ACCA Rulebook 2011

Contents
ACCA
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London
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© The Association of Chartered Certified Accountants (ACCA) 2011
No part of this publication may be reproduced,
in any format, without the prior written permission of ACCA.
January 2011
Typeset by Folios Print Solutions, Hornchurch
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Rulebook
Contents
Page
Section 1
Royal Charter and bye-laws
1.1
Royal Charter
1.2
Bye-laws
Definitions
Members
Students
Practising certificates
Insolvency licences
Investment business
General Liability to disciplinary action
Disciplinary process
Obligation to co-operate and inform
Application and interpretation
Appointment of regulatory board
Elections and appointments to Council
Council
Committees
Local branches and committees
Proceedings of the Council
Staff
Accounts and audit
Indemnity
Investments
General meetings
Proceedings at general meetings
Common Seal
Notices
Annex 1 – The Chartered Certified Accountants’ Fees Regulations 2010
Annex 2 – The Chartered Certified Accountants’ Electronic Communications
Regulations 2002
Annex 3 – The Chartered Certified Accountants’ Online Provision of Annual
Reports and Notices Regulations 2006
5
13
14
15
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31
31
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32
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39
41
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Section 2
Regulations
Introduction
2.1
The Chartered Certified Accountants’
Membership Regulations 1996
Citation, commencement and application
Interpretation
Eligibility for membership
Members’ obligations and rights
Eligibility for affiliate status
Affiliates’ obligations and rights
Eligibility for registered student status
Registered students’ obligations and rights
Application procedure to become a member or registered student
Resignation of member, affiliate or registered student status
Removal of member, affiliate or registered student
Removal of member for non-compliance with CPD regulations
Bankruptcy
Readmission
General
Appendix 1 – ACCA Qualification examination structure
Appendix 2 – Practical experience requirement
Appendix 3 – Certified Accounting Technician scheme examination structure
Appendix 4 – Required experience to obtain Certified Accounting
Technician status
2.2
The Chartered Certified Accountants’
Global Practising Regulations 2003
Citation, commencement and application
Interpretation
Restrictions on carrying on public practice
Meaning of public practice
Practising certificate
Eligibility for a practising certificate
Qualifications
Fit and proper persons
Professional indemnity insurance
Continuing professional development
Continuity of practice
Notification
Conduct
iv
47
49
49
52
55
59
59
60
61
64
67
67
68
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70
71
72
73
75
76
83
83
84
85
86
86
87
88
90
92
92
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96
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Monitoring, quality assurance and compliance
Disclosure of information
Appendix 1 – Competences of practising certificate holders
Annexes:
Annex 1 – Additional Practising Regulations for the United Kingdom,
Jersey, Guernsey and Dependencies and the Isle of Man
Annex 2 – Additional Practising Regulations for the Republic of Ireland
Annex 3 – Additional Practising Regulations for Cyprus
Annex 4 – Additional Practising Regulations for Zimbabwe
2.3
The Chartered Certified Accountants’
Designated Professional Body Regulations 2001
Citation, commencement and application
Interpretation
Eligibility to carry on regulated activities
Scope
Independence
Relations with clients
Compliance procedures
Enforcement
Waivers and service
Liability
2.4
The Chartered Certified Accountants’
Irish Investment Business Regulations 1999
Code of Conduct of the Financial Regulator
Citation, commencement and application
Interpretation
Eligibility for an investment business certificate (Ireland)
Scope
Independence
Advertising
Relations with clients
Effecting transactions for clients
Advising clients
Additional requirements in certain circumstances
Compliance procedures
Enforcement
Waivers and service
Liability
Appendix 1 – Receipt in compliance with section 30 of the Act
Appendix 2 – Advertisements
96
97
98
101
123
141
147
153
154
166
169
175
176
180
182
183
184
185
186
187
192
196
200
201
202
205
206
208
212
215
217
218
219
220
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Appendix 3 – Essential details of a transaction
Appendix 4 – Schedules 1 to 6 of the Life Assurance
(Provision of Information) Regulations 2001
Appendix 5 – Declaration – non-standard PRSAs
2.5
228
240
The Chartered Certified Accountants’ Regulatory Board and
Committee Regulations 2008
Citation, commencement and effect
Interpretation
Appointment of Regulatory Board, Appointments Sub-Committee
and Regulations Review Sub-Committee
Appointment of committees, panel of committee members,
assessors and regulatory assessors
Constitution of Disciplinary, Admissions and Licensing and
Appeal Committees and eligibility
Powers and responsibilities of Disciplinary, Admissions and
Licensing and Appeal Committees
General
Appendix 1
2.6
The Chartered Certified Accountants’
Authorisation Regulations 1998
Citation, commencement and application
Interpretation
Applications for certificates
Validity and renewal
Withdrawal of, suspension of, or imposition of conditions on certificates
Imposition of conditions on certificates by a regulatory assessor
Correction of errors
Appeals, effective date and publicity
Re-application
General
2.7
The Chartered Certified Accountants’ Complaints and
Disciplinary Regulations 2010
Citation, commencement and application
Interpretation
Consideration of complaint
Decision of assessor
Disciplinary Committee
Ill health
General
vi
226
241
241
243
244
245
245
246
247
249
249
251
254
254
257
259
259
261
261
265
265
267
269
273
284
286
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2.8
The Chartered Certified Accountants’
Appeal Regulations 2006
Citation, commencement and application
Interpretation
Appeal
Applying for permission to appeal
Form of application notice and grounds of appeal
Permission to appeal
The appeal
Preparation for the appeal hearing
Notice, representation and adjournments
Hearing
Orders of Appeal Committee
Costs
Effect on costs of withdrawal of appeal
Notification
Correction of errors
Effective date
Publicity
Open hearings
Ill health
General
289
289
291
291
291
293
296
296
297
298
299
299
300
300
301
301
301
302
303
305
Section 3
Code of Ethics and Conduct
Preface to the ACCA Code of Ethics and Conduct
Scope and authority of the Code
How to use the Code
To whom does the Code apply?
Non-compliance with the Code
Part A: General Application of the Code
100 Introduction and fundamental principles
Fundamental principles
Conceptual framework approach
Threats and safeguards
Ethical conflict resolution
312
312
313
313
315
315
316
317
318
110 Integrity
320
120 Objectivity
321
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130 Professional competence and due care
322
140 Confidentiality
323
150 Professional behavior
325
Part B: Professional Accountants in Public Practice
200 Introduction
Threats and safeguards
210 Professional appointment
Client acceptance
Engagement acceptance
Changes in a professional appointment
Matters to be communicated to proposed clients
Matters to be communicated to proposed accountants
Unpaid fees of previous accountant
Transfer of books and papers
Transfer of information
Changes in audit appointment
Casual vacancy in auditorship
220 Conflicts of interest
Conflicts between professional accountants’ and clients’ interests
Commission and other financial gains
Agency work
Conflicts between the interests of different clients
Managing conflicts between clients’ interests
Conflicts between the interests of professional accountants and firms
Disengagement
327
327
332
332
332
333
336
336
337
337
337
338
338
339
340
340
341
341
342
342
342
230 Second opinions
343
240 Fees and other types of remuneration
344
344
345
346
347
347
347
348
348
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Basis of fees
Referral fees and commission
Commission on indemnity terms
Insolvency work in the UK
Management buy-out and raising venture capital
Fee disputes
Investment business in the UK and Ireland
Advertisements
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250 Marketing professional services
Reference to fees in promotional material
Promotional material and promotional activities
Investment business
349
350
351
351
260 Gifts and hospitality
352
270 Custody of client assets
353
353
354
354
354
354
355
355
356
356
356
356
356
357
Clients’ monies
Clients’ accounts
Opening a client bank account
Payments into a client bank account
Withdrawals from a client bank account
Fees paid in advance
Interest payable on client account monies
Monies held by the firm as stakeholder
Maintaining records
Fees and fee disputes
Bank
Insolvency work: UK
Untraceable funds
280 Objectivity – All services
358
290 Independence – Audit and review engagements
359
360
360
362
364
364
365
365
365
366
368
368
368
373
374
375
378
380
Structure of section
A conceptual framework approach to independence
Networks and network firms
Public interest entities
Related entities
Those charged with governance
Documentation
Engagement period
Mergers and acquisitions
Other considerations
Application of the conceptual framework approach to independence
Financial interests
Loans and guarantees
Business relationships
Family and personal relationships
Employment with an audit client
Temporary staff assignments
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Recent service with an audit client
Serving as a director or officer of an audit client
Long association of senior personnel (including partner rotation) with
an audit client
Provision of non-assurance services to audit clients
Management responsibilities
Preparing accounting records and financial statements
Valuation services
Taxation services
Internal audit services
IT systems services
Litigation support services
Legal services
Recruiting services
Corporate finance services
Fees
Fees – Relative size
Fees – Overdue
Contingent fees
Compensation and evaluation policies
Gifts and hospitality
Actual or threatened litigation
Reports that include a restriction on use and distribution
291 Independence – Other assurance engagements
x
Structure of section
A conceptual framework approach to independence
Assurance engagements
Assertion-based assurance engagements
Direct reporting assurance engagements
Reports that include a restriction on use and distribution
Multiple responsible parties
Documentation
Engagement period
Other considerations
Application of the conceptual framework approach to independence
Financial interests
Loans and guarantees
Business relationships
Family and personal relationships
Employment with assurance clients
380
381
382
384
385
386
388
389
394
396
397
397
399
399
401
401
402
402
403
404
404
405
408
409
409
411
411
412
412
414
414
415
416
416
417
419
420
421
424
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Recent service with an assurance client
Serving as a director or officer of an assurance client
Long association of senior personnel with assurance clients
Provision of non-assurance services to assurance clients
Management responsibilities
Other considerations
Fees
Fees – Relative size
Fees – Overdue
Contingent fees
Gifts and hospitality
Actual or threatened litigation
425
426
426
427
427
428
429
429
429
429
430
430
Interpretation 2005-01
Supplementary requirements and guidance:
432
B1
Professional duty of confidence in relation to defaults and
unlawful acts of clients and others
Introduction
Relationship between professional accountants and their clients
Verification of information by reference to the records of a third party who
is also a client
Disclosure of defaults or unlawful acts
Obligatory disclosure
Voluntary disclosure
Disclosure in the public interest
Disclosure to protect a professional accountant’s interests
Disclosure authorised by statute
Disclosure to non-governmental bodies
Prosecution of a client or former client
Appearance as a witness
Professional accountants’ relations with the authorities on clients’ behalf
Professional accountants’ own relations with authorities
Company investigation
Transmission of report to shareholders
Urgent cases
Past accounts and reports
Shareholders
Tax authorities
Other third parties
Removal of the auditor
436
436
437
438
438
439
440
440
441
441
441
442
442
442
443
443
444
445
445
445
445
446
447
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Disclosure of information to office holders under insolvency legislation
Auditors of companies in liquidation
Defamation
Professional accountants’ working papers
Taxation offences and the proceeds of crime
Past accounts
Current accounts
New clients
Private returns
Professional responsibility towards clients
Tax authority powers
Errors in the taxpayers’ favour
Knowledge of offences relating to VAT or its equivalent
VAT or its equivalent and accounts
447
449
449
450
451
451
452
452
452
452
453
453
453
454
B2
Money laundering
Introduction
Relationship with the local law
Internal controls and policies
Client identification
Record keeping
Recognition of suspicion
Reporting suspicious transactions
Tipping off
Advisory Services
455
455
455
456
456
457
458
458
458
459
Whistleblowing responsibilities placed on auditors
Introduction
Whistleblowing duty: non-compliance with law or regulation
Circumstances indicating non-compliance with law or regulation
Professional duty of confidence
Method of reporting
Whistleblowing duty: other matters of material significance
Non-audit assignments
460
460
460
461
461
461
462
462
B4
Descriptions of professional accountants and firms and the
names of practising firms
General
B3
Part I – Descriptions of professional accountants and firms
Professional accountants’ descriptions
Membership of other accountancy bodies
xii
463
463
463
463
463
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Other designatory letters
Compliance with ACCA Charter, bye-laws, regulations and Code of Ethics
and Conduct
Practice descriptions
Statements on professional stationery
Use of the ACCA name and logo
Sole practitioners
Specialisms
Persons named on professional stationery
464
Part II – The names of practising firms
General
Discussion
Legal requirements
New and changed names
Use of firm’s name and premises
Advisory Services
466
466
467
467
467
468
468
Additional requirements for descriptions of professional accountants and
firms and the names of practising firms for the UK
Registered auditors
Insolvency practitioners
Investment business
469
469
470
470
Additional requirements for descriptions of professional accountants and
firms and the names of practising firms for Ireland
Registered auditors
Investment business
471
471
471
B5
Legal ownership of, and rights of access to, books, files,
working papers and other documents
Introduction
Relationship with the local law
The contract
Preservation of documents
Liens
Duty of confidentiality
Access to client papers
Advisory Services
464
464
464
465
465
466
466
473
473
474
474
474
475
475
476
477
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B6
Retention periods for books, files, working papers and
other documents
Introduction
Trusteeships
General considerations
Minimum periods for retention
B7
Activities through corporate or non-corporate organisations
Introduction
Provision of accountancy services through companies
Non-accountancy services
Organisations offering accountancy and non-accountancy services
Appointed representatives under the Financial Services and Markets
Act 2000 in the United Kingdom
General
478
478
478
478
479
480
480
480
480
481
481
481
B8
The obligations of consultants
482
B9
Professional liability of accountants and auditors
Introduction
Engagement letters
Excluding or restricting liability to a client
Advice on limited information
Avoiding liability to third parties
Inclusion of the accountant’s name on a document issued by a client
Specialist advice
Internal complaints-handling procedures
Advisory Services
483
483
483
484
484
485
485
486
486
487
B10 The incapacity or death of a practitioner
xiv
General
Insolvency practitioners: UK
Content of continuity agreement
Descriptions
Records
Incapacity of a practitioner
Death of a practitioner
Statutory audits
Ethical considerations
ACCA approved employer
Advisory Services
488
488
488
488
489
489
490
490
490
491
492
492
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B11 Estates of deceased persons
493
B12 Corporate finance advice including take-overs
494
494
494
494
494
495
496
496
497
Introduction
The regulator for take-overs and mergers
Objectivity and integrity
Conflicts of interest
Avoiding conflicts of interest
Safeguards
Documents for public use
Fees
Part C: Professional Accountants in Business
300 Introduction
Advisory Services
499
502
310 Potential conflicts
503
320 Preparation and reporting of information
504
330 Acting with sufficient expertise
506
340 Financial interests
507
350 Inducements
509
509
510
Receiving offers
Making offers
Supplementary requirements and guidance:
C1
Disclosing confidential information
511
C2
Whistleblowing
512
Part D: Insolvency Code of Ethics
Insolvency Code of Ethics
Code of Ethics for Insolvency Practitioners
Preface
Definitions
514
514
514
514
Part 1 General application of the Code
The practice of insolvency
Introduction
Fundamental principles
515
515
515
515
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Framework approach
Identification of threats to the fundamental principles
Evaluation of threats
Possible safeguards
516
517
518
519
Part 2 Specific application of the Code
Insolvency appointments
Conflicts of interest
Practice mergers
Transparency
Professional competence and due care
Professional and personal relationships
Identifying relationships
Is the relationship significant to the conduct of the insolvency appointment?
Dealing with the assets of an entity
Obtaining specialist advice and services
Fees and other types of remuneration
Obtaining insolvency appointments
Gifts and hospitality
Record keeping
520
520
522
522
522
523
524
524
524
526
526
527
528
528
529
The application of the framework to specific situations
Introduction to specific situations
Part 1 – Examples that do not relate to a previous or existing
insolvency appointment
Part 2 – Examples relating to previous or existing insolvency appointments
Part 3 – Examples in respect of cases conducted under Scottish law
529
529
530
531
532
Definitions
533
Effective date
539
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Section 1
Royal Charter and bye-laws
1
2
Introduction
The Royal Charter, which was granted to the Association on 25 November 1974, by Queen
Elizabeth II, is the constitution of the Association. The affairs of the Association are managed
and regulated in accordance with the Charter and bye-laws. Both the Charter and the byelaws may be amended or added to in general meeting by resolution passed by not less than
two-thirds of the members entitled to vote and voting. Such amendments or additions to
the Charter and bye-laws have no force or effect until they have been approved by the Privy
Council. The Association’s Council may from time to time make such regulations as it thinks
fit, provided such regulations are not in any way inconsistent with any of the provisions of the
Charter and bye-laws.
Members are reminded that, on applying for admission to membership, they sign an
undertaking that if admitted, and as long as they are members, they will observe the Charter,
bye-laws and regulations for the time being in force.
3
4
Royal Charter 1.1
1.1
Royal Charter
Elizabeth the Second by the Grace of God of the United Kingdom of Great Britain
and Northern Ireland and of Our other Realms and Territories Queen, Head of the
Commonwealth, Defender of the Faith:
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING!
Whereas the Association incorporated under the Companies Act 1929 and known as “The
Association of Certified Accountants” (hereinafter referred to as “the existing Association”)
have by their humble Petition prayed that We would be graciously pleased to grant them a
Charter on Incorporation:
And Whereas We have taken the said Petition into Our Royal Consideration and are minded
to accede thereto:
Now Therefore know ye that We by virtue of Our Prerogative Royal have of Our especial
grace, certain knowledge and mere motion granted and declared and do by these Presents
for Us, Our Heirs and Successors grant and declare as follows:
1. The persons now members of the existing Association and all other persons who shall
hereafter pursuant to this Our Charter and the bye-laws become members of the Body
Corporate hereby constituted shall for ever hereafter be one Body Corporate and Politic by
the name of “The Association of Chartered Certified Accountants” and by the same name
shall have perpetual succession and a Common Seal with power to alter, break and make
anew the said Seal from time to time at their will and pleasure, and by the same name shall
and may sue and be sued in all Courts and in all manner of actions and proceedings and
shall have power to do all other matters and things incidental or appertaining to a Body
Corporate.
2. In this Our Charter unless the context otherwise requires:
(a) the Association shall mean The Association of Chartered Certified Accountants as
hereby incorporated;
(b) the bye-laws shall mean the bye-laws set forth in the Second Schedule hereto or
other the bye-laws from time to time of the Association;
(c) the Council shall mean the Council of the Association hereinafter referred to and as
from time to time constituted in accordance with the bye-laws;
(d) public practice means practice as a public accountant in the capacity of sole
principal, in partnership or through the medium of a body corporate or otherwise and
practising as applied to an accountant shall have the same connotation; the decision
of the Council as to whether or not a person is engaged in public practice shall be
conclusive;
5
1.1 Royal Charter
(e) industry and commerce means the administration of organisations of whatever kind
engaged in industrial and commercial activities of every type and shall include the
nationalised industries; the decision of the Council as to whether or not a person is
engaged in industry or commerce shall be conclusive;
(f) the public service means the administrative organisations of central, regional or
local government and all public bodies of a non-industrial character; the decision of
the Council as to whether or not a person is engaged in the public service shall be
conclusive;
(g) the 1989 Act means the Companies Act 1989;
(h) words importing the singular only shall include the plural and vice versa, words
importing the masculine gender only shall include the feminine gender and words
importing persons shall include corporations;
(i) any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference
to a statutory provision shall include that provision as from time to time modified
or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
3. The principal objects and purposes for which the Association is hereby constituted are to
advance the science of accountancy, financial management and cognate subjects as applied
to all or any of the professional services provided by accountants whether engaged in public
practice (in partnership or through the medium of a body corporate or otherwise), industry
and commerce or the public service; to promote the highest standards of competence,
practice and conduct among members of the Association so engaged; to protect and preserve
their professional independence and to exercise professional supervision over them; and to
do all such things as may advance and protect the character of the profession of accountancy
whether in relation to public practice (carried on in partnership or through the medium of a
body corporate or otherwise) or as applied to service in industry and commerce or the public
service.
4. In furtherance of the objects and purposes set out in Article 3 hereof the Association shall
have the following ancillary objects and powers:
(a) to acquire, take over and accept from the existing Association by disposition,
conveyance, assignment or transfer the whole of the assets and property both real
and personal and also the whole of the debts and liabilities of whatever kind of
the existing Association and where necessary to give to any trustees in whom the
said assets or property may be vested a valid receipt, discharge and indemnity for
and in respect of the transfer of the same to the Association and without prejudice
to the generality of the foregoing to assume responsibility for all undertakings and
engagements of whatever kind of the existing Association and to carry out all the
requirements of the same so far as is legally possible to the same extent and in the
same manner as the existing Association would have done;
(b) to purchase, take on lease or in exchange or hire in any other way acquire any real
or personal property or options for acquiring the same in any part of the world
considered necessary for the use of members and others or for any purposes of the
6
Royal Charter 1.1
Association and to sell, lease, mortgage (by issue of debentures, debenture stock or
otherwise), exchange, partition or otherwise deal with in any way any real or personal
property, rights or assets of the Association; and to construct, alter and maintain in
any part of the world any buildings considered necessary for the use of members
and others or for any purposes of the Association and to provide the same with all
property and necessary fixtures, fittings, furniture and other equipment;
(c) to accept any gift, endowment or bequest to the Association and to execute and
perform any trust attaching thereto;
(d) to accept and take by way of gift and absorb upon any terms the undertaking and
assets of any society or body whether incorporated or not having objects similar
to those of the Association and to undertake all or such as may be agreed of the
liabilities and engagements of any such other society or body but so that the exercise
of the powers conferred by this paragraph shall be subject always to the approval of
the Association in general meeting (of which meeting not less than twenty-one days’
clear notice in writing shall have been given) by resolution passed by not less than
two-thirds of the members entitled to vote and voting on such resolution and to the
approval of the Lords of Our Most Honourable Privy Council (of which approval a
Certificate under the hand of the Clerk of Our said Privy Council shall be conclusive
evidence);
(e) to establish and administer or to participate in the establishment and administration
of any organisation, whether incorporated or not and whether subsidiary to the
Association or not, having as its principal object or one of its principal objects
the advancement of the science of accountancy or any part thereof where in the
opinion of the Council the interests of the accountancy profession may be most
advantageously served through the medium of such an organisation and to establish,
maintain, review and finance, alone or in conjunction with others, a body, whether
incorporated or not, independent of the Association, having as its object the review
of the schemes of regulation and discipline of the Association and other participant
accountancy bodies;
(f) to undertake, execute and perform any trusts or conditions affecting any real or
personal property of any description acquired by the Association;
(g) to organise, finance and maintain schemes for the granting of diplomas, certificates
and other awards (with or without prior examinations or tests) to persons seeking
admission to membership of the Association, members of other professional bodies
or others and to issue certificates and diplomas to such persons and to provide
for the use of designatory letters by such persons, provided that no such diploma,
certificate or other award issued by or on the authority of the Association shall
contain any statement expressing or implying that it is granted under the authority of
any Department of Our Government or other authority unless in fact it is so granted;
and provided that no such scheme, open only to members of the Association,
as originally established or subsequently amended, shall provide for the use of
designatory letters by members of the Association unless and until they shall have
been approved by the Association in general meeting and by the Lords of Our Most
Honourable Privy Council (of which approval a Certificate under the hand of the Clerk
of Our said Privy Council shall be conclusive evidence); and provided also that no
member shall in any circumstances be obliged to participate in any such schemes;
7
1.1 Royal Charter
(h) to encourage the study of such subjects by providing scholarships, bursaries, prizes
and donations on such terms and conditions as may be thought fit, by making grants
to universities and other educational institutions, by providing courses, classes,
lectures and other tuition for members and others or by making grants for the
provision of the same or for research or by such other means as may be thought
appropriate;
(i) to promote and facilitate the dissemination and exchange of information on matters
of professional interest among members and others by the holding of conferences,
meetings and seminars for the reading of papers and reports, by the publication of
periodicals, books, monographs or papers and by the promotion, compilation and
publication of research studies;
(j) to establish and maintain a library or libraries for the use of members and others;
(k) to provide such services including technical and advisory services as may promote
and further the interest and efficiency of members and others and of the accountancy
profession generally;
(l) to form local branches and committees or appoint local representatives in any part
of the world with such powers and subject to such conditions as the Council may
from time to time determine and to make such grants and contributions (if any) to the
same as the Council shall think fit;
(m)to procure the Association to be registered or recognised in any overseas country or
place and to exercise any of its objects or powers in any part of the world;
(n) to make and carry out any arrangement for joint working or co-operation with any
other society or body, whether incorporated or not, carrying on work similar to any
work for the time being carried on by the Association;
(o) to borrow or raise money on such terms and on such security as may be thought fit
for any of the purposes of the Association; provided that no money shall be raised
by the mortgage of any real or leasehold property of the Association without such
consent or approval (if any) as may be required by law therefor;
(p) to establish, administer and contribute to any charitable purpose which in the opinion
of the Council may tend to promote any of the objects of the Association or which
has objects similar to those of the Association and to establish and support or aid
in the establishment and support of associations, institutions, funds, trusts and
schemes for such purposes, and generally to contribute to or otherwise assist any
charitable or benevolent institutions or undertakings and grant donations for any
national or public purpose;
(q) to pay to officials and servants of the Association their expenses and such salaries,
pensions, gratuities or other sums in recognition of services (including those rendered
to the existing Association before the date of this Our Charter) and to make such
provision for their widows, children or other dependants as the Council may from
time to time think proper;
(r) to operate schemes of regulation and discipline of the Association’s members and
students and such other persons as agree to be subject to such schemes and, with
8
Royal Charter 1.1
one or more other professional accountancy bodies, to establish and participate in
a scheme (whether constituted as an incorporated body or not) for the investigation
and discipline in certain circumstances of such persons as may be subject to the
scheme pursuant to the procedures of that scheme rather than the Association’s own
disciplinary scheme;
(s) to take all such steps as it thinks fit to enable it to become and operate as a
recognised professional body for the purposes of the Financial Services Act 1986
and do anything whatsoever incidental to or in connection therewith and (without
prejudice to the generality thereof) may:
(i)
implement certification procedures for the purposes of the said Act;
(ii)
provide for the constitution of a scheme, fund or other arrangements for the
compensation of persons dealing with persons certified by the Association for
the purposes of the said Act;
(iii)
accept undertakings and enter into agreements with firms or persons (whether
individuals or corporations) in relation to the certification of such firms or
persons or of firms in which such persons are partners or of corporations with
which such persons are directly or indirectly concerned (whether through
ownership, management or otherwise); and
(iv)
make provision (whether by agreement or otherwise) for the application
of disciplinary procedures and sanctions to firms and persons giving such
undertakings or entering into such agreements;
(t) (i)
to take all steps as it thinks fit to enable it to obtain and maintain recognition
as a supervisory body for the purposes of the 1989 Act, any corresponding
provision under the law of Northern Ireland and any other corresponding or
similar provision of the law of any other jurisdiction anywhere in the world; and
(ii)
to take all steps as it thinks fit to enable any qualifications offered by it to be
declared a recognised professional qualification for the purposes of the 1989
Act so as to enable it to become a recognised qualifying body for the purposes
of the 1989 Act, any corresponding provision under the law of Northern
Ireland and any other corresponding or similar provision of the law of any other
jurisdiction anywhere in the world; and
(iii)
to perform on behalf of other bodies, which are recognised supervisory bodies
under the 1989 Act, the functions of monitoring of compliance with the rules
of such other bodies and of investigating complaints on behalf of such other
bodies against that body or any other person; and
(iv)
to do anything whatsoever incidental to or in connection with such powers
(without prejudice to the generality of those powers) to:
(1)
implement prodecures (including arrangements for monitoring and
enforcement in relation to members or otherwise) to ensure that the
requirements for recognition of the Association as a supervisory body,
set out in Part II of Schedule 11 to the 1989 Act, are and continue to be
fulfilled;
9
1.1 Royal Charter
(2)
implement procedures for the certification of any individual (whether or
not a member of the Association) or firm as eligible for appointment as
company auditor for the purposes of the 1989 Act;
(3)
accept undertakings and make agreements with individuals (whether or
not members of the Association) or firms in relation to such procedures
and certification;
(4)
make provision (whether by agreement or otherwise) for the application
of disciplinary procedures and sanctions to individuals and firms giving
such undertakings or entering into such agreements; and
(5)
lay down requirements and implement procedures (including professional
experience, examinations and practical training) to ensure that the
requirements for recognition of a professional qualification, set out in
Part II of Schedule 12 to the 1989 Act, are and continue to be fulfilled;
and for the purposes of this paragraph “firm” means a partnership and a body
corporate; and
(u) to do, alone or in conjunction with others, the foregoing and all such other lawful
things in any manner whatsoever consistent with the provisions of this Our Charter
and the bye-laws as may be incidental or conducive to furthering or protecting the
interests and efficiency of the Association and its members and of the accountancy
profession.
5. The income and property of the Association, whencesoever derived, shall be applied solely
towards the promotion of its objects as set forth in this Our Charter as amended or added to
in the manner hereinafter provided and no member shall as such have any personal claim on
any of the said income or property. No part of the income or property of the Association shall
be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever
by way of profit to its members, provided that nothing herein contained shall prevent the
payment in good faith of remuneration to any member thereof or to any other person in
return for services rendered to the Association or the payment in good faith of expenses
incurred by any such persons in providing such services or the payment of interest at a rate
not exceeding one per centum per annum above the base rate from time to time of National
Westminster Bank PLC on money borrowed from any member or any payment becoming
due under or by virtue of any indemnity given by the Association to any officials or servants
or to any member thereof in accordance with the bye-laws. No member of the Council shall
receive any remuneration in respect of his services as a member of the Council or as a
member of any committee or sub-committee of the Council other than expenses incurred in
providing such services.
6. There shall be a President, Deputy-President and a Vice-President of the Association who
shall be elected in accordance with the bye-laws. The first President, Deputy-President and
Vice-President whose names are shown in the First Schedule hereto shall each hold office
until the close of the first Annual General Meeting of the Association.
7. The first Council shall be the Council of the existing Association immediately prior to the
date of this Our Charter and whose members, in addition to the President, Deputy-President
and Vice-President already referred to, are shown in the First Schedule hereto.
10
Royal Charter 1.1
8. The Council shall consist of such members, with such qualifications and to be appointed
or elected in such manner and to hold office for such periods and on such terms as to
reappointment and re-election and otherwise as may be prescribed by the bye-laws, subject
always in the case of the first Council to the provisions of the preceding Article of this Our
Charter.
9. The property and affairs of the Association shall, subject to the provisions of this Our
Charter and of the bye-laws, be administered and controlled by the Council, who may
exercise for those purposes all such powers and authorities by this Our Charter or otherwise
expressly conferred on them and do all such acts and things as may be exercised or done by
the Association as are not hereby or by the bye-laws required to be exercised or done by the
Association in general meeting, but no new bye-law or amendment or addition thereto shall
invalidate any prior act of the Council which would have been valid if the same had not been
made.
10. The members of the Association shall, unless and until otherwise provided by the byelaws, consist of two classes, namely, Fellows and Members, herein collectively referred to as
“members”.
11. The Fellows and Associates of the existing Association immediately prior to the date of
this Our Charter shall be deemed hereafter to be Fellows and Members respectively of the
Association.
12. Persons who immediately prior to the date of this Our Charter were Honorary Members
or registered graduates or registered students of the existing Association shall be deemed
hereafter to be of similar status in the Association in Accordance with the bye-laws subject to
the completion by them of such undertaking or requirements as the Council may at any time
require of them.
13. The qualifications for and the method of election to membership and the rights,
privileges, obligations and conditions of membership and the manner in which the same may
be suspended or determined shall be such as the bye-laws or regulations made thereunder
shall prescribe.
14. As soon as is reasonably possible after the date of this Our Charter the Council shall
do all things and execute all documents so as, with effect from that date, to vest the assets
and any other rights, entitlements and benefits of the existing Association, held in its name
or in that of its nominees or in the names of trustees on its behalf, in the Association
and to enable the Association to undertake and be responsible for all the obligations and
commitments of the existing Association.
15. The affairs of the Association shall be managed and regulated in accordance with the
provisions of this Our Charter and of the bye-laws set forth in the Second Schedule hereto.
The said bye-laws may from time to time be amended or added to by the Association in
general meeting (of which meeting not less than twenty-one clear days’ notice shall have
been given) by resolution passed by not less than two-thirds of the members entitled to vote
and voting on such resolution, provided that no such amendment or addition shall have any
force or effect if it be repugnant to any of the provisions of this Our Charter or until the same
has been submitted to and approved by the Lords of Our Most Honourable Privy Council (of
11
1.1 Royal Charter
which approval a Certificate under the hand of the Clerk of Our said Privy Council shall be
conclusive evidence).
16. The Council may from time to time make such regulations as they think fit for the
purpose of carrying any bye-law into effect or otherwise for regulating the affairs of the
Association and may amend or add to any such regulations provided always that no such
regulations shall be in any way inconsistent with any of the provisions of this Our Charter or
of the bye-laws.
17. The Association in general meeting (of which meeting not less than twenty-one clear
days’ notice shall have been given) may from time to time amend or add to the provisions
of this Our Charter by resolution passed by not less than two-thirds of the members entitled
to vote and voting on such resolution and any such amendment or addition shall, when
allowed by Us, Our Heirs or Successors in Council, become effectual so that this Our Charter
shall thenceforth continue and operate as though it had been originally granted and made
accordingly. The provision shall apply to this Our Charter as amended or added to in the
manner aforesaid.
18. It shall be lawful for the Association in general meeting (of which meeting not less
than twenty-one clear days’ notice shall have been given) with the sanction of not less than
two-thirds of the members entitled to vote and voting thereat to surrender this Our Charter
subject to the sanction of Us, Our Heirs or Successors in Council and upon such terms as We
or They may consider fit and to wind up or otherwise deal with the affairs of the Association
in such manner as shall be directed by such general meeting or in default of such direction
as the Council shall think expedient having due regard to the liabilities of the Association
for the time being, and if, on the winding up or the dissolution of the Association, there
shall remain, after the satisfaction of all its debts and liabilities, any property whatsoever,
the same shall not be paid or distributed among the members of the Association or any of
them but shall, subject to any special trusts affecting the same, be given and transferred
to some association or associations having objects similar to the objects of the Association
and which shall prohibit the distribution of its or their income and property amongst its or
their members to an extent at least as great as is imposed on the Association under Article 5
hereof, such association or associations to be determined by the Council at or before the time
of dissolution.
And We do for Ourself, Our Heirs and Successors grant and declare that these Our Letters
or the enrolment thereof shall be in all things valid and effectual in law according to the true
intent and meaning of the same and shall be taken, construed and adjudged in the most
favourable and beneficial sense and for the best advantage of the Association as well in Our
Courts of Record as elsewhere notwithstanding any nonrecital, mis-recital, uncertainty or
imperfection in this Our Charter.
In Witness whereof We have caused these Our Letters to be made Patent.
Witness Ourself at Westminster the twenty-fifth day of November in the twenty-third year of
Our Reign. [1974]
By Warrant under the Queen’s Sign Manual.
DOBSON
12
Bye-laws 1.2
1.2
THE SECOND SCHEDULE
Bye-laws
Definitions
1. In these bye-laws, unless the context otherwise requires:
affiliate means a registered student who has passed the qualifying examinations but not
satisfied the other conditions applicable to applications for membership;
the Association means the Association of Chartered Certified Accountants as
incorporated by the Charter;
the Charter means the Royal Charter of Incorporation granted to the Association in the
year 1974 as amended or supplemented from time to time;
company auditor means a person appointed as auditor under Chapter V of Part XI of the
Companies Act 1985;
consent order has the meaning ascribed to it by bye-law 9(d);
the Council means the Council of the Association as from time to time constituted in
accordance with these bye-laws;
disciplinary order has the meaning ascribed to it by bye-law 9(c) and, for the purposes of
bye-laws 13 to 26, by bye-law 15(b);
exempt regulated activities has the meaning given in Part XX of the Financial Services
and Markets Act 2000;
firm includes any body corporate;
intervention order has the meaning ascribed to it by bye-law 9(d);
member means any person admitted to membership of the Association in accordance
with or pursuant to these bye-laws;
month means a calendar month;
practising certificates, insolvency licences and investment business certificates mean
the certificates and licences issued by the Association pursuant to regulations made
under bye-laws 4(c), 5(c) and 6(1)(b) respectively;
public practice has the meaning ascribed to it by regulations made under bye-law 4(a);
registered student means a student registered with the Association as such and includes
an affiliate;
regulation means any regulation, code of conduct or standing order made, adopted or
approved by Council in accordance with these bye-laws;
relevant firm means any firm which has undertaken to be bound by all or some of these
bye-laws;
13
1.2 Bye-laws
the Secretary means the Secretary of the Association (by whatever name known) or any
other person acting in such capacity by the direction of the Council;
specified person means, in relation to a relevant firm which is a partnership any partner
in that firm, in relation to any firm which is a body corporate a director of that firm and
in relation to any firm such other persons as may from time to time be prescribed in
regulations made under bye-law 11(f);
the United Kingdom means the United Kingdom of Great Britain and Northern Ireland.
