State Board Report

November 2011

The International Federation of Accountants has released proposed changes to its “Code of Ethics for Professional Accountants” that would eliminate current paragraphs addressing inadvertent violations of a requirement in the Code. Speaking at NASBA’s Annual Meeting, IESBA Chair Kenneth Dakkduk, said, “Given the fact that violations do occur, we must have a proper response.”

Regardless of how the violation arose, the IESBA believes the violation requires evaluation to understand its impact on the firm’s objectivity, whether actions can be taken to address the consequences of the violation, and if the firm has to resign. “We think the violation has to be assessed and discussed with the relevant regulator if required,” Mr. Dakkduk stated. The entire fact-finding process and how it was discussed with those charged with governance will all have to be documented, he said. “I think the documentation is the real teeth” in the proposed changes, he observed.

Comments on the exposure draft are due January 23, 2012 (see www.ifac.org) and Mr. Dakkduk said comments would be appreciated.

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