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The Canadian CA profession’s Public Trust Committee formed an Independence Task Force (ITF) to review the independence provisions included in the Rules of Professional Conduct and determine whether or not any changes are needed. The review was precipitated because of changes that were made to the independence standards included in the Code of Ethics for Professional Accountants (Code) issued by the International Ethics Standards Board for Accountants of the International Federation of Accountants (IFAC) last year. The changes to the Code were released in July 2009. The CA profession is a member of IFAC and, as such, monitors IFAC developments to facilitate convergence of national and international standards. As a member of IFAC, the profession’s Rules of Professional Conduct adopted by the Provincial Institutes/Ordre should be not less stringent than the requirements included in the Code unless in respect of a particular provision it is prohibited by law or regulation or it is determined not to be in the public interest. The ITF has determined that changes should be considered in two phases. Partner Rotation Provisions Exposure Draft The comment period has closed. The first phase is the subject of an Exposure Draft. The Exposure Draft proposes that the current Canadian requirements related to rotation of the engagement partner and the engagement quality control reviewer change from rotation after five years followed by a five-year “time-out” period to seven and two years respectively. The Exposure Draft proposes that this change be effective as soon as possible. Comments on the Exposure Draft should be received by June 15, 2010. Comments will be posted on the CICA web site within 10 days of the comment deadline. The ITF will consider the views expressed in response to the Exposure Draft with the intention of making recommendations of any changes to the Rules of Professional Conduct to the Provincial Institute/Ordre Councils/Boards later this year to be effective as soon as possible. In most provinces, any changes to the Rules of Professional Conduct need to be approved ultimately by a vote of the membership. Exposure Draft - Comment Letters
IFAC Convergence Project Consultation Paper The comment period has closed. The second phase is the subject of a consultation paper. The ITF is of the view that in a world of increasingly integrated capital markets, it is in the best interest of investors, issuers and auditors that independence standards converge to the extent possible. The ITF has considered a detailed comparison of the independence provisions in the revised Code and those contained in the current Rules of Professional Conduct. It is of the view that it is appropriate to adopt the Code into the Rules, amended only as appropriate for Canadian specific circumstances. This approach reflects the CA profession’s obligation as a member of IFAC and also reflects the approach taken with the adoption of international accounting and auditing standards in Canada. While the ITF is of the view that the independence requirements in the Rules of Professional Conduct should be as close as possible to those contained in the Code, the ITF has identified a number of key implications of this approach and consequently the consultation paper request stakeholder feedback on these matters. Some stakeholders have requested an extension to the comment deadline and have asked for further information on the implications of potential changes to the independence requirements for small and medium-sized practices with audit or review clients that are not reporting issuers. The ITF has prepared a paper which provides further information on the potential implications. To provide stakeholders with sufficient time to consider consultation paper, the ITF has extended the comment deadline to July 15, 2010. The ITF will consider the views expressed in response to the Consultation Paper in determining the approach to recommend. The proposed changes to the Rules of Professional Conduct will then be exposed for public comment with a view to having any new requirements approved by the Provincial Institute/Ordre Councils/Boards by the end of 2011 and subsequently voted on by members as appropriate. Consultation Paper - Comment Letters |