Words importing the masculine gender shall include the feminine and words in the singular
shall include the plural and vice versa. Any reference to a statutory provision shall include
where the context permits the subordinate legislation made from time to time under that
provision and any reference to a statutory provision shall include that provision as from time
to time modified or re-enacted so far as such modification or re-enactment applies or is
capable of applying to such reference.
Members
2. (a) No individual shall be eligible for membership of the Association unless he has:
(i)
passed the examination or examinations;
(ii)
undertaken the period (which shall be not less than two years in any
case, except as otherwise required by applicable law) and type or types of
accountancy experience; and
(iii)
satisfied such other requirements;
as may from time to time be prescribed by the Council, provided that where an
individual has passed an examination or examinations which in the opinion of
the Council is equivalent to the examination or examinations so prescribed by the
Council, the Council may treat him as having passed such prescribed examination or
examinations.
(b) On admission to membership individuals shall become Members of the Association
and individuals who have been Members continuously for a period of five years (or
such other period as may be prescribed in regulation) shall advance to fellowship and
become Fellows of the Association.
(c) Every member may denote his membership of the Association by the use of the
professional designations Chartered Certified Accountant or Certified Accountant
and/or the designatory letters FCCA in the case of Fellows and ACCA in the
case of Members. Every person admitted as an honorary member in accordance
with regulations prescribed by the Council may denote his status as such by the
designation Hon. FCCA. An honorary member shall not be treated as a member for
the purposes of the Charter and bye-laws or regulations made hereunder except to
the extent they specifically otherwise provide.
(d) The Council shall from time to time prescribe or provide for in regulations:
14
Bye-laws 1.2
(i)
the conditions a person must satisfy to gain admission to membership of
the Association, which conditions may prescribe different requirements for
different classes of persons and include provision for reciprocal and honorary
membership for persons who may not have satisfied the requirements of byelaw 2(a);
(ii)
the qualifications of the Association available to members and other persons,
provided that the only designation and designatory letters which by virtue of
membership of the Association may be used by members shall be as set out in
bye-law 2(c);
(iii)
the procedure for making application for membership of the Association and by
which the Association shall determine the success of such applications and the
procedure for notifying successful applicants, which may include the issuance
of a certificate in such form as the regulations may prescribe;
(iv)
the obligations applicable to a member, including (without limitation)
the paying of admission fees and annual subscriptions, the undertaking
of continuing professional development and the notifying of a member’s
addresses and occupation, provided that any regulation prescribing or providing
for the paying of admission fees and annual subscriptions in excess of 105% of
the admission fees or, as the case may be, annual subscriptions in force prior
to such regulation shall be subject to the approval of the Association in general
meeting by resolution passed by not less than two thirds of the members
entitled to vote and voting on such resolution;
(v)
the maintenance by the Association of a register of members’ names and
addresses and of other information in relation to them as specified by the
regulations;
(vi)
the procedure for retiring from membership of the Association and the
limitations on a member’s right to retire where he is liable to disciplinary
action, the circumstances in which a member shall automatically cease to be
a member, and the circumstances in which and procedure whereby a former
member may re-apply for admission to membership of the Association; and
(vii) such other matters relating to or connected with membership of the
Association as the Council shall in its discretion consider necessary or
desirable.
Students
3. The Council shall from time to time prescribe or provide for in regulations:
(a) the conditions a person must satisfy to become and remain a registered student,
which conditions may prescribe different requirements for different classes of
persons, which may include a requirement that he undertake to be bound by the
Charter, these bye-laws and all applicable regulations made hereunder;
(b) the way in which a registered student may describe himself whilst being a registered
student, including whilst being an affiliate, and the qualifications of the Association
available to registered students and other persons;
15
1.2 Bye-laws
(c) the procedure for making application to become a registered student and by which
the Association shall determine whether or not to accept such application and the
procedure for notifying successful applicants, which may include the issuance of a
certificate in such form as the regulations may prescribe;
(d) the examinations of the Association and all matters related thereto, including (without
limitation) as to the appointment of examiners;
(e) the obligations applicable to a registered student, including (without limitation) the
payment of fees, exam fees and annual subscriptions, the restrictions on description
applicable to him and on the work that may be carried on by him and the notification
of the Association of his address and occupation;
(f) the maintenance by the Association of a register of registered students’ names and
addresses and of other information in relation to them as specified by the regulations;
(g) the procedure for seeking removal from the register of registered students and
the circumstances in which the right to be so removed shall be restricted, the
circumstances in which a registered student shall automatically cease to be a
registered student, and the circumstances in which and procedure whereby a former
registered student may re-apply to become a registered student; and
(h) such other matters relating to or connected with registered students as the Council
shall in its discretion consider necessary or desirable.
Certificates
Practising certificates
4. The Council shall from time to time make all such regulations as it shall consider
necessary or desirable in connection with the Association’s acting as a recognised
supervisory body, and as a qualifying body offering a recognised professional qualification,
within the meaning of the Companies Act 1989, or otherwise relating to the carrying on of
public practice or other activities in the United Kingdom or elsewhere. Such regulations may
(without limitation) prescribe or provide for:
(a) the restrictions applicable to members and other individuals and firms who are
subject to the regulations in the conduct of public practice, which restrictions may
include restrictions on a member being connected with a firm which, or another
person in relation to which, carries on public practice, and the meaning or meanings
of public practice for this purpose and the purposes of these bye-laws;
(b) the qualifications which a person subject to the regulations must hold to be eligible
to accept an appointment as company auditor, and the conditions which a firm
subject to the regulations must satisfy to be so eligible, including (without limitation)
conditions concerning the qualifications of persons responsible for company audit
work on behalf of the firm and the control of the firm, and the examinations and other
requirements of the Association’s recognised professional qualification (within the
meaning of the Companies Act 1989);
16
Bye-laws 1.2
(c) the conditions for the grant, suspension, withdrawal, application of conditions to and
renewal of practising certificates, which may provide for different types of certificate
to be issued to different classes of person, the manner in which an application for a
practising certificate shall be made, the procedure for appealing against a decision on
such an application, the period of time for which a practising certificate shall remain
valid and the fees payable for the issue or renewal of a practising certificate;
(d) the rules applicable to the holder of a practising certificate, including without
limitation to the conduct of public practice and related activities;
(e) the acceptance of undertakings or agreements from persons other than members of
the Association as a condition for the issuance of a practising certificate to them or to
another person; and
(f) the monitoring of compliance by persons subject to the regulations with the
requirements of the regulations.
Insolvency licences
5. The Council shall from time to time make all such regulations as it shall consider
necessary or desirable in connection with the Association’s acting as a recognised
professional body within the meaning of the Insolvency Act 1986. Such regulations may
(without limitation) prescribe or provide for:
(a) the restrictions applicable to members and other persons who are subject to the
regulations in their acting as an insolvency practitioner within the meaning of the
Insolvency Act 1986, which restrictions may include restrictions on a member being
connected with a firm another person in relation to which acts as an insolvency
practitioner (as so defined) and restrictions on the carrying on of other similar
activities;
(b) the qualifications which a person subject to the regulations must hold to be eligible to
act as an insolvency practitioner (as so defined);
(c) the conditions for the grant, suspension, withdrawal, application of conditions to and
renewal of insolvency licences, which may provide for different types of certificate to
be issued to different classes of person, the manner in which an application for an
insolvency licence shall be made, the procedure for appealing against a decision on
such an application, the period of time for which an insolvency licence shall remain
valid and the fees payable for the issue or renewal of an insolvency licence;
(d) the rules applicable to holders of an insolvency licence issued by the Association
including (without limitation) to his acting as an insolvency practitioner within the
meaning of the Insolvency Act 1986;
(e) the acceptance of undertakings or agreements from persons other than members of
the Association as a condition for the issuance of an insolvency licence to them or to
another person; and
(f) the monitoring of compliance by persons subject to the regulations with the
requirements of the regulations.
17
1.2 Bye-laws
Investment business
6. (1) Investment business certificates
The Council shall from time to time make all such regulations as it shall consider necessary
or desirable in connection with the Association’s acting as a recognised professional
body within the meaning of the Financial Services Act 1986 or as a similar body under
corresponding or similar legislation applicable outside the United Kingdom. Such regulations
may (without limitation) prescribe or provide for:
(a) the restrictions applicable to members and other individuals and firms who are
subject to the regulations in the conduct of investment business within the meaning
of the Financial Services Act 1986, which restrictions may include restrictions
on a member being connected with a firm which, or another person in relation to
which, carries on investment business (within the meaning of that Act) in the United
Kingdom;
(b) the conditions for the grant, suspension, withdrawal, application of conditions to and
renewal of investment business certificates issued by the Association, which may
provide for different types of certificate to be issued to different classes of person, the
manner in which an application for an investment business certificate shall be made,
the procedure for appealing against a decision on such an application, the period
of time for which an investment business certificate shall remain valid and the fees
payable for the issue or renewal of an investment business certificate;
(c) the acceptance of undertakings or agreements from persons other than members of
the Association as a condition for the issuance of an investment business certificate
to them or to another person;
(d) the rules applicable to the holder of an investment business certificate issued by
the Association, including (without limitation to) the conduct of investment business
(within the meaning of the Financial Services Act 1986) and related activities;
(e) the monitoring of compliance by persons subject to the regulations with the
requirements of the regulations;
(f) the establishment of a compensation scheme for the compensation of investors who
suffer loss in connection with the activities of a holder of an investment business
certificate issued by the Association; and
(g) similar matters to those set out in paragraphs (a) to (f) of this bye-law relating to the
Association acting as a body under such corresponding or similar legislation.
(2) Exempt regulated activities
The Council may from time to time make all such regulations as it shall consider necessary or
desirable in connection with the Association’s acting as a designated professional body within
the meaning of the Financial Services and Markets Act 2000 or as a similar body under
corresponding or similar legislation applicable outside the United Kingdom. Such regulations
may (without limitation) prescribe or provide for:
18
Bye-laws 1.2
(a) the restrictions applicable to members and other individuals and firms who are
subject to the regulations in the conduct of exempt regulated activities, which
restrictions may include restrictions on a member being connected with a firm which,
or another person in relation to which, carries on exempt regulated activities;
(b) the conditions and eligibility criteria for carrying on exempt regulated activities;
(c) the acceptance of undertakings or agreements from persons other than members of
the Association;
(d) the rules applicable to the member or other person including (without limitation) the
conduct of exempt regulated activities and related activities;
(e) the monitoring of compliance by persons subject to the regulations with the
requirements of the regulations;
(f) the establishment of a compensation scheme for the compensation of investors who
suffer loss in connection with the activities of a person subject to the regulations; and
(g) similar matters to those set out in paragraphs (a) to (f) of this bye-law 6(2) relating to
the Association acting as a body under such corresponding or similar legislation.
General
7. (a) The Charter, bye-laws and applicable regulations for the time being in force shall
apply to each member on and following his admission and, insofar as the Charter,
bye-laws and such regulations provide, following his ceasing to be a member. In
addition, the Charter, bye-laws and applicable regulations shall similarly apply to
each person who undertakes or agrees to be bound by them.
(b) Any person ceasing by death, resignation or otherwise to be a member of the
Association shall not, nor shall his representatives, have any claim upon or interest in
the funds of the Association.
Liability to disciplinary action
8. (a) A member, relevant firm or registered student shall, subject to bye-law 11, be liable
to disciplinary action if:
(i)
he or it, whether in the course of carrying out his or its professional duties or
otherwise, has been guilty of misconduct;
(ii)
in connection with his or its professional duties, he or it has performed his
or its work, or conducted himself or itself, or conducted his or its practice,
erroneously, inadequately, inefficiently or incompetently;
(iii)
he or it has committed any breach of these bye-laws or of any regulations
made under them in respect of which he or it is bound;
(iv)
in the case of a relevant firm, any person has in the course of the business of
that firm committed any breach of these bye-laws or of any regulations made
under them in respect of which that person is bound;
19
1.2 Bye-laws
(v)
he is a specified person in relation to a relevant firm against which a
disciplinary order has been made and which has become effective or which
has been disciplined by another professional body or pursuant to some other
disciplinary process;
(vi)
he or it has been disciplined by another professional body or pursuant to some
other disciplinary process;
(vii) he or it has made an assignment for the benefit of creditors, or has made an
arrangement for the payment of a composition to creditors, or has had an
interim order made by the court in respect of him, or is a specified person in
relation to a relevant firm which has made such an assignment or composition
or been wound up as an unregistered company, or entered into a voluntary
arrangement, administration or liquidation, in each case where applicable
under the Insolvency Act 1986, or other similar or analogous event has
occurred in relation to him or it under applicable legislation; or
(viii) he or it has failed to satisfy a judgment debt without reasonable excuse for
a period of two months (and the fact that he or it did not have sufficient
funds to discharge the debt shall not be a reasonable excuse for this purpose)
whether or not the debt remains outstanding at the time of the bringing of the
disciplinary proceedings hereunder.
(b) Each of the paragraphs in bye-law 8(a) shall be without prejudice to the generality of
any of the other paragraphs therein.
(c) For the purposes of bye-law 8(a), misconduct includes (but is not confined to) any act
or omission which brings, or is likely to bring, discredit to the individual or relevant
firm or to the Association or to the accountancy profession.
(d) For the purposes of bye-law 8(a), in considering the conduct alleged (which may
consist of one or more acts or omissions), regard may be had to the following:
(i) whether an act or omission, which of itself may not amount to misconduct,
has taken place on more than one occasion, such that together the acts or
omissions may amount to misconduct;
(ii)
whether the acts or omissions have amounted to or involved dishonesty on the
part of the individual or relevant firm in question;
(iii)
the nature, extent or degree of a breach of any code of practice, ethical or
technical, adopted by the Council, and to any regulation affecting members,
relevant firms or registered students laid down or approved by Council.
(e) The following shall be conclusive proof of misconduct:
(i) 20
the fact that a member, relevant firm or registered student has pleaded guilty
to, or been found guilty of, any offence discreditable to him or, as the case may
be, it, or derogatory to the Association or the accountancy profession, before
a court of competent jurisdiction in the United Kingdom or before a court of
competent jurisdiction in any other country where such court’s judgments are
in the opinion of Council (or relevant committee of Council) relevant;
Bye-laws 1.2
(ii) the fact that a member, relevant firm or registered student has been found to
have acted fraudulently or dishonestly in any civil proceedings before any court
of competent jurisdiction in the United Kingdom or before a court of competent
jurisdiction in any other country where such court’s judgments are enforceable
in the United Kingdom.
Disciplinary process
9. The Council shall, from time to time, prescribe in regulations the procedures (including
relating to the hearing of appeals) whereby a person subject to bye-law 8 may be disciplined
and as to all other matters pertaining thereto. Such regulations shall provide that such
a person shall have the right to be given notice of any disciplinary proceedings which it
is proposed should be brought against him or it, the right to be represented at any such
disciplinary proceedings, the right to call and cross-examine any witness at such disciplinary
proceedings and a right of appeal against any disciplinary order made against him or it.
In addition, such regulations shall provide that any committee able to make or confirm a
disciplinary order shall include a person or persons who are not members of the Association
and shall not be quorate in the absence of such a person. Where the Association participates
with other professional accountancy bodies in such a scheme as is referred to in Article
4(s) of the Charter, such regulations shall provide for the referral of relevant cases by the
Association to and in accordance with such scheme and all other matters relevant thereto.
In particular (but without limitation) such regulations may prescribe or provide for:
(a) the committees (consisting of members and/or other persons) or the individuals to
whom Council may delegate the responsibility of determining whether or not a person
subject to bye-law 8 is to be disciplined, the making of disciplinary orders (including
consent orders) against persons who it is found are liable to disciplinary action and
the making of intervention orders in appropriate circumstances, the method, timing
and terms of appointment, constitution (where relevant), quorum (where relevant),
powers, and responsibilities of each such committee or individual, and whether any
such committee or individual is to be empowered to make any further regulations
concerning any such matter or any of the other matters mentioned in this bye-law;
(b) the procedures to be followed by each such committee and in the preparation of
cases to be heard by any of them, the manner in which cases may be presented
to them and the circumstances in which matters are to be referred to them for
consideration, which may include (without limitation) procedures for the hearing of
cases in an expedited manner;
(c) the orders (“disciplinary orders”) which may be made against a person in respect of
whom a complaint is found proved in whole or in part, which without limitation may
include an order that a person be excluded from membership, that any certificate
issued by the Association to the person be withdrawn and that a fine be imposed on
the person, which may be unlimited in amount, or be up to such maximum amount
as may from time to time be prescribed by such regulations, and the times at which
such disciplinary orders are to become effective;
(d) the making of certain types of disciplinary orders as specified in the regulations
with the consent of the person concerned (“consent orders”), and the making in
circumstances where it appears to be urgent for the protection of the public or
21
1.2 Bye-laws
members or both an order on a person requiring him to take such action as is
specified in the order (“intervention orders”), which orders may be made without
conducting the full disciplinary procedures which would apply in other circumstances;
(e) subject to bye-law 8(c), guidance as to the meaning of misconduct or other
expression used in bye-law 8 and the relevance for disciplinary purposes of a person
subject to bye-law 8 being found guilty of a criminal offence or having any matter
found against him in any civil proceedings or being subject to discipline from a
tribunal or other body in any such case whether in the United Kingdom or elsewhere;
(f) disciplinary proceedings (including the hearing of appeals) in respect of students
where the alleged misconduct relates to examinations;
(g) the circumstances in which appeals against a disciplinary order may be brought and
the procedures for dealing with such appeals;
(h) the making of orders as to costs, which may provide for different orders in respect of
individuals and firms; and
(i) the publication of disciplinary orders in those cases where a complaint is found
proved in whole or in part.
Obligation to co-operate and inform
10.(a) Every member, relevant firm and registered student shall, and every member shall
use his best endeavours to ensure that every firm (whether or not a relevant firm)
in relation to which he is a specified person shall, at all times, co-operate with the
Council and the committees and/or individuals appointed by it under bye-law 9 in the
administration of the Association’s disciplinary process.
(b) It shall be for every member and for any person to bring to the attention of the
Secretary any facts or matters indicating that a member or relevant firm or registered
student may have become liable to disciplinary action: and in any such case the
Secretary shall lay the facts and matters before the relevant committee of Council or
individual if he or she is of the opinion that the complaint ought to be investigated by
that committee or individual.
Application and interpretation
11. Bye-laws 8 to 10 shall apply and be interpreted as follows:
(a) A member, relevant firm and registered student shall be liable to disciplinary action
whether or not he was a member or registered student or (as the case may be) it was
a relevant firm at the time of the occurrence giving rise to such liability.
(b) A member, relevant firm and registered student shall continue to be liable to
disciplinary action after his or its ceasing to be a member, relevant firm or registered
student in respect of any matters which occurred whilst he was actually a member,
relevant firm or registered student and in respect of which a complaint is referred
to the committee responsible for hearing the complaint, or disciplinary action is
otherwise commenced, within five years of his or its so ceasing to be a member,
relevant firm or registered student (as the case may be).
22
Bye-laws 1.2
(c) For the avoidance of doubt, a person shall be liable to disciplinary action in
accordance with the bye-laws and regulations in force at the time the matters
complained of took place. All disciplinary proceedings, however, shall (for the
avoidance of doubt) be conducted in accordance with the bye-laws and regulations in
force at the time of such proceedings.
(d) Bye-laws 8 to 10 shall, so far as they are capable of doing so, apply to a specified
person (not being a member in public practice) in relation to a relevant firm in respect
only of the undertakings given by that specified person to, and agreements made by
that specified person with, the Association.
(e) In the case of a relevant firm in relation to which there is a specified person or
specified persons other than members in public practice, the provisions of bye-laws
8 to 10 shall apply to that relevant firm in respect only of the undertakings which
have been given to the Association and agreements which have been made with the
Association by it or by each such specified person who is not a member in public
practice, but this paragraph shall not in any way restrict the application of those
bye-laws to a member in public practice who is a specified person in relation to such
relevant firm.
(f) The Council may from time to time by regulation prescribe the persons (additional
to partners in a firm which is a partnership and directors of a firm which is a body
corporate) who are in these bye-laws to be specified persons in relation to a firm and
such regulations may prescribe different persons as specified persons for different
purposes.
(g) For the purposes of this bye-law and bye-laws 8 to 10, “member” includes an
individual (not being a member as defined in bye-law 1) who has undertaken to
be bound by, inter alia, such bye-laws and such bye-laws shall apply to such an
individual insofar as the same are capable of doing so, mutatis mutandis, as they
apply to a member as defined in bye-law 1.
Appointment of regulatory board
12. The Council shall appoint a regulatory board, which shall have a lay chairman and a
majority of lay members. The regulatory board shall be instructed to report to the Council
not less than once a year on the operation of the Association’s disciplinary and regulatory
procedures adopted pursuant to or for the purposes of the Association’s bye-laws and
regulations and its recognition under statute. The regulatory board shall undertake such other
functions as the Council may from time to time specify. The Council shall have power to pay
remuneration to and the reasonable expenses of the lay members of the regulatory board.
Elections and Appointments to Council
13. The Council shall be elected by the Association in accordance with the procedures
provided for in these bye-laws from among the members of the Association.
14. Subject to the provisions of the bye-laws the number of members of the Council shall not
be less than 30 nor more than 36.
23
1.2 Bye-laws
15. Any member of the Association shall be eligible for election (which shall include reelection) as a member of the Council, provided that:
(a) at the date of his nomination for election, or of his written notice of intention to
offer himself for re-election (as the case may be), he is by reason of mental disorder
neither detained in a hospital nor subject to guardianship pursuant to Part II or Part
III of the Mental Health Act 1983, nor subject to any similar supervision in any other
jurisdiction; and
(b) no disciplinary order (which for the purposes of bye-laws 13 to 26 shall be taken to
include any order made pursuant to any joint disciplinary scheme operated by the
Association with any other bodies) excluding him from membership or removing him
from the student register has ever been made against him and become effective; and
(c) within the period of five years immediately preceding the date of his nomination, no
disciplinary order has been made against him and become effective; and
(d) as at the date of the Annual General Meeting at which the result of the election is
to be announced, he will not have served as a member of the Council for 9 years or
more, whether consecutively or otherwise; and
(e) he has been duly nominated for election in accordance with bye-law 16, or he is
exempt from nomination for election.
16. A member may be nominated for election either (a) by the Council; or (b) by 10 or more
members of the Association. Each nomination shall be in writing, shall specify the name of
the candidate and shall be signed by each of those making the nomination or (in the case of
a nomination by the Council) by the Secretary. A nomination by members of the Association
may be contained in one document or in several documents in like form each signed by one
or more of those making the nomination. A member of the Council who is retiring pursuant to
bye-law 18 and intends to seek re-election shall be exempt from nomination, but shall give
written notice to the Secretary of his intention so to offer himself. There shall be appended
to each nomination a declaration, signed by the candidate, of his willingness to be elected
a member of the Council: and to each nomination and each notice of intention to seek
re-election a declaration signed by the candidate containing an undertaking to comply with
and be bound by Council’s standing orders adopted in accordance with bye-law 33(a) and
any Code of Practice for Council members adopted by the Council from time to time. Each
nomination, each notice of intention to seek re-election and each document required to
be appended thereto shall be in such form as may from time to time be prescribed by the
Council and shall be delivered to the Secretary not less than three months before the day
of the Annual General Meeting at which the result of the election is to be announced. Any
candidacy which does not comply with this bye-law shall be void.
17. The Council may also require a member nominated for election, or offering himself
for re-election to the Council, to make such declarations as it shall consider expedient for
determining that none of the circumstances referred to in paragraphs (a) to (d) of bye-law 15
apply to that member. If the Council thinks fit, these declarations may be embodied in any
form of nomination or notice of intention to seek re-election prescribed for the purposes of
bye-law 16. The Council shall be entitled to rely upon the truth of any declarations made by
a member pursuant to bye-law 15 or to bye-law 16 and to reject the nomination or notice
24
Bye-laws 1.2
of intention to seek re-election of any member who declines to make any such declaration
or makes a false or inaccurate declaration. If any member is elected a member of the
Council and one or more of his declarations pursuant to bye-law 15 was false or inaccurate
and he would have been ineligible for election had such declaration been made truthfully
or accurately, the Council shall declare the election of that member void. But any such
declaration shall be without prejudice to the operation of bye-law 37 and shall not affect
the validity of the election of any other member as a member of the Council. The vacancy
arising as a result of any such declaration shall be treated as a casual vacancy. Each member
of Council who is not retiring at the conclusion of an Annual General Meeting shall (i) notify
the Secretary of his practising status and eligibility for appointment as a company auditor
as at the date three months before the day of the Annual General Meeting not less than two
weeks after such date and he shall be treated for the purposes of these bye-laws as holding
such status and eligibility until any amending notice is served under this bye-law in any
subsequent year, and (ii) submit to the Secretary a signed undertaking to comply with and be
bound by Council’s standing orders adopted in accordance with bye-law 33(a) and any Code
of Practice for Council members adopted by Council from time to time.
18. At each Annual General Meeting of the Association there shall retire from office (a)
any member of the Council appointed pursuant to bye-law 22; and (b) any other member
of the Council who did not retire from office at either of the two Annual General Meetings
immediately preceding the present one; and (c) any member who, as at the Annual General
Meeting, will have served as a member of the Council for 9 years or more, whether
consecutively or otherwise, provided that bye-laws 18(b) and (c) shall not apply to the
Deputy-President, Vice-President or the Council’s preferred nominee for Vice-President
(which nomination is subject to his formal appointment in accordance with bye-law 20).
Subject to these bye-laws, the Association may re-elect any person so retiring or elect
another member of the Association to fill his place. A retiring member of the Council shall
retain office until the conclusion of the general meeting at which he retires.
19. At each Annual General Meeting there shall be declared the names of any persons who
shall have been elected members of the Council in accordance with the following provisions
of this bye-law.
(a) If the number of candidates duly nominated or seeking re-election is equal to or
less than the number of vacancies to be filled, all such candidates shall be declared
elected at such Annual General Meeting.
(b) If no declaration of elected candidates can be made in accordance with paragraph
(a) of this bye-law, the election shall be made by ballot and the result shall be
announced at the Annual General Meeting.
(c) If a ballot shall be necessary the Secretary shall cause the name of each candidate to
be entered in the ballot paper. That paper shall be in a form approved by the Council.
There shall be appended to the ballot paper short biographical notes respecting each
candidate and such other information as the Council may direct.
(d) One such ballot paper shall be sent to each member of the Association not less than
28 days prior to the Annual General Meeting at which the result of the election is to
be declared.
25
1.2 Bye-laws
(e) A member shall be entitled to vote for any number of candidates up to but not
exceeding the number of vacancies to be filled, but shall not cast more than one vote
in respect of each candidate.
(f) A member may irrevocably nominate in his ballot paper some person (his “delegate”),
being a member of the Association, to cast some or all of his votes on his behalf.
Such a member, having made his nomination, shall send his ballot paper (marked
with any votes which he has himself cast) to the delegate. The delegate shall be
entitled to exercise his discretion as to how and to what extent he casts the votes
delegated to him.
(g) Each ballot paper shall state the last date on which it may be returned to the
Scrutineer appointed as described in paragraph (i) of this bye-law by a member or his
delegate. Such last date shall be at least 7 days before the Annual General Meeting
at which the result of the election is to be declared.
(h) Any ballot paper which does not comply with this bye-law shall be void.
(i) The President shall in good time prior to any ballot appoint (if not already appointed)
an independent body of good repute to act as scrutineer (the “Scrutineer”) in relation
to the ballot to perform the functions described in this bye-law. The Scrutineer shall
be responsible for:
(i)
receiving ballot papers and determining which are void;
(ii)
counting the votes duly cast;
(iii)
determining which candidates have been successful in the election in
accordance with the requirements of paragraph (j) of this bye-law, including by
the drawing of lots, if applicable;
(iv)
providing a written report to the President on the result of the ballot; and
(v)
retaining all ballot papers received for a period of one month after the relevant
Annual General Meeting.
In so acting, the Scrutineer’s decision on any matter shall be final and binding upon
the Association save in the case of manifest error. The Scrutineer shall perform each
of the above responsibilities by the time specified by the President.
(j) The successful candidates in the election shall be those who attained respectively
the greatest number of votes cast, the next greatest number, and so on in descending
order until the number of vacancies has been filled. If as between two or more
candidates for a vacancy or vacancies there is an equality of votes, the successful
candidate or candidates shall be chosen by lot.
20. At the first meeting of the Council after each Annual General Meeting of the Association,
the members of the Council then present shall choose from among their number a President,
a Deputy-President and a Vice-President, each of whom shall act in his office until the first
to occur of his resigning that office, his ceasing to be a member of the Council and the close
of the next Annual General Meeting. Any casual vacancy in these offices shall be filled for the
current year in like manner at the next meeting of the Council after the occurrence of such
26
Bye-laws 1.2
vacancy. Notice of such meeting and of the existence of any such vacancy shall be given to
all members of the Council.
21. The members of the Council may act and exercise all their powers notwithstanding that
there shall be any vacancy in their body (including any vacancy left unfilled following an
election at an Annual General Meeting): provided that, if and so long as their number is
reduced below 30, they may act for the purpose of filling vacancies, or of summoning a
general meeting of the Association, or of dealing with emergencies but for no other purpose.
22. Any casual vacancy in the Council may be filled by the appointment of any member
of the Association by the Council and, if the number of members of the Council is reduced
below 30, such number of vacancies shall be filled by the Council as is necessary to increase
the number of members to 30: provided that a person shall not be so appointed if:
(a) he is by reason of mental disorder either detained in a hospital or subject to
guardianship pursuant to Part II or Part III of the Mental Health Act 1983 or is
subject to similar supervision in any other jurisdiction; or
(b) there has ever been made in respect of him a disciplinary order excluding him from
membership or removing him from the student register which has become effective;
or
(c) there has within the period of five years immediately preceding the date of his
proposed appointment been made in respect of him any disciplinary order which has
become effective; or
(d) as at the date of his appointment, the member has served as a member of
the Council for 9 years or more, whether as an elected or appointed member,
consecutively or otherwise.
For the purpose of determining that a person is eligible for appointment as a member of the
Council in accordance with this bye-law, the Council may require such person to make such
declarations as it shall consider expedient, and shall be entitled to rely upon the truth of any
declaration so made. If any such person is appointed a member of the Council and one or
more of his declarations made with respect to paragraphs (a) to (c) (inclusive) of this bye-law
is false or inaccurate and he would have been ineligible for appointment had such declaration
been made truthfully or accurately the Council shall declare the appointment of that member
void. But any such declaration shall be without prejudice to the operation of bye-law 37.
The vacancy arising as a result of any such declaration shall be treated as a casual vacancy.
Every person appointed as a member of the Council in accordance with this bye-law shall
be required to make a declaration containing an undertaking to comply with and be bound
by Council’s standing orders adopted in accordance with bye-law 33(a) and any Code of
Practice for Council members adopted by the Council from time to time. Any appointment
which does not comply with this requirement shall be void.
23. In addition to members of the Council who have been elected in accordance with these
bye-laws or appointed by the Council pursuant to bye-law 22, the Council may at any time
appoint or reappoint any member of the Association to the Council, provided that a person
shall not be so appointed if:
27
1.2 Bye-laws
(a) he is by reason of mental disorder either detained in a hospital or subject to
guardianship pursuant to Part II or Part III of the Mental Health Act 1983 or is
subject to similar supervision in any other jurisdiction; or
(b) there has ever been made in respect of him a disciplinary order excluding him from
membership or removing him from the student register which has become effective;
or
(c) there has within the period of five years immediately preceding the date of his
proposed appointment been made in respect of him any disciplinary order which has
become effective; or
(d) such appointment would result in the number of members appointed to the Council
other than to fill a casual vacancy exceeding 4; or
(e) as at the date of his appointment, the member has served as a member of
the Council for 9 years or more, whether as an elected or appointed member,
consecutively or otherwise.
Any appointment or reappointment to the Council in accordance with this bye-law shall be
for such term as the Council may in its discretion determine, subject to the provisions of
these bye-laws. For the purpose of determining that a person is eligible for appointment as a
member of the Council in accordance with this bye-law, the Council may require such person
to make such declarations as it shall consider expedient, and shall be entitled to rely on the
truth of any declaration so made. If any such person is appointed as a member of the Council
and one or more of his declarations made with respect to paragraphs (a) to (c) (inclusive) of
this bye-law is false or inaccurate and he would have been ineligible for appointment had
such declaration been made truthfully or accurately the Council shall declare the appointment
of that member void. But any such declaration shall be without prejudice to the operation of
bye-law 37. Every person appointed as a member of the Council in accordance with this byelaw shall be required to make a declaration containing an undertaking to comply with and be
bound by Council’s standing orders adopted in accordance with bye-law 33(a) and any Code
of Practice for Council members adopted by the Council from time to time. Any appointment
which does not comply with this requirement shall be void.
24. A member of the Council may give notice in writing to the Secretary of his wish to resign
from the Council, and on acceptance of his resignation by the Council his office shall become
vacant. A member of the Council who shall resign under this bye-law shall not thereby be
disqualified from being at any time thereafter re-elected or reappointed.
25.(a) The Association may by resolution in general meeting passed by a majority of those
entitled to vote and voting at it remove a member of the Council from his office.
(b) Notice of intention to move any such resolution shall be given to the Secretary not
less than 28 days before the meeting at which it is to be moved, and the Secretary
shall give members notice of such resolution at the same time and in the same
manner as he shall give notice of the meeting. On receipt of notice of such an
intended resolution the Secretary shall send a copy of it to the member of the Council
concerned.
28
Bye-laws 1.2
(c) A vacancy created by the removal of a member of the Council under this bye-law may
be filled as a casual vacancy.
26. A member of the Council shall vacate his office automatically if he:
(a) ceases to be a member of the Association; or
(b) is by reason of mental disorder either detained in a hospital or made subject to
guardianship pursuant to Part II or Part III of the Mental Health Act 1983 or placed
under similar supervision in any other jurisdiction; or
(c) has made against him a disciplinary order which becomes effective; or
(d) commits a serious breach of any undertaking contained in a declaration given by him
under bye-laws 16, 17, 22 or 23 as determined by Council or (for the avoidance of
doubt and without limitation of Council’s power to delegate to committees any of its
other functions and powers in accordance with bye-law 28) committee of Council to
which Council has delegated its responsibility to determine whether such a breach
has occurred; or
(e) fails to attend six consecutive meetings of the Council without prior leave of absence
from the Council.
The Council
27. Subject to the Charter and these bye-laws, the direction, control and management of
the affairs of the Association shall be vested in the Council which may for those purposes
exercise all the powers of the Association other than those which are required by the Charter
or these bye-laws to be exercised by the Association in general meeting and may from time
to time make such regulations as they may deem necessary or expedient.
Committees
28. Subject to the Charter and the bye-laws, the Council may delegate any of its functions
and powers to committees consisting of such members and other persons as it may think fit
and/or to such individuals as it may think fit. The Council shall prescribe by regulation and/or
standing order the constitution and quorum of each such committee and may prescribe the
proceedings to be followed at each such committee or by each such individual or provide
for the committee or individual to determine its or his own procedure. Council may also
prescribe the powers and responsibilities of each such committee or individual.
29. The Council may from time to time revoke all or any of the powers delegated to any
committee and discharge any committee in whole or in part.
30. Any committee, unless the Council shall otherwise prescribe, shall have power to
delegate to a sub-committee, made up of members of the delegating committee or other
persons, any of the powers conferred upon it. Any such sub-committee shall in the exercise
of the powers delegated to it conform to any regulations that may be imposed on it by the
delegating committee.
