Date posted: 26/11/2020

NZICA Code of Ethics - ITC on Role and Mindset Amendments

The NZ Regulatory Board proposes changes to the NZICA Code to reflect changes made to the International Code by IESBA’s Role and Mindset Project.

In Brief

  • The proposed changes highlight a member’s responsibility to act in the public interest and enhance the fundamental principles and conceptual framework by introducing new concepts including that a member must “have an inquiring mind”.
  • Members are invited to comment on the proposed changes to the NZICA Code. Your views should be provided to us by 12 February 2021.
  • The proposed changes will apply to all members of CA ANZ in New Zealand from 31 December 2021.

Invitation to comment (including ED)

Proposed revisions to the NZICA Code of Ethics to promote the Role and Mindset expected of Members.

The New Zealand Regulatory Board of New Zealand Institute of Chartered Accountants (NZICA) is seeking comments on proposed amendments to the NZICA Code of Ethics (NZICA Code).

The proposed amendments to the NZICA Code are designed to:

  • incorporate (subject to New Zealand specific modifications) amendments made by International Ethics Standards Board for Accountants (IESBA) to the International Code of Ethics for Professional Accountants (including International Independence Standards) (International Code) as reflected in the Final Pronouncement Revisions to the Code to Promote the Role and Mindset Expected of Professional Accountants (Role and Mindset project); and
  • align with recent amendments made by New Zealand Auditing and Assurance Standards Board (NZAuASB) to Professional and Ethical Standard 1, International Code of Ethics for Assurance Practitioners (including International Independence standards) (New Zealand) (PES 1) to align with amendments made by IESBA to the International Code as reflected in the Final Pronouncement Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in International Standard on Assurance Engagements 3000 (Revised) (Part 4B project).

Overview of proposed changes

Role and Mindset project

The proposed changes arising from this project primarily affect Part 1 of the NZICA Code. New text is to be added that:

Section 100: Complying with the Code

  • Highlights that the skills and values that members possess, including ethical principles, ultimately underpin public trust in the profession;
  • Highlights the importance of members complying with the Code in order to meet their responsibility to act in the public interest (and, therefore, maintain and increase trust in the profession);

Section 110: The Fundamental Principles

  • Clarifies that integrity includes having the strength of character to “act appropriately” (i.e. standing one’s ground and challenging others when circumstances warrant it), even when facing pressure to do otherwise or when doing so might create potential adverse personal or organisational consequences.
  • Clarifies, in respect to objectivity, that undue influence can arise from sources other than people i.e. organisations, technology and other factors.
  • Clarifies, in respect professional competence and due care, that maintaining professional competence includes continuing awareness and an understanding of relevant technology related developments.
  • Includes a requirement, in respect to professional behaviour, to behave in a manner that is consistent with the profession’s responsibility to act in the public interest.

Section 120: The Conceptual Framework

  • Expands the existing requirement, when applying the conceptual framework, to remain alert for new information and to changes in facts and circumstances, to an overarching requirement to have an inquiring mind.
  • Provides new application material on the new concept of an inquiring mind.
  • Expands the application material on professional judgement to include factors to consider in determining whether it has been exercised appropriately in the circumstances e.g. bias etc.
  • Provides new application material on bias including examples of different types of bias.
  • Provides new application material to emphasise that compliance with the Code is enhanced when the ethical values of an organisation are aligned with the Code.

Consequential amendments are also made to sections 200 and 220 and the glossary.

Part 4B project

The NZAuASB has recently approved an amending standard Amendments to Professional and Ethical Standard 1: Part 4B - Independence For Assurance Engagements Other Than Audit And Review Engagements that is designed to incorporate the amendments to the International Code arising from the Part 4B project into PES 1. These amendments to PES 1 will apply from 15 June 2021 (early adoption allowed).

Members should refer to the ITC for details of how these amendments impact the NZICA Code.

NZ specific amendments

NZ specific paragraphs in the NZICA Code have generally been updated to reflect the amendments arising from the Role and Mindset project. Members should refer to the ITC for details.

Submissions / Approval process

26 November 2020
Invitation for submissions on ED 2020-1 issued.

12 February 2021
Submissions on ED 2020-1 are due. Information on how to submit is included on page 4 of this ITC.

10 March 2021
NZRB meet to consider submissions and management’s report. The NZRB will finalise the proposed amendments to the Code of Ethics (or decide on an amended timetable if further work is required).

April 2021
Subject to the above, Code of Ethics to be tabled at Parliament as it is a disallowable instrument.

April 2021
Anticipated date for issue of revised Code of Ethics. The revised Code of Ethics will be published on CA ANZ website, together with a copy of the NZRB’s response to management’s report.

31 December 2021
Effective date of revised Code of Ethics

 

Submission to IESBA

CAANZ submission to IESBA on the role and mindset project

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