
received byamember inpublic practice tobeheldorpaidoutontheinstruction oftheperson
from whom oronwhose behalf theyarereceived.
(e) Existing accountant -Amember inpublic practice currently engaged bytheclient torender
professional services tohim.
(f) Investee -Asubsidiary oranentity subject tothesignificant influence ofaninvestor.
(g) Investor -Aparent, general partner, ornatural person orcorporation thathastheability to
exercise significant influence onaninvestee.
(h) Practice -Asolepractitioner, apartnership, acompany oraclose corporation ofmembers
which offers professional services tothepublic.
(i) Member -Aperson whoisamember oftheInstitute.
(j) Member inpublic practice -Amember providing professional services tothepublic, whether
onafulltimeoranoccasional basis.
(k) Professional work, professional services andprofessional business
Thisisregarded asrelated tothefollowing:
(i) Theattest function (audit services)
Theexamination, inaccordance withgenerally accepted auditing standards,
offinancial statements withtheobjective ofexpressing anopinion astotheir
fairness andastotheircompliance withtherequirements ofapplicable statutes.
Theaudit ofother reports andrepresentations ofafinancial nature.
(ii) Thefinancial reporting function (accounting services)
External financial reports: Thepreparation offinancial statements in
accordance withgenerally accepted accounting practice andapplicable statutes
andtheinterpretation ofthose financial statements.
Internal financial systems andreports: Thedesign andoperation ofinternal
accounting systems toprovide management withinformation which willenable
management toplan, monitor andcontrol itsbusiness.
(iii) Theadvising function (advisory andfiduciary services)
Taxation services: Theinterpretation andapplication ofrevenue lawsand
procedures andoftaxplanning.
Management consulting services: Theprovision ofconsulting services to
management ofenterprises; these services include advisory services relating
toplanning, control, costaccounting, financial management andreporting,
dataprocessing andrelated systems.S/WPPS/W/ 7/Add.2
Page21
Other services: These services include investigations, valuations, secretarial
services, trusteeships, theplanning andadministration ofestates, judicial
management andliquidation andinsolvency work.
(l) Proposed accountant -Amember inpublic practice whom theclient proposes toengage in
place oforinaddition totheexisting accountant.
(m) Publicity -Thecommunication tothepublic ofinformation about amember orhisfirmor
bringing hisname orthename ofhisfirmtothenotice ofthepublic.
(n) Receiving accountant -Amember inpublic practice towhom theexisting accountant orclient
oftheexisting accountant hasreferred audit, accounting, taxation, consulting orsimilar
appointments, orwhoisconsulted inorder tomeettheneeds oftheclient.
(o) Reportingassignment-Anengagementwhichrequirestheexpressionofanopinionbyamember
inpublic practice.
(p) Solicitation: Direct mailing andcold-calling -Thedirect orindirect approach toapotential
client forthepurpose ofoffering toperform professional work. Direct mailing andcoldcalling
areforms ofsolicitation. Direct mailing includes sending abrochure toanon-client whodid
notrequest it.Coldcalling includes thedirect orindirect approach toapotential client inperson
orbytelephone.
THE PUBLIC INTEREST
07. Adistinguishing mark ofaprofession isacceptance ofitsresponsibility tothepublic. Theaccountancy
profession 'spublic consists ofclients, governments, employers, employees, investors, thebusiness
andfinancial community, andothers whorelyontheobjectivity andintegrity ofmembers tomaintain
theorderly functioning ofcommerce. Thisreliance imposes apublic interest responsibility onthe
accountancy profession. Thepublic interest isdefined asthecollective well-being ofthecommunity
ofpeople andinstitutions themember serves.
08. Amember 'sresponsibility isnotexclusively tosatisfy theneeds ofanindividual client oremployer.
Thestandards oftheaccountancy profession areheavily determined bythepublic interest, forexample:
(a) independent auditors helptomaintain theintegrity andefficiency ofthefinancial statements
presented tofinancial institutions inpartial support forloans andtostockholders forobtaining
capital;
(b) financial executives serve invarious financial management capacities inorganisations and
contribute totheefficient andeffective useoftheorganisation 'sresources;
(c) internal auditors provide assurance about asound internal control system which enhances the
reliability oftheexternal financial information oftheemployer;
(d) taxexperts helptoestablish confidence andefficiency in,andthefairapplication of,thetax
system;
(e) management consultants havearesponsibility toward thepublic interest inadvocating sound
management decision making.S/WPPS/W/7/Add.2
Page22
09. Members haveanimportant roleinsociety. Investors, creditors, employers andother sectors ofthe
business community, aswellasthegovernment andthepublic atlarge relyonmembers forsound
financial accounting andreporting, effective financial management andcompetent advice onavariety
ofbusiness andtaxation matters. Theattitude andbehaviour ofmembers inproviding suchservices
haveanimpact ontheeconomic well-being oftheircommunity andcountry.
10. Members canremain inthisadvantageous position onlybycontinuing toprovide thepublic withthese
unique services atalevel which demonstrates thatthepublic confidence isfirmly founded. Itisin
thebestinterest oftheaccountancy profession tomake known tousers oftheservices provided by
members thattheyareexecuted atthehighest level ofperformance andinaccordance withethical
requirements thatstrive toensure suchperformance.
OBJECTIVES
11. TheCoderecognisesthattheobjectivesoftheaccountancyprofessionaretoworktothehigheststandards
ofprofessionalism, toattain thehighest levels ofperformance andgenerally tomeetthepublic interest
requirement setoutabove. These objectives require fourbasic needs tobemet:
(a) Credibility
Inthewhole ofsociety there isaneedforcredibility ininformation andinformation systems.
(b) Professionalism
There isaneedforindividuals whocanbeclearly identified byclients, employers andother
interested parties asprofessional persons intheaccountancy field.
(c) Quality ofServices
There isaneedforassurance thatallservices obtained from amember arecarried outtothe
highest standards ofperformance.
(d) Confidence
Users oftheservices ofmembers should beabletofeelconfident thatthereexists aframework
ofprofessional ethics which governs theprovision ofthose services.
FUNDAMENTAL PRINCIPLES
12. Inorder toachieve theobjectives oftheaccountancy profession, members havetoobserve anumber
ofprerequisites orfundamental principles.
13. Thefundamental principles are:
(a) Integrity (seeSection 2)
Integrity isessentially anattitude ofmind. Adherence tocertain standards ofconduct andmoral
behaviour consistently practised willensure integrity.
Amember should bestraightforward andhonest inperforming professional services.S/WPPS/W/ 7/Add.2
Page23
(b) Objectivity (seeSections 2and3)
Objectivity isessentially thequality ofbeing abletomaintain animpartial attitude. Itrequires
amember tobefairandnottoallow prejudice orbiasorinfluence ofothers tooverride
objectivity.
(c) Professional Competence andDueCare (seeSection 4)
Amember, inagreeing toprovide professional services, implies thatthere isalevel of
competence necessary toperform professional services andthattheknowledge, skilland
experience ofthemember willbeapplied withreasonable careanddiligence. Members should
therefore refrain fromperforming anyservices which theyarenotcompetent tocarry outunless
advice andassistance isobtained toensure thattheservices areperformed satisfactorily.
Amember should perform professional services withduecare, competence anddiligence andhasa
continuing dutytomaintain professional knowledge andskillatalevelrequired toensure thataclient
oremployer receives theadvantage ofcompetent professional service based onup-to-date developments
inpractice, legislation andtechniques.
(d) Confidentiality (seeSection 5)
Amember should respect theconfidentiality ofinformation acquired during thecourse of
performing professional services andshould notuseordisclose anysuchinformation without
proper andspecific authority orunless thereisalegalorprofessional rightordutytodisclose.
(e) Professional Behaviour (seeSections 6-10)
Amember should actinamanner consistent withthegood reputation oftheprofession and
refrain from anyconduct which might bring discredit totheprofession. Amember should
conduct himself withcourtesy andconsideration towards clients, thirdparties, other members
oftheaccountancy profession, staff, employers andthegeneral public.
(f) Technical Standards (seeSections 11-19)
Amember should carry outprofessional services inaccordance withtherelevant technical
andprofessional standards. Members have adutytocarry outwithcareandskill, the
instructions oftheclient oremployer insofarastheyarecompatible withtherequirements
ofintegrity, objectivity and,inthecaseofmembers inpublic practice, independence (see
Section 11).Inaddition, theyshould conform withthetechnical andprofessional standards
promulgated bytheInstitute, relevant authorities andrelevant legislation.