29
1.2 Bye-laws
Local branches and committees
31. The Council may form local branches and committees or appoint local representatives
in any part of the world and may dissolve any such branches or local committees or remove
such local representatives. The Council may from time to time make and vary rules for the
government and control of local branches and committees.
Proceedings of the Council
32. The Council shall meet at such times as they may deem requisite and may, subject to
these bye-laws, regulate their meetings as they think fit. On the requisition of the President or
any three members of the Council, the Secretary shall summon a meeting of the Council.
33.(a) At the first meeting of the Council after each Annual General Meeting of the
Association, the Council shall adopt standing orders for the regulation of its
proceedings. The said standing orders shall be such as the Council shall think fit,
provided that they shall in no respect be repugnant to these bye-laws.
(b) At all meetings of the Council the President, failing whom the Deputy-President,
failing whom the Vice-President, shall be Chairman. In the absence of the President,
the Deputy-President and the Vice-President, a Chairman shall be elected from
among those members of the Council present.
(c) A quorum at meetings of the Council shall be ten or such greater number as the
Council may from time to time decide.
34. Except as otherwise provided by these bye-laws every question at a meeting of the
Council shall be determined by a majority of the votes of the members present, every
member having one vote, and in case of an equality of votes the Chairman shall have a
second or casting vote.
35. Minutes of the proceedings of every meeting of the Council and of the attendance of the
members of the Council thereat shall be recorded by the Secretary in a book kept for that
purpose, and shall be signed by the chairman of the meeting at which they are read.
36. Every such minute when so signed shall in the absence of proof of error therein be
considered a correct record.
37. The members of the Council may act and exercise all their powers notwithstanding any
defect in the qualifications or appointment of all or any of them.
Staff
38. The Council shall appoint the Secretary of the Association and such other officials,
servants or agents as the Council may deem necessary on such terms and conditions as
to remuneration and otherwise as the Council shall think fit and may remove any of them.
Subject to these bye-laws, the Council shall determine the duties of the Secretary and such
other officials, servants or agents.
30
Bye-laws 1.2
Accounts and audit
39. The Council shall cause proper books of account to be kept and shall submit to the
Annual General Meeting in each year a statement of income and expenditure and a balance
sheet made up to the preceding thirty-first day of March together with the report of the
auditor or auditors thereon. A copy of the said accounts and of the report of the auditor
or auditors shall be sent to every member entitled to receive notice of the Annual General
Meeting.
40. At each Annual General Meeting the Association shall appoint one or more members
in public practice or firms either holding a practising certificate or otherwise eligible to be
appointed company auditor (within the meaning of section 24(2) of the Companies Act
1989) as the auditor or auditors of the Association to hold office until the close of the next
Annual General Meeting. The fees of the auditor or auditors shall be fixed by the Council. Any
casual vacancy in the auditors may be filled by appointment by the Council of any member in
public practice or firm which holds a practising certificate or which is otherwise so eligible.
Any member or firm so appointed shall hold office until the close of the next Annual General
Meeting.
41. None of the following shall be eligible for appointment as auditor:
(a) a member of the Council or an official or servant of the Association;
(b) a member who is a partner of or in the employment of a member of the Council or of
an official or servant of the Association.
Indemnity
42. Every member of the Council, every member of any committee or sub-committee of the
Council, every trustee, the Secretary, each other official and servant of the Association, and
each auditor:
(a) shall be indemnified by the Association from all liability, expenses or costs which by
virtue of any rule of law would otherwise attach to him in relation to the Association
unless such liability arises from his own wilful default or (in the case of any auditor)
from his own negligence or wilful default; and
(b) shall be entitled to be reimbursed by the Association the amount of any expenses
(including, in the case of a member of the Council or of any committee or subcommittee of the Council, or of trustees, his expenses of attending any meeting of the
Council or of any such committee or sub-committee or of trustees) properly incurred
by him in or about the discharge of his duties to the Association, provided that the
Council shall have power to determine, from time to time, what expenses shall be
eligible for reimbursement pursuant to this paragraph.
Investments
43.(1) All moneys of the Association not immediately required for the purposes of the
Association may be invested by the Council in any of the following:
(a) in the purchase of, or in mortgages of:
31
1.2 Bye-laws
(i)
freehold property in England and Wales or Northern Ireland;
(ii)
leasehold property in those countries of which the unexpired term at the time
of investment is not less than 60 years;
(b) in the purchase of heritable property, or of leasehold property of which the unexpired
term at the time of investment is not less than 60 years, in Scotland;
(c) in loans on heritable security in Scotland;
(d) in deposits with any recognised bank or licensed deposit taker in the United
Kingdom;
(e) in any other investment not above mentioned in which trustees are for the time being
authorised to invest trust funds (including, without limitation, in investments specified
in Schedule I of the Trustee Investments Act 1961);
(f) in the purchase of securities of any government, local authority, statutory undertaking
or company quoted on one or more of the following Stock Exchanges, namely:
Adelaide, Amsterdam, Antwerp, Brisbane, Brussels, Copenhagen, Dusseldorf,
Frankfurt, Johannesburg, Lisbon, Luxembourg, Madrid, Melbourne, Milan, Montreal,
New York, Oslo, Paris, Perth, Singapore, Stockholm, Sydney, Tel Aviv, Tokyo, Toronto,
Vienna or Zurich: provided always that at the time of the investment the paid-up
capital and capital reserves (including the share premium account and capital
redemption reserve fund) of such company shall together total one million pounds at
least or its equivalent at the rate of exchange current at the date of investment and so
that in the case of a company having shares of no par value such paid-up capital and
capital reserves shall be deemed to be the capital sum and capital surplus appearing
in the company’s published accounts (but this requirement shall not prevent an
application for and part payment in respect of shares offered for subscription to the
public if the full subscription for such shares would cause the paid-up capital and
capital reserves of the company concerned to total one million pounds at least or
such equivalent as aforesaid);
(g) in making loans (not being loans authorised by any of the foregoing paragraphs) with
or without security;
(h) in purchasing any real or personal property or interest therein, not herein before
authorised, in any part of the world.
(2) The Council may from time to time vary any investments.
(3) In any case where the Council thinks fit, investments may be made in the name of a
nominee or trustee instead of the name of the Association.
General meetings
44.(a) Unless the Council shall in any particular case otherwise determine, the Annual
General Meeting of the Association shall be held, at such place as the Council shall
appoint, on the third Thursday in September of each year. If the Council shall fix
upon some other date for an Annual General Meeting, it shall notify the members of
32
Bye-laws 1.2
the Association of that other date not later than the day which falls six months before
that date. Not more than fifteen months shall elapse between the date of one Annual
General Meeting and that of the next, with the exception of the Annual General
Meeting held in 2010.
(b) There shall be transacted at each Annual General Meeting the following business:
(i)
receiving the annual report of the Council;
(ii)
declaration of the result of any election for members of the Council;
(iii)
receiving the annual accounts of the Association and the auditors’ report on
them;
(iv)
appointment of an auditor or auditors.
All business, other than the above, to be transacted at an Annual General Meeting
and all business to be transacted at an extraordinary general meeting, shall be
deemed special business.
45. All general meetings other than the Annual General Meeting shall be called extraordinary
general meetings.
46. Any member wishing to bring before the Annual General Meeting any motion not relating
to the ordinary business of the meeting shall give notice in writing of such motion, supported
in writing by nineteen other members expressing their desire that such motion should be so
brought, all to be received by the Secretary not later than by 12.00 GMT on the first Friday
in June prior to the date of the meeting. No such notice shall be valid if any of the members
concerned shall not have paid any subscription or sum payable by him to the Association.
47. An extraordinary general meeting may at any time be called by the Council or on a
requisition addressed to the Secretary specifying the business to be brought forward and
signed by not fewer than 10 members of the Council or by not fewer than one per cent of the
members of the Association as at 1 April in the year in which the requisition is notified to the
Secretary. No such notice or requisition shall be valid if any of the members concerned shall
not have paid any subscription or sum payable by him to the Association.
48. Every extraordinary general meeting shall be held at such time and place as the Council
shall appoint provided that a meeting called on requisition shall be held within three
calendar months of the receipt of the requisition by the Secretary, in default of which the
requisitionists shall themselves be entitled to convene the meeting and to be reimbursed by
the Association in respect of any reasonable expenses thereby incurred.
49. Not less than 21 clear days’ notice of every general meeting specifying the time and
place of the meeting and in the case of special business the nature of such business shall be
given to every member. In the case of an Annual General Meeting, the Secretary shall also
send to each such member with such notice a copy of the annual report of the Council, a
copy of the annual accounts of the Association with the auditors’ report thereon and a list
of the persons nominated for membership of the Council and as auditors. The accidental
omission to give any notice to or the non-receipt of any notice by any such member shall not
invalidate the proceedings at any such meeting.
33
1.2 Bye-laws
Proceedings at general meetings
50. At all general meetings the President, failing whom the Deputy-President, failing whom
the Vice-President shall be Chairman; in the absence of the President, the Deputy-President
and the Vice-President, the Chairman shall be a member of the Council elected by the
members of the Council present. In the absence of any member of the Council the Chairman
shall be elected by the members present from among themselves.
51. Twenty members present in person shall be a quorum at any general meeting. Unless the
requisite quorum shall be present within 15 minutes after the time appointed for the meeting,
the meeting shall (unless convened on requisition) stand adjourned for a fortnight, and be
then held at the same time and place, and the business on the agenda paper, but no other,
shall then be disposed of by the members present in person or by proxy, who shall constitute
a quorum. Unless a quorum be present at any general meeting convened on the requisition
of members within 15 minutes after the time appointed for the meeting, the meeting shall be
dissolved.
52. The Chairman of any meeting may, with the consent of the meeting, adjourn the meeting
from time to time, and from place to place, but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the meeting from which the
adjournment took place. No notice shall be given of any adjourned meeting unless it is so
directed in the resolution for adjournment.
53. Subject to a poll being demanded as hereinafter mentioned every question to be decided
by any general meeting, unless resolved on without dissent, shall be decided on a show of
hands.
54. Unless a poll be demanded (before or on the declaration of the result of the show of
hands) by the Chairman or by at least twenty members of the Association present in person
or by proxy, a declaration by the Chairman that on a show of hands a resolution has been
carried or carried by a particular majority or lost and entry to that effect made in the minutes
of the proceedings of the meeting shall be conclusive evidence of the fact so declared without
proof of the number or proportion of votes given for or against the resolution.
55. No poll shall be taken as to the election of a Chairman or the appointment of the
Scrutineer appointed in accordance with bye-law 56 or on a question of adjournment
and notwithstanding a demand for a poll the meeting shall continue for the transaction of
business other than the question in respect of which a poll has been demanded.
56. On a poll being demanded as aforesaid, it shall be taken at such time (either at the
meeting at which the poll is demanded or within 21 days after the said meeting) and place
and in such manner as the Chairman shall direct and the result of the poll shall be deemed
to be the resolution of the meeting at which the poll was demanded. The Chairman shall
(if he has not already done so) appoint an independent body of good repute to act as
scrutineer (the “Scrutineer”) in relation to the taking of any such poll. The Scrutineer shall be
responsible for:
(a) receiving any instrument of proxy deposited or sent in accordance with bye-law 61
and relating to the vote and collecting all voting papers utilised at the meeting at
which the poll is taken and determining which are valid and duly completed;
34
Bye-laws 1.2
(b) counting the votes duly cast;
(c) providing a written report to the Chairman on the result of the poll; and
(d) retaining all instruments of proxy and such voting papers for a period of one month
after the date of the taking of the poll.
In carrying out its responsibilities under this bye-law, the Scrutineer’s decision on any
matter shall be final and binding upon the Association save in the case of manifest error.
The Scrutineer shall perform each of the above responsibilities by the time specified by the
Chairman.
The result of the poll shall be communicated to members in such manner as the Chairman
shall direct.
57. In the case of an equality of votes either on a show of hands or at a poll the Chairman of
the meeting shall be entitled to a second or casting vote.
58. On a show of hands every member present in person shall have one vote and on a poll
every member present in person or by proxy shall have one vote.
59. No member shall be entitled to be present or to vote at any general meeting who is in
arrears with any subscription or sum payable by him to the Association.
60. A member entitled to vote may appoint as his proxy any other member who is qualified
to vote.
61. Every instrument of proxy shall be in writing and shall be signed by the appointer or his
attorney and together with the power of attorney (if any) under which it is signed, shall be
deposited with or sent to the Scrutineer appointed in accordance with bye-law 56 so as to
be received at least 7 days before the time for holding the meeting or adjourned meeting at
which it is to be acted on or, in the case of a poll, before the time appointed for the taking of
the poll.
62.(a)An instrument appointing a proxy shall be in the following form or as near thereto as
circumstances admit or in such form as the Council may from time to time prescribe
or accept:
“The Association of Chartered Certified Accountants
I ................................................... of ......................................................
being a member of the above named Association hereby appoint
................................................ or failing him ..............................................
each of whom is a member of the said Association as my proxy to vote for me on my
behalf at the (Annual) (Extraordinary) General Meeting of the said Association to be
held on the ................................ day of ................................. .....................
and at any adjournment thereof.
This form is to be used in respect of the resolution(s) below-mentioned as follows:-
35
1.2 Bye-laws
Resolution No. 1 ... *For/Against
Resolution No. 2 ... *For/Against
*Strike out whichever is not desired.
Unless otherwise instructed the proxy will vote as he thinks fit.
Signed this ............. day of ................................. .........”
(b) The instrument appointing a proxy shall be deemed to include authority to demand or
join in demanding a poll.
(c) A vote given under the terms of an instrument of proxy shall be valid notwithstanding
the death or insanity of the appointer or the revocation of the proxy or of the
authority under which the same was executed provided that the Scrutineer appointed
in accordance with bye-law 56 shall have received no intimation in writing of such
death, insanity or revocation up to the time of the commencement of the meeting at
which the proxy is used.
63. No objection shall be made to the validity of any vote except at the meeting or poll at
which such vote be tendered, and every vote not disallowed at such meeting or poll shall
be valid. The Chairman at the meeting shall be the sole and absolute judge of the validity of
every vote tendered at any meeting or poll.
64. Every entry in the minute book of the proceedings of general meetings purporting to
be signed by the Chairman of the meeting to which they relate or by the Chairman of a
subsequent general meeting shall be sufficient evidence of the facts therein stated.
Common Seal
65. The Common Seal of the Association shall not be affixed to any instrument except with
the authority of the Council and in the presence of two members thereof at least and all
such instruments shall be signed by such members of the Council and countersigned by
the Secretary or such other official of the Association as the Council shall authorise for this
purpose.
66. A separate book shall be kept, in which shall be entered a short title and description of
every instrument to which the Seal is affixed together with the date of the minute authorising
the same and such entry shall be signed by the members of the Council who attest the
execution of the document under the Seal of the Association and countersigned by the
Secretary.
Notices
67. Any notice or other document required to be given to a member may be given to him
personally or by sending it by post to his registered place of address. Any notice or other
document required to be given to a relevant firm may be given to it by delivering it or sending
it by post to the registered place of address of any member who is a specified person in
relation to that relevant firm. Where a notice is sent by post, service thereof shall be deemed
to be effected by properly addressing, prepaying and posting a letter containing the same and
to have been effected at the expiration of 72 hours after such letter was posted.
36
Bye-laws 1.2
68. A member who has failed to give a registered address shall not be entitled to receive any
notice or document, but any notice or other document which the Association shall deliver or
send by post to the address of such member last known to the Association shall be deemed
to have been validly given. The accidental omission to send any notice or document to, or the
non-receipt of any notice or document by, any member entitled to receive the same shall not
invalidate the proceedings at any meeting to which they relate.
69. Any notice or document required to be given to the Association may be given by sending
it by post to the Secretary at the principal office of the Association or such other address as
the Council may from time to time designate.
70. The Council may prescribe by regulation that a document, notice, nomination, ballot
paper or other thing required by these bye-laws may be in electronic form and delivered by
electronic means. Such regulations may provide different requirements for different types of
document, notice, nomination, ballot paper or thing.
71. The Council may prescribe by regulation that any person entitled to attend, participate
in and vote at Annual General Meetings, extraordinary general meetings, meetings of Council
or committee meetings may do so by means of a conference video link or other form of
remote visual communication. Such regulations shall prescribe the minimum specifications
for the communication equipment, the criteria for the locations at which the meetings shall
be deemed to be held and the method by which voting at such meetings shall be undertaken.
The regulations may prescribe different requirements for different types of meetings. Persons
attending by such means shall for the purposes of these bye-laws be deemed to be present
and shall count towards the quorum at such meetings, and references in these bye-laws
to such meetings, the place of such meetings and the method of voting thereat shall be
construed accordingly.
37
1.2 Bye-laws (Annex 1)
Annex 1
The Chartered Certified Accountants’ Fees Regulations 2010
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-law 2(d)(iv) of the ACCA’s bye-laws and all other powers enabling it,
hereby makes the following regulations:
1. These regulations may be cited as The Chartered Certified Accountants’ Fees Regulations
2010. These regulations as amended as set out herein shall come into force on 1 December
2010.
2. The admission fees and annual subscriptions applicable for the calendar year 2011 shall
be as follows:
(a) Admission Fees
On admission as an Associate or as a Fellow . .................................. £193
(b) Annual Subscriptions
38
All members other than those in retirement . .................................... £193
Members on the Register of members in retirement .......................... Nil
Bye-laws (Annex 2) 1.2
Annex 2
The Chartered Certified Accountants’ Electronic Communications
Regulations 2002
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 70 and 71 of the Association’s bye-laws and all other powers
enabling it, hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Electronic
Communications Regulations 2002.
(2) These regulations as amended as set out herein shall come into force on 1 January
2002.
(3) These regulations shall apply to all members.
2. Interpretation
(1) In these regulations, words and expressions defined in the bye-laws set forth in the
Second Schedule to the Royal Charter of Incorporation granted to the Association in 1974 as
amended or supplemented from time to time shall have the same meanings herein and the
“bye-laws” shall mean those bye-laws set forth.
(2) Words importing the masculine gender shall include the feminine and words in the
singular shall include the plural and vice versa. Any reference to a statutory provision shall
include where the context permits the subordinate legislation made from time to time
under that provision and any reference to a statutory provision or regulation shall include
that provision or regulation as from time to time modified or re-enacted so far as such
modification or re-enactment applies or is capable of applying to such reference.
(3) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
3. Election of members of Council
(1) Ballots
(a) Where there is a ballot for the election of members of Council, a member may vote
either by signing and completing the ballot paper and returning it to the address
stated on the ballot paper or by casting his votes electronically in accordance with
the instructions on or referred to in the ballot paper.
(b) Votes will be deemed cast on the due receipt of the ballot paper by the Scrutineer
or of the electronically cast votes by or on behalf of the Scrutineer. Once cast, votes
may not be amended and the votes first received will take precedence over any votes
later received.
39
1.2 Bye-laws (Annex 2)
(2) Delegated votes
Where a member wishes to appoint any person whose name is pre-printed on the ballot
paper to act as his delegate to cast some or all of his votes on his behalf, he may either:
(a) duly complete and send his ballot paper (marked with any votes which he wishes
himself to cast) to the address stated on the ballot paper, or
(b) nominate any person whose name is pre-printed on the ballot paper to act as his
delegate electronically, and electronically cast any votes which he wishes himself to
cast in accordance with the instructions on or referred to in the ballot paper.
4. Instruments of proxy
(a) A member wishing to appoint another member to act as his proxy for the purposes of
voting at a general meeting of the Association (including without limitation an Annual
General Meeting or Extraordinary General Meeting) may either:
(i)
complete and sign the hard-copy form provided to him by the Association
and deposit or send it to the Scrutineer in accordance with the bye-laws and
instructions accompanying the form, or
(ii)
complete and send electronically the electronic version of the form in
accordance with the instructions accompanying or referred to in the hard-copy
form.
(b) An electronic form of proxy shall be deemed received on its due receipt by or on
behalf of the Scrutineer.
5. Requirements of the bye-laws
Subject to their meeting and being delivered in accordance with the other relevant
requirements of the bye-laws, ballot papers completed and returned electronically and
instruments of proxy completed and sent electronically in accordance with these regulations
shall constitute valid ballot papers and proxies respectively for the purposes of the bye-laws.
40
Bye-laws (Annex 3) 1.2
Annex 3
The Chartered Certified Accountants’ Online Provision of Annual
Reports and Notices Regulations 2006
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by article 70 of the Association’s bye-laws and all other powers enabling it,
hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Online Provision
of Annual Reports and Notices Regulations 2006.
(2) These regulations as amended as set out herein come into force on 1 January 2010.
2. Interpretation
In these regulations, unless the context otherwise requires, the following expressions have
the following meaning:
Association means the Association of Chartered Certified Accountants;
bye-laws means the bye-laws of the Association in force from time to time;
Customer ID means the identification name or number assigned to each member by the
Association;
meeting(s) means an Annual General Meeting and Extraordinary General Meeting of the
Association;
member means any person admitted to membership of the Association in accordance
with or pursuant to the bye-laws for so long as he remains a member of the Association;
Publication(s) shall mean the annual reports of the Association and notices relating to
general meetings and any accompanying papers as shall be from time to time provided to
members in accordance with or as required by the bye-laws or regulations;
regulations shall mean the regulations of the Association in force from time to time;
Secretary means the Secretary of the Association;
Website means the website of the Association, at www.accaglobal.com.
3. Application
These regulations shall apply to all Publications published by the Association.
4. Electronic publication
Subject to regulation 5, the Association may deliver all Publications to members by
making them available on its Website and any notice or accompanying papers delivered in
accordance with these regulations shall be deemed validly given or sent to members for the
purposes of the Charter and the bye-laws.
41
1.2 Bye-laws (Annex 3)
5. Consent of members
(1) The Association may validly deliver Publications pursuant to regulation 4 to members
and members shall be deemed to have consented to its doing so in accordance with this
regulation 5 unless the member has:
(a) opted to receive hard copies of Publications; or
(b) not provided the Association with an e-mail address.
(2) A member should make every effort to provide the Association with a valid e-mail
address for notifications under regulation 7.
(3) Such consent shall continue until revoked by a member at any time by giving 28 days’
notice in writing to the Secretary at the following address: Association of Chartered Certified
Accountants, 29 Lincoln’s Inn Fields, London, WC2A 3EE (such revocation may not be made
by electronic communication).
(4) It shall be the responsibility of the member to ensure that the Association is notified in
writing of any changes of the member’s details provided under regulation 5(2).
6. Format and access
(1) The Association may make such arrangements as it shall, in its absolute discretion,
consider appropriate to ensure that all members who wish to access Publications
electronically are able to do so.
(2) Access to the Website shall be by Customer ID and password provided by the
Association. Members shall be required to use this information to access Publications on the
Website.
(3) The Publications shall be made available electronically in either Microsoft Word or Adobe
Acrobat PDF format.
7. Notification of availability
(1) The Association shall notify each member who has not revoked consent under regulation
5 by e-mail to the e-mail address provided under regulation 5(2) on each occasion a
Publication is put on the Website. The following details shall be provided:
(a) the presence of the Publication on the Website;
(b) the address or URL of the Website;
(c) the place on the Website where it may be accessed; and
(d) how to access the document or information.
(2) The Publication is deemed to be delivered to the member for the purposes of these
regulations:
42
Bye-laws (Annex 3) 1.2
(a) on the date on which the notification required by regulation 7(1) above is sent to the
member; or
(b) if later, on the date on which the Publication is first available on the Website after
such notification is sent.
8. Validity
The Association shall take all reasonable steps to ensure that Publications are delivered to
the members in accordance with these regulations. However, no failure on the part of the
Association to comply with any requirements of the regulations shall invalidate the validity
of any Publication, or its delivery to a member, or any meeting or other thing relevant to the
Publication in question.
43
44
Section 2
Regulations
45
46
Introduction
The regulations in Section 2 must be read in conjunction with each other. A regulation
may affect members, affiliates and registered students in different ways depending on
the application of other regulations to those members, affiliates and registered students.
Regulations are not always cross-referred to each other.
47
48
Membership Regulations 2.1
2.1
The Chartered Certified Accountants’
Membership Regulations 1996
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 2, 3 and 8 of the Association’s bye-laws and all other powers
enabling it, hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Membership
Regulations 1996.
(2) These regulations as amended as set out herein shall come into force on 1 January 2011.
(3) These regulations shall apply to all members, affiliates and registered students and, to the
extent that they are relevant, to former members, affiliates and registered students.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
ACCA approved employer means an organisation which has received the Association’s
approved employer status for the purposes of these regulations for the provision of
training towards a practising certificate;
ACCA student means a registered student who is undertaking the ACCA Qualification
examinations;
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
affiliate means a registered student who has passed or obtained exemptions from
the Association’s examinations as set out in Appendix 1 but has not progressed to
membership;
Appeal Committee means the Committee appointed by Council pursuant to regulations
made under bye-law 28;
applicant means a person who has applied or is in the course of applying to become a
member, affiliate or registered student;
application means the application to be admitted to membership or to the student
register submitted by an applicant;
49
2.1 Membership Regulations
Association means the Association of Chartered Certified Accountants incorporated by
Royal Charter issued to it in 1974 as amended from time to time;
bankruptcy event means a bankruptcy order, a bankruptcy restriction order, a bankruptcy
restriction undertaking or an equivalent event in any country or jurisdiction;
bye-laws means the bye-laws from time to time of the Association;
CAT status means the status held by an individual who has completed the Association’s
Certified Accounting Technician scheme examinations and has satisfied the scheme’s
conditions and is thereby entitled to call himself a Certified Accounting Technician;
CAT student means a registered student who is undertaking the Association’s Certified
Accounting Technician scheme examinations;
certificate has the meaning given in The Chartered Certified Accountants’ Global
Practising Regulations 2003;
Charter means the Association’s Royal Charter of Incorporation granted to it in the year
1974 as amended or supplemented from time to time;
committee officer means any officer of the Association (whether official, servant or
agent, and whether employed by the Association or otherwise) with responsibility for the
administration of the Admissions and Licensing Committee;
Council means the Council of the Association from time to time;
Diploma student means a registered student who is undertaking one of the Association’s
diploma schemes;
disciplinary order means an order made against a person in respect of whom a complaint
is found proved in whole or in part pursuant to The Chartered Certified Accountants’
Complaints and Disciplinary Regulations 2010 or The Chartered Certified Accountants’
Appeal Regulations 2006;
European Regulations means the European Communities (Recognition of Professional
Qualifications) Regulations 1991, S.I. 1991 No. 824 as amended from time to time;
firm means a sole practice, partnership, or body corporate including a limited liability
partnership;
IFAC means the International Federation of Accountants;
insolvency licence means the licence issued by the Association only to individuals who
are eligible therefor in accordance with The Chartered Certified Accountants’ Global
Practising Regulations 2003;
50
Membership Regulations 2.1
mature student entry route means the Association’s scheme for permitting prospective
students over the age of 21 who do not meet in part, or in full, the normal requirements
for registration as a student;
member means an individual admitted to membership of the Association pursuant to the
bye-laws;
membership means membership of the Association;
NVQ means National Vocational Qualification in the United Kingdom;
personal data has the meaning ascribed to it by the Data Protection Act 1998;
practising certificate means any of the types of certificate issued by the Association to
individuals in accordance with The Chartered Certified Accountants’ Global Practising
Regulations 2003;
public practice has the meaning ascribed to it by The Chartered Certified Accountants’
Global Practising Regulations 2003 as amended from time to time;
registered student means an individual on the register of students maintained by the
Association in accordance with these regulations and includes affiliates and the other
classes of person prescribed in regulation 7 pursuant to bye-law 3(a);
relevant firm means any firm which has undertaken to be bound by some or all of the
bye-laws;
Secretary means the Secretary of the Association (by whatever name known) or any other
person acting in such capacity by the direction of the Council;
specified person means, in relation to a relevant firm which is a partnership, any partner
in that firm, in relation to any firm which is a limited liability partnership, any member
in that firm, in relation to any firm which is a body corporate, a director of that firm and
in relation to any firm, such other person as may from time to time be prescribed in
regulations made pursuant to bye-law 11(f).
(2) Words importing the masculine gender shall include the feminine and words in the
singular shall include the plural and vice versa. Any reference to a statutory provision shall
include where the context permits the subordinate legislation made from time to time
under that provision and any reference to a statutory provision or regulation shall include
that provision or regulation as from time to time modified or re-enacted so far as such
modification or re-enactment applies or is capable of applying to such reference.
(3) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
51
2.1 Membership Regulations
3. Eligibility for membership
Criteria
An individual shall be eligible for membership of the Association if he:
(a)
(i)
has passed or obtained exemptions from the Association’s examinations set out
in Appendix 1;
(ii)
has completed three years of approved experience in accordance with
Appendix 2;
(iii)
has completed the Professional Ethics module save that this requirement does
not apply to those ACCA students registered or readmitted before 1 January
2007; and
(iv)
satisfies the Admissions and Licensing Committee as to his general character
and suitability,
(i)
has the right to practise in the United Kingdom as a Chartered Certified
Accountant pursuant to Regulation 5 of the European Communities
(Recognition of Professional Qualifications) Regulations 1991, having satisfied
any requirements imposed on him pursuant to Regulation 6 thereof; or
OR
(b)
(ii) has the right to practise in the United Kingdom as a Chartered Certified
Accountant pursuant to Regulation 11 of the European Communities
(Recognition of Professional Qualifications) (Second General System)
Regulations 1996, having satisfied any requirements imposed on him pursuant
to Regulation 19 thereof,
OR
(c)
(i)
is a member of a body and the holder of an appropriate qualification
recognised for the purposes of section 1212 of the UK Companies Act 2006;
and
(ii)
is, or intends to be, a partner, director, person responsible for audit or sole
principal of a firm which holds, or intends to hold, an auditing certificate under
The Chartered Certified Accountants’ Global Practising Regulations 2003; and
(iii) satisfies the Admissions and Licensing Committee as to his general character
and suitability,
OR
52
Membership Regulations 2.1
(d)
(i)
is a member of the Hong Kong Institute of Certified Public Accountants,
who has at any time been registered as a student of the Hong Kong Institute
of Certified Public Accountants in Hong Kong (and not in any other place),
having completed the Hong Kong Institute of Certified Public Accountants
Qualification Programme and satisfied the Association that he has at least
three years of practical experience in accountancy which has been gained
under an authorised employer or authorised supervisor complying with the
Hong Kong Institute of Certified Public Accountants Practical Experience
Requirement; or
(ii)
is a member of the Institute of Certified Public Accountants of Singapore,
having completed the Institute of Certified Public Accountants of Singapore
Professional Examination introduced in 2005 and three years of approved
experience in accordance with Appendix 2; or
(iii)
is a member of the Certified General Accountants Association of Canada,
having completed the Certified General Accountants Association of Canada
Program of Professional Studies, satisfied the Certified General Accountants
Association of Canada Practical Experience Requirements and has satisfactorily
completed a designated assessment in local tax and law previously approved
by the Association and the Certified General Accountants Association of
Canada; or
(iv)
is a Certified Public Accountant member of the Malaysian Institute of Certified
Public Accountants, having completed the Malaysian Institute of Certified
Public Accountants examinations, satisfied the Malaysian Institute of Certified
Public Accountants Practical Experience Requirements and has either:
(aa) achieved five years’ relevant post-qualification experience and
satisfactorily completed either the ACCA Professional Ethics module or
the ACCA Critical Incident Questionnaire; or
(bb) passed Paper P1 – The Professional Accountant; and
(v)
satisfies the Admissions and Licensing Committee as to his general character
and suitability and any other prescribed terms in accordance with the relevant
mutual recognition agreement,
(i)
is a:
member by examination of the Canadian Institute of Chartered Accountants; or
member by examination of the Chartered Institute of Management
Accountants; or
member by examination of the Chartered Institute of Public Finance and
Accountancy; or
OR
(e)
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2.1 Membership Regulations
member by examination of the Institute of Chartered Accountants in Australia;
or
member by examination of the Institute of Chartered Accountants in England
and Wales; or
member by examination of the Institute of Chartered Accountants in Ireland; or
member by examination of the Institute of Chartered Accountants of Scotland;
or
without prejudice to rights under the European Communities (Recognition of
Professional Qualifications) Regulations 1991 or the European Communities
(Recognition of Professional Qualifications) (Second General System)
Regulations 1996, is a member by examination of a professional body or
holder of a qualification recognised under these EC Regulations; and
(ii)
satisfies the Admissions and Licensing Committee as to his general character
and suitability; and
(iii)
has held such membership for a continuous period of not less than five years;
or
(iv)
has been employed as a member of staff on a full-time basis by the
Association continuously for at least a year and in the opinion of the Secretary
of the Association will derive benefit in his work for the Association from his
being able to describe himself as a member of the Association; or
(v)
holds, or is eligible to hold, a practising certificate from one of the above
bodies (or on admission to the Association from his being able to describe
himself as a member of the Association); or
(vi)
holds, or is eligible to hold, a practising certificate from one of the above
bodies (or on admission to membership of the Association will be eligible to
hold a practising certificate from the Association); and
(aa) is in, or intends to enter into, partnership including limited liability
partnership with a member of the Association, or be, or become a
director of a body corporate another director of which is or will be a
member of the Association, which partnership or body corporate will
include in the description of such partnership or body corporate the
words “Chartered Certified Accountants”; “Certified Accountants”; or
(bb) is, or intends to be, a partner, director, member or designated member in
the case of a limited liability partnership, or sole principal of a firm which
holds or intends to hold an auditing certificate under the Chartered
Certified Accountants’ Global Practising Regulations 2003; or
(cc) as an individual, holds, or intends to hold, a licence to act as an
insolvency practitioner under The Chartered Certified Accountants’
Global Practising Regulations 2003; or
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Membership Regulations 2.1
(dd) is, or intends to be, a partner, director, member or designated member in
the case of a limited liability partnership, or sole principal of a firm which
holds the Association’s approved employer status,
OR
(f)
(i)
has been invited by the Council to become a member of the Association; and
(ii)
is a member of an accountancy body which is itself a member of the
International Federation of Accountants or is eligible to be a company auditor in
a European Union member state; and
(iii)
has held such membership for a continuous period of not less than five years;
and
(iv)
satisfies the Council as to his general character and suitability; and
(v)
has, in the opinion of the Council, made a significant contribution to the
knowledge or practice of accountancy; and
(vi)
will, in the opinion of the Council, bring benefits to the Association and/or its
membership through his membership.
4. Members’ obligations and rights
(1) Members and Fellows
(a) Subject to the provisions of Global Practising Regulations 3 and 4, which prohibit
members without a practising certificate from carrying on activities which constitute
public practice, on admission to membership an individual shall become a Member
of the Association and may denote his membership of the Association by the use of
the professional designation Chartered Certified Accountant or Certified Accountant
and/or the designatory letters ACCA.
(b) A member who was admitted to membership on or after 1 January 2005 and
has been a Member of the Association for a continuous period of five years shall
automatically advance to fellowship, and be a Fellow, of the Association and may
denote his fellowship of the Association by the use of the professional designation
Chartered Certified Accountant or Certified Accountant and/or the designatory
letters FCCA, providing the member has not breached the continuing professional
development requirements of regulation 4(4) during that time.
(c) Where a member resigns his membership under regulation 10, or is removed from
the register of members under regulation 11, or ceases to be a member under
regulation 12 and/or 13, the continuous period of membership of five years (as
specified in regulation 4(1)(b)) shall commence from the date of readmission under
regulation 14.
(d) The Secretary shall maintain a register of members of the Association and the
Council may if it thinks fit periodically publish lists of members, copies of which may
be made available on such terms as the Council may determine.
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2.1 Membership Regulations
(2) Application of the Charter, bye-laws and regulations
(a) Upon and following admission to membership, the Charter, the bye-laws and the
regulations made pursuant to the bye-laws for the time being in force shall apply to
and bind every person so admitted for so long as he is a member and, insofar as the
Charter, bye-laws and such regulations so provide, thereafter.
(b) Every person shall, on applying for admission to membership, sign an undertaking
that he will, if admitted, and for so long as he is a member and, insofar as the
Charter, bye-laws or such regulations so provide, thereafter, observe the Charter,
bye-laws and such regulations and that he will not use any designation or designatory
letters suggesting that he is a member of or has any other connection with the
Association after he has ceased to be a member of the Association.
