Section 3 Code of Ethics and Conduct

3.1 Introduction

Definitions

18.	In this Code of Ethics and Conduct, the following expressions are defined as follows:

advertising means the communication to the public of information as to the services or skills provided by members with a view to procuring professional business;

assurance client means the responsible party that is the person (or persons) who:

(a)

in a direct reporting engagement, is responsible for the subject matter information; or

(b)

in an assertion-based engagement, is responsible for the subject matter information and may be responsible for the subject matter;

(For an assurance client that is a financial statement audit client see the definition of financial statement audit client.)

assurance engagement means an engagement in which members express a conclusion designed to enhance the degree of confidence of intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria;

(For guidance on assurance engagements see the International Framework for Assurance Engagements issued by the International Auditing and Assurance Standards Board which describes the elements and objectives of an assurance engagement and identifies engagements to which International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs) and International Standards on Assurance Engagements (ISAEs) apply.)

assurance team means:

(a)

all members of the engagement team for the assurance engagement;

(b)

all others within a firm who can directly influence the outcome of the assurance engagement, including:

(i)

those who recommend the compensation of, or who provide direct supervisory, management or other oversight of, the assurance engagement partner in connection with the performance of the assurance engagement. For the purposes of a financial statement audit engagement, this includes those at all successively senior levels above the engagement partner through the firm's chief executive;

(ii)

those who provide consultation regarding technical or industry specific issues, transactions or events for the assurance engagement; and

(iii)

those who provide quality control for the assurance engagement;

and

(c)

for the purposes of a financial statement audit client, all those within a network firm who can directly influence the outcome of the financial statement audit engagement;

clearly insignificant means a matter that is deemed to be both trivial and inconsequential;

close family means a parent, child or sibling, who is not an immediate family member;

contingent fee means a fee calculated on a predetermined basis relating to the outcome or result of a transaction or the result of the work performed. A fee that is established by a court or other public authority is not a contingent fee;

direct financial interest means a financial interest:

owned directly by and under the control of an individual or entity (including those managed on a discretionary basis by others); or

beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has control;

director and officer means those charged with the governance of an entity, regardless of their title, which may vary from country to country;

engagement partner means the partner or other person in the firm who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body;

engagement quality control review means a process designed to provide an objective evaluation, before the report is issued, of the significant judgements the engagement team has made and the conclusions they reached in formulating the report;

engagement team means all personnel performing an engagement, including any experts contracted by the firm in connection with that engagement;

existing accountant means an individual or firm currently holding an audit appointment or carrying out accounting, taxation, consulting or similar services for a client;

financial interest means an interest in an equity or other security, debenture, loan or other debt instrument of an entity, including rights and obligations to acquire such an interest and derivatives directly related to such interest;

financial statement audit client means an entity in respect of which a firm conducts a financial statement audit engagement. When the audit client is a listed or other public interest entity, financial statement audit client will always include its related entities;

financial statement audit engagement means a reasonable assurance engagement in which members express an opinion whether the financial statements are prepared in all material respects in accordance with an identified financial reporting framework, such as an engagement conducted in accordance with International Standards on Auditing. This includes a statutory audit which is a financial statement audit required by legislation or other regulation;

financial statements means the balance sheets, income statements or profit and loss accounts, statements of changes in financial position (which may be presented in a variety of ways, for example as a statement of cash flows or a statement of fund flows), notes and other statements and explanatory material which are identified as being part of the financial statements;

firm means:

(a)

a sole practitioner, partnership or corporation of professional accountants;

(b)

an entity that controls such parties through ownership, management or other means; and

(c)

an entity controlled by such parties through ownership, management or other means;

immediate family means a spouse (or equivalent) or dependant;

independence means:

independence of mind – the state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgement, allowing an individual to act with integrity, and exercise objectivity and professional judgement; and

independence in appearance – the avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, including any safeguards applied, would reasonably conclude a firm's, or a member of the assurance team's, integrity, objectivity or professional scepticism had been compromised; and

indirect financial interest means a financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control;

key audit partner means an audit partner of the assurance team (including engagement partner) who is at group level responsible for reporting on significant matters, such as on significant subsidiaries or divisions of the financial statement audit client, or on significant risk factors that relate to the financial statement audit of that client. Where there are no group accounts, the definition should be taken to refer to company level;

key management position means any position at the financial statement audit client which involves the responsibility for fundamental management decisions that include the ability to influence the accounting policies and the preparation of the financial statements of the financial statement audit client. A key management position also includes contractual and factual arrangements which by substance allow an individual to participate in exercising this management function in a different way, e.g. via a consulting contract. Such a position would generally include appointments as director and anyone in a senior financial position on whose advice the directors are accustomed to act;

listed entity means an entity whose shares, stock or debt are quoted or listed on a recognised stock exchange, or are marketed under the regulations of a recognised stock exchange or other equivalent body;

members in business means members employed or engaged in an executive or non-executive capacity in such areas as commerce, industry, service, the public sector, education, the not-for-profit sector, regulatory bodies or professional bodies, or members contracted by such entities;

members in public practice means members, irrespective of functional classification (for example, audit, tax or consulting) in a firm that provides professional services. This term is also used for firms in public practice;

network1 means a larger structure:

(a)

that is aimed at co-operation; and

(b)

that is clearly aimed at profit or cost sharing or shares common ownership, control or management, common quality control policies and procedures, a common business strategy, the use of a common brand name, or a significant part of professional resources;

network firm means a firm or entity that belongs to a network;

office means a distinct sub-group, whether organised on geographical or practice lines;

professional services means services requiring accountancy or related skills performed by members including accounting, auditing, taxation, investment business, management consulting and financial management services;

public interest entities means entities, other than listed entities, which are of significant public interest because of their business, their size or their number of employees or their corporate status is such that they have a wide range of stakeholders. Examples of such entities might include credit institutions (for example banks), insurance companies, investment firms and pension firms;

related entity means an entity that has any of the following relationships with the client:

(a)

an entity that has direct or indirect control over the client provided the client is material to such entity;

(b)

an entity with a direct financial interest in the client provided that such entity has significant influence over the client and the interest in the client is material to such entity;

(c)

an entity over which the client has direct or indirect control;

(d)

an entity in which the client, or an entity related to the client under (c) above, has a direct financial interest that gives it significant influence over such entity and the interest is material to the client and its related entity in (c); and

(e)

an entity which is under common control with the client (hereinafter a "sister entity") provided the sister entity and the client are both material to the entity that controls both the client and sister entity.

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