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1 | P a G E CODE of PROFESSIONAL CONDUCT of the SOUTH SAICA CODE OF PROFESSIONAL CONDUCT (UPDATED 2020) CODE OF PROFESSIONAL CONDUCT OF THE SOUTH AFRICAN INSTITUTE OF CHARTERED ACCOUNTANTS (REVISED 2020) 1 | P a g e COPYRIGHT © 2020 THE SOUTH AFRICAN INSTITUTE OF CHARTERED ACCOUNTANTS Copyright in all publications originated by The South African Institute of Chartered Accountants rests in The Institute. Apart from the extent reasonably necessary for the purposes of research, private study, personal or private use, criticism, review or the reporting of current events, as permitted in terms of the Copyright Act, 1978 (Act 98 of 1978), no portion may be reproduced by any process without written permission from the South African Institute of Chartered Accountants. This Code is based on the International Ethics Standards Board for Accountants (IEBSA) International Code of Ethics for Professional accountants (including International Independence Standards), published by the International Federation of Accountants (IFAC) in April 2018, and is used with the permission of IFAC. ISBN: 978-0-86983-442-8 THE SOUTH AFRICAN INSTITUTE OF CHARTERED ACCOUNTANTS PRIVATE BAG X32, NORTHLANDS, 2116 Page 2 of 232 STATUS OF THE CODE This document contains the SAICA Code of Professional Conduct (“the Code”) (Revised 2020). The Board of the South African Institute of Chartered Accountants (“SAICA”) has adopted the International Code of Ethics for Professional Accountants (including International Independence Standards) as released by the International Ethics Standards Board for Accountants’ (IESBA) in 2018 in its entirety. SAICA is a member of the International Federation of Accountants (IFAC) and has adopted the International Code of Ethics for Professional Accountants with the permission of IFAC but have however included additional guidance to assist in the local application of certain requirements applicable to all SAICA members and associates. The Code is applicable to all SAICA members and associates as defined in the SAICA Constitution. A contravention of, or failure to comply with any requirements of the Code, may be regarded as a Punishable Conduct or misconduct in terms of sections 4.1.5, 4.1.7, 4.2.5, 5.1.5, 5.2.2, 6.1.5, 6.1.8 and 6.2.2 of Appendix 4 of the SAICA By-laws 1and as such may be investigated and if appropriate the member or associate may be found guilty and may be liable for penalties as described in the By-laws. Sections 4.3 and 5.1.12 of the By-laws state that Punishable Conduct on the part of a trainee accountant shall include any conduct which would amount to Punishable Conduct had it been perpetrated by a Member, Associate General Accountant or Accounting Technician. Annexure 3, item 2.4 of the SAICA training regulations requires that trainee accountants should at all times keep the affairs of the training office and its clients confidential and not breach any codes of professional conduct, disciplinary rules or by-laws that apply to the profession of a CA(SA) or an AGA(SA) and, if applicable, a Registered Auditor. The Code also conforms to the Independent Regulatory Board for Auditors (IRBA) Code of Professional Conduct for Registered Auditors. South African amendments to the IESBA Code of Ethics are underlined and in italics in the Code. 1 South African Institute of Chartered Accountants By-laws and Appendices effective from 1 June 2020 Page 3 of 232 #XXX CHANGES OF SUBSTANCE FROM THE 2018 EDITION Code of Professional Conduct of the South African Institute of Chartered Accountants This document replaces the 2018 edition of the Code of Professional Conduct of the South African Institute of Chartered Accountants, as revised by: Final amendments to the IRBA Code of Professional Conduct (Revised November 2018) relating to Registered Candidate Auditors SAICA adopted these local amendments following their issue on Exposure Draft 401 for public comment. The key elements of the project included the definition of a registered candidate auditor. The SAICA Code currently includes the definition of a registered auditor. In 2015, amendments to the Auditing Profession Act, 2005 (Act 26 of 2005) (APA), resulted in the additional regulation of registered candidate auditors (RCAs). As per the amendments, an RCA is defined as: “An individual who has obtained a professional accountant designation from an accredited professional body, who is registered as a candidate auditor with the Regulatory Board and who is serving under the supervision of a registered auditor.” Currently, the IRBA Code addresses the definition and role of a registered auditor, and this includes both the individual and the firm. It, however, does not specifically consider the definition and role of an RCA. The RCA is also a chartered accountant (CA (SA)) and will be required