(3) Admission fees and annual subscriptions
(a) Each member must pay an admission fee on admission to membership of the
Association. In addition, for so long as he remains a member of the Association, he
must pay an annual subscription to the Association.
(b) Admission fees are due on admission and annual subscriptions on 1 January of each
year, unless the Council shall otherwise direct. Annual subscriptions shall be payable
whether or not the member intends to remain a member for the entire year to which
the subscription relates.
(c) The amount of the admission fee and annual subscription shall be as specified in
regulations made from time to time pursuant to and in accordance with bye-law 2(d).
(d) Council may, in its absolute discretion, vary, suspend or waive payment of the
admission fee or annual subscription payable by any applicant for membership or by
any member on such terms and for such period as it may think fit.
(4) Continuing professional development (CPD)
(a) All members must obtain CPD, and be able to demonstrate that they have obtained
CPD, in accordance with this regulation 4(4).
(b) A member may obtain CPD in one of the following ways:
(i)
with an employer who holds approved CPD employer status from the
Association;
(ii)
by following the unit scheme set out in regulations 4(4)(d) to 4(4)(g) below; or
(iii)
by following the CPD scheme of another IFAC body of which he is also a
member, provided that the scheme complies with the CPD requirements of
IFAC.
(c) By no later than 1 January each year, all members must submit to the Association an
annual CPD declaration in the prescribed form which has been properly completed
and signed. Failure to comply with this regulation may lead to removal from the
register of members in accordance with regulation 12.
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Membership Regulations 2.1
(d) Units required
(i)
Members must obtain at least 40 units per calendar year of acceptable CPD
learning activities which are relevant to their work. One unit is equal to one
hour spent on an acceptable CPD learning activity.
(ii)
At least 21 units must be verifiable units. A unit will be verifiable if the
member can prove that he or she was involved in an acceptable CPD learning
activity. A unit will be non-verifiable if the member is unable to prove that the
CPD learning activity has taken place.
(iii)
Members may carry forward a credit of up to 21 verifiable units from one year
to the next.
(iv)
Members must obtain their CPD units in areas relevant to their work and must
comply with regulations 4(4)(d)(v) and (vi) below.
(v)
All members, regardless of their role, must:
(aa) maintain competence in professional ethics; and
(bb) keep their business and finance knowledge up to date.
(vi)
All members holding practising certificates, insolvency licences and/or carrying
on exempt regulated activities or investment business must:
(aa) maintain competence in the specialised areas of their practice; and
(bb) obtain an appropriate proportion of CPD units in those areas.
(vii) Where a member works for 770 hours or less over the course of a calendar
year, he need not comply with the requirements of regulation 4(4)(d)(i) and
(ii) provided that he can demonstrate that he has undertaken CPD relevant
and sufficient for his role, save that he must obtain at least 19 units of nonverifiable CPD. This regulation does not apply to a member who:
(aa) undertakes audit or other regulated work;
(bb) is involved in the preparation or presentation of accounts of listed or
other public interest entities; or
(cc) is a non-executive director of a listed entity.
(e) Records
(i)
Individuals subject to this regulation 4(4) shall maintain records of both
verifiable and non-verifiable CPD units obtained and of the relevance of those
units to their role. In the case of verifiable units, the records shall include proof
that the individual was involved in an acceptable CPD learning activity.
(ii)
Such records shall be retained for three years and shall be subject to
examination and verification by the Association and shall be provided to
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2.1 Membership Regulations
the Association upon their being requested in writing. Such records shall be
provided within the deadline specified in the request, which shall be no sooner
than seven days after the date of the request. Failure to comply with this
regulation may lead to removal from the register of members in accordance
with regulation 12.
(f) Guidance
Before planning their CPD programmes, members should consult the detailed
guidance issued by the Association from time to time regarding subject areas and the
types of CPD learning activity that will be acceptable.
(g) Waiver and variations
(i)
Subject to regulations 4(4)(g)(ii) and (iii) below, the Admissions and Licensing
Committee may waive, vary or suspend the requirements of this regulation 4(4)
at any time to adapt them to an individual’s requirements as the Admissions
and Licensing Committee, in its absolute discretion, thinks fit.
(ii)
Any waivers or variations granted will be in respect of one calendar year only.
(iii)
Waivers or variations in respect of non-verifiable CPD units will only be granted
in exceptional circumstances.
(iv)
Members who have been granted waivers are nevertheless required to comply
with regulation 4(4)(c).
(v)
Members must comply with the conditions of any variation granted pursuant to
regulation 4(4)(g)(i). Failure to do so may lead to removal from the register of
members in accordance with regulation 12.
(5) Annual return and members’ addresses
(a) Every member shall make a return to the Association in such form and at such
time as the Council may prescribe showing whether or not the member is in public
practice and notifying a place of business or residence as his registered address.
(b) Each member must notify the Secretary forthwith of any change in his registered
address(es) (place of business or residence) other than one which is merely
temporary.
(6) Members in retirement
(a) A member who has been a member for at least 30 years, and who has, with a view
to permanent retirement, retired from professional work or business, may apply to
Council to be placed on the register of members in retirement. Members on the
register of retired members shall not be permitted to hold a practising certificate
or an insolvency licence, save that this shall not apply to those members who
transferred to the register of retired members prior to 1 January 1998 and who held
a practising certificate or an insolvency licence on 31 December 1997.
(b) Insofar as Council is provided with satisfactory evidence of the member’s retirement,
on his paying one additional year’s full annual subscription at the rate current at
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Membership Regulations 2.1
the time of application, the member may be placed on the register of members in
retirement, and shall thereafter be exempt from the requirement to pay the annual
subscription referred to in regulation 4(3) for so long as he remains on the register of
members in retirement.
(c) A member in retirement who does not hold a practising certificate or insolvency
licence is not required to comply with regulation 4(4).
(7) Provision of data
The Association may process members’ personal data subject to the provisions of the Data
Protection Act 1998. In certain circumstances this may include disclosure of said data to
third parties, including statutory regulators. This provision shall also be of application to
affiliates and registered students.
(8) Honorary members
(a) On admission, an honorary member shall undertake to be bound by the Charter, the
bye-laws and the regulations made under them insofar as the same are capable of
applying to honorary members.
(b) An honorary member shall not be liable to pay admission fees or annual subscriptions
under regulation 4(3) and shall not be eligible to be elected as a member of the
Council. He shall not be entitled to receive notice of or attend or vote at any general
meeting of the Association. Provided that none of these disabilities shall apply in the
case of a person who, prior to his election as an honorary member, was a member of
the Association in his own right.
(c) All applications for honorary membership of the Association shall be considered by
Council.
5. Eligibility for affiliate status
An ACCA student shall be eligible for affiliate status if he:
(a) has passed or obtained exemptions from the Association’s examinations as set out in
Appendix 1;
(b) has not yet completed three years of approved accountancy experience in accordance
with Appendix 2; and/or
(c) has not yet completed the Professional Ethics module save that this requirement does
not apply to those ACCA students registered or readmitted before 1 January 2007.
6. Affiliates’ obligations and rights
(1) Application of the Charter, bye-laws and regulations
Upon and following admission as an affiliate, the Charter, the bye-laws and the regulations
made pursuant to the bye-laws for the time being in force shall insofar as applicable to them
apply to and bind every person so admitted for so long as he is an affiliate and, insofar as the
Charter, bye-laws and such regulations so provide, thereafter.
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2.1 Membership Regulations
(2) Descriptions
(a) An affiliate shall not be entitled to describe himself as a member of the Association,
imply that he is a member, or use the Association’s designatory letters ACCA.
(b) An affiliate may not hold himself out as being in public practice and shall abide by
the obligations set out in Membership Regulation 8 (registered students’ obligations
and rights).
(3) Subscriptions
(a) An affiliate shall be entitled to pay a reduced rate subscription, set at half of the
membership subscription rounded to the nearest £5 for three complete calendar
years following the year in which examination results are received. Thereafter, full
membership subscription rates will apply regardless of whether the affiliate has
achieved membership status.
(b) Council may, in its absolute discretion, extend the period during which the reduced
rate of subscription may be paid.
(c) In cases of exceptional hardship Council may suspend or waive payment of the
annual subscription payable on such terms and for such period as it may think fit.
(4) Continuing professional development
From 1 January 2008, an affiliate who has held affiliate status for three years or more (which
need not be a consecutive period of three years) must participate in relevant and sufficient
CPD where they are not fulfilling any of the practical experience requirements required for
qualification and admission to membership.
(5) Affiliates’ addresses
Every affiliate shall be required to notify the Association of a place of business or residence
as his registered address and to notify the Secretary forthwith of any change in his registered
address(es) other than one which is merely temporary.
7. Eligibility for registered student status
(1) ACCA Qualification
An individual shall be eligible to be registered as an ACCA student if he:
(a) has attained UK university entrance standard or equivalent or has successfully
completed the requirements of the mature student entry route described in regulation
7(2) or has satisfied the Association’s requirements, as laid down from time to
time, for acceptance of Certified Accounting Technician students on to the ACCA
Qualification; and
(b) satisfies the Admissions and Licensing Committee as to his general character and
suitability.
(2) Mature student entry route (MSER) scheme
An individual shall be eligible to be registered as an MSER if he:
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Membership Regulations 2.1
(a) satisfies the Association’s requirements, as laid down from time to time, for
acceptance on the MSER scheme; and
(b) satisfies the Admissions and Licensing Committee as to his general character and
suitability.
To complete the mature student entry route an MSER student must pass two of the relevant
MSER examination papers set by the Association within four examination sessions after
joining the route. On completion, the student shall be exempted from papers F2 and F3 of
the Fundamentals level of the ACCA Qualification examinations.
(3) Certified Accounting Technician (CAT) scheme
An individual shall be eligible to be registered as a CAT student if he:
(a) satisfies the Association’s requirements, as laid down from time to time, for
acceptance on the Association’s CAT scheme; and
(b) satisfies the Admissions and Licensing Committee as to his general character and
suitability.
(4) Diploma schemes
An individual shall be eligible to be registered as a Diploma student if he:
(a) satisfies the Association’s requirements, as laid down from time to time, for
acceptance on any of the Association’s diploma schemes; and
(b) satisfies the Admissions and Licensing Committee as to his general character and
suitability.
8. Registered students’ obligations and rights
(1) Application of the Charter, bye-laws and regulations
Upon and following admission as a registered student, the Charter, the bye-laws and
the regulations made pursuant to the bye-laws for the time being in force shall insofar
as applicable to them apply to and bind every person so admitted for so long as he is a
registered student and, insofar as the Charter, bye-laws and such regulations so provide,
thereafter.
(2) Permitted activities of ACCA students
(a) ACCA students of the Association may not claim to be members of the Association,
nor may they be, or hold themselves out to be, in public practice, or a partner,
director or controller of a firm or a member of a limited liability partnership which
carries on public practice. ACCA students are, however, permitted to provide basic
book-keeping services for reward, either directly to the public or for an accountant,
provided that they do not refer to their studentship or potential membership of the
Association. Such service may be provided by the ACCA student acting in a selfemployed capacity, or as an employee. Basic book-keeping services are defined as:
(i)
The recording of basic accounting data up to and including the preparation of
accounting records to trial balance stage
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2.1 Membership Regulations
(aa) bank accounts
(bb) cash
(cc) sales ledger and purchase ledger
(ii)
Payroll
(aa) wages
(bb) PAYE, National Insurance deductions
(iii)
VAT or its equivalent.
(b) Any accountancy services, other than basic book-keeping services, can only be
provided for reward by an ACCA student working for, and under the supervision
of, a person who, in the opinion of Council, is suitably qualified and/or suitably
experienced. The ACCA student may undertake such work either as an employee or
as a self-employed person.
(c) The provision of basic book-keeping services directly to the public cannot constitute
approved accountancy experience, for the purpose of regulation 3(a)(ii). However,
basic book-keeping and other accountancy work undertaken under supervision may
constitute approved accountancy experience.
(d) An ACCA student or affiliate who wishes to provide basic book-keeping services may
obtain or seek such work by direct approaches to existing or prospective clients by
mail or any other means unless prohibited by law in the country in which the student
operates and subject to the requirements in paragraphs (e) and (f) below.
(e) An ACCA student may inform the public of his book-keeping services by means of
advertising, or other forms of promotion, subject to the general requirement that the
medium should not, in the opinion of Council, reflect adversely on the ACCA student,
the Association or the accountancy profession, nor should the advertisement or
promotion material, in the opinion of Council:
(i)
as to content or presentation, bring the Association into disrepute or bring
discredit to the ACCA student, firm or the accountancy profession;
(ii)
discredit the services offered by others whether by claiming superiority for the
ACCA student’s services or otherwise;
(iii)
contain comparisons with the services offered by others;
(iv)
be misleading, either directly or by implication;
(v)
fall short of the requirements of the Advertising Standards Authority as to
legality, decency, honesty and truthfulness.
(f) Advertisements and other promotional material may refer to the basis on which fees
are calculated, or to hourly or other charging rates, provided that the information
given is not misleading.
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Membership Regulations 2.1
(g) Where ACCA students provide services pursuant to the above rules, they are subject
to the same rules of professional conduct which apply to members who provide such
services.
(h) Regulations 8(2)(a)–(g) do not apply to ACCA students:
(i)
who are members of one or more of the UK or Irish Institutes of Chartered
Accountants, The Chartered Institute of Management Accountants or The
Chartered Institute of Public Finance and Accounting and who hold practising
certificates or the equivalent status from such bodies; or
(ii)
who are authorised for appointment as company auditor under Section 1212 of
the Companies Act 2006; or
(iii)
who are resident outside the United Kingdom, Jersey, Guernsey and
Dependencies, the Isle of Man and the Republic of Ireland, and hold a
professional accountancy qualification which confers the right to practise in
their country of residence.
ACCA students falling within these categories are permitted to engage in public
practice (although, in respect of category (iii), in their country of residence only)
provided that they describe themselves only as members of the professional bodies
to which they belong (if any) and not as students of the Association.
(i) For money laundering purposes in the UK, ACCA students who provide accountancy
services within the terms of the Money Laundering Regulations 2007 by way of
business will be subject to supervision for compliance with the anti-money laundering
provisions under the Money Laundering Regulations 2007. In such cases, ACCA
students should seek registration for supervision from HM Revenue and Customs or
another body recognised for such purposes.
(3) MSER students
The provisions of regulation 8(2) apply to MSER students in respect of their permitted
activities.
(4) CAT students
(a) The provisions of regulation 8(2) apply to CAT students in respect of their permitted
activities.
(b) CAT students are eligible to apply for CAT status and to use the letters “CAT” after
their names if they:
(i)
have passed or obtained exemptions from the Association’s Certified
Accounting Technician scheme examinations set out in Appendix 3; and either
(ii)
have completed one year of approved experience in accordance with Appendix
4; or
(iii)
hold an NVQ Level 4 in accounting.
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2.1 Membership Regulations
The activities of individuals holding CAT status are not restricted by the provisions of
regulation 8(2) unless they are ACCA students.
(5) Diploma students
The activities of Diploma students are not restricted by the provisions of regulation 8(2)
unless they are ACCA students.
(6) Students’ addresses
Every registered student shall be required to notify the Association of a place of business or
residence as his registered address and to notify the Secretary forthwith of any change in his
registered address(es) other than one which is merely temporary.
9. Application procedure to become a member or registered student
(1) Form of application
(a) An applicant must apply in writing in such form, giving such undertakings and
accompanied by such fees, as may be prescribed by Council from time to time.
(b) It shall be for an applicant to satisfy the Admissions and Licensing Committee that he
is eligible in accordance with these regulations for membership or, as the case may
be, to become a registered student.
(2) Procedure
(a) Applications shall be considered by the Admissions and Licensing Committee. At any
time after receiving an application and before finally deciding upon it, the Admissions
and Licensing Committee may require the applicant to furnish it with additional
information.
(b) Any information furnished by the applicant shall, if the Admissions and Licensing
Committee so requires, be verified in such manner as it may specify.
(c) (i)
The Admissions and Licensing Committee may additionally take into account
any other information which it considers appropriate in relation to the
applicant, provided such information is disclosed to the applicant where such
disclosure does not constitute a breach by the Admissions and Licensing
Committee of any duty to any other person.
(ii)
The applicant may within a reasonable time after service of such other
information serve on the Admissions and Licensing Committee any additional
information and/or written comments or submissions for the committee’s
consideration.
(d) Where the Admissions and Licensing Committee deems it appropriate to have regard
to the findings of any other body in its consideration of an application, any such
finding which has not been set aside on appeal or otherwise shall be regarded as
conclusive proof of the fact that it has been made and shall not be re-opened before
the Admissions and Licensing Committee unless the Admissions and Licensing
Committee in its absolute discretion otherwise determines.
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Membership Regulations 2.1
(e) After consideration of all of the information before it, the Admissions and Licensing
Committee shall make a decision on the application.
(3) The Admissions and Licensing Committee’s decision
The Admissions and Licensing Committee may decide to:
(i) grant the application;
(ii) refuse the application;
(iii)grant the application subject to such condition(s) as it considers appropriate; or
(iv)adjourn consideration of any application or postpone the admission of any applicant
to membership or, as the case may be, to the student register.
(4) The hearing
(a) Before making a decision under regulation 9(3), the Admissions and Licensing
Committee shall consider the matter at a hearing. It shall determine the date of
the hearing and shall give the applicant at least 21 days prior written notice of the
date set, unless a shorter period of notice is agreed between the applicant and the
Association.
(b) The applicant and the Association may appear at the hearing in person and/or by
solicitor, counsel or other representative and may call witnesses who may give
evidence and be cross-examined. The Admissions and Licensing Committee may, at
any time, ask questions of the applicant, the Association, any representative or any
witness and shall announce its decision at the hearing.
(c) The hearing shall be open to the public unless the Admissions and Licensing
Committee determines that the public shall be excluded from all or any part of the
hearing on one or more of the following grounds:
(i)
in the interests of morals, public order or national security in a democratic
society;
(ii)
where the interests of juveniles or the protection of the private lives of the
parties so require; or
(iii)
to the extent strictly necessary in the opinion of the Admissions and Licensing
Committee in special circumstance, where publicity would prejudice the
interests of justice.
(d) The procedure to be adopted in relation to any hearing shall, subject to the foregoing
paragraphs of this regulation, be such as the Admissions and Licensing Committee
shall, in its absolute discretion, determine.
(5) Communication of the decision
The Admissions and Licensing Committee shall notify the applicant in writing within 14 days
of its decision, and a written statement of the reasons for the decision shall be given to the
applicant within 21 days, or such longer period as shall be necessary in the circumstances.
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2.1 Membership Regulations
When an application is granted, or granted subject to conditions, the applicant shall be
issued with a certificate of admission to membership or, as the case may be, notification
of admission to the student register. Any such certificate shall remain the property of the
Association and shall be returned to the Association on the individual ceasing to be a
member or, as the case may be, a registered student.
(6) Correction of errors
(a) Where the order and/or written statement of the reasons for the decision of the
Admissions and Licensing Committee contains an accidental error or omission, a
party may apply by way of an application notice for it to be corrected. The application
notice shall describe the error or omission and state the correction required.
(b) The Chairman of the Admissions and Licensing Committee may deal with the
application without notice if the error or omission is obvious, or may direct that notice
of the application be given to the other party.
(c) The application may be considered without a hearing with the consent of the parties,
such consent not to be unreasonably withheld.
(d) If the application is opposed, it should be heard by the same Admissions and
Licensing Committee which made the order and/or written statement of reasons for
the decision which are the subject of the application.
(e) The Admissions and Licensing Committee may of its own volition vary its own order
and/or written statement of reasons for the decision for the purpose of making the
meaning and intention clear.
(7) Appeal
A person (“the appellant”) aggrieved by any decision of the Admissions and Licensing
Committee made pursuant to regulation 9(3) of these regulations may appeal to the Appeal
Committee in accordance with the Association’s appeal procedures as set out in The
Chartered Certified Accountants’ Appeal Regulations 2006 (hereafter referred to as “the
Appeal Regulations”). Any such appeal shall be dealt with in accordance with the Appeal
Regulations.
The Association may appeal against a decision of the Admissions and Licensing Committee
in accordance with the Appeal Regulations.
(8) Effective date
Any decision made by the Admissions and Licensing Committee pursuant to regulation 9(3)
of these regulations shall take effect from the date of expiry of the appeal period referred to
in the Appeal Regulations, unless the appellant shall duly give notice of appeal prior to the
expiry of such period, in which case it shall become effective (if at all) as described in the
Appeal Regulations.
(9) Administration charge
If an application is withdrawn by the applicant the Association may charge the applicant
such sum as seems reasonable to it to defray or contribute to the cost of processing the
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Membership Regulations 2.1
application between its receipt by the Association and its withdrawal by the applicant but,
subject to this, shall return any fee tendered with the application.
(10) Affiliate’s application
(a) An affiliate must apply for membership of the Association as soon as he has
completed
(i)
three years of approved experience in accordance with Appendix 2; and
(ii)
the Professional Ethics module save that this requirement does not apply to
those ACCA students registered or readmitted before 1 January 2007.
(b) Council may, in its absolute discretion, remove an individual’s affiliate status where it
believes that an individual has delayed his application for membership without good
cause.
10. Resignation of member, affiliate or registered student status
(1) Notice
Any member, affiliate or registered student wishing to resign shall tender written notice to
the Council and on its acceptance his membership shall cease or, as the case may be, he
shall cease to have the status of member, affiliate or registered student and his name shall be
removed from the relevant register.
(2) Fees and subscriptions
Any individual giving notice of his intention to resign shall remain liable to pay any
subscription or other sums due from him at the date the relevant notice is accepted.
(3) Outstanding disciplinary matters
An individual’s notice of resignation or notice seeking removal from the member, affiliate or
student register shall not be accepted, and the individual shall accordingly not cease to be
a member or, as the case may be, an affiliate or a registered student, where a complaint
in respect of him or of a relevant firm in relation to which he is a specified person has
been received by the Association, or where disciplinary proceedings of the Association are
otherwise pending against him or such relevant firm until such time as the matter has been
finally disposed of and the amount of any fine or costs specified in a disciplinary order made
in respect of him or such relevant firm has been paid in full.
11. Removal of member, affiliate or registered student for non-payment of
sums due to the Association
(1) Subject to the remainder of regulation 11 below, a member, affiliate or registered student
shall be removed from the register of members, affiliates or registered students if any sum
due to the Association (including without limitation in the case of a member his annual
subscription) shall remain unpaid after three months from the date on which it was due to
the Association.
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2.1 Membership Regulations
(2) The Council may in its absolute discretion, either on its own volition or on the application
of the individual concerned, suspend the operation of regulation 11(1) where it is of the
opinion it is reasonable to do so.
(3) Regulation 11(1) shall not apply to an individual where a complaint in respect of him
or of a relevant firm in relation to which he is a specified person has been received by the
Association until such time as the complaint is finally disposed of and all applicable appeal
periods have expired.
(4) Where a disciplinary order has been made against an individual member, affiliate or
registered student or against a relevant firm in relation to which such person is a specified
person, he will be removed from the register of members, affiliates or registered students
if he fails to pay when due any amount imposed by way of a fine or costs pursuant to such
order. Provided that the Chairman of the Committee that made the order may at his absolute
discretion and on such terms as he deems fit agree to defer the due date for payment on
the application of the member prior to such date if he is of the opinion that such deferral is
appropriate in all the circumstances.
(5) The Association shall be entitled to recover the amount of any fine or costs which an
individual has been ordered to pay pursuant to a disciplinary order from that individual and
his personal representatives, notwithstanding that he has ceased to be a member, affiliate or
registered student howsoever that may have occurred.
12. Removal of member for non-compliance with CPD regulations
(1) Subject to the remainder of regulation 12 below, a member shall be removed from the
register of members if he has breached regulations 4(4)(c), 4(4)(e)(ii) or 4(4)(g)(v) and such
breach has not been rectified within three months after the breach occurred.
(2) The Council may in its absolute discretion, either on its own volition or on the application
of the individual concerned, suspend the operation of regulation 12(1) where it is of the
opinion it is reasonable to do so.
(3) Regulation 12(1) shall not apply to an individual where a complaint in respect of him
or of a relevant firm in relation to which he is a specified person has been received by the
Association until such time as the complaint is finally disposed of and all applicable appeal
periods have expired.
13. Bankruptcy
(1) Duty to notify
If an individual becomes the subject of a bankruptcy event, he must:
(a) notify the Admissions and Licensing Committee within one month of the event, and
(b) satisfy the Admissions and Licensing Committee that he is still eligible in accordance
with these regulations to remain a member, affiliate or registered student,
notwithstanding the fact of the bankruptcy event.
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Membership Regulations 2.1
Any individual who fails to notify the Association of the bankruptcy event within the period
specified in regulation 13(1)(a) will automatically cease to be a member or, as the case
may be, an affiliate or registered student, on the expiry of one month from the date of the
bankruptcy event.
(2) Procedure
On receipt of notification of an individual’s bankruptcy event, the Admissions and Licensing
Committee may require the individual to furnish it with such information (including
documents) as it requires, and may take into account any other information it considers
appropriate, in considering whether the individual continues to be eligible to remain a
member, affiliate or registered student. Such information shall be disclosed to the individual
unless such disclosure would constitute a breach by the Admissions and Licensing
Committee of a duty to any other person. Any information furnished by the individual shall,
if the Admissions and Licensing Committee so requires, be verified in such matter as it may
specify.
(3) The Admissions and Licensing Committee’s decision
The Admissions and Licensing Committee may:
(i) permit the individual to retain his membership, affiliate or registered student status;
(ii) withdraw the individual’s membership, affiliate or registered student status;
(iii)permit the individual to retain his membership, affiliate or registered student status
subject to such condition(s) as it may specify; or
(iv)make such other decision as it thinks fit in respect of the individual.
(4) The hearing
(a) Before making a decision under regulation 13(3), the Admissions and Licensing
Committee shall consider the matter at a hearing. Accordingly, it shall determine the
date of the hearing and shall give the individual at least 21 days prior written notice
of the date set unless a shorter period of notice is agreed between the individual and
the Association.
(b) The individual and the Association may appear at the hearing in person and/or
by solicitor, counsel or other representative and may call witnesses who may give
evidence and be cross-examined. The Admissions and Licensing Committee may ask
questions of the individual, the Association, any representative or any witness at any
time and shall announce its decision at the hearing.
(c) The hearing shall be open to the public unless the Admissions and Licensing
Committee determines that the public shall be excluded from all or part of the
hearing on one or more of the following grounds:
(i)
in the interests of morals, public order or national security in a democratic
society;
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2.1 Membership Regulations
(ii)
where the interests of juveniles or the protection of the private lives of the
parties so require; or
(iii)
to the extent strictly necessary in the opinion of the Admissions and Licensing
Committee in special circumstances, where publicity would prejudice the
interests of justice.
(d) The procedure to be adopted in relation to any hearing shall, subject to the foregoing
paragraphs of this regulation, be such as the Admissions and Licensing Committee
shall, in its absolute discretion, determine.
(5) Communication of the decision
The Admissions and Licensing Committee shall notify the individual in writing within 14 days
of the decision, and a written statement of reasons for the decision shall be given to the
individual within 21 days or such longer period as shall be necessary in the circumstances.
(6) Appeal
An individual (“the appellant”) aggrieved by any decision of the Admissions and Licensing
Committee made pursuant to regulation 13(3) of these regulations may appeal to the Appeal
Committee in accordance with the Association’s appeal procedures as set out in the Appeal
Regulations. Any such appeal shall be dealt with in accordance with the Appeal Regulations.
(7) Effective date
Any decision made by the Admissions and Licensing Committee pursuant to regulation 13(3)
of these regulations shall take effect from the date of expiry of the appeal period referred to
in the Appeal Regulations unless:
(i) the individual shall duly give notice of appeal prior to the expiry of such period in
which case it shall become effective (if at all) as described in the Appeal Regulations;
or
(ii) the Admissions and Licensing Committee directs that, in the interests of the public,
the decision should have immediate effect, subject to its being varied or rescinded on
appeal as described in the Appeal Regulations.
14. Readmission
(1) Any former member, affiliate or registered student may apply for readmission provided
that any outstanding sums due to the Association, including any fine or costs imposed by
a disciplinary order, have been paid and any breach of regulation 4(4) has been rectified.
Such application should be made in the same manner as the original application and it
will be considered by the Admissions and Licensing Committee in the ordinary way, and in
accordance with regulation 9 above, save that:
(a) the Admissions and Licensing Committee shall have specific regard to the
circumstances of his cessation as a member, affiliate or registered student; and
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Membership Regulations 2.1
(b) the Admissions and Licensing Committee may, in its absolute discretion, require him
to pass further examinations and/or tests and/or satisfy other requirements before it
considers his application for readmission.
(2) No former member, affiliate or registered student who has had a disciplinary order made
against him excluding him from membership or, as the case may be, causing him to lose his
affiliate or registered student status may apply for readmission until after the later of:
(a) the expiry of twelve months after the effective date of the disciplinary order; or
(b) where the disciplinary order prohibits him from applying for readmission to
membership or, as the case may be, seeking restoration of his affiliate or registered
student status for a specified period, the expiry of such period.
15. General
(1) Notice
(a) Any notice or other document required to be given to any person pursuant to these
regulations may be given to him personally or by sending it by post or courier to his
registered address. If the person has no registered address any notice or document
should be sent by post or courier to his address last known to the Association. Any
such notice or document so sent shall be deemed to have arrived within 72 hours
(excluding Saturdays and Sundays and Public and Bank Holidays) of despatch.
(b) Any notice or document required to be given to the Association may be given by
sending it to the committee officer at the principal office of the Association.
(2) Hearings
Where a matter is to proceed by way of a hearing in accordance with these regulations, and
is of particular interest to a specific government or government agency, or primarily affects
persons resident in a specific country, either the Admissions and Licensing Committee or
the Secretary may, at their discretion, direct that any hearing before the Admissions and
Licensing Committee take place in that country. In the absence of any such direction,
hearings before the Admissions and Licensing Committee shall take place in London.
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2.1 Membership Regulations
Appendix 1
ACCA Qualification Examination Structure
The new ACCA Qualification structure below applies from August 2007, and will be first
examined in December 2007. All current students will be converted to the new syllabus
below in August 2007 and advised of the papers that they are required to complete.
Fundamentals
Knowledge
F1 Accountant in Business (AB)
F2 Management Accounting (MA)
F3 Financial Accounting (FA)
Skills
F4 Corporate and Business Law (CL)
F5 Performance Management (PM)
F6 Taxation (TX)
F7 Financial Reporting (FR)
F8 Audit and Assurance (AA)
F9 Financial Management (FM)
Professional
Essentials
P1 Professional Accountant (PA)
P2 Corporate Reporting (CR)
P3 Business Analysis (BA)
Options
P4 Advanced Financial Management (AFM)
P5 Advanced Performance Management (APM)
P6 Advanced Taxation (ATX)
P7 Advanced Audit and Assurance (AAA)
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Membership Regulations 2.1
Appendix 2
PRACTICAL EXPERIENCE REQUIREMENT
Trainees must demonstrate that they have met a range of workplace performance objectives.
There are 20 performance objectives which are divided into 8 key areas of knowledge and
classified as either Essentials or Options. The performance objectives describe the types of
work activities that trainees should be involved with in addition to the values and attitudes
they should demonstrate to fulfil the requirement.
To satisfy the PER, trainees must achieve 13 performance objectives – all 9 from Essentials
and any 4 from Options.
Trainees demonstrate that they have achieved a performance objective by responding to 3
“challenge questions”. A performance objective is achieved once it has been reviewed and
signed off by a workplace mentor.
ACCA students must record their achievements on an online trainee development matrix
(TDM). Trainees who opt to use a paper-based version of the TDM must retain hard copies
of their responses to the challenge questions and of performance objectives they have had
reviewed and signed off. ACCA may require to view these records for audit purposes.
Trainees working for an ACCA approved employer – trainee development – gold or platinum
are not required to use the TDM, unless they or their employer wishes them to do so.
ACCA will accept the Hong Kong Institute of Certified Public Accountants Practical
Experience Requirement as substitute for the TDM where ACCA students in Hong Kong are
complying with the Hong Kong Institute of Certified Public Accountants Practical Experience
Requirement.
ESSENTIALS
Professionalism, ethics and governance
1
2
3
Demonstrate the application of professional ethics, values and judgement
Contribute to the effective governance of an organisation
Raise awareness of non-financial risk
Personal effectiveness
4
5
6
Manage self
Communicate effectively
Use information and communications technology
Business management
7
8
9
Manage ongoing activities in your area of responsibility
Improve departmental performance
Manage an assignment
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2.1 Membership Regulations
OPTIONS
Financial accounting and reporting
10
11
Prepare financial statements for external purposes
Interpret financial transactions and financial statements
Performance measurement and management accounting
12
13
14
Prepare financial information for management
Contribute to budget planning and production
Monitor and control budgets
Finance and financial management
15
16
Evaluate potential business/investment opportunities and the required finance options
Manage cash using active cash management and treasury systems
Audit and assurance
17
18
Prepare for and collect evidence for audit
Evaluate and report on audit
Taxation
19
20
74
Evaluate and compute taxes payable
Assist with tax planning
Membership Regulations 2.1
Appendix 3
CERTIFIED ACCOUNTING TECHNICIAN SCHEME
EXAMINATION STRUCTURE
Introductory Level
Paper 1
Paper 2
Recording Financial Transactions
Information for Management Control
Intermediate Level
Paper 3
Paper 4
Maintaining Financial Records
Accounting for Costs
Advanced Level
Paper 5 Managing People and Systems
Paper 6 Drafting Financial Statements
Paper 7 Planning, Control & Performance Management
Paper 8 Implementing Audit Procedures
Paper 9 Preparing Taxation Computations
Paper 10 Managing Finances
(any two
from three
papers)
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2.1 Membership Regulations
Appendix 4
REQUIRED EXPERIENCE TO OBTAIN CERTIFIED ACCOUNTING
TECHNICIAN STATUS
(The content of this appendix applies to those who first registered as Certified Accounting
Technician scheme students on or after 16 August 2003. Alternative provisions apply to
those registering before this date. Details are available from the Association.)
The Association has identified 21 units of competence that cover a range of technical
and management functions. Within each of these units, specific elements of competence
have been defined. Each element of competence relates to a specific skill, task or area
of responsibility that may be demonstrated by a Certified Accounting Technician in the
workplace.
Each unit contains two or more elements of competence. The units are numbered 1 to 23.
There is no unit 16 or unit 20 because the Accounting Occupational Standards Group has
withdrawn these two units. Some units of competence have been identified as mandatory.
These are important areas in which training is essential.
Each element of competence is underpinned by performance criteria that describe the
standards expected. Overviews of the performance criteria, together with examples which
illustrate the tasks and activities that Certified Accounting Technician students might
undertake in order to achieve an element of competence, are available from the Association’s
website.
To satisfy the Association’s minimum competence requirements for Certified Accounting
Technician status, students must either:
achieve at least 10 units of competence, including:
- 3 mandatory units (marked by the symbol
- at least 7 other units
M
)
or
achieve an NVQ Level 4 in Accounting.
Competence is the ability to perform an activity to a set standard within the workplace.
Certified Accounting Technician students achieve an element of competence if they meet the
performance criteria associated with the element of competence without close supervision or
regular instruction from their Supervisor.
Certified Accounting Technician students (with the exception of those students who have
achieved an NVQ Level 4 in Accounting) must record their achievement of workplace
experience and skills in their Technician Training Record (TTR) or such other document as
the Association may require from time to time. Certified Accounting Technician students must
provide the Association with their completed TTR if requested to do so.
