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In its letter, the PAIB Committee provides general comments and comments on the specific questions outlined in the ED. The PAIB Committee generally agrees with the objective of this project—to examine Sections 220 and 310 of the Code of Ethics for Professional Accountants (the Code) and revise them to provide more comprehensive guidance in identifying, evaluating and managing conflicts of interest. In this light, the committee has the following general comments.
The Code rightly says in paragraph 300.4 that “a professional accountant in business has a responsibility to further the legitimate aims of the accountant’s employing organisation”, and “this Code does not seek to hinder a professional accountant in business from properly fulfilling that responsibility, but addresses circumstances in which compliance with the fundamental principles, as mentioned in part A of the Code, may be compromised”. In addition, paragraph 300.14 of the Code points to some of the safeguards in the work environment, such as the employing organisation’s ethics and conduct programmes. However, this safeguard can also be perceived as a threat, as many professional accountants in business are required to follow their organisation’s code of conduct or ethics, which, in the committee’s opinion, might not be perfectly aligned with the Code. The Code should therefore mention how to deal with this matter, for example by expanding or referring paragraph 300.5 on how professional accountants in business can further an ethics-based culture in their organisation, including a code of conduct in line with the provisions with the Code. The committee would like to emphasise, however, that the responsibility for setting the organisation’s standards of integrity and the avoidance of conflicts of interest rests first and foremost with the leadership of the organisation.
The ED points out (on page 7) that conflicts of duty are dealt with elsewhere in the Code and can be deleted from section 310. The PAIB Committee suggests that the relevant sections could be cross-referred to the new section 310. In addition, part of the extant section 310, such as the examples in paragraph 310.2, might usefully be transferred to other parts of the Code.
With respect to the definition of “professional activities” performed by professional accountants in business (page 5), the PAIB Committee recommends that the scope of activities could be further expanded to include professional accountants in business working in other capacities. For example, professional accountants in business who are working as a director of governance, risk manager or compliance officer do not seem to be included. The term “management consulting” could be replaced with “providing competent advice on a variety of business-related matters” in line with paragraph 300.2 of the Code.
The PAIB Committee agrees with the general requirement for professional accountants in business to identify, evaluate and manage conflicts of interests. In doing so, professional accountants in business could use the newly-provided guidance in this Code on identifying, evaluating and managing conflicts of interest. But above all else they should use their professional judgement. The committee recommends including the use of professional judgment in the revised version.