STATUS OFTHE CODE
14. Theobjectives aswellasthefundamental principles areofageneral nature andarenotintended to
beusedtosolve amember 'sethical problems inaspecific case. Therefore, theCode alsoprovides
detailed guidance astotheapplication inpractice oftheobjectives andthefundamental principles with
regard toanumber oftypical situations occurring intheaccountancy profession.
15. If,having consulted thisCode, doubt stillexists inamember 'smind, heshould fullydiscuss thematter
withanappropriate andsenior member oftheInstitute. Ifconsidered necessary, advice should be
sought from oneoftheAdvisory Panels setupbytheProfession.S/WPPS/W/7/Add.2
Page24
16. Paragraph 21oftheInstitute 'sBy-laws setsoutactsandpractices which shallbeoffences andwhich,
ifcommitted byamember, render himliable topenalties. Insub-paragraph (1)ofparagraph 21of
theBy-laws itisstated that"ifamember conducts himself inamanner which, intheopinion ofthe
Investigation Committee ortheDisciplinary Committee, isdiscreditable, dishonourable, dishonest,
irregular, orunworthy orwhich isderogatory totheInstitute, ortends tobring theprofession of
accountancy intodisrepute", suchconduct willbeconsidered anactorpractice which shallbeanoffence.
Itshould benoted thatthedecision oftheDisciplinary Committee isfinalandthereisnoappeal against
itsdecision. When forming itsopinion thecommittee willbeguided bythisCode. Itisemphasised
thattheCode setsoutthewayCouncil considers amember should behave incertain circumstances
andalsosetsoutthose circumstances inwhich amember should verycarefully consider hisposition
before deciding onhiscourse ofaction. Breach oftheCode willindicate onlythatanoffence may
havebeencommitted. Ifacomplaint islodged alleging thatamember hasbreached theCode such
member maywellbecalled uponbytheInvestigation orDisciplinary Committees toshow cause why
heconsiders thatthebreach, ifthere wasone,didnotconstitute anoffence.
17. TheCode setoutbelow isdivided intotwoparts: PartAapplies toallmembers unless otherwise
specified, PartBapplies onlytothose members inpublic practice.
PART A-APPLICABLE TOALL MEMBERS
SECTION 1-JOINT AND VICARIOUS LIABILITY
01. Amember maybeheldresponsible forabreach of,orfailure tocomply with, thisCode onthepart
ofallpersons whoare:
(a) hisemployees; or
(b) under hissupervision; or
(c) hispartners; or
(d) fellow shareholders in,ordirectors oremployees of,acompany controlled bythemember
orthemember andhispartners andoffering professional services tothepublic. (Forpurposes
ofthisCode acompany willbedeemed tobecontrolled bymembers ifmembers between them
holddirectly orindirectly, more thanhalfofthevoting rights attached totheshares ofthe
company ordirectly orindirectly andeither alone ortogether withanyone elseareentitled
toexercise thedefacto righttocontrol themanner inwhich thebusiness ofthecompany is
carried on(including, butwithout limitation, therighttoappoint themajority ofthepersons
entitled toexercise control overitsmanagement andaffairs)); or
(e) fellow members inoremployees ofaclosecorporation controlled bythemember orthemember
andhispartners andoffering todoprofessional work tothepublic. (Forpurposes ofthisCode
aclose corporation willbedeemed tobecontrolled bymembers ifmembers between them
holdaninterest inthecorporation which would entitle them toamajority voteatameeting
ofmembers ofthecorporation, orwould otherwise entitle themtoexercise thedefactoright
tocontrol themanner inwhich thebusiness ofthecorporation iscarried on.)
02. Amember maynot,under theguiseorthrough themedium ofapartnership, company, closecorporation
oranyother entity, doanything orallow anything tobedonewhich hewould notbepermitted todo
asanindividual.S/WPPS/W/ 7/Add.2
Page25
03. Amember maynotpermit others tocarry outonhisbehalf, either withorwithout remuneration, acts
which, ifcarried outbyhimself, would constitute acontravention ofthisCode.
SECTION 2-INTEGRITY AND OBJECTIVITY
01. Theprinciples ofintegrity andobjectivity impose theobligation onallmembers tobefair,honest and
freeofconflicts ofinterest, prejudice andbias.
02. Members serve inmany different capacities andthereisanobligation onthemtoapply theseprinciples,
evenatthesacrifice ofpersonal advantage, whether theyareincommerce, inindustry, inacademic
situations, inthepublic sector orinpublic practice. Regardless ofservice orcapacity, members should
protect theintegrity oftheirprofessional services, maintain objectivity, andavoid anysubordination
oftheirjudgement byothers.
03. Relationships orinterests, whether direct orindirect, which could adversely influence, impair orthreaten
hiscapacity toactwithintegrity andobjectivity should beavoided. Amember should notaccept or
provide giftsorsimilar favours which could impair hisintegrity orobjectivity.
04. Members willbeexposed tosituations which involve thepossibility ofpressures being exerted onthem.
These pressures mayimpair theirintegrity andobjectivity. Itisimpracticable todefine andprescribe
allsuchsituations where thesepossible pressures exist, butreasonableness should prevail inidentifying
relationships thatarelikely to,orappear to,impair amember 'sintegrity andobjectivity.
SECTION 3-CONFLICTS OFINTEREST
01. Amember should beandappear tobefreeofanyinfluence, interest orrelationship, whether direct
orindirect which might beregarded, whatever itsactual effect, asbeing incompatible withintegrity,
objectivity and,inthecaseofamember inpublic practice, independence.
02. Amember should beconstantly alerttothepossibility ofaconflict ofinterest.
03. Themember should consider thefactsandcircumstances before deciding whether ornothisintegrity
andobjectivity would beimpaired byaccepting theengagement orcontinuing intheposition.
04. Suchconflicts mayariseinawidevariety ofways, ranging fromtherelatively trivial dilemma tothe
extreme caseoffraud andsimilar illegal activities. Itisnotpossible toattempt toitemise a
comprehensive check listofpotential cases where conflicts ofinterest might occur.
05. Itshould benoted thatanhonest difference ofopinion between amember andanother party isnot
initself anethical issue.
06. Itisrecognised, however, thatthere canbeparticular factors which occur when theresponsibilities
ofamember mayconflict withinternal orexternal demands ofonetypeoranother. Hence:
(a) There maybethedanger ofpressure from anoverbearing supervisor, manager, director or
partner; orwhen therearefamily orpersonal relationships which cangiverisetothepossibility
ofpressures being exerted uponthem. Indeed, relationships orinterests which could adversely
influence, impair orthreaten amember 'sintegrity should bediscouraged.
(b) Amember maybeasked toactcontrary totechnical and/or professional standards.S/WPPS/W/7/Add.2
Page26
(c) Aquestion ofdivided loyalty asbetween themember 'ssuperior andtherequired professional
standards ofconduct could occur.
(d) Conflict could arisewhen false, misrepresenting, ormisleading statements orinformation are
released orpublished which maybetotheadvantage oftheemployer orclient andwhich may
ormaynotbenefit themember asaresult ofsuchpublication.
07. Where amember hasreason tobelieve thathisorhisemployee 'sinvolvement inanassignment would
possibly cause aconflict ofinterest, heshould immediately disclose thisfact.
08. Where itisclear thatamaterial conflict ofinterest exists, amember should decline toact.
09. Where amember considers thatitwould bepossible toactobjectively, theengagement maybeaccepted
provided:
(a) thenature oftheconflict isfullyexplained toeachparty forwhom themember willbeacting;
and
(b) theparties agree inwriting thatthemember mayact.
10. Inapplying standards ofethical conduct, members mayencounter problems inidentifying unethical
behaviour orinresolving anethical conflict. When faced withsignificant ethical issues, members
notinpublic practice should follow theestablished policies oftheemploying organisation toseeka
resolution ofsuchconflict. Ifthose policies donotresolve theethical conflict, thefollowing should
beconsidered:
(a) Review theconflict problem withtheimmediate superior. Iftheproblem isnotresolved with
theimmediate superior andthemember determines togotothenexthigher managerial level,
theimmediate superior should benotified ofthedecision. Ifitappears thatthesuperior is
involved intheproblem, themember should raise theissue withthenexthigher level of
management. When theimmediate superior istheChief Executive Officer (orequivalent) the
nexthigherreviewinglevelmaybetheExecutiveCommittee,BoardofDirectors,Non-Executive
Directors, Trustees, Partners 'Management Committee orshareholders.
(b) Seekcounselling andadvice onaconfidential basiswithanindependent advisor orappropriate
andsenior member oftheInstitute toobtain anunderstanding ofpossible courses ofaction.
Ifconsidered necessary, advice should besought from theAdvisory Panel oftheInstitute.