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Membership Regulations 2.1
Unit 1 – Recording income and receiving payments
Competence must be achieved in 1 of the 2 elements:
Element 1.1
Process documents relating to goods and services supplied
Element 1.2
Process receipts
Unit 2 – Making and recording payments
Competence must be achieved in 1 of the 2 elements:
Element 2.1
Process documents relating to goods and services received
Element 2.2
Process payments
Unit 3 – Preparing ledger balances and an initial trial balance
Competence must be achieved in 2 of the 3 elements:
Element 3.1
Balance bank transactions
Element 3.2
Prepare ledger balances and control accounts
Element 3.3
Draft an initial trial balance
Unit 4 – Supplying information for management control
Competence must be achieved in 1 of the 2 elements:
Element 4.1
Code and extract information
Element 4.2
Provide comparisons on costs and income
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2.1 Membership Regulations
Unit 5 – Maintaining financial records and preparing accounts
Competence must be achieved in 1 of the 3 elements:
Element 5.1
Maintaining records relating to capital acquisition and disposal
Element 5.2
Collecting and collating information for the preparation of final accounts
Element 5.3
Preparing the final accounts of sole traders and partnerships
Unit 6 – Recording and evaluating costs and revenues
Competence must be achieved in 2 of the 3 elements:
Element 6.1
Record and analyse information relating to direct costs and revenues
Element 6.2
Record and analyse information relating to the allocation, apportionment and absorption of
overhead costs
Element 6.3
Prepare and evaluate estimates of costs and revenues
Unit 7 – Preparing reports and returns
Competence must be achieved in 2 of the 3 elements:
Element 7.1
Prepare and present periodic performance reports
Element 7.2
Prepare reports and returns for outside agents
Element 7.3
Prepare sales tax/VAT returns
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Membership Regulations 2.1
Unit 8 – Contributing to the management of performance and the
enhancement of value
Competence must be achieved in 1 of the 2 elements:
Element 8.1
Collect, analyse and disseminate information about costs
Element 8.2
Monitor performance and make recommendations to enhance value
Unit 9 – Contributing to the planning and control of resources
Competence must be achieved in 1 of the 3 elements:
Element 9.1
Prepare forecasts of income and expenditure
Element 9.2
Prepare draft budget proposals
Element 9.3
Monitor the performance of responsibility centres against budgets
Unit 10 – Managing systems and people in the accounting environment
Competence must be achieved in 1 of the 2 elements:
Element 10.1
Manage people within the accounting environment
Element 10.2
Identify opportunities for improving the effectiveness of an accounting system
Units 11, 12, 13 and 14 – Drafting financial statements
These units are about drafting and interpreting financial statements for specific industry
sectors:
Unit 11 – Drafting financial statements (accounting practice, industry
and commerce)
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2.1 Membership Regulations
Unit 12 – Drafting financial statements (central government)
Unit 13 – Drafting financial statements (local government)
Unit 14 – Drafting financial statements (health sector)
Competence must be achieved in 1 of the 2 elements:
Element 14.1
Draft financial statements for one of the following sectors:
- - - - accounting practice, industry and commerce
central government
local government
health sector
Element 14.2
Interpret financial statements for one of the following sectors:
- - - - accounting practice, industry and commerce
central government
local government
health sector
Unit 15 – Operating a cash management and credit control system
Competence must be achieved in 2 of the 4 elements:
Element 15.1
Monitor and control cash receipts and payments
Element 15.2
Manage cash balances
Element 15.3
Grant credit
Element 15.4
Monitor and control the collection of debts
Unit 16 – This unit has been withdrawn
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Membership Regulations 2.1
Unit 17 – Implementing audit procedures
Competence must be achieved in 2 of the 3 elements:
Element 17.1
Contribute to the planning of an audit assignment
Element 17.2
Contribute to the conduct of an audit assignment
Element 17.3
Prepare related draft reports
Unit 18 – Preparing business taxation computations
Competence must be achieved in 2 of the 4 elements:
Element 18.1
Prepare capital allowances computations
Element 18.2
Compute assessable business income
Element 18.3
Prepare capital gains computations
Element 18.4
Prepare corporation tax computations
Unit 19 – Preparing personal taxation computations
Competence must be achieved in 2 of the 4 elements:
Element 19.1
Calculate income from employment
Element 19.2
Calculate property and investment income
Element 19.3
Prepare income tax computations
Element 19.4
Prepare capital gains tax computations
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2.1 Membership Regulations
Unit 20 – This unit has been withdrawn
M
Unit 21 – Working with computers
Competence must be achieved in all elements:
Element 21.1
Use computer systems and software
Element 21.2
Maintain security of data
M
Unit 22 – Contribute to the maintenance of a healthy, safe and
productive working environment
Competence must be achieved in all elements:
Element 22.1
Monitor and maintain a safe, healthy and secure working environment
Element 22.2
Monitor and maintain an effective and efficient working environment
M
Unit 23 – Achieving personal effectiveness
Competence must be achieved in all elements:
Element 23.1
Plan and organise your own work
Element 23.2
Maintain good working relationships
Element 23.3
Improve your own performance
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Global Practising Regulations 2.2
2.2
The Chartered Certified Accountants’ Global
Practising Regulations 2003
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 4, 5, 6, 27 and 28 of the Association’s bye-laws and all other
powers enabling it, hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations and annexes may be cited as The Chartered Certified Accountants’
Global Practising Regulations 2003.
(2) These regulations and annexes as amended as set out herein shall come into force on 1
January 2011.
(3) These regulations and annexes shall apply to all members and to all persons who
otherwise agree to be bound by them.
(4) These regulations and the annexes may be amended by resolution of Council.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
ACCA approved employer means an organisation which has received the Association’s
approved employer status for the purposes of these regulations for the provision of training
towards a practising certificate;
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
Association means the Association of Chartered Certified Accountants incorporated by
Royal Charter issued to it in 1974 as amended from time to time;
auditor means a person who signs or holds himself out as being available to sign an audit
report whether or not that report is required by statute;
bye-laws mean the bye-laws from time to time of the Association;
certificate means a practising certificate;
Charter means the Royal Charter of Incorporation granted to the Association as amended
or supplemented from time to time;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
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2.2 Global Practising Regulations
designated territory means the United Kingdom, the Republic of Ireland, Jersey, Guernsey
and Dependencies and the Isle of Man and any other country or jurisdiction designated as
such by Council from time to time;
Disciplinary Regulations means The Chartered Certified Accountants’ Complaints and
Disciplinary Regulations 2010;
FGI means fidelity guarantee insurance;
firm means a sole practice, partnership or body corporate including a limited liability
partnership;
member means an individual admitted to membership of the Association pursuant to the
bye-laws;
Membership Regulations means The Chartered Certified Accountants’ Membership
Regulations 1996;
PII means professional indemnity insurance;
practising certificate means a practising certificate issued by the Association and referred
to in regulation 5(1) of The Chartered Certified Accountants’ Global Practising Regulations
2003;
public practice has the meaning given by regulation 4;
registered student has the meaning given by The Chartered Certified Accountants’
Membership Regulations 1996;
United Kingdom means the United Kingdom of Great Britain and Northern Ireland.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(3) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
(4) In these regulations words shall be interpreted in accordance with the context of the
regulation in which they are contained, unless otherwise stated.
3. Restrictions on carrying on public practice
(1) Members
(a) Subject to regulation 3(1)(b), no member shall carry on public practice unless he
holds a practising certificate which authorises the carrying on of the activity in
question.
(b) Where a member carries on public practice in a country other than a designated
territory or Zimbabwe, he may carry on public practice not authorised by his
practising certificate (such as audit work) where he is authorised to do so by local
law and has notified the Admissions and Licensing Committee of his practising status
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Global Practising Regulations 2.2
and of any local body of which he is a member or by which he is regulated in the
conduct of his public practice.
(c)A member shall only be regarded as holding a practising certificate where it is current
and valid. The certificate shall at all times remain the property of the Association and
the Association shall retain the right to demand its return at any time and without
giving reasons.
(2) Members and firms
(a) No member shall be a sole proprietor, partner or director of a firm, or member of a
limited liability partnership, where public practice is carried on in the name of the
firm, or otherwise in the course of the firm’s business, unless the member holds a
practising certificate.
(b) No member shall hold rights in a firm where public practice is carried on in the name
of the firm, or otherwise in the course of the firm’s business, which in effect put
him in the position of a principal of the firm, unless the member holds a practising
certificate.
4. Meaning of public practice
(1) Activities
Subject to regulation 4(3), public practice, which may be carried on by an individual or a firm
(the “practitioner”), means:
(a) accepting an appointment as an auditor; and/or
(b) signing or producing any accounts or report or certificate or tax return concerning any
person’s financial affairs, whether an individual sole-trader, an unincorporated body
or a firm, in circumstances where reliance is likely to be placed on such accounts or
report or certificate or tax return by any other person (the “third party”), or doing any
other thing which may lead the third party to believe that the accounts or report or
certificate or tax return concerning the financial affairs of such a person have been
prepared, approved or reviewed by the practitioner; and/or
(c) holding oneself or itself out, or allowing oneself or itself to be held out, as being
available to undertake the activities referred to in (a) and (b) above (and allowing
oneself to be known as a, or a firm of “Chartered Certified Accountant(s)”, “Certified
Accountant(s)”, “Chartered Accountant(s)”, “Accountant(s)” or “Auditor(s)” or any
similar description or designation standing for any such description in the context of
the practitioner’s business shall be regarded as an example of such a holding out);
and/or
(d) holding oneself out, or allowing oneself to be held out, as a sole proprietor, partner or
director of a firm, or designated member or member of a limited liability partnership,
where public practice is carried on.
Book-keeping services, as defined in paragraphs 8(2)(a)(i) to 8(2)(a)(iii) of the Membership
Regulations 1996, do not constitute public practice.
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2.2 Global Practising Regulations
(2) Where carried on
Public practice shall be taken to be carried on in the country whose laws apply to the activity
carried on by the practitioner, or where the said laws are unclear, in the country in which the
practitioner is resident.
(3) Honorary reports
The activities set out in regulation 4(1)(b) shall not constitute public practice where all of the
following conditions are satisfied:
(a) the accounts are of an entity which does not require the appointment of an auditor;
and
(b) no fee is payable or other material benefit receivable in respect of the work
performed; and
(c) the gross income of the entity for the year prior to the year in question does not
exceed £100,000; and
(d) the aggregate of such gross income with such gross income of any other entity in
respect of which the member has relied upon this regulation 4(3) in the calendar year
in question does not exceed £200,000; and
(e) any third parties are made aware that the activity has been carried out by an
Honorary Reporting Accountant; and
(f) the member does not hold himself out, or allow himself to be held out, as a sole
proprietor, partner, director, member or designated member of a firm where public
practice is carried on.
5. The practising certificate
(1) Authorised activity
The practising certificate shall authorise a member to carry on in the country to which the
certificate relates any activity constituting public practice. The practising certificate shall
authorise the carrying on of the activities as specified in the holder’s application, as updated
from time to time.
(2) Countries
The practising certificate shall specify the country or countries to which it relates.
6. Eligibility for a practising certificate
A member shall be eligible for a practising certificate where:
(a) he is sufficiently qualified in accordance with regulation 7 to carry on any activity
constituting public practice in the country to which the certificate applied for relates;
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Global Practising Regulations 2.2
(b) he is fit and proper within the meaning of regulation 8;
(c) he holds the necessary PII in accordance with regulation 9; and
(d) he has made arrangements for the continuity of his practice in accordance with
regulation 11.
7. Qualifications
(1) Qualification for a practising certificate
(a) To be qualified to hold a global practising certificate authorising a member for the
carrying on of any activity constituting public practice, except accepting appointments
as an auditor, an individual must have been a member of the Association
continuously for a period of not less than two years and either:
(i)
(aa) completed three years’ practical training in an ACCA approved employer,
working either as an employee or sub-contractor, under the supervision
of a suitably experienced member or another person having in the
opinion of Council adequate qualification; and
(bb) at least two years of practical training must be completed after the
individual’s admission to membership and must comply with the
requirement at regulation 7(2). The remaining training period may
be completed before or after, or partly before and partly after, the
individual’s admission to membership and must include experience in
the matters set out in Appendix 2 of the Membership Regulations in an
ACCA approved employer; and
(cc) completed a practising certificate training record; or
(ii)
previously held an equivalent certificate issued to members by the Association
prior to 1 January 2011.
(b) An individual practising in a country other than a designated territory and who holds
a practising certificate from a recognised national body or regulatory authority in
that country may apply for a practising certificate which is valid only in that country,
in which case the individual will be exempted from regulation 7(1)(a)(i). If such an
individual wishes to obtain a global practising certificate, regulation 7(1)(a)(i) will
apply.
(c) The requirements at regulations 7(1)(a)(i)(bb) and (cc) above do not apply to
Zimbabwe or any other country that Council may designate from time to time, where
the licensing body of the country to which the certificate relates does not require
practical training to have taken place after the individual’s admission to membership
in order to issue a practising certificate.
(d) Any experience gained by an individual whilst carrying on public practice in breach of
regulation 3 shall not count towards supervised experience referred to in regulation
7(1)(a).
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2.2 Global Practising Regulations
(2) Training requirements after admission to membership
(a) Training in an ACCA approved employer after admission to membership must
cover all the following key areas of competence as set out in Appendix 1 to these
regulations and must be recorded in the practising certificate training record:
(i)
Professional Conduct (key area 1);
(ii)
Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review); and
(iii)
Management (key area 6).
(b) Candidates for a practising certificate must achieve proficiency in the following
elements of competence as set out in Appendix 1 to these regulations, which must
be recorded in the practising certificate training record:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
(3) Waiver
In exceptional circumstances, the requirements of regulation 7(1) may be waived, varied
or suspended at the direction of the Admissions and Licensing Committee in its absolute
discretion. The Admissions and Licensing Committee may impose such alternative
requirements as it thinks fit, which may include without limitation a requirement to pass any
tests of competence and/or examinations.
8. Fit and proper persons
The Admissions and Licensing Committee shall only issue a practising certificate to an
applicant that is fit and proper, as determined by it in accordance with this regulation 8.
(1) In determining whether a person is “fit and proper”, the Admissions and Licensing
Committee may, without limitation, take into account whether that person has:
(i) been convicted of a criminal offence; or
(ii) been the subject of a disciplinary order made by the Association or another
professional body; or
(iii)been or is the subject of an investigation, whether criminal, disciplinary or otherwise,
in respect of his conduct; or
(iv)committed a material breach of an applicable regulation of the Association; or
(v) fallen within any of the criteria set out at regulations 8(3) and (4); or
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Global Practising Regulations 2.2
(vi)on any occasion given the Association false, inaccurate or misleading information or
failed to co-operate with the Association.
(2) The Admissions and Licensing Committee may take into account all current and past
matters which impact on the ability to hold a practising certificate.
(3) In the case of individuals, the criteria referred to in regulation 8(1)(v) are whether the
person is or has been:
(i) at any time bankrupt, signed a trust deed for creditors or entered into a deed of
arrangement, scheme or composition in respect of his financial affairs (or any similar
or analogous event); or
(ii) removed from the office of liquidator, trustee, administrative receiver, administrator or
supervisor; or
(iii)the subject of a disqualification order or disqualification undertaking made under the
Company Directors Disqualification Act 1986 of the United Kingdom; or
(iv)the subject of a bankruptcy restriction order or bankruptcy restriction undertaking
under the Insolvency Act 1986 of the United Kingdom; or
(v) excluded from or refused membership of a professional body on disciplinary grounds;
or
(vi)found to have failed to ensure that the experience and competence of his employees
and practice associates are adequate, having regard to the nature of the work
involved; or
(vii)a patient under the Mental Health Act 1983 of the United Kingdom; or
(viii)the equivalent of or similar to the above criteria under the corresponding legislation of
any country or jurisdiction.
(4) In the case of firms, the criteria referred to in regulation 8(1)(v) are as for individuals as
specified in regulation 8(3), with such amendments as are appropriate to make the criteria
applicable to firms.
(5) In determining whether any person is “fit and proper” for the purposes of this regulation
8, the Admissions and Licensing Committee may take into account any matter which relates
to him or it and:
(i) any matter relating to any person who is or will be employed by or associated with
him or it for the purposes of or in connection with public practice;
(ii) in the case of a partnership, any matter relating to any of the partners, any director or
controller of any of the partners, any body corporate in the same group as any of the
partners and any director or controller of any such other body;
(iii)in the case of a body corporate, any matter relating to any director or controller of the
body, any other body corporate in the same group or any director or controller of any
such other body; and
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2.2 Global Practising Regulations
(iv)in the case of a limited liability partnership, any matter relating to any of the
members or designated members of the limited liability partnership.
9. Professional indemnity insurance
(1) Holders of a practising certificate
(a) Subject to regulation 9(6), applicants for and holders of a practising certificate must
hold professional indemnity insurance (“PII”) covering the liabilities and according
with the limits set out in this regulation 9 and, in the case of such a person whose
firm employs full and/or part time staff, the firm must also hold a policy of fidelity
guarantee insurance (“FGI”) in respect of all partners, directors, members and
designated members of limited liability partnerships and employees in accordance
with this regulation. For the avoidance of doubt such FGI may, but need not, form a
single policy with such PII and all such PII and FGI must remain in force for all of the
period during which a relevant practising certificate is held.
(b)Such PII and FGI may be effected with any reputable insurance company or
insurance companies or other underwriter provided that Council reserves the right to
require applicants for or holders of a practising certificate not to use certain insurance
companies or underwriters, if it so directs.
(2) Liabilities to be covered
PII shall provide cover in respect of all civil liability incurred in connection with the conduct of
the firm’s business by the partners, directors, members and designated members of limited
liability partnerships or employees and FGI shall include cover against any acts of fraud or
dishonesty by any partner, director or employee in respect of money or goods held in trust by
the firm.
(3) Limits
(a) Subject to regulation 9(3)(g), the limit of indemnity on PII in respect of each and
every claim shall be:
(i)
in the case of a person whose firm’s total income for the accounting year
immediately preceding the year in question (the “relevant total income” and
“relevant accounting year”) is less than or equal to £200,000, at least the
greatest of:
(aa) two and one half times that firm’s relevant total income; and
(bb) twenty-five times the largest fee paid to the firm during the relevant
accounting year; and
(cc) £50,000;
(ii)
in the case of a person whose firm’s relevant total income exceeds £200,000
but is less than or equal to £700,000, at least the greater of:
(aa) the aggregate of £300,000 and the firm’s relevant total income; and
(bb) twenty-five times the largest fee paid to the firm during the relevant
accounting year;
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Global Practising Regulations 2.2
(iii)
in the case of a person whose firm’s relevant total income exceeds £700,000,
at least the greater of:
(aa) £1 million; and
(bb) twenty-five times the largest fee paid to the firm during the relevant
accounting year.
(b) The limit of indemnity on PII in respect of year 2000 date recognition claims, where
available, may be on an aggregate basis as opposed to an each and every claim
basis. The minimum limit on this cover must be calculated in accordance with
regulation 9(3)(a).
(c) A firm’s “total income” is the aggregate of the firm’s professional charges and all
other income (including commissions) received by a firm in respect of and in the
course of the firm’s business, but excluding any commission which the firm passes
on to the client.
(d) The “largest fee” paid to a firm relates, in all cases, to the highest cumulative amount
of fees raised to a particular client during the year rather than the largest single
invoice raised.
(e) Subject to regulation 9(3)(g), any uninsured excess (that is to say, the amount of
any claim which is borne by the firm before there is any payment by the insurer) in
accordance with a firm’s PII and FGI shall be restricted to 2 per cent of the limit
of indemnity in respect of each and every claim provided pursuant to the PII or, as
the case may be, FGI or £20,000 per principal in respect of each and every claim,
whichever amount is the lesser.
(f) Subject to regulation 9(3)(g), the annual limit of indemnity to be provided by a firm’s
FGI shall be not less than £50,000 in respect of each and every claim.
(g) Persons carrying on public practice in a country other than a designated territory
may, instead of complying with regulations 9(3)(a), 9(3)(e) and 9(3)(f), comply with
the minimum requirements of a recognised national body or regulatory authority
in that country in respect of the limit of indemnity on PII and FGI and in respect of
uninsured excess.
(4) Administrative provisions
(a) (i)
(ii)
Each person subject to regulation 9(1) must on request provide the Association
with a policy and/or certificate from his insurer or broker as evidence that PII
and, if required, FGI is in force in accordance with this regulation as at the
certificate renewal date of each year, and will remain in force for the year
covered by the certificate, being PII and, as the case may be, FGI which meets
the requirements of this regulation.
In the event that PII is subject to an aggregate limit and claims are notified
during the year in question but not met in that year, the aggregate limit for
the following year and, if such claims are not by then met, subsequent years
should be increased to take account of the amount (or a best estimate of that
amount) either paid or reserved for such claims.
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2.2 Global Practising Regulations
(b) The policy terms and wording shall be available for inspection by the Admissions and
Licensing Committee.
(c) Each person subject to regulation 9(1) shall be deemed to have authorised the
Admissions and Licensing Committee to seek, direct from the relevant insurer and/or
broker, confirmation of matters of record.
(d) Each person subject to regulation 9(1) must keep a record of insurance claims made
by him pursuant to his PII and, as the case may be, FGI.
(e) Such record, together with each annual renewal proposal form, must be available for
inspection by the Admissions and Licensing Committee.
(5) Continuity following cessation
Persons subject to regulation 9(1) shall ensure that arrangements exist for the continued
existence of PII and, as the case may be, FGI for a period of six years after they cease to
engage in public practice. Such PII and, as the case may be, FGI shall be on terms satisfying
the requirements of this regulation as applied to their business during the year immediately
preceding such cessation.
(6) Exception
An individual who is not a sole proprietor, partner or director of the firm in which he works,
or member or designated member of a limited liability partnership, but holds a practising
certificate and is responsible for public practice work carried on by the firm, shall be deemed
to hold PII in accordance with regulation 9(1) where the firm (or all of them if more than one)
in which he works:
(a) is a person subject to regulation 9(1) and holds PII in compliance with regulation
9(1); or
(b) holds PII which the Admissions and Licensing Committee regards as adequate.
(7) Waiver
In exceptional circumstances, the requirements of regulation 9 may be waived, varied or
suspended at the direction of the Admissions and Licensing Committee in its absolute
discretion.
10. Continuing professional development
Members must comply with Membership Regulation 4(4).
11. Continuity of practice
(1) Individuals
(a) A holder of a practising certificate must enter into and keep in force for all of
the period during which a certificate is held a written agreement with another
accountant, a firm of accountants or a limited company (the “nominee”), providing
for the nominee, or nominees if more than one, to be responsible for the individual’s
practice in the event of his death or incapacity.
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Global Practising Regulations 2.2
(b) The nominee or nominees must:
(i)
be based in the same country as the individual; and
(ii)
hold an equivalent qualification and be authorised to carry on the individual’s
work for which they have undertaken to be responsible.
(c) Where the individual’s practice is based in more than one country, he must comply
with this regulation in respect of each country in which he is based, but may appoint
different nominees in respect of different countries.
(2) Firms
(a) A firm must make provision for the continuity of its practice in the event of its
dissolution, winding-up or liquidation, or the death or incapacity of an individual
holder of a practising certificate who is a partner, director or member of the firm,
by providing for another accountant or a firm of accountants (the “nominee” or
“nominees” if more than one) to be responsible for the firm’s practice in those
circumstances.
(b) Such provision may be made in the partnership agreement (where the firm is a
partnership) or in the Memorandum and Articles of Association (where a firm is
a company) or in the incorporation document (where the firm is a limited liability
partnership) or other such agreement as the members of the limited liability
partnership may agree or by entering into and keeping in force for all of the period
during which a practising certificate is held a written agreement with another firm.
(c) The nominee or nominees must:
(i)
be based in the same country as the firm; and
(ii)
hold an equivalent qualification and be authorised to carry on the firm’s work
for which they have undertaken to be responsible.
(d) An individual holder of a practising certificate who is the sole director and
shareholder of his firm may not provide nominee services to his firm.
(e) Where the firm’s practice is based in more than one country, it must comply with this
regulation in respect of each country in which it is based and may appoint different
nominees in respect of different countries.
(3) Exception for individuals
An individual holder of a practising certificate who does not carry on public practice on his
own account shall not have to comply with regulation 11(1) provided any firm of which he
is a partner, director, member or designated member of a limited liability partnership or
employee and for whom he works has complied with regulation 11(2) or, if it is not subject
to that regulation, has made arrangements for the continuity of its practice which the
Admissions and Licensing Committee regards as adequate.
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2.2 Global Practising Regulations
(4) Waiver
In exceptional circumstances, for members in a country other than a designated territory,
Cyprus or Zimbabwe, the requirements of regulations 11(1) and 11(2) may be waived, varied
or suspended at the direction of the Admissions and Licensing Committee in its absolute
discretion.
12. Notification
(1) Notification 28 days in advance
(a) A holder of a practising certificate shall notify the Association in writing of the
following changes not less than 28 days before the change is implemented:
(i)
a change in the name of the holder, or where it is a body corporate, its
registered name and, in the case of a firm, of any partner, member or
designated member or director or controller of it;
(ii)
a change in the address of the holder’s principal or, in the case of a body
corporate, registered office or, if different, the address of the place for service
of notices or documents;
(iii)
the opening or closure of a branch office of the holder;
(iv)
the disposal or cessation of a holder’s practice.
(b) Notification of a change of name of a person holding a practising certificate shall be
accompanied by an application for a new certificate of the relevant type from the
stated date.
(2) Notification forthwith
A holder of a practising certificate shall give written notice forthwith to the Association of the
occurrence of any of the following, setting out in the notice details of the event in question
and any other relevant information:
(a) in the case of a partner, member or designated member or director of a firm, a
person has become or ceased to be a partner, member or designated member or
director of it, and, in the case of a body corporate, a person has become or ceased to
be a controller of it and, in the case of a sole practitioner, he has ceased to practise;
(b) the appointment of a receiver, administrator, trustee, judicial factor or sequestrator of
the assets of the holder (or the happening of any similar or analogous event) or, in the
case of a firm, of any partner, member or designated member or director of it and, in
the case of a body corporate, a controller of it;
(c) the making or any proposals for the making of a composition or arrangement with
creditors or any one creditor of the holder or, in the case of a firm, of any partner,
member or designated member or director of it and, in the case of a body corporate,
a controller of it;
(d) where the holder is a partnership, an application or notice to dissolve the partnership
and where it is a body corporate, the presentation of a petition for winding-up or the
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Global Practising Regulations 2.2
summoning of any meeting to consider a resolution to wind up the body corporate or
any other body corporate in its group;
(e) the granting or refusal of any application for, or revocation of, a recognised
professional qualification or any certificate entitling the holder or, in the case of a
firm, any partner, member or designated member or director of it and, in the case
of a body corporate, a controller of it to carry on company audit work from another
qualifying or supervisory body or authorisation to carry on insolvency, investment,
banking or insurance business;
(f) the appointment of inspectors by a statutory or regulatory authority to investigate
the affairs of the holder or, in the case of a firm, any partner, member or designated
member or director of it or controller of it;
(g) the imposition of disciplinary measures or sanctions on the holder or, in the case of a
firm, any partner, member or designated member or director of it or controller of it by
any other regulatory authority or professional body of which he or such a person is a
member;
(h) in relation to a holder or, in the case of a firm, any partner, member or designated
member or director of it or controller of it:
(i)
the institution and abandonment or completion of proceedings in relation to
and/or a conviction for any offence involving fraud or other dishonesty;
(ii)
the institution and abandonment or completion of proceedings in relation to
and/or a conviction for any offence under legislation relating to investment,
banking, building societies, companies, consumer credit, credit unions, friendly
societies, industrial and provident societies, insolvency, insurance or other
financial services;
(iii)
the presentation of a petition for a bankruptcy order or an award of
sequestration;
(iv)
the making of an order by a court disqualifying that individual from serving as
director or as a restricted director or as a disqualified director of a company or
from being concerned with the management of a company;
(v)
the commencement by the police or any other authority of an investigation
into any matter related to public practice, or any other matter which might
reasonably affect the Admissions and Licensing Committee’s willingness to
grant or renew a certificate of a type relevant to the activities in question;
(i) the disappearance of a partner, member or designated member of a firm such that he
is no longer contactable by the other partners or members of the firm;
(j) the happening of any event which causes the holder to cease to be eligible for the
certificate;
(k) any changes in any of the information previously supplied to the Association;
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2.2 Global Practising Regulations
(l) any other information relevant to the determination by the Admissions and Licensing
Committee of the fitness and propriety of the holder in accordance with regulation 8;
(m)any other information that the Association may require in connection with the
requirements of these regulations.
(3) Force Majeure
If any event happens or any circumstances arise which make it impossible, impracticable or
unreasonable for a person to comply with this regulation 12, provided he takes all practicable
steps to relieve the situation and complies with this regulation as soon as the event or
circumstances cease to apply, he will not be regarded as having been in breach of this
regulation if he fails to comply with it for so long as the event or circumstances do apply.
(4) Notification obligation
A member who has notified the Admissions and Licensing Committee that he is carrying on
public practice but does not hold a practising certificate shall give written notice forthwith to
the Association of all of the matters referred to in regulation 12(1)(a) and 12(2).
13. Conduct
Holders of a practising certificate shall, in the conduct of their work to which the certificate
relates:
(a) comply with the Code of Ethics and Conduct of the Association or of another
recognised body which incorporates the International Federation of Accountants
(IFAC) Code of Ethics for Professional Accountants; and
(b) maintain documented (either paper-based or electronic) quality assurance systems
and procedures for ensuring timely and accurate identification of client requirements;
and
(c) apply to all relevant assignments the International Financial Reporting Standards
issued by the International Accounting Standards Board or the equivalent standards
of the country in which the individual carries on public practice; and
(d) apply to all relevant assignments the International Standards on Auditing issued by
the International Auditing and Assurance Standards Board or the equivalent standards
of the country in which the individual carries on public practice.
14. Monitoring, quality assurance and compliance
(1) Persons subject to these regulations shall be subject to:
(a) monitoring by the Association, in order to monitor compliance with these regulations
and with the bye-laws; and
(b) the Association’s quality assurance programme;
which may be carried out by post, by email, by visiting the person’s business premises and/or
by any other form of communication.
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Global Practising Regulations 2.2
(2) For the purposes of regulation 14(1), members must supply the Association with all
the information necessary to enable the Association to complete its monitoring process and
quality assurance programme efficiently.
(3) Persons subject to these regulations shall, and shall ensure (insofar as they are able) that
all persons associated with them shall, co-operate with the Association in its monitoring and
enforcement of compliance with these regulations and with the bye-laws.
(4) Persons subject to these regulations shall maintain proper books and records at all times
to facilitate the proper performance of their duties.
(5) The requirements of this regulation 14 shall apply to persons for as long as they hold a
certificate, and for a period of five years after they cease to do so for any reason.
(6) For the purposes of this regulation 14, certificate includes all types of certificates and
licences issued by the Association.
15. Disclosure of information
Registered students, affiliates and members must supply the Association with all necessary
information to enable the Association to comply with its obligations with respect to any legal
and regulatory requirements that may exist in the country where the registered student,
affiliate or member is based.
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2.2 Global Practising Regulations
Appendix 1
Competences of Practising Certificate Holders
M
indicates a mandatory element
K
indicates a key element
A
indicates an audit element
Key Area 1 Professional Conduct
A
A1 Establish and maintain effective and ethical business relationships and networks
M
A2 Maintain an awareness and understanding of changes affecting the profession
M
A3 Demonstrate a commitment to own personal and professional knowledge and development
M
B
B1 Maintain the confidentiality of internal and external information M
B2 Uphold professional ethics, values and standards M
Key Area 2 Accounting
C
C1 Appraise information for the preparation of financial and other statements and accounts
K
C2 Prepare and present financial and other statements and accounts
K
D
D1 Appraise financial information for the preparation of management information
K
D2 Prepare and present financial information for management purposes
K
E
E1 Identify potential changes to an organisation’s accounting systems
E2 Implement and evaluate new/changes to accounting systems
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Global Practising Regulations 2.2
Key Area 3 Business Advice, Development and Measurement
F
F1 Identify and advise on relevant legal and regulatory obligations
F2 Provide support in meeting regulatory obligations
G
G1 Formulate business strategy and objectives
G2 Devise business plans
H
H1 Assist clients to understand and evaluate their options for raising finance
H2 Assist clients to raise finance to achieve objectives
I
I1
Prepare spending proposals and profiles
I2
Agree, monitor and report on budgets for activities
J
J1
Identify financial objectives and performance measures
J2
Facilitate the introduction of systems and practices to plan and monitor financial performance
J3
Monitor the achievement of financial performance and objectives
K
K1 Evaluate the potential profitability of products and services
K2 Calculate the actual costs of products and services
K3 Make recommendations to reduce costs and enhance value
L
L1
L2 Recommend ways of optimising the use of assets
L3 Establish the value of businesses
Determine the risks and benefits associated with business/investment opportunities
K
K
K
K
K
K
K
Key Area 4 Taxation
M
M1 Compute the tax payable
K
M2 Provide advice on tax liabilities and payments
K
M3 Provide advice on current and future tax planning
K
M4 Provide advice about the tax implications of externally or internally initiated changes
M5 Negotiate with the tax authorities on behalf of clients
Key Area 5 Business Assurance and Internal Review
N
N1 Determine the scope, purpose and objectives of an internal review or investigation
N2 Deliver evidence for an internal review or investigation
O
O1 Obtain evidence for analysis against the objectives of an internal review or investigation
O2 Make judgements against the objectives of an internal review or investigation
K
O3 Report on the findings and outcomes of an internal review or investigation
K
O4 Present evidence as an expert witness for litigation or criminal proceedings
K
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2.2 Global Practising Regulations
Key Area 6 Management
P
P1 Promote services to existing and potential clients
K
P2 Evaluate potential and existing clients
K
P3 Agree service details and engage clients
Q
Q1 Set fees and credit limits for activities
Q2 Collect fee income from clients
R
R1 Identify changes to products and services
R2 Implement and monitor client service standards and policies
R3 Promote continuous quality improvement in products, services and processes
S
S1
S2 Control costs to improve services to clients
T
T1 Identify personnel requirements and role specifications
T2 Select teams and individuals
T3 Develop teams and individuals
U
U1 Identify and agree objectives and methods to deliver required outcomes
U2 Delegate activities to teams and individuals
U3 Monitor and appraise the work of others
V
V1 Monitor and maintain the security of high value items
V2 Maintain the health, safety and security of the working environment W
W1 Develop and maintain information systems to meet the employer’s requirements
W2 Monitor and control the employer’s information systems
K
Monitor and control activities against budgets
K
K
Key Area 7 Audit
X
X1 Determine the level of audit risk
A
X2 Evaluate the risk within an organisation’s internal control structure
A
X3 Co-ordinate the delivery of audit evidence
A
Y
Y1 Evaluate evidence collected for an audit
A
Y2 Make judgements about the truth and fairness of an organisation’s financial statements
A
Y3 Review the performance of an audit
A
Z
Z1
A
Z2 Prepare a formal audit report
100
Advise on the findings and implications of the audit
A
Global Practising Regulations (Annex 1) 2.2
Additional Practising Regulations for the
United Kingdom, Jersey, Guernsey and
Dependencies and the Isle of Man
Annex 1 to The Chartered Certified Accountants’ Global
Practising Regulations 2003
1. Application
The regulations contained in this annex form part of The Chartered Certified Accountants’
Global Practising Regulations 2003, and shall apply to all members and to all persons who
otherwise agree to be bound by them.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
ACCA student means a registered student who is undertaking the ACCA qualification
examinations;
agent, in relation to a person, means any person (including an employee) who acts on
that person’s behalf;
AIU means the Audit Inspection Unit of the Professional Oversight Board;
appropriate qualification means a qualification in accordance with section 1216 of the
Companies Act 2006 of the United Kingdom;
Audit Directive means Directive 2006/43/EC of the European Parliament and of the
Council on statutory audits of annual accounts and consolidated accounts;
audit qualification means an audit qualification to the practising certificate issued by the
Association to individuals holding the Association’s recognised professional qualification
and referred to in regulation 5, which authorises the individual to hold himself out as an
auditor and to carry on audit work;
audit report means a report on accounts or financial statements which is described as an
audit report or having been made by an auditor or is given in true and fair terms or which
states that the accounts present fairly the financial position;
audit working papers means any documents which:
(a) are or have been held by an auditor; and
(b) are related to the conduct of an audit conducted by that auditor;
auditing certificate means an auditing certificate issued by the Association to firms and
referred to in regulation 6;
auditor means a person who signs or holds himself out as being available to sign an audit
report whether or not that report is required by statute;
controller has the meaning given in paragraph 8(4) of Schedule 10 of the Companies Act
2006 of the United Kingdom;
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EEA auditor means an individual who is approved in accordance with the Audit Directive
by an EEA competent authority to carry on audit work;
EEA competent authority means a competent authority within the meaning of article 2.10
of the Audit Directive of an EEA state other than the United Kingdom;
EEA state means a state which is a Contracting Party to the Agreement on the European
Economic Area signed at Oporto on 2 May 1992 (as it has effect from time to time);
exempt regulated activities has the meaning given in The Chartered Certified
Accountants’ Designated Professional Body Regulations 2001;
group means a parent undertaking and its subsidiary undertakings;
group auditor means a person appointed as auditor to conduct an audit of group
accounts;
insolvency licence means the licence issued by the Association referred to in regulation
10 and which authorises the holder in accordance with section 390(2) of the Insolvency
Act 1986 of the United Kingdom to act as an insolvency practitioner;
insolvency practitioner means a person acting as such in accordance with section 388 of
the Insolvency Act 1986 of the United Kingdom;
licensed person means a person holding an insolvency licence;
major audit means a statutory audit conducted in respect of:
(a) a company any of whose securities have been admitted to the official list (within the
meaning of Part 6 of the Financial Services and Markets Act 2000 of the United
Kingdom); or
(b) any other person in whose financial condition there is a major public interest;
non-member means a person who is not registered as a student, affiliate or member of
the Association;
qualified person means:
(a) in relation to an individual a person qualified to hold:
(i) a practising certificate with an audit qualification; or
(ii) a corresponding qualification to audit accounts under the law of an EEA state, or
part of an EEA state, other than the United Kingdom; and
(b) in relation to a firm:
(i) a firm that is eligible to be appointed as an auditor; or
(ii) a firm that is eligible for a corresponding appointment as an auditor under the
laws of an EEA state, or part of an EEA state, other than the United Kingdom;
recognised professional qualification means a qualification declared as such for the
purpose of Part 2 of Schedule 11 of the Companies Act 2006 of the United Kingdom;
regulated work means work conducted under an insolvency licence, or an auditing
certificate;
senior statutory auditor means a person acting as such in accordance with section 504
of the Companies Act 2006 of the United Kingdom;
statutory auditor has the meaning given by section 1210 of the Companies Act 2006 of
the United Kingdom;
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supervisory body has the meaning given by section 1217(1) of the Companies Act 2006
of the United Kingdom;
third country means a country or territory that is not an EEA state or part of an EEA
state;
third country auditor means a person, other than a person eligible for appointment as a
statutory auditor, who is eligible to conduct audits of the accounts of bodies corporate
incorporated or formed under the law of a third country in accordance with the law of
that country;
third country competent authority means a body established in a third country exercising
functions related to the regulation or oversight of auditors.