to comply with the SAICA Code of Professional Conduct. Effective Date These amendments are effective on or after 1 January 20212. Final amendments to the IRBA Code of Professional Conduct (Revised November 2018) in respect of Second Opinions SAICA adopted these local amendments following their issue on Exposure Draft 401 for public comment. The proposed amendments to the SAICA Code Section 321 includes the following: Incorporate practical and relevant guidance from Circular 01/2006, Giving Second Opinions, issued in November 2006 by the Committee for Auditor Standards; Align the guidance, where applicable, with the South African amendments made elsewhere in the SAICA Code; Further strengthen the guidance by elevating certain application material to a requirement paragraph; and 2 As per IRBA Code of Professional Conduct effective from 1 November 2020. Page 4 of 232 Include additional safeguards mentioned in other sections of the SAICA Code that might be relevant in addressing a possible self-interest threat when a professional accountant is engaged to provide a second opinion. Effective Date The changes will be effective for engagements commencing on or after 1 January 20213. Final Pronouncement —Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in International Standards on Asssurance Engagements 3000 (Revised) Changes Significant Matters Considered and Changes in Substance Among other matters, the revision includes a proposed revised definition of the term “assurance client” and a new definition of the term “responsible party”; proposed revisions to describe more clearly the circumstances in which the firm needs to be independent of the measurer or evaluator with regard to attestation engagements; and clarification of the types of assurance engagement addressed in Part 4B. New terminology Used in ISAE 3000 (Revised) ISAE 3000 (Revised) introduced a change in terminology in the two types of assurance engagement from ‘assertion-based’ and ‘direct reporting’ engagements in the original ISAE 3000 to ‘attestation’ and ‘direct’ engagements. In changing the terminology, the IAASB has clarified that the distinction between the two types of assurance engagement is based on who is undertaking the measurement or evaluation of the subject matter now referred as “underlying subject matter” to avoid confusion with the term “subject matter information” against the criteria. Changes in terminology ISA 3000 (Revised) states that all assurance engagements have at least three parties: the responsible party, the practitioner (i.e. the professional accountant in public practice), and the intended users. The term ‘responsible party’ is used only for the party responsible for the underlying subject matter and the term ‘measure or evaluator’ is reserved for the party who evaluates the underlying subject matter against the criteria to produce the subject matter information. The IESBA included the definitions of ‘responsible party’, ‘attestation engagement’, ‘direct engagement’, ‘criteria’, ‘subject matter information’ and ‘underlying subject matter’ in the Glossary to be consistent with ISAE 3000 (Revised). Other significant matters and changes of substance 1. Other significant matters and changes of substance proposed by the IESBA were: Changes in the independence requirements; Split of assurance engagements between Parts 4A and 4B; Multiple responsible parties; 3 As per IRBA Code of Professional Conduct effective from 1 November 2020. Page 5 of 232 Application of independence provisions to relationships with or service as employees in a position to exert significant influence over the underlying subject matter of the assurance engagement; and Balance of explanatory material. Effective Date The effective date relating to independence for assurance engagements r with respect to the underlying subject matter covering periods will be effective for periods beginning on or after 15 June 2021; otherwise, it will be effective as of 15 June 2021. Early adoption will be permitted. Changes to the Code Issued Subsequent to December 2019 and Exposure Drafts For information on recent developments and to obtain final pronouncements issued subsequent to December 2019 or outstanding exposure drafts, visit the IESBA’s website at www.ethicsboard.org. Changes to the Code South African changes has been indicated as underlined, italics and in blue. IESBA changes has been indicated as underlined. Page 6 of 232 SAICA CODE OF PROFESSIONAL CONDUCT (UPDATED 2020) CONTENTS Page GUIDE TO THE CODE ………………………………………………………………………………… 7 SAICA CODE OF PROFESSIONAL CONDUCT …………………………………………..…….… 14 DEFINITIONS, INCLUDING THE LIST OF ABBREVIATIONS ……………………………………. 18 PART 1 – COMPLYING WITH THE CODE, FUNDAMENTAL PRINCIPLES AND CONCEPTUAL FRAMEWORK ………………………………………………………………………………………….
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