(c) Iftheethical conflict stillexists afterfullyexhausting alllevels ofinternal review, themember,
asalastresort, mayhavenoother recourse onsignificant matters, suchasfraud, thantoresign
from theemploying organisation, andtosubmit amemorandum setting outthereasons for
resigning toanappropriate representative ofthatorganisation.
SECTION 4-PROFESSIONAL COMPETENCE
01. Amember should notundertake orcontinue withanyprofessional services which heisnotcompetent
tocarry outunless competent advice andassistance isobtained soastoenable himtosatisfactorily
perform suchservices. Ifamember doesnothavethecompetence toperform aspecific partofthe
professional service, technical advice maybesought from experts suchasother members, lawyers,
actuaries, engineers, geologists, valuers.S/WPPS/W/ 7/Add.2
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02. Whether amember isinpublic practice, commerce, industry, academic lifeorthepublic sector, he
hasaresponsibility tokeephimself up-to-date inwhatever fieldofactivity heisengaged.
03. Amember should maintain hisprofessional knowledge andskill. Thisrequires acontinuing awareness
ofdevelopments intheaccountancy profession including relevant national andinternational
pronouncements onaccounting, auditing andother relevant regulations andstatutory requirements.
04. Allmembers should adopt aprogramme ofcontinuing professional education. Guidance isissued by
theInstitute from timetotime.
SECTION 5-CONFIDENTIALITY
01. Members haveanobligation torespect theconfidentiality ofinformation acquired about aclient'sor
employer 'saffairs. Thedutyofconfidentiality continues evenaftertheendoftherelationship between
themember andtheclient oremployer.
02. Confidentiality should always beobserved byamember unless specific authority hasbeengiven to
disclose information orthere isalegalorprofessional dutytodisclose.
03. Members haveanobligation toensure thatstaffunder theircontrol andpersons from whom advice
andassistance isobtained respect theprinciple ofconfidentiality.
Confidentiality isnotonlyamatter ofdisclosure ofinformation. Italsorequires thatamember acquiring
information inthecourse ofperforming professional services shallneither usenorappear tousethat
information forpersonal advantage orfortheadvantage ofathirdparty.
Amember hasaccess tomuch confidential information about aclient'soremployer 'saffairs not
otherwise disclosed tothepublic. Therefore themember should berelied uponnottomake unauthorised
disclosures toother persons. Thisdoesnotapply todisclosure ofsuchinformation inorder properly
todischarge themember 'sresponsibility according totheprofession 'sstandards, orwhen required
bylaw.
04. Thefollowing should beconsidered indetermining theextent towhich confidential information may
bedisclosed.
(a) When disclosure isauthorised.
When authorisation todisclose isgiven bytheclient ortheemployer theinterests ofallthe
parties including those thirdparties whose interests might beaffected should beconsidered.
(b) When disclosure isrequired bylaw.
Examples ofwhen amember isrequired bylawtodisclose confidential information are:
(i) toproduce documents ortogiveevidence inthecourse oflegalproceedings; and
(ii) todisclose totheappropriate authorities infringements ofthelawwhich come tolight.S/WPPS/W/7/Add.2
Page28
(c) When there isaprofessional dutyorrighttodisclose:
(i) tocomply withtechnical standards andethics requirements- suchdisclosure isnot
contrary tothissection;
(ii) toprotect theprofessional interests ofamember inlegalproceedings;
(iii) tocomply withthequality review oftheInstitute;
(iv) torespond toaninquiry orinvestigation bytheInvestigation orDisciplinary
Committees.
05. Where amember isrequired todisclose information about aclient'soremployer 'saffairs heshould
advise theclient oremployer thatthisisthecase. Care should betaken toensure thatnomore
information thanisstrictly necessary bemade available.
SECTION 6-TAX PRACTICE
01. Amember rendering professional taxservices isentitled toputforward thebestposition infavour
ofaclient, oranemployer, provided theservice isrendered withprofessional competence, doesnot
inanywayimpair integrity andobjectivity, andisintheopinion ofthemember consistent withthe
law. Doubt mayberesolved infavour oftheclient ortheemployer ifthere isreasonable support for
theposition.
02. Amember should notholdouttoaclient oranemployer theassurance thatthetaxreturn prepared
andthetaxadvice offered arebeyond challenge. Instead, themember should ensure thattheclient
ortheemployer areaware ofthelimitations attaching totaxadvice andservices sothattheydonot
misinterpret anexpression ofopinion asanassertion offact.
03. Amember whoundertakes orassists inthepreparation ofataxreturn should advise theclient orthe
employer thattheresponsibility forthecontent ofthereturn restsprimarily withtheclient oremployer.
Themember should takethenecessary steps toensure thatthetaxreturn isproperly prepared onthe
basis oftheinformation received.
04. Taxadvice oropinions ofmaterial consequence given toaclient oranemployer should berecorded,
either intheform ofaletter orinamemorandum forthefiles.
05. Amember should notbeassociated withanyreturn orcommunication inwhich thereisreason tobelieve
thatit:
(a) Contains afalseormisleading statement;
(b) Containsstatementsorinformationfurnishedrecklesslyorwithoutanyrealknowledgeofwhether
theyaretrueorfalse; or
(c) Omits orobscures information required tobesubmitted andsuchomission orobscurity would
mislead therevenue authorities.S/WPPS/W/ 7/Add.2
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06. Forthepurpose ofthissection oftheCode, "associated" hasthefollowing meaning:
Amember, orinthecaseofapractice, hispractice is"associated"with areturn orwithafinancial
statement tobesubmitted withareturn orwithasubmission onbehalf ofaclient oremployer when
hehasconsented totheuseofhisorhispractice 'sname inthatreturn orstatement orsubmission or
when hehassubmitted tothetaxation authorities, withorwithout acovering letter, areturn orfinancial
statement orsubmission which heorhispractice hasprepared orassisted inpreparing. Thefactthat
thereturn orfinancial statement orsubmission maybetyped orotherwise reproduced onplain paper
(asdistinct from themember 'sorhispractice 'sownstationery) orthatthename ofthemember or
hispractice isnotappended tothem doesnotitself negate suchassociation.
07. Amember mayprepare taxreturns involving theuseofestimates ifsuchuseisgenerally acceptable
orifitisimpractical under thecircumstances toobtain exact data. When estimates areused, they
should bepresented assuchinamanner soastoavoid theimplication ofgreater accuracy thanexists.
Themember should besatisfied thatestimated amounts arereasonable under thecircumstances.
08. Inpreparing ataxreturn, amember ordinarily mayrelyoninformation furnished bytheclient or
employer provided thattheinformation appears reasonable. Although theexamination orreview of
documentsorotherevidenceinsupportoftheinformationisnotrequired,themembershouldencourage,
when appropriate, suchsupporting datatobeprovided.
09. Inaddition, themember:
(a) should make useoftheclient'sreturns forprior years whenever feasible.
(b) isrequired tomake reasonable inquiries when theinformation presented appears tobeincorrect
orincomplete.
(c) isencouraged tomake reference tothebooks andrecords ofthebusiness operations.
10. When amember learns ofamaterial error oromission inataxreturn ofaprior year(with which the
member mayormaynothavebeenassociated), orofthefailure tofilearequired taxreturn, themember
hasaresponsibility topromptly advise theclient oremployer oftheerrororomission andrecommend
thatdisclosure bemade totherevenue authorities. Themember isnotobligated toinform therevenue
authorities, normaythisbedonewithout permission.
11. Iftheclient ortheemployer doesnotcorrect theerror themember:
(a) should inform theclient ortheemployer thatitisnotpossible toactforthem inconnection
withthatreturn orother related information submitted totheauthorities; and
(b) should consider whether continued association withtheclient oremployer inanycapacity is
consistent withprofessional responsibilities; and
(c) should refer tothesection intheCode ofProfessional Conduct dealing withtheresolution
ofethical conflicts.
12. Ifthemember concludes thataprofessional relationship withtheclient oremployer canbecontinued,
allreasonable steps should betaken toensure thattheerror isnotrepeated insubsequent taxreturns.S/WPPS/W/7/Add.2
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SECTION 7-DISCRIMINATION
Amember should notpractise discrimination against anyperson based onrace,colour, religion, sex,
marital status, ageororigin inengagement, promotion, dismissal, salary, transfer, training orother
practices relating toemployment.
SECTION 8-CROSS BORDER ACTIVITIES
Members working inother countries where theprofession iscontrolled byareputable bodyorbylaw
should adhere tolocalethical requirements eventhough todosomaynotbeinaccordance withthis
Code. Members working inacountry where theprofession isnotsocontrolled, should follow the
guidance oftheInstitute unless recognised, wellestablished andreputable local standards arebeing
applied.