(2) For the purposes of these regulations, unless the context otherwise requires, a reference
to the Companies Act 2006 of the United Kingdom or any of the provisions of that Act
shall, in relation to the carrying on of public practice in Northern Ireland, the eligibility, the
qualifications and other conditions in relation thereto and the functions of the Association
as a supervisory body (or corresponding concept) in Northern Ireland, be deemed to be a
reference to the corresponding legislation or provision of the law of Northern Ireland.
(3) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(4) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
(5) The Interpretation Act 1978 of the United Kingdom shall apply to these regulations in the
same way as it applies to an enactment.
3. Restrictions on carrying on public practice
(1) Members
(a) Subject to regulation 3(1)(b), a member holding an insolvency licence may not carry
on an activity constituting public practice which is outside the practice of acting as
an insolvency practitioner unless he holds a practising certificate.
(b) A member who holds an insolvency licence who does not carry on an activity
constituting public practice which is outside the practice of acting as an insolvency
practitioner, but who is a partner or director of a firm where such an activity is
carried on, is not required to hold a practising certificate.
(2) Members and firms
Where public practice is carried on in the name of a firm, or otherwise in the course of a
firm’s business, and that public practice involves the accepting of an appointment as an
auditor, or the holding out of the firm as being available to accept such an appointment, no
member shall be a sole proprietor, partner or director of that firm unless the firm holds an
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auditing certificate issued by the Association and is thereby authorised by the Association to
carry on audit work.
(3) A firm required by regulation 3(2) to hold an auditing certificate may instead hold
another certificate or authorisation which is in the opinion of the Admissions and Licensing
Committee equivalent.
(4) A practising certificate or auditing certificate shall only authorise the carrying on of an
activity where the activity is both carried on in the country to which the certificate relates, as
determined in accordance with regulation 4(2), and is covered by the certificate as provided
for in regulations 5 and 6.
4. Meaning of public practice
(1) Activities
Public practice has the meaning described by regulation 4 of the Global Practising
Regulations.
(2) Where carried on
Where the public practice consists of accepting an appointment as an auditor, or holding
oneself out as available to do so, it shall be taken to be carried on in the United Kingdom,
Jersey, Guernsey and Dependencies and/or the Isle of Man whose laws apply to the
appointment, or would apply to the potential appointment, in question.
(3) Insolvency practice
Insofar as practitioners carrying on their professional activities in the United Kingdom are
concerned, any activity carried on by a person acting as an insolvency practitioner shall not
constitute public practice for the purposes of these regulations, but a member acting as an
insolvency practitioner shall be deemed to be a member in practice for the purposes of the
bye-laws concerning elections to Council.
(4) Supervision for money laundering
Members who provide accountancy services within the terms of the Money Laundering
Regulations 2007 by way of business which fall outside the meaning described by
regulation 4 of the Global Practising Regulations (for example book-keeping) will be subject
to supervision for compliance with the anti-money laundering provisions under the Money
Laundering Regulations 2007. In such cases, eligible members should consider obtaining
a practising certificate from the Association in order to be supervised by the Association.
Alternatively, members must register with HM Revenue and Customs or another body
recognised for such purposes.
5. Eligibility for an audit qualification
Members accepting an appointment as an auditor shall be required to obtain the
Association’s recognised professional qualification in accordance with regulation 7 in addition
to complying with regulation 5 of the Global Practising Regulations as regards their practising
certificate. The audit qualification will convey to the holder the necessary authorisation to
carry on audit work.
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6. Eligibility for an auditing certificate
A firm shall be eligible for an auditing certificate if:
(a) each of the individuals responsible for the firm’s audit work holds an audit
qualification, or, in the case of non-members of the Association, holds an equivalent
certificate;
(b) it is controlled by qualified persons within the meaning of regulation 8;
(c) it is fit and proper within the meaning of regulation 13;
(d) it holds the necessary PII in accordance with regulation 14;
(e) it has made arrangements for the continuity of its practice in accordance with
regulation 16;
(f) it undertakes to be bound by the Global Practising Regulations including this annex,
the Complaints and Disciplinary Regulations, the Membership Regulations and the
Charter and bye-laws insofar as they are applicable to it; and
(g) it has arrangements to prevent individuals who do not hold an appropriate
qualification for the purposes of Part 42 of the Companies Act 2006 of the United
Kingdom and persons who are not members of the firm from being able to exert any
influence over the way in which an audit is conducted in circumstances in which that
influence would be likely to affect the independence or integrity of the audit.
A firm which has ceased to comply with the conditions (a) and (b) above may be permitted to
remain eligible for appointment as an auditor for a period of not more than three months.
7. Qualifications
(1) Qualifications required to hold a practising certificate
To be qualified to hold a practising certificate, members will need to meet the requirements
of regulation 7 of the Global Practising Regulations.
(2) Qualifications required to obtain an audit qualification
To be qualified to hold an audit qualification, an individual must meet one of the following
requirements:
(a) where the audit qualification is to relate to the United Kingdom:
(i)
an individual (other than an EEA auditor) must:
(aa) have obtained the Association’s recognised professional qualification (in
accordance with regulation 7(5) below); or
(bb) have a third country qualification approved by the Secretary of State
under section 1221 of the Companies Act 2006 and have passed the
Association’s aptitude test in accordance with 7(3) below unless an
aptitude test is not required (see 7(4) below); or
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(cc) have previously held an equivalent certificate issued to members prior to
5 April 2008; or
(ii)
an individual who is an EEA auditor must:
(aa) hold an appropriate qualification;
(bb) have been authorised on or before 5 April 2008 to practise the
profession of statutory auditor pursuant to the European Communities
(Recognition of Professional Qualifications) Regulations 2005 (S.I.
2005/18) and have fulfilled any requirements imposed pursuant to
regulation 6 of those Regulations; or
(cc) have passed an aptitude test in accordance with 7(3) below unless an
aptitude test is not required (see 7(4) below).
(b) where the audit qualification is to relate to Jersey, Guernsey and Dependencies, or
the Isle of Man:
(i)
comply with the relevant requirements in Appendix 2 of these regulations; or
(ii)
have previously held an equivalent certificate issued to members prior to 1
January 2011.
(3) The aptitude test
The aptitude test:
(i)
must test the person’s knowledge of subjects:
(aa) that are covered by a recognised professional qualification;
(bb) that are not covered by the recognised professional qualification already
held by the person; and
(cc) the knowledge of which is essential to the pursuit of the profession of
statutory auditor;
(ii)
may test the person’s knowledge of rules of professional conduct:
(iii)
must not test the person’s knowledge of any other matters.
(4) Aptitude test not required
No aptitude test is required if the subjects that are covered by a recognised professional
qualification and the knowledge of which is essential in the pursuit of the profession of
statutory auditor are covered by the professional qualification already held by the person.
(5) Recognised professional qualification of the Association
To obtain the Association’s recognised professional qualification, members must:
(a) have completed three years’ practical training in an ACCA approved employer,
working either as an employee or sub-contractor, under the supervision of:
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(i)
a member who is authorised to carry on audit work by way of an audit
qualification (or a practising certificate issued to members prior to 1 January
2011); or
(ii)
any other person having in the opinion of Council adequate qualifications and
experience and who is a fully qualified statutory auditor under paragraph 9(4)
of Schedule 11 to the Companies Act 2006 of the United Kingdom, such as
statutory auditors practising in EEA states (or equivalent persons in relation to
applicants for certificates relating to countries other than the United Kingdom);
and must comply with the requirements set out in Part 1 of Appendix 1. Individuals
who became members of the Association prior to 1 January 2010 may, until
31 December 2012, comply with the transitional provisions set out in Part 2 of
Appendix 1;
(b) have passed the UK tax and law variants of the Association’s examinations and the
UK variant of the relevant examinations stipulated in Part 3 of Appendix 1 of these
regulations, if any;
(c) have completed the adapted paper P2, Corporate Reporting, if this paper P2 was
completed on or after 1 January 2011; and
(d) have been a member of the Association continuously for a period of not less than two
years.
8. Meaning of firm controlled by qualified persons
Firms controlled by qualified persons are authorised for carrying on audit work in accordance
with regulation 6.
(a) A firm shall only be regarded as controlled by qualified persons for the purposes of
regulation 6 where:
(i)
a majority of the partners or a majority of the directors and shareholders of the
firm are qualified persons; and
(ii)
if the firm’s affairs are managed by a board of directors, committee or other
management body, a majority of that body are qualified persons, or if the body
consists of only two persons, at least one of them is a qualified person and has
a casting vote.
(b) References in regulation 8(a) above to a person being qualified are, in relation to an
individual, to his being qualified to hold an audit qualification in accordance with
regulation 7(2) and that he spends a material amount of his time working in the firm
concerned, or being otherwise eligible to be appointed as an auditor.
(c) A majority of the partners or a majority of the directors and shareholders of the firm
in regulation 8(a)(i) means:
(i)
where under the firm’s constitution matters are decided on by the exercise of
voting rights, partners or directors and shareholders holding a majority of the
rights to vote on all, or substantially all, matters;
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(ii)
in any other case, partners or directors and shareholders having such rights
under the constitution of the firm as enable them to direct its overall policy or
alter its constitution.
(d) A majority of the members of the management body of a firm in regulation 8(a)(ii)
means:
(i)
where matters are decided at meetings of the management body by the
exercise of voting rights, members holding a majority of the rights to vote on
all, or substantially all, matters at such meetings;
(ii)
in any other case, members having such rights under the constitution of the
firm as enable them to direct its overall policy or alter its constitution.
(e) The provisions of paragraphs 5 to 7 of Schedule 7 to the Companies Act 2006 of the
United Kingdom (rights to be taken into account and attribution of rights) apply for
the purposes of this regulation 8.
9. Restriction on carrying on insolvency practice
(1) Members
No member shall act as an insolvency practitioner unless he holds an insolvency licence
issued by the Association or he is otherwise authorised so to act for the purposes of section
391 of the Insolvency Act 1986 of the United Kingdom and holds an insolvency licence
issued by another recognised professional body under that section. Where the individual
acts as an insolvency practitioner but does not hold an insolvency licence issued by the
Association, he must hold a practising certificate.
(2) Non-members
Persons who are non-members may be regulated by the Association solely to act as an
insolvency practitioner.
(3) A person shall only be regarded as holding an insolvency licence where it is current and
valid.
10. Eligibility for an insolvency licence
(1) Members and non-members
A person shall be eligible for an insolvency licence if:
(a) he is qualified in accordance with regulation 11;
(b) he is fit and proper within the meaning of regulation 13;
(c) he holds the necessary PII in accordance with regulation 14; and
(d) he has made arrangements for the continuity of his practice in accordance with
regulation 16.
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(2) Additional requirements for non-members
In addition to complying with regulation 10(1), non-members shall be required to provide
undertakings to be bound by the following regulations as if they were members of the
Association:
(a) the Global Practising Regulations;
(b) the continuing professional development requirements of Membership Regulation
4(4);
(c) the Authorisation Regulations, including the requirement at Authorisation Regulation
3(1)(a) to pay such fees as Council may from time to time require when applying for
an insolvency licence;
(d) the Charter, bye-laws and regulations of the Association insofar as they are
appropriate and applicable (other than those relating to members’ rights to attend
and vote at meetings of the Association and obligations to pay subscriptions); and
(e) the disciplinary procedures of ACCA and penalties which may be imposed under such
provisions insofar as such penalties could be applicable to a person who is not a
member of the Association.
11. Qualification requirements for an insolvency licence
(1) Qualifications and experience
To be qualified for the purposes of regulation 10(1)(a), an individual must:
(a) if he is a member of the Association:
(i)
have been a member of the Association for a continuous period of not less than
two years; and
(ii)
have passed the examinations set by the Joint Insolvency Examination Board;
and
(iii)
have completed three years of practical experience in a firm of accountants
or insolvency practitioners, under the supervision of a licensed insolvency
practitioner, or in an Official Receiver’s office, of which two years must have
been obtained subsequent to his admission as a member or as a member of
another accountancy body recognised under section 391 Insolvency Act 1986
of the United Kingdom; and
(iv)
have obtained a minimum of 600 hours’ insolvency experience in the three
years immediately preceding the application for an insolvency licence, of which
at least 150 hours must have been gained in each of three calendar years
within such period; or
(b) if he is a non-member:
(i)
have passed the examinations set by the Joint Insolvency Examination Board;
and
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(ii)
have completed three years of practical experience under the supervision of a
licensed insolvency practitioner or in an Official Receiver’s office; and
(iii)
have obtained a minimum of 600 hours’ insolvency experience in the three
years immediately preceding the application for an insolvency licence, of which
at least 150 hours must have been gained in each of three calendar years
within such period; or
(c) have the right to practise in the United Kingdom as an insolvency practitioner
pursuant to the European Communities (Recognition of Professional Qualifications)
Regulations 2007 (S.I. 2007/2781) and have fulfilled any requirements imposed
pursuant to regulation 6 of those Regulations; or
(d) hold, or be eligible to hold, an insolvency licence issued by another recognised
professional body or by the competent authority under sections 391 and 393
respectively of the Insolvency Act 1986 of the United Kingdom.
(2) Insolvency experience
The insolvency experience referred to in regulations 11(1)(a)(iv) and 11(1)(b)(iii) must have
been gained in the course of:
(a) assisting an insolvency practitioner acting as such; or
(b) assisting or being an Official Receiver in accordance with section 399 Insolvency Act
1986 of the United Kingdom; or
(c) where the individual was authorised to act as an insolvency practitioner at the
relevant time, acting as an insolvency practitioner.
(3) Experience on renewal
A licensed person wishing to renew his insolvency licence must continue to meet, as an
appointment holder, joint appointment holder or as an assistant to an appointment holder,
the number of hours of relevant insolvency experience as follows:
(a) 600 hours’ experience gained over a period of more than three but less than or equal
to five years immediately preceding the renewal application of which at least 150
hours must have been gained in each of three calendar years within such period; or
(b) 750 hours’ experience gained over a period of more than five but less than or equal
to eight years immediately preceding the renewal application of which at least 100
hours must have been gained in each of four calendar years within such period; or
(c) 900 hours’ experience gained over a period of more than eight years immediately
preceding the renewal application of which at least 75 hours must have been gained
in each of six calendar years within such period
save that any licensed person who fails to meet the relevant insolvency experience
requirement for any one calendar year shall be eligible for an insolvency licence provided he
can demonstrate that he has undertaken an adequate programme of additional continuing
professional development during that year.
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(4) Waiver
In exceptional circumstances, the requirements of regulations 11(1)(a)(iv) and 11(1)(b)(iii)
may be waived, varied or suspended at the direction of the Admissions and Licensing
Committee in its absolute discretion.
12. Restriction on carrying on exempt regulated activities
No member, nor any firm in relation to which he is a sole proprietor, partner or director, may
carry on, or purport to carry on, exempt regulated activities in the United Kingdom unless
he or, as the case may be, it is registered by the Association to carry on exempt regulated
activities or is otherwise authorised, or exempted from the need for authorisation, in respect
of such exempt regulated activities for the purposes of the Financial Services and Markets
Act 2000 of the United Kingdom. However, any member, or firm, satisfying the eligibility
requirements contained in regulation 3 of the Designated Professional Body Regulations can
register to conduct exempt regulated activities in accordance with and from the effective date
of those regulations. The exempt regulated activities must be the only regulated activities
carried out, other than regulated activities in relation to which the member or firm is an
exempted person. Exempt regulated activities are as defined in the Designated Professional
Body Regulations.
13. Fit and proper persons
Regulation 8 of the Global Practising Regulations applies to members. Additionally, where
auditing certificates or insolvency licences are concerned, this regulation 13 shall apply to the
Admissions and Licensing Committee’s determination.
In determining whether a person is “fit and proper”, the Admissions and Licensing
Committee:
(a) may take into account whether that person has contravened any provision of law
relating to the seeking appointment or acting as auditor or insolvency practitioner
or to the carrying on of exempt regulated activities or the provision of investment
business services or investment advice;
(b) shall take into account whether that person has contravened any law or regulation
or undertaken any practices or conduct referred to in relevant law, regulation or
guidance issued by a body with responsibility for the regulation of the activities of
the holder of the certificate or of the Association in its regulation of such activities,
including without limitation in the case of holders of insolvency licences regulation 4
of the Insolvency Practitioners Regulations 2005 and the Guidance Notes for Persons
seeking Authorisation to Act as an Insolvency Practitioner issued by the DTI;
(c) may take into account any matter which relates to him or it and any matter relating
to any person who is or will be employed by or associated with him or it for the
purposes of or in connection with public practice, insolvency work, exempt regulated
activities or investment business services or investment advice.
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14. Professional indemnity insurance
(1) Practising certificates, insolvency licences and auditing certificates held by firms
Regulation 9 of the Global Practising Regulations applies to applicants for and holders of
(a) practising certificates;
(b) insolvency licences; and
(c) auditing certificates held by firms.
(2) Continuity following cessation
Regulation 9(5) of the Global Practising Regulations applies to persons subject to regulation
14(1) in respect of their ceasing to engage in public practice, insolvency work, exempt
regulated activities or investment business services or investment advice.
(3) Insolvency licences
(a) In addition to holding PII, a holder of an insolvency licence must hold a bond by
way of security or, in Scotland, a caution for the proper performance of his functions
that complies with regulation 10 of, and Part 2 of Schedule 2 to, the Insolvency
Practitioners Regulations 2005 of the United Kingdom (the “enabling bond”).
(b) A holder of an insolvency licence shall comply with section 390(3) Insolvency Act
1986 of the United Kingdom and the Insolvency Practitioners Regulations 2005 of
the United Kingdom as regards the enabling bond and shall ensure that:
(i)
the enabling bond is in force at a time when he is appointed to act as an
insolvency practitioner in relation to a person; and
(ii)
there is in force in relation to the enabling bond with effect from the time when
he is appointed so to act in relation to that person, specific penalty as required
by the provisions of the Insolvency Practitioners Regulations 2005 of the
United Kingdom.
(c) The enabling bond shall be lodged with the Association on application for or renewal
of an insolvency licence issued by the Association.
15. Continuing professional development
Firms holding an auditing certificate and/or firms which carry on exempt regulated activities
must require the individuals who are partners or directors or agents of the firm who are not
members but who are responsible for the firm’s audit work or carry on exempt regulated
activities in the United Kingdom on behalf of the firm to comply with Membership Regulation
4(4) as if they were members.
16. Continuity of practice
Regulation 11 of the Global Practising Regulations shall be applicable to all holders of
an insolvency licence, firms holding an auditing certificate and firms carrying on exempt
regulated activities. The nominee providing continuity of practice for a holder of an insolvency
licence may be any person licensed to act as an insolvency practitioner and need not be an
accountant.
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17. Notification
Holders of an insolvency licence and firms holding an auditing certificate must comply with
regulation 12 of the Global Practising Regulations.
Additionally, they shall give written notice forthwith of the commencing of proceedings
against the holder or any partner or director or controller of a firm any actions for damages,
injunctions or restitution orders connected with regulated work carried on by the individual in
question.
Firms holding an auditing certificate shall notify the Association in writing within 28 days
after their acceptance of an appointment as auditor to a public interest entity whose audits
are within the scope of the AIU. An up-to-date list of such entities can be found at
http://www.frc.org.uk/pob/audit/.
18. Conduct
(1) Audit work
(a) In the conduct of audit work in the United Kingdom, Jersey, Guernsey and
Dependencies and the Isle of Man, holders of an audit qualification and firms
holding an auditing certificate shall comply with all the applicable sections of the
Association’s Rulebook and in particular the Auditing Standards issued by the
Auditing Practices Board, the International Standards on Auditing issued by the
International Auditing and Assurance Standards Board, and the Ethical Standards
issued by the Auditing Practices Board.
(b) In the conduct of audit work in the United Kingdom holders of an audit qualification
and firms holding an auditing certificate shall use the designation “Registered
Auditor” or “Registered Auditors” when signing audit reports for accounting periods
commencing on or before 5 April 2008. For accounting periods commencing on or
after 6 April 2008, the audit report shall:
(i)
state the name of the auditor and be signed and dated;
(ii)
where the auditor is an individual, be signed by him;
(iii)
where the auditor is a firm, be signed by the senior statutory auditor in his
own name, for and on behalf of the auditor, and use the designation “Senior
Statutory Auditor” after his name;
(iv)
state the name of the firm as it appears on the register; and
(v)
use the designation “Statutory Auditor” or “Statutory Auditors” after the name
of the firm.
The auditor’s name and, where the auditor is a firm, the name of the person who
signed the report as senior statutory auditor may be omitted from published copies of
the report and the copy of the report to be delivered to the registrar of companies if
the conditions set out in section 506 of the Companies Act 2006 are met.
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(c) In the United Kingdom, in the case of a major audit, an auditor ceasing to hold office
for any reason must notify the Professional Oversight Board. In the case of an audit
which is not a major audit, an auditor ceasing to hold office before the end of his
term in office must notify the Association. In each case the notice must inform the
appropriate audit authority that he has ceased to hold office and be accompanied
by a copy of the statement deposited by him at the company’s registered office in
accordance with section 519 of the Companies Act 2006 of the United Kingdom.
(d) In the United Kingdom, a person ceasing to hold office as an auditor shall make
available to his successor in that office all relevant information which he holds in
relation to that audit.
(e) In the United Kingdom, an auditor may not accept an appointment as a director or
other officer of a public interest entity during a period of two years commencing on
the date on which his appointment as auditor ended. This regulation also applies to
individuals who are no longer members of the Association.
(f) In the United Kingdom, in the conduct of group audit work, the group auditor shall:
(i)
review for the purposes of a group audit the audit work conducted by other
persons and record that review;
(ii)
retain copies of any documents necessary for the purposes of the review that
it has received from third country auditors who are not covered by the working
arrangements under section 1253E of the Companies Act 2006;
(iii)
agree with those third country auditors proper and unrestricted access to those
documents on request.
(2) Accountants’ reports
Members reporting on an entity which is a member of a regulatory body shall comply with
the requirements of that regulatory body and adhere to any guidance issued by it for the
preparation and presentation of their reports.
(3) Insolvency work
In the conduct of insolvency appointments, a holder of an insolvency licence shall comply
with the Insolvency Act 1986 of the United Kingdom and all subordinate legislation made
thereunder and in particular, but without limitation, the Insolvency Regulations 1994 of the
United Kingdom and the Insolvency Practitioners Regulations 2005 of the United Kingdom
and the Statements of Insolvency Practice and shall have due regard to any other guidelines
issued under the procedures agreed between the insolvency regulatory authorities acting
through the Joint Insolvency Committee (“JIC”), approved by the JIC, and adopted by the
Association.
(4) Exempt regulated activities
Members and firms conducting exempt regulated activities under the Designated Professional
Body Regulations shall comply with the Association’s Code of Ethics and Conduct in the
conduct of that work.
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19. Disclosure of information
(1) Conduct of audit work
In the conduct of audit work, holders of an audit qualification and firms holding an auditing
certificate must supply the Association with all necessary information in accordance with,
and to enable the Association to comply with any other obligations imposed upon it by
regulations made under, sections 1239 and 1240 of the Companies Act 2006 of the United
Kingdom. This requirement shall apply for the duration of time that an audit qualification and
auditing certificate are held.
(2) Responsibility of group auditor
In the case of a group audit where part of the group is audited by a third country auditor, an
auditor must make arrangements so that, if requested by the Association or by a competent
authority, it can obtain from that third country auditor all audit working papers necessary for
a review of that third country auditor’s audit work. An auditor shall make those documents
available to:
(a) the Association;
(b) any other body with which the Association has entered into arrangements for the
purposes of paragraph 23 or 24 of Schedule 10 of the Companies Act 2006 of the
United Kingdom;
(c) the Secretary of State.
If, after taking all reasonable steps, a group auditor is unable to obtain copies of the
documents or the access to the documents necessary for the review, the group auditor shall
record:
(a) the steps taken to obtain copies of or access to those documents;
(b) the reasons why the copies or access could not be obtained; and
(c) any evidence of those steps or those reasons.
(3) Transfer of audit documentation to third country competent authorities
In the case of a request by a third country competent authority, an auditor must provide that
body with a copy of its audit working papers as soon as practicable, provided:
(a) the transfer is to an approved third country competent authority;
(b) the Secretary of State has approved the transfer;
(c) the transfer to the third country competent authority is made for the purpose of an
investigation of an auditor or audit firm;
(d) the following conditions are met:
(i)
the third country competent authority has requested the audit working papers
for the purposes of an investigation, which has been initiated by itself or
another third country competent authority established in that same third
country;
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(ii)
the audit working papers relate to audits of companies that:
(aa) have issued securities in that third country; or
(bb) form part of a group issuing statutory consolidated accounts in that third
country;
(iii)
where the authority has made the request for the audit working papers directly
to the statutory auditor, the authority has given the Secretary of State advance
notice of the request, indicating the reasons for it;
(iv)
the authority has entered into arrangements with the Secretary of State in
accordance with section 1253E of the Companies Act 2006 of the United
Kingdom.
The statutory auditor must refuse to transfer audit working papers to a third country
competent authority if the Secretary of State directs under section 1253(6) of the
Companies Act 2006 of the United Kingdom.
The auditor must also inform the Association of the request.
(4) Conduct of insolvency work
In the case of individuals holding an insolvency licence, such persons must supply the
Association with all necessary information to enable the Association to comply with its
obligations to the Insolvency Service and other bodies in its capacity as a recognised
professional body under the Insolvency Act 1986 of the United Kingdom.
(5) Conduct of exempt regulated activities
In the case of firms eligible to conduct exempt regulated activities under the Designated
Professional Body Regulations, firms must supply the Association with all the necessary
information to enable the Association to comply with its obligations to the Financial Services
Authority and other bodies in its capacity as a designated professional body.
20. Monitoring
(1) Individuals holding a practising certificate, an audit qualification and/or an insolvency
licence, and firms holding an auditing certificate, shall be subject to monitoring by the
Association in accordance with regulation 14 of the Global Practising Regulations.
(2) Firms holding an auditing certificate shall be subject to monitoring by the AIU if they hold
an appointment as auditor to a public interest entity whose audits are within the scope of the
AIU. Such firms must supply the AIU with any information the AIU requires to enable it to
complete its monitoring process.
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Global Practising Regulations (Annex 1) 2.2
Appendix 1
Requirements for the recognised professional qualification
Part 1: Training requirements
To obtain the Association’s recognised professional qualification (i.e. the UK audit
qualification), members must have completed three years’ (i.e. 132 weeks based on 44
weeks per annum) practical training in an ACCA approved employer.
Training in an ACCA approved employer must cover all the following key areas of competence
as set out in Appendix 1 to the Global Practising Regulations:
(a) Audit (key area 7 – see below);
(b) Professional Conduct (key area 1);
(c) Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review);
(d) Management (key area 6).
Candidates for the Association’s recognised professional qualification must:
(a) be proficient in all the competences shown for audit (key area 7) as described
in more detail in the competences of practising certificate holders reproduced in
Appendix 1 to the Global Practising Regulations;
(b) be proficient in:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
At least 44 weeks of the training must be in audit work. This should include:
(a) at least 22 weeks specifically in statutory audit, and
(b) a further 22 weeks which is either:
(i)
audit work of companies established under the Companies Acts, or
(ii)
audit work in respect of either:
(aa) organisations whose financial reporting requirements are laid down in
statutes other than the Companies Acts, as set out in regulations made
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2.2 Global Practising Regulations (Annex 1)
under section 1263 of the Companies Act 2006 of the United Kingdom
and consequential amendments (or equivalent provisions of the laws of
the country to which the qualification is to relate), for example:
- nationalised industries;
- local councils, health authorities and self-governing trusts (excluding
value for money audits and parish accounts);
- housing associations;
- insurance companies;
- trade unions;
- friendly or industrial and provident societies;
- building societies, or
(bb) other entities where the provisions of the Auditing Standards issued by
the Auditing Practices Board or the International Standards on Auditing
issued by the International Auditing and Assurance Standards Board
apply and where an opinion or certificate is placed on accounts stating
that they give a true and fair view of the financial position of the entity or
that they present fairly the financial position of the entity. The turnover of
the entity must exceed the VAT threshold ruling at the date to which the
accounts are made up. Examples of non-statutory audits include:
- partnerships or sole traders whose external reporting obligations are
governed by legislation or regulatory bodies;
- professional bodies (e.g. the Association);
- charities;
- UK branches of overseas corporations;
- private partnerships and sole traders (subject to partnership
agreements or bankers’/other third party demands).
The length of time to be spent on the other areas is not fixed, but candidates must be able to
demonstrate competence in each of the three specified areas.
Part 2: Transitional provisions: training requirements applicable to individuals
who became members of the Association prior to 1 January 2010. The
transitional provisions apply until 31 December 2012
To obtain the Association’s recognised professional qualification, members must have
completed three years’ practical training in an ACCA approved employer, two years of which
must be completed after the individual’s admission to membership and must comply with the
requirements set out below. The remaining training period may be completed before or after,
or partly before and partly after, the individual’s admission to membership and must include
experience in the matters set out in Appendix 2 of the Membership Regulations in the office
of a public accountant.
Training in an ACCA approved employer after admission to membership must cover all
the following key areas of competence as set out in Appendix 1 to the Global Practising
Regulations:
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Global Practising Regulations (Annex 1) 2.2
(a) Audit (key area 7 – see below);
(b) Professional Conduct (key area 1);
(c) Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review);
(d) Management (key area 6).
Candidates for the Association’s recognised professional qualification must:
(a) be proficient in all the competences shown for audit (key area 7) as described
in more detail in the competences of practising certificate holders reproduced in
Appendix 1 to the Global Practising Regulations;
(b) be proficient in:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
30 per cent of the training must be in audit work. This should include:
(a) approximately 20 per cent specifically in statutory audit, and
(b) a further 10 per cent which is either:
(i)
audit work of companies established under the Companies Acts, or
(ii)
audit work in respect of either:
(aa) organisations whose financial reporting requirements are laid down in
statutes other than the Companies Acts, as set out in regulations made
under section 1263 of the Companies Act 2006 of the United Kingdom
and consequential amendments (or equivalent provisions of the laws of
the country to which the qualification is to relate), for example:
- nationalised industries;
- local councils, health authorities and self-governing trusts (excluding
value for money audits and parish accounts);
- housing associations;
- insurance companies;
- trade unions;
- friendly or industrial and provident societies;
- building societies, or
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2.2 Global Practising Regulations (Annex 1)
(bb) other entities where the provisions of the Auditing Standards issued by
the Auditing Practices Board or the International Standards on Auditing
issued by the International Auditing and Assurance Standards Board
apply and where an opinion or certificate is placed on accounts stating
that they give a true and fair view of the financial position of the entity or
that they present fairly the financial position of the entity. The turnover of
the entity must exceed the VAT threshold ruling at the date to which the
accounts are made up. Examples of non-statutory audits include:
- partnerships or sole traders whose external reporting obligations are
governed by legislation or regulatory bodies;
- professional bodies (e.g. the Association);
- charities;
- UK branches of overseas corporations;
- private partnerships and sole traders (subject to partnership
agreements or bankers’/other third party demands).
The length of time to be spent on the other areas is not fixed, but candidates must be able to
demonstrate competence in each of the three specified areas.
Part 3: Additional requirements for certain members
(a) A person who first registered as a student on or after 1 January 2007 and who
was admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance must in
addition to satisfying any other conditions laid down in these regulations pass the
following of the Association’s examination papers to be eligible for the recognised
professional qualification:
P7 Advanced Audit and Assurance.
A person who first registered as a student before 1 January 2007 and who was
admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance (or optional
papers 3.1 Audit and Assurance Services or 10 Accounting and Audit Practice under
previous examination syllabi) must in addition to satisfying any other conditions laid
down in these regulations pass the following of the Association’s examination papers
to be eligible for the recognised professional qualification:
P7 Advanced Audit and Assurance.
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In addition, such an applicant who was exempted from all the Fundamentals Level (or
Part 1 and Part 2 under the December 2001 syllabus) of the Association’s syllabus
must have completed the Professional Level (or Part 3 of the December 2001
syllabus) of the Association’s syllabus within five years of becoming eligible to sit
that part. Similarly, an applicant who first registered as an ACCA student on or after
1 January 2010 and is eligible for exemption from all or part of the Fundamentals
Level (or Part 1 and Part 2 under the December 2001 syllabus) of the Association’s
syllabus on the basis of qualifications gained more than five years previously (at the
date of initial registration as an ACCA student) will forfeit this exemption and will be
required to sit the Fundamentals Level of the Association’s syllabus.
Global Practising Regulations (Annex 1) 2.2
(b) A person who was admitted to membership of the Association under Membership
Regulation 3(e) as a member of the Chartered Institute of Management Accountants
or the Chartered Institute of Public Finance and Accountancy (unless he has
completed the papers specified within the Chartered Institute of Public Finance
and Accountancy’s professional accountancy qualification to be eligible for its audit
qualification) must in addition to satisfying any other conditions laid down in these
regulations pass the following of the Association’s examination papers to be eligible
for the recognised professional qualification:
P7 Advanced Audit and Assurance.
(c) A person who was admitted to membership of the Association as the holder of a
qualification recognised under Membership Regulation 3(c), (d) or (f) (or the former
bye-law 7) must in addition to satisfying any other conditions laid down in these
regulations successfully complete the following of the Association’s examination
papers to be eligible for the recognised professional qualification:
P7 Advanced Audit and Assurance.
