IFAC proposes
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IFAC Proposes Ethics Upgrade
The International Federation of Accountants issued for exposure modifications to its Code of Ethics for Professional Accountants . The revised code includes more guidance on the disclosure of confidential information and the employment of nonaccountants for certain engagements. Comments on the proposals are due no later than June 30.
Disclosure vs. confidentiality
According to the proposal, there are times when professional, legal or other requirements may override the need for confidentiality. The revisions provide guidance to accountants who have determined they should disclose information that otherwise would be considered confidential. “This draft focuses on the sensitive nature of such situations,” said John W. Gruner, IFAC director general. “It is not always easy to determine when or when not to disclose confidential information.”
The ED also covers guidance for accountants who employ the services of nonaccountants. Because increasingly accounting firms are being called on to do nontraditional accounting work, they often employ the services of other professionals, such as lawyers, actuaries and valuers. According to the proposal, regardless of who actually performs a service for a client, the accountant must take ultimate responsibility. Therefore, the ED emphasizes that accountants must communicate to nonaccountants their basic ethical requirements by asking them to read the appropriate ethical code sections and to request consultation when potential conflicts arise.
Use the code!
The ED reinforces the concept of the IFAC code as a model on which national guidance should be based. “We always have had a paragraph in the front cover of the ethics code about the applicability of the international code of ethics as national requirements,” said Gruner. “We added this language to the code itself to emphasize that no matter how diverse various regulatory regimes are, certain basics of the IFAC ethics code have to be adhered to.”
Free copies of the exposure draft are available by calling the IFAC in New York at 212-302-5952. The ED also is on the IFAC Web site at http://www.ifac.org .
| News |
We Want a Single Set of Standards
A majority of multinational companies would prefer to use a single set of harmonized accounting standards, according to Survey on Derivatives , a poll of 136 companies published by the International Accounting Standards Committee. Here are some of the highlights of the survey results:
- Ninety percent think international comparability is important to their businesses.
- Approximately half of the companies intend to increase the number of risks they hedge and the volume of the derivatives they use.
- Few use derivatives for speculative purposes.
- Only half see any problems in the way they measure derivatives.
- Forty-five percent use hedge accounting and 10% use the realization of financial instruments to avoid volatility in reported earnings.
- Interest rates and foreign currency transactions are the most frequently managed risks.
Copies of the survey can be obtained from the IASC for $25 by calling +44-171-353-0565, faxing +44-171-353-0562 or e-mailing at iasc@netcomuk.co.uk .
| Clarification |
Clarification“Litigation Services: Standards and Ethics” ( JofA, Apr.97 ), stated that Interpretation 102-6, “Professional Services Involving Client Advocacy,” does not apply to litigation services engagements. It should have more narrowly said that it does not apply to expert witness services engagements. It is possible to have a litigation services engagement not involving expert witness services in which the practitioner is acting as an advocate for the client. |