SECTION 9-PUBLICITY, ADVERTISING AND SOLICITATION
Publicity andadvertising
01. Members inpublic practice ordinarily offerawiderange ofprofessional services andproducts. For
theirpractices tobeconducted inabusinesslike manner andtocompete effectively withindividuals
andorganisations offering similar services andproducts, itisnecessary forthepublic tobeinformed
oftheservices andproducts onoffer.
02. Publicity andadvertising byallmembers ofallservices andproducts istherefore permitted.
03. Amember preparing orauthorising theissueofmaterial forthepurpose ofpublicity, advertising, direct
mailing orcoldcalling ofhisservices andproducts should dosowithaduesense ofresponsibility
totheprofession andtothepublic asawhole. Inparticular, suchmaterial should beaimed atinforming
thepublic inanobjective manner andbeingoodtastebothastocontent andpresentation. Themedium
usedmust beconsistent withthedignity oftheprofession.
04. Advertisements should conform withtheaccepted norms oflegality, decency, honesty andtruthfulness.
05. Amember willbepersonally responsible forensuring thattheprovisions ofthissection arecomplied
with, andthatwhatispublished about himorhisfirmcomplies withthisCode. Amember willalso
bepersonally responsible forensuring thatallpublicity, advertising, direct mailing andcoldcalling
issubject tothelimitations andrequirements ofthisCode.
Good taste
06. Judgement astowhat mayormaynotconstitute good tastecanonlybemade inthecontext ofthe
particular factsonwhich thatjudgement isexercised.
07. Itispossible, however, togivesome broad guidance andgeneral examples astowhat might, in
appropriate circumstances, beregarded asnotbeing inaccordance withgood taste. Thus material
which tends tosensationalise orshock, orwhich islikely togiveoffence toreligious beliefs, orisracist,
isunacceptable.Otherpossibleexamplesincludethetrivialisationofimportantissues,excessivereliance
onaparticular personality orpersonalities, thederiding ofpublic figures, disparagement ofeducational
attainment andmaterial which makes odious comparisons orisstrident intone,hectoring orextravagant.
Furthermore, suchmaterial should notcompare withnorbelittle services offered byothers, whetherS/WPPS/W/ 7/Add.2
Page31
members ornot,either byclaiming superiority fortheservices ofaparticular member orotherwise
andshould notcontain testimonials orendorsements.
Advertisements
08. Advertisements mayrefer tothebasis onwhich professional feesforservices arecalculated butto
statehourly orother charging ratescould bemisleading andisconsidered tobeinconsistent withthe
dignity oftheprofession.
Solicitation
09. Direct mailing byallmembers, pertaining toanyservices andproducts, ispermitted.
10. Amember maynotcontinue toaddress direct mailmaterial, forthepurpose ofoffering toperform
professional work, toarecipient whohasasked himtodesist.
11. Cold calling bymembers notinpublic practice inrespect ofallservices andproducts ispermitted.
12. Cold calling bymembers inpublic practice forprofessional work isnotpermitted.
SECTION 10-RESPONSIBILITIES TOCOLLEAGUES
01. Amember should conduct himself inamanner which willpromote co-operation andgood relations
between members andwithin theprofession.
02. Thesupportofaprofessionbyitsmembersandtheirco-operationwithoneanotherareessentialelements
ofprofessional character. Thepublic confidence andrespect which amember enjoys islargely the
result ofthecumulative accomplishments ofallmembers, pastandpresent. Itis,therefore, inthe
member 'sowninterest aswellasthatofthegeneral public, tosupport thecollective efforts ofcolleagues
through professional societies andorganisations andtodealwithfellow practitioners inamanner that
willnotdetract from theirreputation andwell-being.
03. While theCode prescribes certain specific actions intheareaofrelationships withcolleagues, itshould
beunderstood thatthese prescriptions donotdefine thelimits ofdesirable intra-professional conduct.
Suchconduct should encompass theprofessional consideration andcourtesies which eachmember would
liketohavefellow members extend tohim.
04. Amember should assist hisfellow members incomplying withthisCode andshould co-operate with
theappropriate disciplinary authorities inapplying theCode. Tocondone serious faultcanbeasbad
astocommit it.Itmaybeevenworse, infact,since some errors mayresult from ignorance rather
thanintent and,ifletpasswithout action, willprobably berepeated. Insituations ofthiskindthe
welfare oftheprofession asawhole should betheguide toamember 'saction.
05. Although thereluctance ofaprofessional togivetestimony thatmaybedamaging toacolleague is
understandable, theobligation ofprofessional courtesy andfraternal consideration cannever excuse
lackofcomplete candour ifthemember istestifying asanexpert witness inajudicial proceeding or
properly constituted enquiry.
06. Amember should notirresponsibly criticise another member.S/WPPS/W/7/Add.2
Page32
07. Itisnatural thatamember inpublic practice willseektodevelop hispractice. However, indoing
soheshould notseektodisplace another member inaclient relationship bymeans which willlessen
theeffectiveness oftechnical performance, andinparticular theintegrity andobjectivity ofauditopinions
orimpinge upontherights ofthirdparties toreliable information. Further, amember should notact
inanywaythatreflects negatively onfellow members.
08. Amember should extend thesame professional considerations andcourtesies toanynon-member with
whom hemayhaveaprofessional relationship, assetoutinparagraph 01.Heshould alsofollow the
same procedures ofconduct ashewould withamember where there isachange inappointment, as
setoutinSection 17.
09. While itisessential thatthelegitimate interests ofclients areprotected itisalsoimportant thatthe
person whoproposes toaccept appointment astheaccounting officer ofaclose corporation hasthe
opportunity ofascertaining whether there areanyreasons whyheshould notaccept theappointment.
Amember whoresigns asaccounting officer ofaclose corporation should state inhisletter of
resignation, which issenttoevery member oftheclose corporation, thereasons forhisresignation.
Inaddition, acopyofthisletter must besenttotheclose corporation.
10. Where amember hasaccepted theappointment asaccounting officer ofaclose corporation, heshould,
interms ofthenormal professional courtesies, inform theoutgoing accounting officer ofthechange,
inwriting, whether heisamember oftheInstitute ornot.
PART B-APPLICABLE TOMEMBERS INPUBLIC PRACTICE
SECTION 11-INDEPENDENCE
01. Independence isanessential quality, concomitant withintegrity andobjectivity, inamember inpublic
practice undertaking areporting assignment.
02. Independence isaquality which enables amember inpublic practice toapply unbiased judgement and
objective considerations toestablished factsinarriving atanopinion ordecision. Toberecognised
asindependent, themember inpublic practice mustbefreefromanyobligation to,orinterest inthe
client, itsmanagement oritsowners.
03. Members inpublic practice, when undertaking areporting assignment, should beindependent infact
andappearance.
04. Thefollowing paragraphs indicate some ofthose situations which, because oftheactual orapparent
lackofindependence, would giveareasonable observer grounds fordoubting theindependence of
amember inpublic practice.
Fiduciary orfinancial involvement with, orintheaffairs of,clients
05. Financial involvement withaclient mayaffect independence andmayleadareasonable observer to
conclude thatithasbeenimpaired. Such involvement canariseinanumber ofways suchas:
(a) Bydirect orindirect financial interest inaclient.
(b) Byafiduciary interest inaclient.S/WPPS/W/ 7/Add.2
Page33
(c) Byloans toorfrom theclient oranyofficer, director orprincipal shareholder ofaclient
company.
(d) Byholding afinancial interest inajointventure withaclient oremployee(s) ofaclient.
(e) Byhaving afinancial interest inanon-client thathasaninvestor orinvestee relationship with
theclient.
06. Thefollowing, however, would notordinarily beconsidered toimpair amember 'sindependence:
(a) Holding ofsecurities inapublic company inwhich thesecurities arewidely held, provided
thatholding isnotmaterial either inrelation tothetotalnumber ofsecurities issued bythe
company orinrelation totheassets ofthemember, orhisprofessional staff, orhisspouse
ordependent children; andtheyarenotdirectly involved inproviding professional services
tothatcompany;
(b) Making deposits with, oraccepting loans from clients which areregistered asfinancial
institutions onthesame terms asareavailable tothegeneral public;
(c) Making investments inloanstock ofpublic utility corporation clients ormunicipal clients;
(d) Making indirect investments inclients through theholding ofunitsinmutual funds, insurance
policies orretirement funding investments;
(e) Indebtedness arising outofnormal trading transactions onthesame terms asareavailable to
thegeneral public.
Commentary
07. Independence maybeimpaired when amember inpublic practice hasoriscommitted toacquire a
direct orindirect financial interest inacompany forwhich themember inpublic practice provides
professional services requiring independence. Adirect financial interest includes aninterest heldby
thespouse ordependent child ofthemember inpublic practice.
