Consultation response

18 April 2016

IESBA proposed revisions to safeguards in the Code – Phase 1

 

The Federation of European Accountants submitted its comments on the IESBA Exposure Draft Proposed Revisions Pertaining to Safeguards in the Code – Phase 1.

In its general comments, the Federation states that it would like to assess Phase 2 of this project, as well as the outcome of the other EDs currently under consultation, before expressing any final opinion on the overall impact of the proposed changes to the Code. Below are some of the key views expressed in the letter:

  • By adding further requirements the Code becomes rules-based, leading invariably to a tick-box approach. Nevertheless, the Federation supports the increased prominence of the requirement to apply the conceptual framework.
  • The imposition of the “third party test” is intended to provide a basis for establishing a framework to ensure the objective and rigorous assessment for determining the need for further action. What is deemed to be a “reasonable and informed third party” is subjective and the reference to a “hypothetical person” only reinforces this approach without any benefit for the user.
  • Regarding the “acceptable level”, the proposed amendment introduces a different concept, making it unnecessarily more stringent. This amendment does not bring added value as it is not very instructive on how professional accountants would achieve the intended result.
  • The proposed description of safeguards has to be assessed in conjunction with the other amendments introduced in this regard. Introducing the concept of effectiveness in the definition of safeguard is unnecessary as, by definition, the elimination of threats must always be effective.
  • We have strong concerns in relation to the removal of certain conditions, policies, and procedures as safeguards. This adds confusion to the process and makes it more difficult for SMPs to consider how to apply the safeguards approach.

Overall, the Federation believes that IESBA is proposing a very strict concept of safeguard, disregarding important practical implications.

Please refer to the complete comment letter below for more information.

Related documents

FEE comment letter on IESBA Exposure Draft Proposed Revisions Pertaining to Safeguards in the Code – Phase 1 

IESBA Exposure Draft

 

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