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Revised IFA Code of Ethics for 2020

The new IFA Code of Ethics will be effective from 1 March 2020. It incorporates all the developments in ethics and independence from the International Ethics Standards Board for Accountants (IESBA) Code of Ethics (part of IFAC).

Revised IFA Code of Ethics for 2020
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  • Contributed by Anne Davis
  • February 20, 2020
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The code has been revamped to make it easier to navigate and understand. It includes a ‘guide to the code’ to explain how it’s structured and how it should be used. The language in the code is clarified, distinguishing between ‘must, may and might’, including application material to aid understanding of the code. The content has been re-ordered and re-numbered and complex sentences have been simplified. 

Same ethical principles

The fundamental principles – integrity, objectivity, professional competence, due care, confidentiality and professional behaviour – continue to establish the standards of behaviour expected of IFA members.

These fundamental principles, as well as the categories of threats to them (self-review, self-interest, advocacy, familiarity and intimidation threats, and the conceptual framework) are unchanged.

All IFA members are required to identify, evaluate and address threats to compliance with the fundamental principles, and where applicable, independence. However, there have been some enhancements in the conceptual framework.

Enhanced conceptual framework

The framework clarifies that:

  • Threats are addressed either by eliminating the circumstances creating the threats; applying safeguards where they are available or capable of reducing the identified threats to an acceptable level; or by declining or ending the specific professional activity or service.
  • Members should take note of the new requirement for members to ‘stand back’ and think about whether the overall conclusion made or actions they have taken are appropriate to resolve the issue.
  • Safeguards are ‘actions, either individually or in combination, that a member takes that effectively reduce threats to compliance with the fundamental principles to an acceptable level’.
  • There is a distinction between safeguards and ‘conditions, policies and procedures’. Conditions, policies and procedures that are established by profession, legislation, regulation, the firm, or the employing organisation to enhance members acting ethically are not safeguards as they are not specifically designed to deal with a particular threat.
  • Compliance with the fundamental principles supports the exercise of professional scepticism.
  • Members must remain alert for new information, or changes to facts and circumstances in applying the conceptual framework and evaluate any impact of these changes on threats. Members are required to exercise professional judgement and use the concept of the ‘reasonable and informed third-party (RITP) test’ when identifying, evaluating and addressing threats to the fundamental principles. The RITP test involves weighing all the relevant facts and circumstances that a member knows, or could reasonably be expected to know, at the time that the conclusions are made.

Other key changes

Clarification of the applicability of part 2 and part 3 of the code

There is clarification of how the provisions of the part two (members in business) and part three (members in public practice) work together. There are new requirements that the guidance in part two of the code may apply to members in practice when they perform professional services for a firm and the relationship between the firm and the member in practice is similar to a contractor, employee or owners of the firm.

Changes to independence requirements for audit and assurance engagements

The changes have little impact on IFA members as they relate principally to audit work. However, some changes do affect assurance engagements. In particular, the explicit requirement to consider whether the engagement needs to be terminated. 

Additional guidance and clarification is now provided relating to: management responsibilities, including demarcation of ‘administrative services’; and ‘routine and mechanical’, in the context of the provision of accounting services to entities to which audit and assurance services are also supplied.

Inducements (e.g. gifts and hospitality)

There is clarification on the meaning of inducements, introduction of a framework for deciding what is acceptable inducements and guidance on behaviour in situations involving inducements for members in practice and in business. There is a new intent test that prohibits offering or accepting inducements where there is actual or perceived intent to improperly influence the behaviour of the recipient or another individual.

Pressure to breach the fundamental principles

There is a new explicit requirement which requires members not to allow pressure to result in breach of the fundamental principles. This includes not pressuring others to breach the fundamental principles.

Preparing and presenting information

There is additional guidance on exercising discretion when preparing or presenting information with an intent to mislead or inappropriately influence contractual or regulatory outcomes, including how members may consider disassociating themselves from misleading information.

To recap

The changes in the code are the result of a long period of stakeholder engagement by IESBA and are aimed at improving the understanding of the requirements by making them easier to use, navigate and enforce.

Further information is available at

Anne Davis is director of professional standards at the IFA

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