08. When themember inpublic practice holds oradvises oninvesting inshares inanauditclient onbehalf
ofathirdparty, e.g.atrust, theappearance ofindependence isatrisk. Thisisbecause responsibilities
tothethirdparty mayconflict withresponsibilities totheaudit client.
09. Because oftheneedtobeseentobeindependent inanyreporting assignment, infactandinappearance,
amember inpublic practice should avoid theappointment asatrustee inanysituation where theabsence
ofaconflict ofinterest cannot beclearly demonstrated. Atrustee should therefore notpersonally be
involved intheauditofthetrust. Heshould alsonotpersonally beinvolved intheauditofacompany
inwhich thetrusthasamaterial share-holding. Where themember isrequested tobeatrustee, he
should beaminority trustee.
10. Shares inaclient maybeinvoluntarily acquired aswhen amember inpublic practice inherits such
shares ormarries ashareholder orinatake-over situation. Inthesecases theshares should bedisposed
ofattheearliest practicable dateorthemember inpublic practice should decline anyfurther reporting
assignment onthatcompany.S/WPPS/W/7/Add.2
Page34
11. Neither amember inpublic practice norhisspouse ordependent child should make aloantoaclient
orguarantee aclient'sborrowing oraccept aloanfrom aclient orhaveborrowing guaranteed bya
client. Thislatter proscription doesnotapply toloans toorfrom banks orother similar financial
institutions when made under normal lending procedures, terms andrequirements; tohome mortgages
ortocurrent ordeposit accounts withBanks, etc.
12. When anon-client investee ismaterial toaclient investor, anydirect ormaterial indirect financial interest
ofthemember inthenon-client investee would beconsidered toimpair themember 'sindependence
withrespect totheclient. Likewise, where aclient investee ismaterial toanon-client investor, any
direct ormaterial indirect financial interest ofthemember inthenon-client investor would beconsidered
toimpair themember 'sindependence withrespect totheclient.
13. Other relationships, suchasclient-non-client jointventures, mayaffect theappearance ofindependence.
Ingeneral, inajointventure situation, animmaterial financial interest ofthemember inthenon-client
investor would notimpair theindependence ofthemember withrespect totheclient investor provided
thatthemember could notsignificantly influence thenon-client investor. Ifthemember doesnotand
could notreasonably beexpected tohaveknowledge ofthefinancial interests orrelationships involving
thejointventures, themember 'sindependence would notbeconsidered tobeimpaired.
14. Generally, themember should beindependent ofaclient andallitsparents, subsidiaries andaffiliates.
Appointments incompanies
15. When amember inpublic practice isorwas,within theperiod under current review orimmediately
preceding anassignment:
(a) amember oftheboard, anofficer oremployee ofacompany,
(b) apartner of,orintheemployment of,amember oftheboard oranofficer oremployee of
acompany,
hewould beregarded ashaving aninterest which could detract from independence when reporting
onthatcompany.
Commentary
16. Members inpublic practice insuchsituations should notbeappointed asauditors ofthecompanies
concerned. Itisalsoclearly desirable thattheyshould notbepersonally appointed orinvolved inother
assignments onwhich anopinion isrequired. Itissuggested thattheperiod immediately preceding
theassignment should benolessthan2years.
Provision ofother services toaudit clients
17. When amember inpublic practice, inaddition tocarrying outanaudit orother reporting function,
provides other services toaclient, careshould betaken nottoperform management functions ormake
management decisions, responsibility forwhich remains withtheboard ofdirectors andmanagement.S/WPPS/W/ 7/Add.2
Page35
Commentary
18. Itisappropriate interms ofskillandeffort formembers inpublic practice tobeabletooffer other
financial andmanagement consultancy services totheirclients, sincetheyalready haveaclosefamiliarity
withtheclient'sbusinesses. Many companies (particularly thesmaller ones) would beadversely affected
iftheyweredenied therighttoobtain other services fromtheirauditors. Inthecourse ofperforming
theirprofessional services members inpublic practice frequently offer advice totheirclients. This
happens particularly inthecaseofsmaller businesses, where theauditofthefinancial statements and
advice, forexample, ontheprovision tobemade fortaxes, areoften soinextricably linked thatthey
cannot beseparated. Moreover, onekeyconcept inauditing involves examination ofthesystem of
internal control which necessarily involves suggestions forimprovement. Forthese reasons itis
impracticable todefine thelimitations ontheadvice which amember inpublic practice maygive.
19. Theservices provided bythemember inpublic practice inthefields ofmanagement consultancy and
taxation areadvisory services. Such services should notusurp themanagement functions ofclient
companies. Theindependence ofamember inpublic practice isnotimpaired byoffering advisory
services, provided there isnoinvolvement inorresponsibility assumed formanagement decisions.
Theprovision ofother professional services isnotinprinciple afactor indetermining whether the
member inpublic practice isindependent. Nevertheless, themember inpublic practice should becareful
nottogobeyond theadvisory function intothemanagement sphere. Amember inpublic practice
whohasadvised ontheinstallation ofastock recording system should carry outanormal auditreview
ontheworking ofthesystem asfailure totakeallnormal audit steps inrelation tothatsystem will
haveanadverse impact oncompetence andindependence.
20. Thepreparation ofaccounting records isaservice which isfrequently requested ofamember inpublic
practice,particularlybysmallerclients,whosebusinessesarenotsufficientlylargetoemployanadequate
internal accounting staff. Itisunlikely thatlarger clients willneedthisservice other thaninexceptional
circumstances. Inallcasesinwhich independence isrequired andinwhich amember inpublic practice
isconcerned inthepreparation ofaccounting records foraclient thefollowing requirements should
beobserved:
(a) Themember inpublic practice should nothaveanyrelationship orcombination ofrelationships
withtheclient oranyconflict ofinterest which would impair integrity orindependence.
(b) Theclient should accept responsibility forthestatements.
(c) Themember inpublic practice should notassume theroleofemployee orofmanagement
conducting theoperations ofanenterprise.
(d) Staffassigned tothepreparation ofaccounting records ideally should notparticipate inthe
examination ofsuchrecords. Thefactthatthemember inpublic practice hasprocessed or
maintained certain records doesnoteliminate theneedtomake sufficient audit tests.
Personal andfamily relationships
21. Personal andfamily relationships canaffect independence. There isaparticular needtoensure that
anindependent approach toanyassignment isnotendangered asaconsequence ofanypersonal or
family relationship.S/WPPS/W/7/Add.2
Page36
Commentary
22. Itisrecognised thatitwould beimpracticable toattempt toprescribe indetail inethical requirements
thepermissible extent ofapersonal relationship between amember inpublic practice andaclient or
thoseoccupyingresponsibleexecutivepositions(e.g.director,chiefexecutive,financialofficeroranother
employee inasimilar position) withaclient. Thekinds ofsituations which cangiverisetothepossibility
ofpressures being exerted upon members inpublic practice mayarise, forexample, when amember
inpublic practice hasamutual business interest withanofficer oremployee ofaclient orhasamaterial
interest inajointventure withaclient.
23. Withrespect tofamily relationships itisimportant toensure thatthedegree ofrelationship withaclient
should notbetooclose toensure thatanindependent approach toprofessional services forthatclient
willsuffer.
24. Family relationships which always poseanunacceptable threat toindependence arethose inwhich
asolepractitioner orapartner inapractice, oranemployee engaged ontheassignment relating to
theclient, isthespouse, dependent child orrelative living inacommon household, oftheclient.
Fees
25. When thereceipt ofrecurring feesfrom aclient orgroup ofconnected clients, represents alarge
proportion ofthetotalgross feesofamember inpublic practice orthepractice asawhole, the
dependence ontheclient orgroup ofclients should inevitably come under scrutiny andcould raise
doubts astoindependence.
Commentary
26. Itisnotpossible tostateprecisely whatconstitutes anunacceptable proportion oftotalfeesemanating
from oneclient orgroup ofconnected clients. However, ifsuchfeesaretheonlyorthesubstantial
partofthegross income, themember inpublic practice should carefully consider whether independence
hasbeenimpaired. Asimilar situation mayariseiffeesduefrom aclient forprofessional services
remain unpaid foranextended period oftime, especially ifasubstantial partisnotpaidbefore the
issueofthereport ofthemember inpublic practice forthefollowing year. Allowances willbemade
fornewpractices seeking toestablish themselves orpractices which areplanning tocease operations.
Exemptions willbemade forabranch office which isreliant upon oneclient orgroup ofconnected
clients. Forexample, thismight bethecaseifthebranch office isauditing thefinancial statements
ofaclient ofthepractice asawhole andthatclient forms amajor partofthebusiness ofthebranch
office. Insuchcircumstances professional services forthatclient orgroup should bethesubject of
review byapartner from another office.
