Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICSof work until the signing of the final report being produced. For arecurring audit, independence may only cease on termination ofthe contract between the parties.10.3 CONCEPTUAL FRAMEWORK APPROACH TO MANAGING THREATSTSThe Code of Ethics for Professional Accountants (2009) provides a solidconceptual framework approach for managing threats under Section 100(6)to 100(11), the summary of which, is as follows:(a)(b)(c)(d)(e)(f)The situations in which professional accountants operate are not onlydiverse and many but may also create specific threats to compliancewith the above–stated fundamental principles. The International Federationof Accountants has handed down conceptual framework handling, withbroad based guidelines. The type of engagement and / or assignmentswill determine the approach to adopt. The conceptual frameworkoutlined thus assists professional accountants in their choice of ethicaltools, to uphold the canons of the code. However, a professional accountantis estopped from concluding that a situation is exempted once it is notspecially prohibited;When a professional accountant identifies threats which are not atacceptable level, he shall look for safeguards to counter them or reducethem to acceptable level, after having exercised qualitative and soundjudgment expected of an informed third party who has skillfully weighedall the scenarios. Ultimately, compliance with the fundamental principlesshould not be comprised;A professional accountant is obliged to appraise any threats to complywith the fundamental principles when it is clear that objectively, theemerging circumstances or relationships have the potentiality ofcompromising compliance;He shall analyse qualitatively and quantitatively all factors whenevaluating the significance of a threat. If it is too significant or appropriatesafeguards cannot be found or applied, the professional accountant shallreject or discontinue the service or, as appropriate, resign from theappointment;Where a professional accountant has mistakenly violated a provisionof the Code, depending upon each development, the inadvertence maynot be deemed to be an infringement, if the violation is discovered andpromptly corrected with the necessary safeguards applied; andWhere a professional accountant is faced with unusual situations “inwhich the application of a specific requirement of the Code would resultin a disproportionate outcome” or a development which may run counter194