The above requirements are without prejudice to the rights under Directive (89/48/
EEC) of certain members admitted under Membership Regulation 3(e) to complete
the Association’s Aptitude Test to be eligible for the recognised professional
qualification.
The above requirements shall not apply where an applicant holds a qualification
approved by the Secretary of State under section 1221 of the Companies Act 2006
of the United Kingdom and has completed the Association’s Aptitude Test.
In addition to meeting the above requirements, a person admitted under Membership
Regulation 3(d) or (f) shall be required to complete the Association’s Aptitude Test.
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2.2 Global Practising Regulations (Annex 1)
Appendix 2
Qualification requirements for an audit qualification
Jersey, Guernsey and Dependencies and the Isle of Man
1. The requirements referred to in regulation 7(2)(b)(i) are:
(a) the member has been a member of the Association continuously for a period of not
less than two years; and
(b) the member must have completed three years’ practical training in an ACCA
approved employer, working either as an employee or sub-contractor, under the
supervision of:
(i)
a member holding an audit qualification (or an equivalent certificate issued to
members prior to 1 January 2011); or
(ii)
any other person having in the opinion of Council adequate qualifications and
experience and who is a fully qualified statutory auditor under paragraph 9(4)
of Schedule 11 to the Companies Act 2006 of the United Kingdom;
and must comply with the requirements set out in Part 1 of Appendix 1. Individuals who
became members of the Association prior to 1 January 2010 may, until 31 December 2012,
comply with the transitional provisions set out in Part 2 of Appendix 1.
2. The member shall have passed such local equivalents in the country of the examinations
specified in Part 3 of Appendix 1 of these regulations as the Admissions and Licensing
Committee shall from time to time specify as acceptable.
3. In exceptional circumstances, the requirements of paragraphs 1 and 2 of Appendix 2 may
be waived, varied or suspended at the direction of the Admissions and Licensing Committee
in its absolute discretion.
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Global Practising Regulations (Annex 2) 2.2
Additional Practising Regulations for the
Republic of Ireland
Annex 2 to The Chartered Certified Accountants’ Global
Practising Regulations 2003
1. Application
The regulations contained in this annex form part of The Chartered Certified Accountants’
Global Practising Regulations 2003, and shall apply to all members and to all persons who
otherwise agree to be bound by them.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
ACCA student means a registered student who is undertaking the ACCA qualification
examinations;
agent, in relation to a person, means any person (including an employee) who acts on
that person’s behalf;
appropriate qualification means a qualification in accordance with section 187 of the
Companies Act, 1990 and regulation 26 of the European Communities (Statutory Audits)
(Directive 2006/43/EC) Regulations 2010 of the Republic of Ireland;
approved professional body has the meaning given by section 55 of the Investment
Intermediaries Act, 1995 of the Republic of Ireland;
audit qualification means an audit qualification to the practising certificate issued by the
Association to individuals holding the recognised professional qualification and referred to
in regulation 5, which authorises the individual to hold himself out as an auditor and to
carry on audit work;
audit report means a report on accounts or financial statements which is described as an
audit report or having been made by an auditor or is given in true and fair terms or which
states that the accounts present fairly the financial position;
audit working papers means material (whether in the form of data stored on paper, film,
electronic media or other media or otherwise) prepared by or for, or obtained by, the
statutory auditor or audit firm in connection with the performance of the audit concerned
and includes:
(a) the record of audit procedures performed;
(b) the relevant audit evidence obtained; and
(c) conclusions reached;
auditing certificate means an auditing certificate issued by the Association to firms and
referred to in regulation 6;
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2.2 Global Practising Regulations (Annex 2)
auditor means a statutory auditor or statutory audit firm within the meaning of the
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of
the Republic of Ireland;
competent authority means a recognised accountancy body;
Directive means Directive 2006/43/EC of the European Parliament and of the Council on
statutory audits of annual accounts and consolidated accounts;
disqualified director means a person referred to in section 160 of the Companies Act,
1990 of the Republic of Ireland;
EEA auditor means a member state auditor;
EEA state means a state which is a Contracting Party to the Agreement on the European
Economic Area signed at Oporto on 2 May 1992 (as it has effect from time to time) as
adjusted by the Protocol signed at Brussels on 17 March 1993;
Financial Regulator means the Irish Financial Services Regulatory Authority (IFSRA);
group means a parent undertaking and its subsidiary undertakings;
group auditor means the statutory auditor or audit firm carrying out the statutory audit of
the group accounts in question;
IAASA means the Irish Auditing and Accounting Supervisory Authority;
investment advice has the meaning given in the Investment Intermediaries Act, 1995 of
the Republic of Ireland;
investment business certificate (Ireland) means the certificate referred to in regulation
10, issued by the Association in accordance with The Chartered Certified Accountants’
Irish Investment Business Regulations 1999;
investment business services has the meaning given in the Investment Intermediaries
Act, 1995 of the Republic of Ireland;
member state means a member state of the European Union or an EEA state;
member state audit firm means an audit entity approved in accordance with the Directive
by a competent authority of another member state to carry out audits of annual or group
accounts as required by Community Law;
member state auditor means an auditor approved in accordance with the Directive by
a competent authority of another member state to carry out audits of annual or group
accounts as required by Community Law;
non-member means a person who is not registered as a member of the Association;
public auditor means a public auditor for the purposes of the Industrial and Provident
Societies Acts, 1893 to 1978, and the Friendly Societies Acts, 1896 to 1977 of the
Republic of Ireland;
public interest entity means:
(a) companies or other bodies corporate governed by the law of a member state whose
transferable securities are admitted to trading on a regulated market of any member
state within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC;
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Global Practising Regulations (Annex 2) 2.2
(b) credit institutions as defined at Article 1 of Directive 2000/12/EC of the European
Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit
of the business of credit institutions; and
(c) insurance undertakings within the meaning of Article 2(1) of Directive 91/674/EEC;
qualified person means:
(a) in relation to an individual, a person qualified to hold:
(i) a practising certificate with an audit qualification; or
(ii)a corresponding qualification to audit accounts under the law of a member state,
or part of a member state, other than Ireland; and
(b) in relation to a firm:
(i) a firm that is eligible to be appointed as an auditor; or
(ii)a firm that is eligible for a corresponding appointment as an auditor under the
laws of a member state, or part of a member state, other than Ireland;
recognised accountancy body means a body of accountants recognised or deemed, by
virtue of section 191(3) or (4) of the Companies Act, 1990 of the Republic of Ireland, to
be recognised by IAASA for the purposes of section 187 of the Companies Act, 1990 or
the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010
of the Republic of Ireland;
recognised professional qualification means an appropriate qualification for the purpose
of regulation 264 of the European Communities (Statutory Audits) (Directive 2006/43/
EC) Regulations 2010 of the Republic of Ireland;
regulated work means work conducted under an auditing certificate or an investment
business certificate (Ireland);
restricted director means a person referred to in section 150 of the Companies Act,
1990 of the Republic of Ireland;
statutory audit firm means an audit firm which is approved in accordance with the
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of
the Republic of Ireland to carry out statutory audits;
statutory auditor means a natural person who is approved in accordance with the
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of
the Republic of Ireland to carry out statutory audits;
supervisory authority has the meaning given in The Chartered Certified Accountants’ Irish
Investment Business Regulations 1999;
third country means a country or territory that is not a member state or part of a member
state;
third country audit entity means an entity that is entitled, under or by virtue of the laws,
regulations or administrative provisions of a third country, to carry out audits of the
annual or group accounts of a company incorporated in that third country;
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2.2 Global Practising Regulations (Annex 2)
third country auditor means a natural person who is entitled, under or by virtue of the
laws, regulations or administrative provisions of a third country, to carry out audits of the
annual or group accounts of a company incorporated in that third country;
third country competent authority means an authority in a third country with
responsibilities, as respects auditors and audit entities in that country, equivalent to those
of a competent authority or IAASA.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(3) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
(4) The Interpretation Act, 1937 of the Republic of Ireland shall apply to these regulations in
the same way as it applies to an enactment.
3. Restrictions on carrying on public practice
(1) Members and firms
Where public practice is carried on in the name of a firm, or otherwise in the course of a
firm’s business, and that public practice involves the accepting of an appointment as an
auditor, or the holding out of the firm as being available to accept such an appointment, no
member shall be a sole proprietor, partner or director of that firm unless the firm holds an
auditing certificate issued by the Association and is thereby authorised by the Association to
carry on audit work.
(2) A firm required by regulation 3(1) to hold an auditing certificate may instead hold
another certificate or authorisation which is in the opinion of the Admissions and Licensing
Committee equivalent.
(3) A practising certificate or an auditing certificate shall only authorise the carrying on of an
activity where the activity is both carried on in the country to which the certificate relates, as
determined in accordance with regulation 4(2), and is covered by the certificate as provided
for in regulations 5 and 6.
(4) A firm carrying on public practice which involves the accepting of an appointment as a
public auditor cannot be established as a body corporate.
4. Meaning of public practice
(1) Activities
Public practice has the meaning described in regulation 4 of the Global Practising
Regulations.
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Global Practising Regulations (Annex 2) 2.2
(2) Where carried on
Where the public practice consists of accepting an appointment as an auditor, or holding
oneself out as available to do so, it shall be taken to be carried on in the Republic of Ireland,
whose laws shall apply to the appointment, or potential appointment.
5. Eligibility for an audit qualification
Members accepting an appointment as an auditor shall be required to obtain the
Association’s recognised professional qualification in accordance with regulation 7 in addition
to complying with regulation 5 of the Global Practising Regulations as regards their practising
certificate. The audit qualification will convey to the holder the necessary authorisation to
carry on audit work.
6. Eligibility for an auditing certificate
A firm shall be eligible for an auditing certificate if:
(a) each of the individuals responsible for the firm’s audit work holds an audit
qualification, or in the case of non-members of the Association, holds an equivalent
certificate;
(b) it is controlled by qualified persons within the meaning of regulation 8;
(c) it is fit and proper within the meaning of regulation 11;
(d) it holds the necessary PII in accordance with regulation 12;
(e) it has made arrangements for the continuity of its practice in accordance with
regulation 14;
(f) it undertakes to be bound by the Global Practising Regulations and this annex,
the Complaints and Disciplinary Regulations, the Membership Regulations and the
Charter and bye-laws insofar as they are applicable to it; and
(g) it has arrangements to prevent individuals who do not hold an appropriate
qualification and persons who are not members of the firm from being able to exert
any influence over the way in which an audit is conducted in circumstances in which
that influence would be likely to affect the independence or integrity of the audit.
A firm which has ceased to comply with the conditions (a) and (b) above may be permitted to
remain eligible for appointment as an auditor for a period of not more than three months.
7. Qualifications
(1) Qualifications required to hold a practising certificate
To be qualified to hold a practising certificate, members will need to meet the requirements
of regulation 7 of the Global Practising Regulations.
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2.2 Global Practising Regulations (Annex 2)
(2) Qualifications required to obtain an audit qualification
To be qualified to hold an audit qualification:
(a) an individual (other than an EEA auditor) must:
(i) have obtained the Association’s recognised professional qualification (in
accordance with regulation 7(5) below); or
(ii)
have previously held an equivalent certificate issued to members prior to 1
January 2011; or
(b) an individual who is an EEA auditor:
(i) holds an appropriate qualification;
(ii)
meets the conditions as a statutory auditor in accordance with Regulation
24 of the European Communities (Statutory Audits) (Directive 2006/43/EC)
Regulations 2010 of the Republic of Ireland;
(iii)
has passed an aptitude test in accordance with 7(3) below unless an aptitude
test is not required (see 7(4) below).
(c) an individual must be a third country auditor and meets the conditions for approval
as a statutory auditor in accordance with regulation 24 of the European Communities
(Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of the Republic of
Ireland and have passed an aptitude test in accordance with 7(3) below unless an
aptitude test is not required (see 7(4) below);
(3) The aptitude test
The aptitude test:
(i)
must test the person’s knowledge of subjects:
(aa) that are covered by a recognised professional qualification;
(bb) that are not covered by the recognised qualification already held by the
person; and
(cc) the knowledge of which is essential to the pursuit of the profession of
statutory auditor;
(ii)
may test the person’s knowledge of the rules of professional conduct;
(iii)
must not test the person’s knowledge of any other matters.
(4) Aptitude test not required
No aptitude test is required if the subjects that are covered by a recognised professional
qualification and the knowledge of which is essential in the pursuit of the profession of
statutory auditor are covered by the professional qualification already held by the person.
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Global Practising Regulations (Annex 2) 2.2
(5) Recognised professional qualification of the Association
To obtain the Association’s recognised professional qualification, members must:
(a) have completed three years’ practical training in an ACCA approved employer,
working either as an employee or sub-contractor, under the supervision of:
(i)
a member who is authorised to carry on audit work by way of an audit
qualification (or a practising certificate issued to members prior to 1 January
2011); or
(ii)
any other person having in the opinion of Council adequate qualifications and
experience and who is a fully qualified statutory auditor under paragraph 9(4)
of Schedule 11 to the Companies Act 2006 of the United Kingdom, such
as statutory auditors practising in member states, subject to the relevant
authorisations (or equivalent persons in relation to applicants for certificates
relating to countries other than the United Kingdom);
and must comply with the requirements set out in Part 1 of Appendix 1. Individuals
who became members of the Association prior to 1 January 2010 may, until 31
December 2012, comply with the transitional provisions set out in Part 2 of Appendix
1;
(b) have passed the Irish tax and law variants of the Association’s examinations and the
Irish variant of the relevant examinations stipulated in Part 3 of Appendix 1 of these
regulations, if any;
(c) have completed the adapted paper P2, Corporate Reporting, if this paper P2 was
completed on or after 1 January 2011; and
(d) have been a member of the Association continuously for a period of not less than two
years.
8. Meaning of firm controlled by qualified persons
Firms controlled by qualified persons are authorised for carrying on audit work in accordance
with regulation 6.
(a) A firm shall only be regarded as controlled by qualified persons for the purposes of
regulation 6 where:
(i)
a majority of the partners or a majority of the directors and shareholders of the
firm are qualified persons; and
(ii)
if the firm’s affairs are managed by a board of directors, committee or other
management body, a majority of that body are qualified persons, or if the body
consists of only two persons, at least one of them is a qualified person and has
a casting vote.
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2.2 Global Practising Regulations (Annex 2)
(b) References in regulation 8(a) above to a person being qualified are, in relation to an
individual, to his being qualified to hold an audit qualification in accordance with
regulation 7(2) and that he spends a material amount of his time working in the firm
concerned, or being otherwise eligible to be appointed as an auditor.
(c) A majority of the partners or a majority of the directors and shareholders of the firm
in regulation 8(a)(i) means:
(i)
where under the firm’s constitution matters are decided on by the exercise of
voting rights, partners or directors and shareholders holding a majority of the
rights to vote on all, or substantially all, matters;
(ii)
in any other case, partners or directors and shareholders having such rights
under the constitution of the firm as enable them to direct its overall policy or
alter its constitution.
(d) A majority of the members of the management body of a firm in regulation 8(a)(ii)
means:
(i)
where matters are decided at meetings of the management body by the
exercise of voting rights, members holding a majority of the rights to vote on
all, or substantially all, matters at such meetings;
(ii)
in any other case, members having such rights under the constitution of the
firm as enable them to direct its overall policy or alter its constitution.
9. Restriction on carrying on investment business
No member, nor any firm in relation to which he is a sole proprietor, partner or director, may
act or do anything in contravention of section 9(1) of the Investment Intermediaries Act,
1995 of the Republic of Ireland.
10. Eligibility for an investment business certificate (Ireland)
The eligibility criteria for an investment business certificate (Ireland) are set out in The
Chartered Certified Accountants’ Irish Investment Business Regulations 1999.
11. Fit and proper persons
Regulation 8 of the Global Practising Regulations applies to members. Additionally, where
auditing certificates or investment business certificates (Ireland) are concerned, this
regulation 11 shall apply to the Admissions and Licensing Committee’s determination.
In determining whether a person is “fit and proper”, the Admissions and Licensing
Committee:
(a) may take into account whether that person has contravened any provision of law
relating to the seeking appointment or acting as auditor or to the carrying on of
investment business or the provision of investment business services or investment
advice;
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Global Practising Regulations (Annex 2) 2.2
(b) shall take into account whether that person has contravened any law or regulation
or undertaken any practices or conduct referred to in relevant law, regulation or
guidance issued by a body with responsibility for the regulation of the activities of the
holder of the certificate or of the Association in its regulation of such activities;
(c) may take into account any matter which relates to him or it and any matter relating
to any person who is or will be employed by or associated with him or it for the
purposes of or in connection with public practice, investment business or investment
business services or investment advice.
12. Professional indemnity insurance
(1) Practising certificates, auditing certificates held by firms and investment business
certificates (Ireland)
(a) Regulation 9 of the Global Practising Regulations applies to applicants for and
holders of
(i)
practising certificates;
(ii)
auditing certificates held by firms; and
(iii)
investment business certificates (Ireland).
(2) Continuity following cessation
Regulation 9(5) of the Global Practising Regulations applies to persons subject to regulation
12(1) in respect of their ceasing to engage in public practice, investment business or
investment business services or investment advice.
13. Continuing professional development
Firms holding an auditing certificate and/or an investment business certificate (Ireland)
must require the individuals who are partners or directors or agents of the firm who are not
members but who are responsible for the firm’s audit work or carry on investment business
on behalf of the firm to comply with Membership Regulation 4(4) as if they were members.
14. Continuity of practice
Regulation 11 of the Global Practising Regulations shall be applicable to all holders of an
investment business certificate (Ireland) and firms holding an auditing certificate.
15. Notification
(a) Holders of an investment business certificate (Ireland) and firms holding an auditing
certificate must comply with regulation 12 of the Global Practising Regulations.
Additionally they shall give written notice forthwith of
(i)
the commencing of proceedings against the firm or, as the case may be, any
partner or controller of it, under the Investment Intermediaries Act, 1995 of the
Republic of Ireland; and
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2.2 Global Practising Regulations (Annex 2)
(ii)
the withdrawal or suspension of any qualification which is a condition of the
firm’s eligibility for an investment business certificate (Ireland) by reason of
regulation 3(1)(b), regulation 3(2)(e) or regulation 3(3)(e) of The Chartered
Certified Accountants’ Irish Investment Business Regulations 1999.
(b) Firms holding an auditing certificate shall notify the Association in writing within:
(i)
(ii)
28 days after their acceptance of an appointment as auditor to a public interest
entity;
one month of any change in the information contained in the public register of
the Registrar of Companies.
16. Conduct
(1) Audit work
(a) In the conduct of audit work holders of an audit qualification and firms holding an
auditing certificate shall comply with all the applicable sections of the Association’s
Rulebook and in particular the Auditing Standards issued by the Auditing Practices
Board, the International Standards on Auditing issued by the International Auditing
and Assurance Standards Board and the Ethical Standards issued by the Auditing
Practices Board.
(b) In the conduct of audit work in the Republic of Ireland holders of an audit
qualification and firms holding an auditing certificate shall use the designation
“Registered Auditor” or “Registered Auditors” when signing audit reports for
accounting periods commencing before 20 May 2010. In the event that an audit
report is signed by a firm with an auditing certificate, the audit report shall
additionally identify the member(s) and/or other person(s) in relation to that firm
responsible for the conduct of that audit. For accounting periods commencing on or
after 20 May 2010, the audit report shall:
(i)
state the name of the auditor and be signed and dated;
(ii)
where the auditor is an individual, be signed by him;
(iii)
where the auditor is a firm, be signed by the statutory auditor in his own name,
for and on behalf of the firm;
(iv)
state the name of the firm as it appears on the public register of the Registrar
of Companies; and
(v)
use the designation “Statutory Auditor” or “Statutory Auditors” after the name
of the firm.
(c) In the Republic of Ireland, an auditor ceasing to hold office for any reason before the
end of his term in office must notify IAASA. In each case the notice must inform the
appropriate audit authority that he has ceased to hold office and be accompanied
by a copy of the statement deposited by him at the company’s registered office
in accordance with section 161A of the Companies Act, 1990 of the Republic of
Ireland.
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Global Practising Regulations (Annex 2) 2.2
(d) In the Republic of Ireland, a person ceasing to hold office as a statutory auditor
shall make available to his successor in that office all relevant information which
he holds in relation to that audit in accordance with regulation 47 of the European
Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010 of the
Republic of Ireland.
(e) In the Republic of Ireland, an auditor may not accept an appointment as a director or
other officer of a public interest entity during a period of two years commencing on
the date on which his appointment as auditor ended in accordance with regulation 78
of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations
2010 of the Republic of Ireland. This regulation also applies to individuals who are no
longer members of the Association.
(f) In the Republic of Ireland, in the conduct of group audit work, the group auditor shall:
(i)
review for the purposes of a group audit the audit work conducted by other
persons and record that review;
(ii)
retain copies of any documents necessary for the purposes of the review that
it has received from third country auditors who are not covered by the working
arrangements under regulation 55 of the European Communities (Statutory
Audits) (Directive 2006/43/EC) Regulations 2010;
(iii)
agree with those third country auditors proper and unrestricted access to those
documents on request.
(2) Accountants’ reports
Members reporting on an entity which is a member of a regulatory body shall comply with
the requirements of that regulatory body and adhere to any guidance issued by it for the
preparation and presentation of their reports.
(3) Investment business services and investment advice
In the conduct of investment business services and the provision of investment advice, a
holder of an investment business certificate (Ireland) shall comply with the Association’s Irish
Investment Business Regulations 1999 and the code of conduct of the supervisory authority.
17. Disclosure of information
(1) Conduct of audit work
In the conduct of audit work, holders of an audit qualification and firms holding an auditing
certificate must supply the Association with all necessary information in accordance with,
and to enable the Association to comply with any other obligations imposed upon it by
regulations made under Sections 199 and 200 of the Companies Act, 1990 and regulation
48 of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations
2010 of the Republic of Ireland. This requirement shall apply for the duration of time that an
auditing certificate is held.
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2.2 Global Practising Regulations (Annex 2)
(2) Responsibility of group auditor
In the case of a group audit where part of the group is audited by a third country auditor, an
auditor must make arrangements so that, if requested by the Association or by IAASA, it can
obtain from that third country auditor all audit working papers necessary for a review of that
third country auditor’s audit work. An auditor shall make those documents available to:
(a) the Association;
(b) any other body with which the Association has entered into arrangements for the
purposes of regulation 104 of the European Communities (Statutory Audits) (Directive
2006/43/EC) Regulations 2010 of the Republic of Ireland;
(c) IAASA.
If, after taking all reasonable steps, a group auditor is unable to obtain copies of the
documents or the access to the documents necessary for the review, the group auditor shall
record:
(a) the steps taken to obtain copies of or access to those documents;
(b) the reasons why the copies or access could not be obtained; and
(c) any evidence of those steps or those reasons.
The requirements of this regulation 17(2) for the group auditor regarding the review of a
third country auditor’s audit work are as a result of having no working arrangements under
regulations 109(1)(c) or 110(c) of the European Communities (Statutory Audits) (Directive
2006/43/EC) Regulations 2010 of the Republic of Ireland.
(3) Transfer of audit documentation to third country competent authorities
In the case of a request by a third country competent authority, an auditor must provide that
body with a copy of its audit working papers as soon as practicable, provided:
(a) there is an agreement between the third country competent authority and IAASA
in accordance with regulation 109 of the European Communities (Statutory Audits)
(Directive 2006/43/EC) Regulations 2010 of the Republic of Ireland;
(b) the following four conditions are met:
(i)
those audit working papers or other documents relate to the audit of a
company which:
(aa) has issued securities in the third country concerned; or
(bb) forms part of a group of companies that issue statutory consolidated
accounts in the third country concerned;
(ii)
134
the third country competent authority meets requirements which have been
declared adequate in accordance with Article 47(3) of the Directive;
Global Practising Regulations (Annex 2) 2.2
(iii)
there are working arrangements on the basis of reciprocity agreed between
IAASA and the third country competent authority; and
(iv)
the transfer of personal data to the third country concerned is in accordance
with Chapter IV of Directive 95/46/EC; and
(c) IAASA, in response to receipt of a request, determines that the conditions for transfer
as set out in regulation 17(3)(b) above are complied with and IAASA authorises such
a transfer.
(d) By way of derogation from regulation 109 of the European Communities (Statutory
Audits) (Directive 2006/43/EC) Regulations 2010 of the Republic of Ireland, IAASA
may, in exceptional circumstances, allow a statutory auditor or audit firm to transfer
audit working papers and other documents directly to a third country competent
authority, provided that:
(i)
an investigation has been initiated by that competent authority in the third
country concerned;
(ii)
the transfer does not conflict with the obligations with which statutory auditors
and audit firms are required to comply in relation to the transfer of audit
working papers and other documents to the competent authorities;
(iii)
there are working arrangements with the third country competent authority of
a reciprocal nature that allow IAASA direct access to audit working papers and
other documents of audited entities in the third country concerned;
(iv)
the third country competent authority informs in advance IAASA of each direct
request for information, indicating the reasons therefor; and
(v)
conditions similar to those specified in regulation 109(2)(a) to (d) of the
European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations
2010 of the Republic of Ireland are satisfied.
The auditor must also inform the Association of the request.
(4) Holders of investment business certificate (Ireland)
In the case of holders of an investment business certificate (Ireland), firms must supply
the Association with all necessary information and documents to enable the Association
to comply with its obligations to the Financial Regulator and others in its capacity as an
approved professional body.
18. Monitoring
Members holding a practising certificate and/or an audit qualification and/or an investment
business certificate (Ireland) and firms holding an auditing certificate shall be subject to
monitoring by the Association in accordance with regulation 14 of the Global Practising
Regulations.
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2.2 Global Practising Regulations (Annex 2)
Appendix 1
Requirements for the recognised professional qualification
Part 1: Training requirements
To obtain the Association’s recognised professional qualification (i.e. the Irish audit
qualification), members must have completed three years’ (i.e. 132 weeks based on 44
weeks per annum) practical training in an ACCA approved employer.
Training in an ACCA approved employer must cover all the following key areas of competence
as set out in Appendix 1 to the Global Practising Regulations:
(a) Audit (key area 7 – see below);
(b) Professional Conduct (key area 1);
(c) Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review);
(d) Management (key area 6).
Candidates for the Association’s recognised professional qualification must:
(a) be proficient in all the competences shown for audit (key area 7) as described in
more detail in Appendix 1 to the Global Practising Regulations;
(b) be proficient in:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
At least 44 weeks of the training must be in audit work. This should include:
(a) at least 22 weeks specifically in statutory audit, and
(b) a further 22 weeks which is either:
(i)
audit work of companies established under the Companies Acts, or
(ii)
audit work in respect of either:
(aa) organisations whose financial reporting requirements are laid down in
statutes other than the Companies Acts, for example:
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Global Practising Regulations (Annex 2) 2.2
- nationalised industries;
- local councils, health authorities and self-governing trusts (excluding
value for money audits and parish accounts);
- housing associations;
- insurance companies;
- trade unions;
- friendly or industrial and provident societies;
- building societies, or
(bb) other entities where the provisions of the Auditing Standards issued by
the Auditing Practices Board or the International Standards on Auditing
issued by the International Auditing and Assurance Standards Board
apply and where an opinion or certificate is placed on accounts stating
that they give a true and fair view of the financial position of the entity or
that they present fairly the financial position of the entity. The turnover of
the entity must exceed the VAT threshold ruling at the date to which the
accounts are made up. Examples of non-statutory audits include:
- partnerships or sole traders whose external reporting obligations are
governed by legislation or regulatory bodies;
- professional bodies (e.g. the Association);
- charities;
- credit unions;
- Irish branches of overseas corporations;
- private partnerships and sole traders (subject to partnership
agreements or bankers’/other third party demands).
The length of time to be spent on the other areas is not fixed, but candidates must be able to
demonstrate competence in each of the three specified areas.
Part 2: Transitional provisions: training requirements applicable to individuals
who became members of the Association prior to 1 January 2010. The
transitional provisions apply until 31 December 2012
To obtain the Association’s recognised professional qualification, members must have
completed three years’ practical training in an ACCA approved employer, two years of which
must be completed after the individual’s admission to membership and must comply with the
requirements set out below. The remaining training period may be completed before or after,
or partly before and partly after, the individual’s admission to membership and must include
experience in the matters set out in Appendix 2 of the Membership Regulations in the office
of a public accountant.
Training in an ACCA approved employer after admission to membership must cover all
the following key areas of competence as set out in Appendix 1 to the Global Practising
Regulations:
(a) Audit (key area 7 – see below);
(b) Professional Conduct (key area 1);
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2.2 Global Practising Regulations (Annex 2)
(c) Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review);
(d) Management (key area 6).
Candidates for the Association’s recognised professional qualification must:
(a) be proficient in all the competences shown for audit (key area 7) as described
in more detail in the competences of practising certificate holders reproduced in
Appendix 1 to the Global Practising Regulations;
(b) be proficient in:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
30 per cent of the training must be in audit work. This should include:
(a) approximately 20 per cent specifically in statutory audit, and
(b) a further 10 per cent which is either:
(i)
audit work of companies established under the Companies Acts, or
(ii)
audit work in respect of either:
(aa) organisations whose financial reporting requirements are laid down in
statutes other than the Companies Acts, for example:
- nationalised industries;
- local councils, health authorities and self-governing trusts (excluding
value for money audits and parish accounts);
- housing associations;
- insurance companies;
- trade unions;
- friendly or industrial and provident societies;
- building societies, or
(bb) other entities where the provisions of the Auditing Standards issued by
the Auditing Practices Board or the International Standards on Auditing
issued by the International Auditing and Assurance Standards Board
apply and where an opinion or certificate is placed on accounts stating
that they give a true and fair view of the financial position of the entity or
that they present fairly the financial position of the entity. The turnover of
the entity must exceed the VAT threshold ruling at the date to which the
accounts are made up. Examples of non-statutory audits include:
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Global Practising Regulations (Annex 2) 2.2
- partnerships or sole traders whose external reporting obligations are
governed by legislation or regulatory bodies;
- professional bodies (e.g. the Association);
- charities;
- Irish branches of overseas corporations;
- private partnerships and sole traders (subject to partnership
agreements or bankers’/other third party demands).
The length of time to be spent on the other areas is not fixed, but candidates must be able to
demonstrate competence in each of the three specified areas.
Part 3: Additional requirements for certain members
(a) A person who first registered as a student on or after 1 January 2007 and who
was admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance must in
addition to satisfying any other conditions laid down in these regulations pass the
following of the Association’s examination papers to be eligible for the recognised
professional qualification:
P7 Advanced Audit and Assurance.
A person who first registered as a student before 1 January 2007 and who was
admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance (or optional
papers 3.1 Audit and Assurance Services or 10 Accounting and Audit Practice under
previous examination syllabi) must in addition to satisfying any other conditions laid
down in these regulations pass the following of the Association’s examination papers
to be eligible for the recognised professional qualification:
P7 Advanced Audit and Assurance.
In addition, such an applicant who was exempted from the Fundamentals Level (or
Part 1 and Part 2 under the December 2001 syllabus) of the Association’s syllabus
must have completed the Professional Level (or Part 3 of the December 2001
syllabus) of the Association’s syllabus within five years of becoming eligible to sit that
part.
(b) A person who was admitted to membership of the Association under Membership
Regulation 3(e) as a member of the Chartered Institute of Management Accountants
or the Chartered Institute of Public Finance and Accountancy (unless he has
completed the papers specified within the Chartered Institute of Public Finance
and Accountancy’s professional accountancy qualification to be eligible for its audit
qualification) must in addition to satisfying any other conditions laid down in these
regulations pass the following of the Association’s examination papers to be eligible
for the recognised professional qualification:
P7 Advanced Audit and Assurance.
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2.2 Global Practising Regulations (Annex 2)
(c) A person who was admitted to membership of the Association as the holder of a
qualification recognised under Membership Regulation 3(c), (d) or (f) (or the former
bye-law 7) must in addition to satisfying any other conditions laid down in these
regulations successfully complete the following of the Association’s examination
papers to be eligible for the recognised professional qualification:
P7 Advanced Audit and Assurance.
The above requirements are without prejudice to the rights under Directive (89/48/
EEC) of certain members admitted under Membership Regulation 3(e) to complete
the Association’s Aptitude Test to be eligible for the recognised professional
qualification.
The above requirements shall not apply where an applicant holds a qualification
recognised by the relevant Irish legislation and has completed the Association’s
Aptitude Test.
In addition to meeting the above requirements, a person admitted under Membership
Regulation 3(d) or (f) shall be required to complete the Association’s Aptitude Test.
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Global Practising Regulations (Annex 3) 2.2
Additional Practising Regulations for Cyprus
Annex 3 to The Chartered Certified Accountants’ Global
Practising Regulations 2003
1. Application
The regulations contained in this annex form part of The Chartered Certified Accountants’
Global Practising Regulations 2003, and shall apply to all members and to all persons who
otherwise agree to be bound by them.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
audit qualification means an audit qualification to the practising certificate issued by the
Association to individuals referred to in regulation 5, which authorises the individual to
hold himself out as an auditor and to carry on audit work;
audit report means a report on accounts or financial statements which is described as an
audit report or having been made by an auditor or is given in true and fair terms or which
states that the accounts present fairly the financial position;
auditor means a person who signs or holds himself out as being available to sign an audit
report whether or not that report is required by statute;
qualified person means, in relation to an individual, a person qualified to hold a
practising certificate with an audit qualification and, in relation to a firm, a firm that is
eligible to be appointed as an auditor;
regulated work means work conducted under a practising certificate with an audit
qualification.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(3) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
3. Restrictions on carrying on public practice
(1) Members
Where a member carries on public practice and holds a practising certificate, he may carry
on public practice not authorised by his practising certificate (such as audit work) where he
is authorised to do so by local law and has notified the Admissions and Licensing Committee
of his practising status and of his membership of any local body by which he is regulated in
the conduct of public practice.
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2.2 Global Practising Regulations (Annex 3)
(2) Members and firms
Where public practice is carried on in the name of a firm, or otherwise in the course of a
firm’s business, and that public practice involves the accepting of an appointment as an
auditor, or the holding out of the firm as being available to accept such an appointment, no
member shall be a sole proprietor, partner or director of that firm unless the firm holds the
appropriate authorisation to carry on the activity in question.
(3) A practising certificate shall only authorise the carrying on of an activity where the activity
is both carried on in the country to which the certificate relates, as determined in accordance
with regulation 4(2), and is covered by the certificate as provided for in regulation 5.
4. Meaning of public practice
(1) Activities
Public practice has the meaning described in regulation 4 of the Global Practising
Regulations.
(2) Where carried on
Where the public practice consists of accepting an appointment as an auditor, or holding
oneself out as available to do so, it shall be taken to be carried on in Cyprus, whose laws will
apply to the appointment, or potential appointment.
5. Eligibility for an audit qualification
Members accepting an appointment as an auditor shall be required to obtain an audit
qualification in accordance with regulation 6(2) in addition to complying with regulation 5 of
the Global Practising Regulations as regards their practising certificate. The audit qualification
will convey to the holder the necessary authorisation to carry on audit work.
6. Qualifications
(1) Qualifications required to hold a practising certificate
To be qualified to hold a practising certificate, members will need to meet the requirements
of regulation 7 of the Global Practising Regulations.
(2) Qualifications required to obtain an audit qualification
To be qualified to hold an audit qualification members must have obtained a practising
certificate in accordance with regulation 6(1) above. Members must also meet the following
requirements:
(a) comply with the relevant requirements in parts 1 and 2 of Appendix 1 to these
regulations; or
(b) have previously held an equivalent certificate issued to members prior to 1 January
2011;
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Global Practising Regulations (Annex 3) 2.2
(c) in any case, satisfy any other qualification requirements applicable to individuals
wishing to become eligible to act as an auditor in accordance with the laws of
Cyprus.
(3) Waiver
In exceptional circumstances, the requirements of regulations 6(1) may be waived, varied
or suspended at the direction of the Admissions and Licensing Committee in its absolute
discretion.
7. Fit and proper persons
General eligibility
(a) Regulation 8 of the Global Practising Regulations applies to members. Additionally,
where audit qualifications are concerned, this regulation 7 shall apply to the
Admissions and Licensing Committee’s determination.