Goods andservices
27. Acceptance ofgoods andservices fromaclient maybeathreat toindependence. Acceptance ofundue
hospitality poses asimilar threat.
Commentary
28. Goods andservices should notbeaccepted bymembers inpublic practice, theirspouses ordependent
children except onbusiness terms nomore favourable thanthose generally available toothers.
Hospitality andgiftsonascale which isnotcommensurate withthenormal courtesies ofsocial life
should notbeaccepted.S/WPPS/W/ 7/Add.2
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Former partners
29. Apartner inapractice mayleave thepractice byresignation, termination, retirement, orsaleofthe
practice. Such apartner mayaccept anappointment withaclient ofthepractice, ofwhich heisa
former partner when anauditorother reporting function isbeing performed bythatpractice. Insuch
circumstances, theindependence ofthepractice would notbeimpaired where:
(a) Payments oftheamounts duetoaformer partner forhisinterest inthepractice andforunfunded,
vested retirement benefits aremade inaccordance withaschedule thatisfixed astoboth
payment dates andamounts. Inaddition theamounts owed should besuchthattheydonot
cause asubstantial doubt about thepractice 'sability tocontinue asagoing concern.
(b) Theformer partner doesnotparticipate orappear toparticipate inthepractice 'sbusiness or
professional activities, whether ornotcompensated. Indications ofparticipation include the
provision ofoffice space andrelated amenities totheformer partner bythepractice.
Actual orthreatened litigation
30. Litigation involving themember inpublic practice andaclient maycause concern thatthenormal
relationship withtheclient isaffected totheextent thatthemember 'sindependence andobjectivity
maybeimpaired.
Commentary
31. Thecommencement byaclient orothers ofproceedings against themember inpublic practice, orthe
commencement oflitigation bythemember inpublic practice alleging e.g.fraud ordeceit bytheofficers
ofacompany, orsub-standard performance oftheclient'saudit bythemember, mayimpair
independence. Such commencement oracredible threat tocommence oradeclared intention to
commence legalaction against amember inpublic practice relating totheaffairs ofthecompany, or
viceversa, maycause themember inpublic practice andthecompany tobeplaced inpositions which
mayaffect theobjectivity ofthemember inpublic practice. Thus, theability toreport fairly and
impartially onthecompany 'sfinancial statements maybeaffected. Atthesame time, theexistence
ofsuchaction (orthreat ofaction) mayaffect thewillingness ofthemanagement ofthecompany to
disclose relevant information tothemember inpublic practice.
32. Itisnotpossible tospecify precisely thepoint atwhich itwould become improper forthemember
tocontinue toreport. However, themember inpublic practice should haveregard tocircumstances
when litigation might beperceived bythepublic aslikely toaffect theaccountant 'sindependence.
SECTION 12-FEES FOR PROFESSIONAL SERVICES
Introduction
01. Members whoundertake professional services foraclient, assume theresponsibility toperform such
services withintegrity andobjectivity andinaccordance withtheappropriate technical standards. That
responsibility isdischarged byapplying theprofessional skillandknowledge which members inpublic
practice haveacquired through training andexperience. Fortheprofessional services rendered, the
member isentitled tobefairly remunerated.S/WPPS/W/7/Add.2
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Determination offees
02. Indetermining what constitutes fairremuneration amember maytakeintoaccount thevalue ofthe
professional service totheclient, thecustomary charge forsimilar services byother professions, banks
andmanagement andbusiness consultants, andanyother special circumstances which mayexist. No
single factor isnecessarily thedetermining factor. Agreeing onanacceptable feeisprimarily amatter
fornegotiation between themember andhisclient.
03. Feesshould beafairreflection ofthevalue oftheprofessional services performed fortheclient. In
determining thefee,thefollowing factors should betaken intoaccount:
(a) theskillandknowledge required forthetypeofprofessional service involved;
(b) thelevel oftraining andexperience ofthepersons necessarily engaged inperforming the
professional services;
(c) thetimenecessarily occupied byeachperson engaged inperforming theprofessional services;
(d) thedegree ofresponsibility thatperforming those services entails; and
(e) thelevelandextent ofinvestment intechnology.
04. Itisinthebestinterests ofboththeclient andthemember thatthemember should explain theprecise
range ofprofessional services thatthefeeisintended tocover, thebasisonwhich hisfeesarecomputed
andanybilling arrangements. Thisshould bedone, preferably inwriting, before thecommencement
oftheengagement, tohelpinavoiding misunderstandings withrespect tofees.
05. Amember should furnish onrequest suchdetails asarereasonable toenable theclient tounderstand
thebasis upon which thefeeaccount hasbeenprepared.
06. Itfollows that:
(a) timerecords should, where appropriate, bekeptasabasis fordetermining fees;
(b) theratesusedtocalculate thefeesshould befairandreasonable inthecircumstances; and
(c) these ratesshould bebased onthefundamental premise thattheorganisation andconduct of
themember andtheservices provided toclients arewellplanned, controlled andmanaged.
07. Amember should notmake arepresentation thatspecific professional services incurrent orfuture
periods willbeperformed foreither astated fee,estimated fee,orfeerange ifitislikely atthetime
oftherepresentation thatsuchfeeswillbesubstantially increased andtheprospective client isnotadvised
ofthatlikelihood.
Commissions
08. Thepayment orreceipt ofacommission byamember mayimpair hisobjectivity andindependence.
Amember should not,forexample:
(a) payacommission toobtain aclient; orS/WPPS/W/ 7/Add.2
Page39
(b) accept acommission from thirdpersons forreferring products orservices toaclient, unless
theclient hasprior knowledge ofthearrangement.
09. Thepayment orreceipt offeesinrespect ofwork referred between members inpublic practice isnot
regarded asacommission.
10. Payment andreceipt ofreferral feesbetween members inpublic practice when noservices areperformed
bythereferring accountant areregarded ascommissions forthepurpose ofparagraph 08.
11. Amember inpublic practice mayenter intoanarrangement forthepurchase ofthewhole orpartof
anaccounting practice requiring payments toindividuals formerly engaged inthepractice orpayments
totheir heirs orestates. Such payments arenotregarded ascommissions forthepurpose of
paragraph 08.
Contingent fees
12. Acontingent feeisafeewhich isnegotiated fortheperformance ofanyprofessional services pursuant
toanarrangement whereby afeewillnotbecharged unless aspecified finding orresult isobtained,
orwhere thepayment ofthefeeorthequantum thereof isotherwise dependent onthefinding orresult
oftheservice.
13. Feesoften cannot practically becharged other thanonacontingency basis incircumstances suchas
advising onamanagement buy-out, theraising ofventure capital, acquisition search orsalesmandates
orwhere thecapacity oftheclient topayisdependent upon thesuccess orfailure oftheventure.
14. Amember maynotperform work related totheattest function, normayheprepare anoriginal or
amended taxreturn, foracontingent feeforanyclient.
15. Inallcases thecharging offeesonacontingency basis maybedoneonlyaftercareful consideration
thatthemember 'sobjectivity andintegrity would notbecompromised.
16. Where thework issubject toafeeonacontingency basis, thecapacity inwhich themember hasworked
andthebasisofhisremuneration should, where appropriate, bemade clearinanydocument prepared
bythemember incontemplation thatathirdparty mayrelyonit.
Lowballing
17. Itisnotimproper foramember inpublic practice tocharge aclient alower feethanhaspreviously
beencharged forsimilar services, provided:
(a) thefeehasbeencalculated inaccordance withthefactors referred toinparagraphs 01,02,
03and06;
(b) careistaken toensure thattheclient isnotmisled:
(i) astotheprecise range ofservices thatthequoted feeisintended tocover; and
(ii) astotheleveloffeesitisanticipated charging forsubsequent work atpresent-date
prices.S/WPPS/W/7/Add.2
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18. Amember whoobtains orretains work byquoting levels offeeswhich aresignificantly lower than
those charged byanexisting member orquoted byother tendering firms should beaware thattheir
perceived independence mayappear tobethreatened. Suchmembers should takecaretoallocate the
appropriate quantity andquality ofstaff, bothinterms ofcompetence andtime, totheassignment.
19. Membersshouldtakecarewhatevertheirrateofchargingthattheycomplywithallprofessionalstandards
andguidelines and,inparticular, quality control procedures.
20. Intheevent ofacomplaint being made totheInstitute where feeswereafeature inobtaining thework
suchmembers should beprepared todemonstrate totheInvestigation andDisciplinary Committees
that:
(a) theirindependence hasnotbeenaffected;
(b) theresources allocated totheassignment were atleastthose thatwould havebeenallocated
towork ofasimilar nature; and
(c) theclient wasnotmisled astotheleveloffeesforfollowing andsubsequent years.
