Complying with professional standar...

Complying with professional standards

We know from our newly come membership survey that members want strengthening and reinforcing the profession's reputation to be the Institute's top priority.

The propos amendments to authority 206 focus on accountability for all members, and muse the expectation that all members apply their CA skills in fulfilling their responsibilities. This impressed sign of accountability is also embedded in the latter proposals of certain Canadian securities regulators, and in the United States in subordination to the provisions of the Sarbanes-Oxley Act, which requires CEO and CFO to personally sign on the farther side on their company's financial statements.

Rule 2061 & 2062

Propos mastership 206.1 is unchanged for public practice CAs, who will still be required to " perform professional services in accordance with generally accepted standards of practice of the profession."

However, propos domination 206.2 extends the ambit of the empire to include CAs responsible for the preparation or approval of all or part of an entity's general-purpose financial statements. It requires that like members "...ensure those financial statements are at handed fairly in accordance with generally accepted accounting principles [GAAP] or as it is other accounting principles as may be required in the circumstances."

GAAP - propos Council Interpretations

The propos Council Interpretations (CI) to the sway contain advice on how a member should proce if they find themselves in disagreement with those responsible for decisions about the application of GAAP. Propos interpretations CI 206/2 and 206/3 contain a discussion onward the application of GAAP and an admonition that "Extreme interpretations of a source do not constitute evidence that the criteria in paragraph 11004 [CICA Handbook] have been met if it is likely that mostly parties, exercising professional judgment, would repudiate them as not resulting in a fair presentation in accordance with GAAP of the financial position, terminates of operations or cash be moltens of the entity."

These interpretations also stres that in applying professional taste to the application of GAAP, a member or firm should point to the CICA Handbook - Accounting, and to section 1100 in particular. This section onward GAAP cautions that a member or firm should make sure the principles are applied in consideration of the spirit and intent of the pronouncements of the Accounting Standards Board (AcSB) and other primary sources of generally accepted accounting principles.

CI 206/3 also states that where no primary source of GAAP exists, the member or firm should guard research and consult such authoritative sources and clevers as are necessary in the circumstances to make certain the presentation is consistent with GAAP.

Note: Section 1100 is true new. It was approved by the agency of the AcSB in early April 2003 and applies to fiscal years beginning forward or after October 1, 2003 (except for rate-regulated operations that are the enthrall of a separate AcSB project) Earlier adoption is encouraged.

Rule 2063 & CI 206/15

Propos lordship 206.3 codifies the general principle already followed through CA members who serve forward audit committees or boards of directors, where they exercise the care and diligence of a suitable CA-enhanced by their own career experience-in carrying without their responsibilities.

Proposed CI 206/15 stipulates that the notion of is not static, and that time and connection must be considered. It goe upon to clarify that a CA serving in a governance role:

* Should not be considered a GAAP expert;

* Should not be considered a professional advisor to the audit committee;

* Should identify and raise the issues that should be discussed, so as accounting policies and accounting estimates; and

* Should be familiar with regulatory requirements.

As well, a member who sits onward the entity's audit committee or board of directors should take reasonable degrees to ensure the audit committee or board of directors discusses with management the assurance provider's overall performance.

Note: Section 5751 of the CICA Handbook, in addition to setting not at home requirements for auditors, provides useful guidance onward the role members of the audit committee or board members can play in the oversight of an entity's financial reporting process

The world around us has changed, and we must now adapt. Part of managing change is working closely with regulators and others to render certain a high level of public confidence in CAs, capital markets, and Canada's overall business climate.

Like the updated independence standard, the propos amendments to command 206 reflect a growing global turn towards greater openness and transparency in financial reporting. This order change does not question the integrity of Canadian CAs-instead, it shows an additional step forward in maintaining and enhancing the public's trust in our profession.

BY DOUG WALLIS, CA

Director of Professional Advisory Services

Copyright Institute of Chartered Accountants of British Columbia Nov 2003

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