Code of Ethics Applicable to Professional Accountants in Public Practice: Professional Appointments

Professional Appointments

  • Client Acceptance
    • Before accepting a new client relationship, a professional accountant in public practice should consider whether acceptance would create any threats to compliance with the fundamental principles. Potential threats to integrity and professional behavior may be created if the client is involved in illegal activities or if the client's owners or management lack integrity.
    • Appropriate safeguards may include obtaining knowledge and understanding of the client, its owners, managers, and those responsible for its governance and business activities or securing the client's commitment to improve corporate governance practices or internal controls. 
  • Engagement Acceptance
    • A professional accountant in public practice should agree to provide only those services that he is competent to perform. A self-interest threat to competence and due care principle is created if the engagement team does not possess, or cannot acquire the competence necessary to properly carry out the engagement. 
    • Appropriate safeguards may include:
      • Acquiring an appropriate understanding of the nature of the client's business, the complexity of its operations, the specific requirements of the engagement and the purpose, nature and scope of the work performed.
      • Acquiring knowledge of relevant industries or subject matters.
      • Possessing of obtained experience with relevant regularity or reporting requirements. 
      • Assigning sufficient staff with the necessary competencies. 
      • Using experts where necessary.
      • Agreeing on a realistic time frame for the performance of the engagement. 
      • Complying with quality control policies and procedures designed to provide reasonable assurance that specific engagements are accepted only when they can be performed competently.
  • Changes in a Professional Appointment
    • A professional accountant in public practice who is asked to replace another professional accountant in public practice, or who is considering tendering for an engagement currently held by another professional accountant in public practice, should determine whether there are any reasons, professional or other, for not accepting the engagement, such as circumstances that threaten compliance with the fundamental principles. For example, there may be a threat to professional competence and due care if a professional accountant in public practice accepts the engagement before knowing all the pertinent facts.
    • Appropriate safeguards may include:
      • Discussing the client's affairs fully and freely with the existing accountant. 
      • Asking the existing accountant to provide known information on any facts or circumstances, that in the existing accountant's opinion, the proposed accountant should be aware of of before deciding whether to accept the engagement.
      • When applying to request to submit tenders, stating in the tender that, before accepting the engagement, contact with the existing accountant will be requested so that inquiries may be made as to whether there are any professional or other reasons why the appointment should not be accepted.
    • A professional accountant in public practice will ordinarily need to obtain the client's permission, preferably in writing, to initiate discussion with an existing accountant. If the proposed accountant is unable to communicate with the existing accountant, the proposed accountant should try to obtain information about any possible threats by other means such as through inquiries of third parties or background investigations on senior management or those charged with governance of the client.
  • Conflicts of Interest
    • A professional accountant in public practice should take reasonable steps to identify circumstances that could pose a conflict of interest. For example, a threat to objectivity may be created when a professional accountant in public practice competes directly with a client or has a joint venture or similar arrangement with a major competitor of a client. A threat to objectivity or confidentiality may also be created when a professional accountant in public practice performs services for clients whose interest where conflict or the clients are in dispute with each other in relation to the matter or transaction in question.
    • Depending upon the circumstances giving rise to the conflict, safeguards should ordinarily include the professional accountant in public practice:
      • Notifying the client of the firm's business interest or activities that may represent a conflict of interest and obtaining their consent to act in such circumstances.
      • Notifying all known relevant parties that the professional accountant in public practice is acting for two or more parties in respect of a matter where their respective interests are in conflict, and obtaining their consent to so act.
      • Notifying the client that the professional accountant in public practice does not act exclusively for any one client in the provision of proposed services (for example, in a particular market sector or with respect to a specific service) and obtaining their consent to so act.
    • Additional safeguards that should also be considered, include:
      • The use of separate engagement teams
      • Procedures to prevent access information (e.g., strict physical separation of such teams, confidential and secure data filing).
      • Clear guidance for members of the engagement team in issues of security and confidentiality
      • The use of confidentiality agreements signed by employees and partners of the firm.
      • Regular review of the application of safeguards by a senior individual not involved with relevant client engagements. 
  • Second Opinion
    • A professional accountant in public practice who is asked to provide a second opinion on the application of accounting, auditing, reporting on other standards or principles to specific circumstances or transactions by or on behalf of the a company or an entity it is not an existing client may give rise to threats to compliance with the fundamental principles. For example, there maybe a threat to professional competence and due care in circumstances where second is not based on the same set of facts that were not made available to the existing accountant, or is based on inadequate evidence. The significance of the threat will depend on the circumstances of the request and all the other available facts and assumptions relevant to the expression of a professional judgement. 
    • Appropriate safeguards may include seeking client permission to contact the existing accountant, describing the limitations surrounding any opinion in communications with the client and providing the existing accountant with a copy of the opinion. If the company or entity seeking the opinion will not permit communication with the existing accountant, a professional accountant in public practice should consider whether, taking all the circumstances into account, it is appropriate to provide opinion sought. 

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