SECTION 13-SIGNING OFREPORTS ORCERTIFICATES
Amember maynotdelegate toanyperson whoisnothispartner, hispower tosignaudit orother
reports expressing opinions, orcertificates. Inspecific cases where emergencies ofsufficient gravity
arise, however, thisprohibition mayberelaxed, provided thefullcircumstances giving risetotheneed
fordelegation arereported bothtotheclient ofthemember concerned andtotheBoard.
SECTION 14-STATIONERY AND LETTERHEADS
01. Stationery ofmembers inpublic practice should beofanacceptable professional standard.
02. Apart fromthename ofthefirm, itslogo(ifany)andthecustomary details regarding itsaddress and
telephone, telexandtelefax numbers, amember 'sprofessional stationery mayalsocontain thefollowing
information:
(a) thenames ofallpartners, specified assuch;
(b) thenames ofallprofessional assistants whoareregistered withtheBoard specified assuch;
(c) thenames ofother employees orconsultants (whether of"partner status" ornot)provided it
isclear thatsuchemployees orconsultants arenotpartners orregistered withtheBoard;
(d) thenames ofpersons, firms ororganisations including those notregistered withtheBoard,
withwhom themember isassociated.
(Members should bearinmind theconstraints contained inSections 14and27(1) ofthePublic
Accountants 'andAuditors 'Act,80of1991andSection 83oftheAttorneys 'Act,53of1979.)S/WPPS/W/ 7/Add.2
Page41
SECTION 15-ACTIVITIES INCOMPATIBLE WITH THE PRACTICE OFPUBLIC
ACCOUNTANCY
01. Amember inpublic practice should notconcurrently engage inanybusiness, occupation oractivity
which impairs ormight impair integrity, objectivity orindependence, orthegood reputation ofthe
profession andtherefore would beincompatible withtherendering ofprofessional services.
02. Therendering oftwoormore types ofprofessional services concurrently willnotbyitself impair
integrity, objectivity orindependence.
03. Thesimultaneousengagementinanotherbusiness,occupationoractivityunrelatedtoprofessionalservices
which hastheeffect ofnotallowing themember inpublic practice properly toconduct apractice in
accordance withthefundamental ethical principles oftheaccountancy profession should beregarded
asinconsistent withthepractice ofpublic accountancy.
SECTION 16-RELATIONS WITH OTHER MEMBERS INPUBLIC PRACTICE
Accepting newassignments
01. Theextension oftheoperations ofabusiness undertaking frequently results intheformation ofbranches
orsubsidiary companies atlocations where anexisting accountant does notpractice. Inthese
circumstances, theclient ortheexisting accountant inconsultation withtheclient mayrequest areceiving
accountantpractisingatthoselocationstoperformsuchprofessionalservicesasarenecessarytocomplete
theassignment.
02. Referral ofbusiness mayalsoariseintheareaofspecial services orspecial tasks. Thescope ofthe
services offered bymembers inpublic practice continues toexpand andthedepth ofknowledge which
isneeded toserve thepublic oftencallsforspecial skills. Since itisimpracticable foranyonemember
inpublic practice toacquire special expertise orexperience inallfields ofprofessional services some
members inpublic practice maydecide thatitisneither appropriate nordesirable todevelop within
theirfirms thecomplete range ofspecial skills which mayberequired.
03. Members inpublic practice should undertake onlysuchservices which theycanexpect tocomplete
withprofessional competence. Itisessential therefore fortheprofession ingeneral andintheinterests
oftheirclients thatmembers inpublic practice beencouraged toobtain advice when appropriate from
those whoarecompetent toprovide it.
04. Anexisting accountant without aparticular skillmay,however, bereluctant toreferaclient toanother
member inpublic practice whomaypossess thatskill, because ofthefearoflosing existing business
totheother member inpublic practice. Asaresult, clients maybedeprived ofthebenefit ofadvice
which theyareentitled toreceive.
05. Thewishes oftheclient should beparamount inthechoice ofprofessional advisers, whether ornot
special skills areinvolved. Accordingly, amember inpublic practice should notattempt torestrict
inanywaytheclient'sfreedom ofchoice inobtaining special advice, andwhen appropriate should
encourage aclient todoso.S/WPPS/W/7/Add.2
Page42
06. Theservices oradvice ofamember inpublic practice having special skills maybesought inoneor
other ofthefollowing ways:
(a) bytheclient
(i) afterprior discussion andconsultation withtheexisting accountant;
(ii) onthespecific request orrecommendation oftheexisting accountant;
(iii) without reference totheexisting accountant; or
(b) bytheexisting accountant withdueobservance ofthedutyofconfidentiality.
07. When amember inpublic practice isasked toprovide services oradvice, inquiries should bemade
astowhether theprospective client hasanexisting accountant. Incases where there isanexisting
accountant whowillcontinue toprovide professional services, theprocedures setoutinparagraphs 08
to13should beobserved. Iftheappointment willresult inanother member inpublic practice being
superseded, theprocedures setoutinparagraphs 14to26should befollowed.
08. Thereceivingaccountantshouldlimittheservicesprovidedtothespecificassignmentreceivedbyreferral
from theexisting accountant ortheclient unless otherwise requested bytheclient. Thereceiving
accountant alsohasthedutytotakereasonable steps tosupport theexisting accountant 'scurrent
relationshipwiththeclientandshouldnotexpressanycriticismoftheprofessionalservicesoftheexisting
accountant without giving thelatter anopportunity toprovide allrelevant information.
09. Areceiving accountant whoisasked bytheclient toundertake anassignment ofatypewhich isclearly
distinct fromthatbeing carried outbytheexisting accountant orfromthatinitially received byreferral
fromtheexisting accountant orfromtheclient should regard thisasaseparate request toprovide services
oradvice. Before accepting anyappointment ofthisnature, thereceiving accountant should advise
theclient oftheprofessional obligation tocommunicate withtheexisting accountant andshould
immediately dosopreferably inwriting, advising oftheapproach made bytheclient andthegeneral
nature oftherequest. Thisaction isindicated notonlybyconsiderations ofprofessional courtesy but
bygood business judgement.
10. Circumstancessometimesarisewhentheclientinsiststhattheexistingaccountantshouldnotbeinformed.
Inthiscase,thereceiving accountant should decide whether theclient'sreasons arevalid. Intheabsence
ofspecial circumstances amere disinclination bytheclient forcommunication withtheexisting
accountant would notbeasatisfactory reason.
11. Thereceiving accountant should:
(a) comply withtheinstructions received fromtheexisting accountant ortheclient totheextent
thattheydonotconflict withrelevant legalorother requirements; and
(b) ensure, insofarasitispracticable todoso,thattheexisting accountant iskeptinformed of
thegeneral nature oftheprofessional services being performed.
12. When there aretwoormore other members inpublic practice performing professional services for
theclient concerned, itmaybeappropriate tonotify onlytherelevant member inpublic practice
depending onthespecific services being performed.S/WPPS/W/ 7/Add.2
Page43
13. When appropriate, theexisting accountant, inaddition toissuing instructions concerning referred
business, should maintain contact withthereceiving accountants andco-operate withthem inall
reasonable requests forassistance.
Superseding another member inpublic practice
14. Clients haveanindisputable righttochoose theirprofessional advisers andtochange toothers should
theysodesire.
15. While itisessential thatthelegitimate interests oftheclients areprotected, itisalsoimportant that
amember inpublic practice whoisasked toreplace another member inpublic practice hasthe
opportunitytoascertainifthereareanyprofessionalreasonswhytheappointmentshouldnotbeaccepted.
Thiscannot effectively bedone without direct communication withtheexisting accountant. Inthe
absence ofarequest, theexisting accountant should notvolunteer information about theclient'saffairs.
16. Communication enables amember inpublic practice toascertain whether thecircumstances inwhich
achange inappointment isproposed aresuchthattheappointment canproperly beaccepted andalso
whether thereisawishtoundertake theengagement. Inaddition, suchcommunication helps topreserve
theharmonious relationships which should existbetween allmembers inpublic practice onwhom clients
relyforprofessional advice andassistance.
17. Theextent towhich anexisting accountant candiscuss theaffairs oftheclient withtheproposed member
inpublic practice willdepend on:
(a) whether theclient'spermission todosohasbeenobtained; and/or
(b) thelegalorethical requirements relating tosuchdisclosure.
18. Theproposed accountant should treatinthestrictest confidence andgivedueweight toanyinformation
provided bytheexisting accountant.
