Question

Based on your readings assignment for week 4 discuss the similarities and differences between the AICPA code of conduct and IFAC code of conduct.

Answer 1

More similar than different. The IESBA and AICPA codes are more similar than different although some differences are significant. Though this article will focus mainly on the differences, in many cases, applying the codes to the same fact pattern will yield similar results. Also, some differences reflect formatting approaches and drafting conventions. For example, the IESBA Code is divided into three parts: Part A applies to all professional accountants; Part B, only to persons in public accounting; and Part C, to persons in business, in other words, everyone who is not in public practice. The AICPA does not apportion its principles and rules in this manner. Other differences are more substantive.

IFAC’s International Ethics Standards Board for Accountants promulgates the Code of Ethics for Professional Accountants (IESBA Code). The latest edition of the IESBA Code was updated and revised in July 2009 and is effective Jan. 1, 2011. The revisions clarified the requirements for all professional accountants and significantly strengthened the independence requirements.

The IESBA and AICPA codes are more similar than different although some differences are significant. In many cases, applying the codes to the same fact pattern will yield similar results.

The IESBA Code discusses certain potential independence matters that appear in the AICPA Conceptual Framework but not in the AICPA independence rules. Examples include Long Association of Senior Personnel (Including Partner Rotation) with a Client (§§ 290.150–.155) and Fees—Relative Size (§§ 290.220–.222).

The IESBA Code imposes additional independence provisions that reflect the “extent of public interest in certain entities.” Public interest entities—or “PIEs”—are listed entities (for example, entities whose securities are listed on a recognized stock exchange) and entities whose auditors are required by law or regulation to comply with the same independence requirements as listed entities.

The IESBA splits its independence requirements into two sections. Section 290 provides the strongest proscriptions and applies to audits and reviews of financial statements. Section 291 provides generally less restrictive independence standards that apply to all other assurance engagements. The AICPA does not bifurcate its independence standards.