19. Theinformation provided bytheexisting accountant mayindicate, forexample, thattheostensible
reasons given bytheclient forthechange arenotinaccordance withthefacts. Itmaydisclose that
theproposal tomake achange inmembers inpublic practice wasmade because theexisting accountants
stood theirground andproperly carried outtheduties asmembers inpublic practice despite opposition
orevasion onanoccasion onwhich important differences ofprinciples orpractice havearisen with
theclient.
20. Communication between theparties therefore serves:
(a) toprotect amember inpublic practice fromaccepting anappointment incircumstances where
allthepertinent factsarenotknown;
(b) toprotect theminority proprietors ofabusiness whomaynotbefully informed ofthe
circumstances inwhich thechange isproposed; and
(c) toprotect theinterests oftheexisting accountant when theproposed change arises from, or
isanattempt tointerfere with, theconscientious exercise oftheexisting accountant 'sdutyto
actasanindependent professional.S/WPPS/W/7/Add.2
Page44
21. Before accepting anappointment involving continuing professional services previously carried outby
another member inpublic practice, theproposed accountant should:
(a) Explain totheprospective client hisdutytocommunicate withtheexisting accountant.
(b) Ascertain iftheprospective client hasadvised theexisting accountant oftheproposed change
andhasgiven permission, preferably inwriting, todiscuss theclient'saffairs fullyandfreely
withtheproposed accountant.
(c) When satisfied withthereply received from theprospective client, request permission to
communicate withtheexisting accountant. Ifsuchpermission isrefused orthepermission
referred toin(b)above isnotgiven, theproposed accountant should, intheabsence of
exceptional circumstances ofwhich there isfullknowledge, andunless there issatisfaction
astonecessary factsbyother means, decline theappointment.
(d) Onreceipt ofpermission, asktheexisting accountant, preferably inwriting:
(i) toprovide information onanyprofessional reasons which should beknown before
deciding whether ornottoaccept theappointment and,ifthere aresuchmatters,
(ii) toprovide allthenecessary details tobeabletocome toadecision,
(iii) toprovide theinformation within aspecified timeotherwise hewillassume thatthere
arenomatters which should bebrought tohisattention.
22. Theexistingaccountant,onreceiptofthecommunicationreferredtoinparagraph21(c)shouldforthwith:
(a) Reply, preferably inwriting, advising whether there areanyprofessional reasons whythe
proposed accountant should notaccept theappointment, and
(b) Ifthereareanysuchreasons orother matters which should bedisclosed, ensure thattheclient
hasgivenpermissiontogivedetailsofthisinformationtotheproposedaccountant.Ifpermission
isnotgranted theexisting accountant should report thatfacttotheproposed member inpublic
practice.
(c) Onreceipt ofpermission from theclient, disclose allinformation needed bytheproposed
accountant tobeabletodecide whether ornottoaccept theappointment, anddiscuss freely
withtheproposed accountant allmatters relevant totheappointment ofwhich thelatter should
beaware.
23. Iftheproposed accountant doesnotreceive, within areasonable time, areply from theexisting
accountant andthere isnoreason tobelieve thatthere areanyexceptional circumstances surrounding
theproposed change, theproposed accountant should endeavour tocommunicate withtheexisting
accountant bysome other means. Ifunable toobtain asatisfactory outcome inthisway,theproposed
accountant should sendafurther letter, stating thatthere isanassumption thatthereisnoprofessional
reason whytheappointment should notbeaccepted andthatthere isanintention todoso.
24. Thefactthattheremaybefeesowing totheexisting accountant isnotaprofessional reason whyanother
member inpublic practice should notaccept theappointment.S/WPPS/W/ 7/Add.2
Page45
25. Theexisting accountant should promptly make available tothereceiving accountant allbooks andpapers
oftheclient which areormaybeheldafterthechange inappointment hasbeeneffected andshould
advise theclient accordingly, unless theexisting accountant hasalegalrighttowithhold them.
26. Thematters ofwhich theproposed member inpublic practice should beaware would, where relevant,
include that:
(a) reasons forthechange advanced bytheclient ofwhich theexisting accountant isaware are
notinaccordance withthefacts, asunderstood bythelatter;
(b) theproposal todisplace theexisting accountant arises because theincumbent carried outhis
duties inthefaceofopposition orevasion/s inwhich important differences ofprinciple or
practice hadarisen withtheclient;
(c) theclient, itsdirectors, oremployees mayhavebeenguilty ofsome unlawful actordefault
orthatanyaspect oftheirconduct which isrelevant tothecarrying outofanaudit ought, in
theopinion oftheexisting accountant, tobeinvestigated further bytheappropriate authority;
(d) theexisting accountant hasunconfirmed suspicions thattheclient oritsdirectors oremployees
havedefrauded theInland Revenue, Customs andExcise orothers;
(e) thereremains afailure orrefusal bytheclient tosupply theexisting accountant withinformation
required byhimfortheperformance ofhisduties;
(f) theexisting accountant hasserious doubts regarding theintegrity ofthedirectors and/or senior
managers oftheclient company;
(g) theclient, itsdirectors, oremployees haveattempted tolimitthescope oftheexisting accountant
suchthatthiswould entail theissue ofadisclaimer ofopinion;
(h) theexisting accountant proposes tobring totheattention ofmembers orcreditors circumstances
surrounding theproposed change ofauditor.
27. Theexisting accountant should notrefuse tocommunicate, ordelay hisreply, onthegrounds that:
(a) aproposed member inpublic practice hasobtained nomination incontravention ofthisguidance;
or
(b) theexisting accountant hasagenuine belief, whether justified ornot,ofhaving beenunfairly
treated bytheclient.
SECTION 17-RECRUITING
Visits toschools anduniversities
01. Experience hasindicated thatrecruiting atschools isbestdone onaninstitutional basis. Members
maynotvisitschools forthepurpose ofrecruiting staff.
02. Different considerations apply touniversities. Where facilities aremade available byuniversity
authorities, members mayrecruit staffonuniversity campuses.S/WPPS/W/7/Add.2
Page46
Educational institutions
03. Amember mayofferbursaries andprizes forstudents ateducational institutions, andmayallow the
bursaries andprizes tobenamed afterhimorhisfirm.
04. Amember mayendow achair atauniversity andmayallow hisorhisfirm'ssponsorship tobe
acknowledged publicly bytheuniversity.
Competitors 'staff
05. Amember should not,directly orindirectly, offer employment toanemployee ofanother member
without firstinforming thelatter. However, anemployee ofanother member who, inresponse toan
advertisement orofhisowninitiative, applies tohimforemployment maybeengaged subject tohis
informing theapplicant 'semployer.
SECTION 18-INCLUSION OFTHE NAME OFAMEMBER INPUBLIC PRACTICE INA
DOCUMENT ISSUED BYACLIENT
01. When aclient proposes topublish areport byamember inpublic practice (whether aspartofanother
document oronitsown) dealing withtheclient'sexisting business affairs orinconnection withthe
establishment ofanewbusiness venture themember inpublic practice should takestepstoensure that
thecontext inwhich thereport ispublished isnotsuchasmight result inthepublic being misled as
tothenature andmeaning ofthereport. Inthese circumstances themember inpublic practice should
advise theclient thatpermission should firstbeobtained before publication ofthedocument.
02. Similar consideration should begiven toother documents proposed tobeissued byaclient containing
thename ofamember inpublic practice acting inanindependent professional capacity. Thisdoes
notpreclude theinclusion ofthename ofamember inpublic practice intheannual report ofaclient.
03. When members intheirprivate capacity areassociated with, orholdoffice inanorganisation, the
organisation mayusetheirname andprofessional designation onstationery andother documents. The
member inpublic practice should ensure thatthisinformation isnotusedinsuchawayasmight lead
thepublic tobelieve thatthere isaconnection withtheorganisation inanindependent professional
capacity.S/WPPS/W/ 7/Add.2
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ATTACHMENT 4
PUBLIC ACCOUNTANTS 'AND AUDITORS 'BOARD
CODE OFPROFESSIONAL CONDUCT
CONTENTS
Status ofthecode
Definitions
Joint andvicarious liability
Fundamental principles
Integrity, objectivity andindependence
Knowledge andskills
Professional conduct
Amplification offundamental principles
Financial involvement with, orinvolvement intheaffairs ofaclient
Incompatible andinconsistent businesses
Provision ofother services toclients incases where thepractioner isengaged inperforming
theattest function
Family andpersonal relationships
Independence inrelation tofees
Goods andservices
Excessive borrowings
Professional skill
Confidentiality
Form ofpractice
Feesforprofessional work
Publicity, advertising andsolicitation bypractioners
Publications
Recruiting
Responsibilities tocolleagues
Signing ofreports andcertificates