(b) In determining whether a person is “fit and proper”, the Admissions and Licensing
Committee:
(i)
may take into account whether that person has contravened any provision of
law relating to the seeking appointment or acting as auditor;
(ii)
shall take into account whether that person has contravened any law or
regulation or undertaken any practices or conduct referred to in relevant law,
regulation or guidance issued by a body with responsibility for the regulation
of the activities of the holder of the certificate or of the Association in its
regulation of such activities;
(iii)
may take into account any matter which relates to him or it and any matter
relating to any person who is or will be employed by or associated with him or
it for the purposes of or in connection with public practice.
8. Disclosure of information
In the conduct of audit work, holders of an audit qualification must supply the Association
with all necessary information in accordance with applicable relevant legislation, and to
enable the Association to comply with any other obligations it is legally obliged to meet. This
requirement shall apply for the duration of time that the audit qualification is held.
9. Monitoring
Members holding a practising certificate and/or an audit qualification shall be subject to
monitoring by the Association in accordance with regulation 14 of the Global Practising
Regulations.
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2.2 Global Practising Regulations (Annex 3)
Appendix 1
Requirements for an audit qualification
Part 1: Additional requirements for certain members
(a) A person who first registered as a student on or after 1 January 2007 and who
was admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance must in
addition to satisfying any other conditions laid down in these regulations pass the
following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
A person who first registered as a student before 1 January 2007 and who was
admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance (or optional
papers 3.1 Audit and Assurance Services or 10 Accounting and Audit Practice under
previous examination syllabi) must in addition to satisfying any other conditions laid
down in these regulations pass the following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
In addition, such an applicant who was exempted from the Fundamentals Level (or
Part 1 and Part 2 under the December 2001 syllabus) of the Association’s syllabus
must have completed the Professional Level (or Part 3 of the December 2001
syllabus) of the Association’s syllabus within five years of becoming eligible to sit that
part.
(b) A person who was admitted to membership of the Association under Membership
Regulation 3(e) as a member of the Chartered Institute of Management Accountants
or the Chartered Institute of Public Finance and Accountancy (unless he has
completed the papers specified within the Chartered Institute of Public Finance
and Accountancy’s professional accountancy qualification to be eligible for its audit
qualification) must in addition to satisfying any other conditions laid down in these
regulations pass the following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
(c) A person who was admitted to membership of the Association as the holder of a
qualification recognised under Membership Regulation 3(c), (d) or (f) (or the former
bye-law 7) must in addition to satisfying any other conditions laid down in these
regulations successfully complete the following of the Association’s examination
papers:
P7 Advanced Audit and Assurance.
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Global Practising Regulations (Annex 3) 2.2
Part 2: Qualifications requirements for an audit qualification
1. For all members applying for the certificate on or after 1 January 2003, the requirements
are set out below.
2. A member who wishes to obtain an audit qualification shall be required to:
(a) have been a member continuously for two years;
(b) have completed three years of training in an ACCA approved employer, at least two
years of which shall have been obtained after admission to membership, save that
the training in audit may be completed at any time in the three years; and
(c) pass any tests of competence and/or examinations as Council may prescribe in this
appendix from time to time.
3. The training must consist of experience in all of the following key areas of competence as
set out in Appendix 1 to the Global Practising Regulations:
(a) Audit (key area 7);
(b) Professional Conduct (key area 1);
(c) Technical (key areas 2–5: Accounting; Business advice, development and
measurement; Taxation; Business assurance and internal review);
(d) Management (key area 6).
4. For the purposes of paragraph 3, a member must:
(a) be proficient in all the competences shown for audit as described in the competences
of practising certificate holders reproduced in Appendix 1 to the Global Practising
Regulations; and
(b) be proficient in:
(i)
all 5 mandatory elements of competence in relation to Professional Conduct;
and
(ii)
at least 8 elements of competence in relation to Technical skills, 6 of which
must be key elements taken from at least 2 key areas; and
(iii)
at least 2 elements of competence in relation to Management skills, 1 of which
must be a key element.
5. The training must be obtained in an ACCA approved employer under the supervision of
either:
(a) a principal who is entitled to practise and throughout the period of training does
practise as an auditor in the country; or
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2.2 Global Practising Regulations (Annex 3)
(b) any other person having in the opinion of Council adequate qualifications and
experience providing that such a person is a fully qualified auditor under the law of
Cyprus.
6. The training shall be recorded in a manner that the Association specifies as acceptable
from time to time.
7. The member shall have passed such local equivalents in the country of the examinations
specified in Part 1 of Appendix 1 of these regulations as the Admissions and Licensing
Committee shall from time to time specify as acceptable.
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Global Practising Regulations (Annex 4) 2.2
Additional Practising Regulations for
Zimbabwe
Annex 4 to The Chartered Certified Accountants’ Global
Practising Regulations 2003
1. Application
The regulations contained in this annex form part of The Chartered Certified Accountants’
Global Practising Regulations 2003, and shall apply to all members and to all persons who
otherwise agree to be bound by them.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
audit qualification means an audit qualification to the practising certificate issued by the
Association to individuals referred to in regulation 5, which authorises the individual to
hold himself out as an auditor and to carry on audit work;
audit report means a report on accounts or financial statements which is described as an
audit report or having been made by an auditor or is given in true and fair terms or which
states that the accounts present fairly the financial position;
auditor means a person who signs or holds himself out as being available to sign an audit
report whether or not that report is required by statute;
qualified person means, in relation to an individual, a person qualified to hold a
practising certificate with an audit qualification and, in relation to a firm, a firm that is
eligible to be appointed as an auditor;
regulated work means work conducted under a practising certificate with an audit
qualification.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(3) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
3. Restrictions on carrying on public practice
(1) Members and firms
Where public practice is carried on in the name of a firm, or otherwise in the course of a
firm’s business, and that public practice involves the accepting of an appointment as an
auditor, or the holding out of the firm as being available to accept such an appointment, no
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2.2 Global Practising Regulations (Annex 4)
member shall be a sole proprietor, partner or director of that firm unless the firm holds the
appropriate authorisation to carry on the activity in question.
(2) A practising certificate shall only authorise the carrying on of an activity where the activity
is both carried on in the country to which the certificate relates, as determined in accordance
with regulation 4(2), and is covered by the certificate as provided for in regulation 5.
4. Meaning of public practice
(1) Activities
Public practice has the meaning described in regulation 4 of the Global Practising
Regulations.
(2) Where carried on
Where the public practice consists of accepting an appointment as an auditor, or holding
oneself out as available to do so, it shall be taken to be carried on in Zimbabwe, whose laws
will apply to the appointment, or potential appointment.
5. Eligibility for an audit qualification
Members accepting an appointment as an auditor shall be required to obtain an audit
qualification in accordance with regulation 6(2) in addition to complying with regulation 5 of
the Global Practising Regulations as regards their practising certificate. The audit qualification
will convey to the holder the necessary authorisation to carry on audit work subject to the
requirements of regulation 6(2)(c).
6. Qualifications
(1) Qualifications required to hold a practising certificate
To be qualified to hold a practising certificate, members will need to meet the requirements
of regulation 7 of the Global Practising Regulations.
(2) Qualifications required to obtain an audit qualification
To be qualified to hold an audit qualification, members must have obtained a practising
certificate in accordance with regulation 6(1) above. Members must also meet the following
requirements:
(a) comply with the relevant requirements in Parts 1 and 2 of Appendix 1 to these
regulations; or
(b) have previously held an equivalent certificate issued to members prior to 1 January
2011;
(c) in any case, satisfy any other qualification requirements applicable to individuals
wishing to become eligible to act as an auditor in accordance with the laws of
Zimbabwe.
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Global Practising Regulations (Annex 4) 2.2
(3) Waiver
In exceptional circumstances, the requirements of regulations 6(1) may be waived, varied
or suspended at the direction of the Admissions and Licensing Committee in its absolute
discretion.
7. Fit and proper persons
General eligibility
(a) Regulation 8 of the Global Practising Regulations applies to members. Additionally,
where audit qualifications are concerned, this regulation 7 shall apply to the
Admissions and Licensing Committee’s determination.
(b) In determining whether a person is “fit and proper”, the Admissions and Licensing
Committee:
(i)
may take into account whether that person has contravened any provision of
law relating to the seeking appointment or acting as auditor;
(ii)
shall take into account whether that person has contravened any law or
regulation or undertaken any practices or conduct referred to in relevant law,
regulation or guidance issued by a body with responsibility for the regulation
of the activities of the holder of the certificate or of the Association in its
regulation of such activities;
(iii)
may take into account any matter which relates to him or it and any matter
relating to any person who is or will be employed by or associated with him or
it for the purposes of or in connection with public practice.
8. Disclosure of information
In the conduct of audit work, holders of an audit qualification must supply the Association
with all necessary information in accordance with applicable relevant legislation, and to
enable the Association to comply with any other obligations it is legally obliged to meet. This
requirement shall apply for the duration of time that the audit qualification is held.
9. Monitoring
Members holding a practising certificate and/or an audit qualification shall be subject to
monitoring by the Association in accordance with regulation 14 of the Global Practising
Regulations.
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2.2 Global Practising Regulations (Annex 4)
Appendix 1
Requirements for an audit qualification
Part 1: Additional requirements for certain members
(a) A person who first registered as a student on or after 1 January 2007 and who
was admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance must in
addition to satisfying any other conditions laid down in these regulations pass the
following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
A person who first registered as a student before 1 January 2007 and who was
admitted to membership of the Association under Membership Regulation 3(a)
without completing the optional paper P7 Advanced Audit and Assurance (or optional
papers 3.1 Audit and Assurance Services or 10 Accounting and Audit Practice under
previous examination syllabi) must in addition to satisfying any other conditions laid
down in these regulations pass the following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
In addition, such an applicant who was exempted from the Fundamentals Level (or
Part 1 and Part 2 under the December 2001 syllabus) of the Association’s syllabus
must have completed the Professional Level (or Part 3 of the December 2001
syllabus) of the Association’s syllabus within five years of becoming eligible to sit that
part.
(b) A person who was admitted to membership of the Association under Membership
Regulation 3(e) as a member of the Chartered Institute of Management Accountants
or the Chartered Institute of Public Finance and Accountancy (unless he has
completed the papers specified within the Chartered Institute of Public Finance
and Accountancy’s professional accountancy qualification to be eligible for its audit
qualification) must in addition to satisfying any other conditions laid down in these
regulations pass the following of the Association’s examination papers:
P7 Advanced Audit and Assurance.
(c) A person who was admitted to membership of the Association as the holder of a
qualification recognised under Membership Regulation 3(c), (d) or (f) (or the former
bye-law 7) must in addition to satisfying any other conditions laid down in these
regulations successfully complete the following of the Association’s examination
papers:
P7 Advanced Audit and Assurance.
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Global Practising Regulations (Annex 4) 2.2
Part 2: Qualification requirements for an audit qualification
1. For all members applying for the certificate on or after 1 January 2003, the requirements
are set out below.
2. A member who wishes to obtain an audit qualification shall be required to:
(a) have completed three years of training in an ACCA approved employer; and
(b) pass any tests of competence and/or examinations as Council may prescribe in this
appendix from time to time.
The requirement in (a) above shall be extended to five years in the case of applicants who are
not holders of a university degree.
3. The training must consist of experience in all of the following:
(a) Audit;
(b) Accounting; and
(c) Taxation.
4. For the purposes of paragraph 3, a member must:
(a) be proficient in all the performance objectives for audit and assurance as described
in the Practical Experience Requirement as set out in Appendix 2 of the Membership
Regulations; and
(b) endeavour to achieve proficiency in a broad range of practical experience in relation
to accounting and taxation.
5. The training must be obtained in an ACCA approved employer under the supervision of
either:
(a) a principal who is entitled to practise and throughout the period of training does
practise as an auditor in the country; or
(b) any other person having in the opinion of Council adequate qualifications and
experience providing that such person is a fully qualified auditor under the law of
Zimbabwe.
6. The training shall be recorded in a manner that the Association specifies as acceptable
from time to time.
7. The member shall have passed such local equivalents in the country of the examinations
specified in Part 1 of Appendix 1 of these regulations as the Association shall from time to
time specify as acceptable.
151
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Designated Professional Body Regulations 2.3
2.3
The Chartered Certified Accountants’
Designated Professional Body Regulations
2001
Amended 1 March 2009
The Council of the Association of Chartered Certified Accountants, in exercise of all the
powers conferred on it by bye-laws 6 and 27 of the Association’s bye-laws and all other
powers enabling it, hereby makes the following regulations:
Chapter 1 Citation
1. Citation, commencement and application
(1) Citation
These regulations may be cited as The Chartered Certified Accountants’ Designated
Professional Body Regulations 2001. The Association is a designated professional body
under Part XX of the Financial Services and Markets Act 2000 (‘the Act’) and is required,
under section 332(3) of that Act, to make rules relating to carrying on regulated activities
that may be carried on by members and firms without breaching the general prohibition.
(2) Commencement
These regulations as amended as set out herein shall come into force on the following dates:
(a) regulations concerning activities related to regulated mortgage contracts on 31
October 2004;
(b) regulations concerning insurance mediation activities related to contracts of long-term
care insurance on 31 October 2004;
(c) regulations concerning all other insurance mediation activities on 14 January 2005;
(d) regulations concerning regulated home purchase plans, regulated home reversion
plans and rights under personal pension plans on 6 April 2007;
(e) regulations concerning the revised minimum levels of professional indemnity
insurance for firms carrying on insurance mediation activities on 1 March 2009;
(f) all other regulations on 1 January 2005.
(3) Application
(a) These regulations shall apply to all members and firms.
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2.3 Designated Professional Body Regulations
(b) A firm shall not be eligible to undertake any regulated activities pursuant to these
Regulations if it is an authorised person (i.e. a firm cannot be regulated by a
designated professional body and at the same time be authorised by the FSA).
(c) These regulations shall apply to exempt regulated activities carried on in, into or from
the United Kingdom.
(4) Approval by the FSA
The regulations in this chapter and chapters 2, 3 and 4 have been approved by the FSA
under section 332(5) of the Act.
Chapter 2 Interpretation
2. Interpretation
(1) Definitions
In these regulations, unless the context otherwise requires:
Act means the Financial Services and Markets Act 2000;
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
agent, in relation to a person, means any person (including an employee) who acts on
that person’s behalf;
Appeal Committee means the committee appointed by Council pursuant to regulations
made under bye-law 28;
appointed representative means a person (other than an authorised person) who is
employed by an authorised person (his principal) under a contract for services which
requires or permits him to carry on a regulated activity of a kind to which Section 39 of
the Act applies;
associate, in relation to a person, shall be construed as follows:
(a) in relation to an individual, “associate” means:
(i) that individual’s spouse or minor child or step-child;
(ii) any body corporate of which that individual is a director; and
(iii) any employee or partner of that individual;
(b) in relation to a body corporate, “associate” means:
(i) any body corporate of which that body is a director;
(ii) any body corporate in the same group as that body; and
(iii) any employee or partner of that body or of any body corporate in the same group;
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Designated Professional Body Regulations 2.3
(c) in relation to a Scottish partnership, or a partnership constituted under the law of any
other country or territory in which a partnership is a legal person, “associate” means:
(i) any body corporate of which the partnership is a director;
(ii) any employee of or partner in the partnership; and
(iii) any person who is an associate of a partner in the partnership; and
(d) in relation to a partnership constituted under the law of England and Wales or
Northern Ireland, or the law of any other country or territory in which a partnership
is not a legal person, “associate” means any person who is an associate of any of the
partners;
Association means the Association of Chartered Certified Accountants incorporated by
Royal Charter issued to it in 1974 as amended from time to time;
authorised person means a person who is authorised by the FSA under section 31(1) of
the Act;
authorised unit trust scheme means a unit trust scheme declared by an order of the FSA
for the time being in force to be an authorised unit trust scheme for the purposes of the
Act;
broker funds arrangement means an arrangement between a firm and a life office (or
operator of a regulated collective investment scheme) under which the life office (or
operator of the regulated collective investment scheme) agrees to establish a separate
fund whose composition may be determined by instructions from the firm and in which it
is possible for more than one client to invest;
capital redemption contracts means (in relation to a class of contract of insurance)
capital redemption contracts where effected or carried out by a person who does not
carry on a banking business, and otherwise carries on the regulated activity of effecting
or carrying out contracts of insurance, as specified in paragraph VI of Part II of Schedule
1 to the Regulated Activities Order (Contracts of long-term insurance);
charges means any fee or charge levied by the firm to a client in connection with
investment business activities;
client means any person to whom a firm provides public practice accountancy services
under these regulations including a potential client and an indirect client but does not
include a trust beneficiary;
collective investment scheme means any arrangements with respect to property of any
description, including money, the purpose or effect of which is to enable persons taking
part in the arrangements (whether by becoming owners of the property or any part of it
or otherwise) to participate in or receive profits or income arising from the acquisition,
holding, management or disposal of the property or sums paid out of such profits or
income, which are not excluded by the Financial Services and Markets Act (Collective
Investment Schemes) Order 2001;
company includes any body corporate;
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2.3 Designated Professional Body Regulations
contract of insurance means:
(1) (in relation to a specified investment) the investment, specified in article 75 of the
Regulated Activities Order (Contracts of insurance), which is rights under a contract
of insurance in (2).
(2) (in relation to a contract) (in accordance with article 3(1) of the Regulated Activities
Order (Interpretation)) any contract of insurance which is a long-term insurance
contract or a general insurance contract, including:
(a)
fidelity bonds, performance bonds, administration bonds, bail bonds, customs
bonds or similar contracts of guarantee, where these are:
(i)
effected or carried out by a person not carrying on a banking business;
(ii)
not effected merely incidentally to some other business carried on by the
person effecting them; and
(iii)
effected in return for the payment of one or more premiums;
(b)
tontines;
(c)
capital redemption contracts or pension fund management contracts, where
these are effected or carried out by a person who:
(i)
does not carry on a banking business; and
(ii)
otherwise carries on the regulated activity of effecting or carrying out
contracts of insurance;
(d)
contracts to pay annuities on human life;
(e)
contracts of a kind referred to in article 1(2)(e) of the Consolidated Life
Directive (collective insurance etc); and
(f)
contracts of a kind referred to in article 1(3) of the Consolidated Life Directive
(social insurance);
but does not include a funeral plan contract or a contract which would be a funeral plan
contract but for the exclusion in article 60 of the Regulated Activities Order;
in this definition, “annuities on human life” does not include superannuation allowances
and annuities payable out of any fund applicable solely to the relief and maintenance
of persons engaged, or who have been engaged, in any particular profession, trade or
employment, or of the dependants of such persons;
contract of long-term care insurance means a contract of long-term care insurance
specified in Article 1(4) of the Financial Services and Markets Act 2000 (Regulated
Activities) (Amendment) (No. 2) Order 2003;
contract of long-term insurance means a contract of long-term insurance specified in
Part II of Schedule 1 to the Regulated Activities Order;
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Designated Professional Body Regulations 2.3
controller means, in relation to any company, a person who either alone or with any
associate or associates is entitled to exercise or control the exercise of 10 per cent or
more of the rights to vote on all, or substantially all, matters at general meetings of the
company or another company of which it is a subsidiary;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
deposit means a sum of money, paid on terms:
(a) under which it will be repaid, with or without interest or premium, and either on
demand or at a time or in circumstances agreed by or on behalf of the person making
the payment and the person receiving it; and
(b) which are not referable to the provision of property (other than currency) or services
or the giving of security;
derivative means an investment falling within any of articles 83, 84 or 85 of the
Regulated Activities Order;
designated investment means a security or a contractually based investment (other than
a funeral plan contract and a right to or interest in a funeral plan contract), that is, any of
the following investments, specified in Part III of the Regulated Activities Order (Specified
Investments):
(a) life policy (subset of article 75 (Contracts of insurance));
(b) share (article 76);
(c) debenture (article 77);
(d) government and public security (article 78);
(e) warrant (article 79);
(f) certificate representing certain securities (article 80);
(g) unit (article 81);
(h) stakeholder pension scheme (article 82(1)) and personal pension scheme (article
82(2));
(i) option (article 83);
(j) future (article 84);
(k) contract for differences (article 85);
(l) regulated mortgage contracts (article 88);
(m)regulated home reversion plans (article 88A);
(n) regulated home purchase plans (article 88B);
(o) rights to or interests in investments in (a) to (k) (article 89);
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2.3 Designated Professional Body Regulations
designated investment business means any of the activities, specified in Part II of the
Regulated Activities Order (Specified Activities) which are carried on by way of business;
designated professional body has the meaning given by section 326 of the Act;
distance contract means any contract for financial services, the making or performance
of which constitutes or is part of a regulated activity, concluded under an organised
distance sales or service provision scheme run by the contractual provider of the service,
who, for the purpose of that contract, makes exclusive use (directly or through an
intermediary) of one or more means of distance communication up to and including the
time at which the contract is concluded;
Distance Marketing Directive means the Distance Marketing of Consumer Financial
Services Directive 2002/65/EC;
EIS scheme means an enterprise investment scheme approved under Chapter III of Part
VII of the Income and Corporation Taxes Act 1988;
employee means an individual who is employed in connection with the firm’s exempt
regulated activities under a contract of service or under a contract for services such
that he is held out as an employee or consultant of the firm and includes an appointed
representative of the firm;
execution-only client, in relation to the effecting of a transaction by a firm, means a
person with or for whom that transaction is effected in circumstances in which the firm
can reasonably assume that the client is not relying upon the firm to advise him on or to
exercise any judgement on his behalf as to the merits of or the suitability for him of the
transaction and where that person has agreed in writing that the firm has not provided
and is not responsible for providing him with investment advice or for exercising any
judgement on his behalf as to the merits of or the suitability for him of the transaction
and has reasonably concluded that the client can be expected to understand the risks
involved in the transaction, and execution-only shall be construed accordingly;
exempt person means a person who is exempt under sections 38 and 39 of the Act;
exempt regulated activities means a regulated activity which may, as a result of Part XX
of the Act (Provision of Financial Services by Members of the Professions), be carried
on by members of a profession which is supervised and regulated by a designated
professional body without breaching the general prohibition;
FSA means the Financial Services Authority;
FSA Register means the record maintained by the FSA, which includes a record of
unauthorised persons that carry on, or are proposing to carry on, insurance mediation
activity;
firm means a sole practice, partnership or body corporate including a limited liability
partnership that satisfies the eligibility requirements for carrying on exempt regulated
activities;
funeral plan contract means the investment, specified in articles 59(2), 60 and 87 of
the Regulated Activities Order which come into force on 1 January 2002, which is in
summary, rights under a contract under which:
(a) a person (“the customer”) makes one or more payments to another person (“the
provider”); and
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Designated Professional Body Regulations 2.3
(b) the provider undertakes to provide, or secure that another person provides, a funeral
in the United Kingdom for the customer (or some other person who is living at the
date when the contract is entered into) on his death;
unless, at the time of entering into the contract, the customer and the provider intend
or expect the funeral to occur within one month; but excluding certain contracts under
which sums paid will be applied towards a contract of insurance or will be held on trust;
general prohibition means the prohibition imposed by section 19 of the Act which states
that no person may carry on a regulated activity in the United Kingdom, or purport to do
so, unless he is:
(a) an authorised person; or
(b) an exempt person;
group, in relation to a body corporate, means the body corporate, any other body
corporate which is its holding company or subsidiary and any other body corporate which
is a subsidiary of that holding company;
holding company has the meaning given by section 736 of the Companies Act 2006;
indirect client means, where a client is known to be acting as agent, an identified
principal who would be a client if he were dealt with direct;
inducement does not include disclosable commission that is accounted for fully to the
client;
insurance mediation activity means any of the following regulated activities carried on in
relation to a contract of insurance or rights to or interest in a life policy:
(a) dealing in investments as agent in the manner specified by article 21 of the
Regulated Activities Order;
(b) arranging (bringing about) deals in investments in the manner specified by article
25(1) of the Regulated Activities Order:
(c) making arrangements with a view to transactions in investments in the manner
specified by article 25(2) of the Regulated Activities Order;
(d) assisting in the administration and performance of a contract of insurance within
article 39A of the Regulated Activities Order;
(e) advising on investments in the manner specified by article 53 of the Regulated
Activities Order;
(f) agreeing to carry on a regulated activity in (a) to (e) within article 64 of the Regulated
Activities Order;
investment trust savings scheme means a dealing service dedicated to the securities of
a particular investment trust or of investment trusts within a particular marketing group
(and references to an investment trust savings scheme include references to securities to
be acquired through that scheme);
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2.3 Designated Professional Body Regulations
ISA means an account which is a scheme of investment satisfying the conditions
prescribed by the Individual Savings Accounts Regulations 1998 (SI 1998/1870) or any
regulations amending or replacing them;
material interest, in relation to a transaction, does not include disclosable commission on
the transaction that is accounted for fully to the client;
means of distance communication means (in accordance with Article 2(e) of the Distance
Marketing Directive) any means used for the distance marketing of a service between
parties which does not involve the simultaneous physical presence of those parties;
member means an individual admitted to membership of the Association pursuant to the
bye-laws;
officer means, in relation to a firm which is a partnership, a partner, and in relation to
a firm which is a limited liability partnership, a member, and in relation to a firm which
is a company, a director or company secretary; and in relation to the Association means
any official, servant or agent of the Association, whether employed by the Association or
otherwise;
open-ended investment company means a collective investment scheme which satisfies
both the property condition and the investment condition:
(a) the property condition is that the property belongs beneficially to, and is managed by
or on behalf of, a body corporate (“BC”) having as its purpose the investment of its
funds with the aim of:
(i)
spreading investment risk; and
(ii)
giving its members the benefit of the results of the management of those funds
by or on behalf of that body;
(b) the investment condition is that, in relation to BC, a reasonable investor would, if he
were to participate in the scheme:
(i)
expect that he would be able to realise, within a period appearing to him be
reasonable, his investment in the scheme (represented, at any given time, by
the value of shares in, or securities of, BC held by him as a participant in the
scheme); and
(ii)
be satisfied that his investment would be realised on a basis calculated wholly
or mainly by reference to the value of property in respect of which the scheme
makes arrangements;
Order means an intervention order made pursuant to regulation 8;
packaged product means a life policy, personal pension scheme, stakeholder pension
scheme, a unit in a regulated collective investment scheme, or an investment trust
savings scheme;
pension fund withdrawals means in relation to a decision of a client in respect of a
personal pension scheme, to defer the purchase of an annuity and to take:
(a) income withdrawals within the meaning of section 630 of the Income and
Corporation Taxes Act 1988, as amended by section 58 and Schedule 11 of the
Finance Act 1995; or
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Designated Professional Body Regulations 2.3
(b) payments made under interim arrangements in accordance with section 28A of the
Pension Schemes Act 1993, as inserted by section 143 of the Pensions Act 1995;
and, in respect of an election to make pension fund withdrawals, a reference in these
regulations to a client, an investor or a policyholder includes, after that person’s death,
his surviving spouse and/or anyone who is, at that time, his dependant;
pension transfer means any transaction by a client resulting from a decision to:
(a) opt out of or not join an occupational pension scheme of which a client is a current
member, or which he is, or at the end of a waiting period will become eligible to join,
in order to enter into a personal pension policy or stakeholder pension scheme; or
(b) make a payment into a personal pension scheme or stakeholder pension scheme of
accrued pension benefits under an occupational pension scheme;
PEP means a plan which is a scheme of investment satisfying the conditions prescribed
by the Personal Equity Plan Regulations 1989 (SI 1989/469);
permission means permission given by the FSA, under Part IV of the Act or resulting from
any other provision of the Act, to carry on regulated activities in the UK;
permitted third party means in relation to a regulated activity, an authorised person with
permission under Part IV of the Act to carry on that activity or an exempt person who is
an exempt person in relation to that activity but in relation to packaged products does not
include the regulated life office or operator of the regulated collective investment scheme
in question, or an appointed representative of either; and in the case of any reference to
the firm acting as disclosed agent where the permitted third party has confirmed to the
firm that the client is or will be treated by the authorised person as its customer;
personal pension policy means a right to benefits obtained by the making of contributions
to a personal pension scheme;
personal pension scheme means:
(a) (in relation to a specified investment) the investment specified in article 82(2) of the
Regulated Activities Order (Rights under a pension scheme) which is rights under a
personal pension scheme in (b);
(b) (in relation to a scheme) (in accordance with 3(1) of the Regulated Activities Order)
a pension scheme or arrangement which is not an occupational pension scheme or
a stakeholder pension scheme and which is comprised in one or more instruments
or agreements, having or capable of having effect so as to provide benefits to or in
respect of people:
(i)
on retirement;
(ii)
on having reached a particular age; or
(iii)
on termination of service in an employment;
plan manager means in relation to:
(a) a group PEP, the PEP manager;
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2.3 Designated Professional Body Regulations
(b) a group ISA, the ISA manager;
(c) a group savings plan, the person primarily responsible for that group savings plan;
practising certificate means any practising certificate relating to the UK issued by the
Association only to members pursuant to The Chartered Certified Accountants’ Global
Practising Regulations 2003;
public practice accountancy services means services within the definition of public
practice contained in The Chartered Certified Accountants’ Global Practising Regulations
2003:
(a) which do not constitute carrying on a regulated activity, and
(b) the provision of which is supervised and regulated by a designated professional body;
Regulated Activities Order means the Financial Services and Markets Act 2000
(Regulated Activities) Order 2001 (Statutory Instrument 2001 No. 544) as amended;
regulated activity means an activity included in the Financial Services and Markets Act
2000 (Regulated Activities) Order 2001;
regulated collective investment scheme means an authorised unit trust scheme, a
recognised scheme or a United Kingdom OEIC;
regulated home purchase plan means an arrangement comprised in one or more
instruments or agreements, in relation to which the following conditions are met at the
time it is entered into:
(a) the arrangement is one under which a person (the “home purchase provider”) buys
a qualifying interest in land (other than timeshare accommodation) in the United
Kingdom;
(b) where the undivided share of a qualifying interest in land is bought, the interest is
held on trust for the home purchase provider and the individual or trustees mentioned
in (c) below as beneficial tenants in common;
(c) the arrangement provides for the obligation of an individual or trustees (the “home
purchaser”) to buy the interest bought by the home purchase provider over the
course of or at the end of a specified period; and
(d) the home purchaser (if he is an individual) or an individual who is a beneficiary of a
trust (if the home purchaser is a trustee), or a related person, is entitled under the
arrangement to occupy at least 40% of the land in question as or in connection with
a dwelling during that period, and intends to do so;
in the context of a regulated home purchase plan:
“administering” means either or both of:
162
(i)
notifying the home purchaser of changes in payments due under the plan, or of
other matters of which the plan requires him to be notified; and
(ii)
taking any necessary steps for the purposes of collecting or recovering
payments due under the plan from the home purchaser;
Designated Professional Body Regulations 2.3
but a person is not to be treated as administering a regulated home purchase plan
merely because he has, or exercises, a right to take action for the purposes of
enforcing the plan or to require that such action is or is not taken;
“qualifying interest” in land means:
(i)
in relation to land in England or Wales, is to an estate in fee simple absolute or
a term of years absolute, whether subsisting at law or in equity;
(ii)
in relation to land in Scotland, is to the interest of an owner in land or the
tenant’s right over or interest in a property subject to a lease;
(iii)
in relation to land in Northern Ireland, is to any freehold estate or any
leasehold estate, whether subsisting at law or in equity;
“timeshare accommodation” has the meaning given by section 1 of the Timeshare
Act 1992;
“related person” in relation to the home purchaser or, where the home purchaser is a
trustee, a beneficiary of the trust, means:
(i)
that person’s spouse or civil partner;
(ii)
a person (whether or not of the opposite sex) whose relationship with that
person has the characteristics of the relationships between husband and wife;
or
(iii)
that person’s parent, brother, sister, grandparent or grandchild;
for the purposes of (d) above, the area of any land which comprises a building or other
structure containing two or more storeys is to be taken to be the aggregate of the floor
areas of each of those storeys;
regulated home reversion plan means an arrangement comprised in one or more
instruments or agreements, in relation to which the following conditions are met at the
time it is entered into:
(a) the arrangement is one under which a person (the “plan provider”) buys all or part
of a qualifying interest in land (other than timeshare accommodation) in the United
Kingdom from an individual or trustees (the “reversion seller”);
(b) the reversion seller (if he is an individual) or an individual who is a beneficiary of the
trust (if the reversion seller is a trustee), or a related person, who is entitled under the
arrangement to occupy at least 40% of the land in question as or in connection with
a dwelling, and intends to do so; and
(c) the arrangement specifies one or more qualifying termination events, on the
occurrence of which that entitlement will end;
in the context of a regulated home reversion plan:
“administering” means any of:
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2.3 Designated Professional Body Regulations
(i)
notifying the reversion seller of changes in payments due under the plan, or of
other matters of which the plan requires him to be notified; and
(ii)
taking any necessary steps for the purposes of making payments to the
reversion seller under the plan; and
(iii)
taking any steps for the purposes of collecting or recovering payments due
under the plan from the reversion seller;
but a person is not to be treated as administering a regulated home reversion plan
merely because he has, or exercises, a right to take action for the purposes of
enforcing the plan (or to require that such action is or is not taken);
“qualifying interest” in land means:
(i)
in relation to land in England or Wales, is to an estate in fee simple absolute or
a term of years absolute, whether subsisting at law or in equity;
(ii)
in relation to land in Scotland, is to the interest of an owner in land or the
tenant’s right over or interest in a property subject to a lease;
(iii)
in relation to land in Northern Ireland, is to any freehold estate or any
leasehold estate, whether subsisting at law or in equity;
“timeshare accommodation” has the meaning given by section 1 of the Timeshare Act
1992;
“related person” in relation to the reversion seller or, where the reversion seller is a
trustee, a beneficiary of the trust, means:
(i)
that person’s spouse or civil partner;
(ii)
a person (whether or not of the opposite sex) whose relationship with that
person has the characteristics of the relationships between husband and wife;
or
(iii)
that person’s parent, brother, sister, grandparent or grandchild;
“qualifying termination event”, in relation to a person’s entitlement to occupy land,
means:
(i)
the person becomes resident in a care home;
(ii)
the person dies;
(iii)
the end of a specified period of at least twenty years beginning with the day on
which the reversion seller entered into the arrangement;
for the purposes of (b) above, the area of any land which comprises a building or other
structure containing two or more storeys is to be taken to be the aggregate of the floor
areas of each of those storeys;
regulated mortgage contract means:
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Designated Professional Body Regulations 2.3
(a) (in relation to a contract) (in accordance with article 61(3) of the Regulated Activities
Order) a contract which, at the time it is entered into, meets the following conditions:
(i)
a lender provides credit to an individual or to trustees (the “borrower”); and
(ii)
the obligation of the borrower to repay is secured by a first legal mortgage on
land (other than timeshare accommodation) in the United Kingdom, at least
40% of which is used, or is intended to be used, as or in connection with a
dwelling by the borrower or (in the case of credit provided to trustees) by an
individual who is a beneficiary of the trust, or by a person who is in relation to
the borrower or (in the case of credit provided to trustees) a beneficiary of the
trust:
(aa) that person’s spouse; or
(bb) a person (whether or not of the opposite sex) whose relationship with
that person has the characteristics of the relationship between husband
and wife; or
(cc) that person’s parent, brother, sister, child, grandparent or grandchild;
(b) (in relation to a specified investment) the investment, specified in article 88 of the
Regulated Activities Order, which is rights under a regulated mortgage contract within
(a);
regulatory system means the arrangements for regulating a firm under the Act including
these regulations;
securities means investments falling within articles 76 to 81 of the Regulated Activities
Order;
shares means an investment falling within article 76 of the Regulated Activities Order;
soft commission agreement means an agreement in any form, the terms of which permit
a firm to receive certain goods or services from another person in return for transacting
investment business with or through that other person;
specified investment means any of the investments specified in Part III of the Regulated
Activities Order (Specified Investments);
stakeholder pension scheme means:
(a) (in relation to a specified investment) the investment specified in article 82 of the
Regulated Activities Order (Rights under a stakeholder pension scheme) which is
rights under a stakeholder pension scheme in (b);
(b) (in relation to a scheme) a scheme established in accordance with Part I of the
Welfare Reform and Pensions Act 1999 and the Stakeholder Pension Schemes
Regulations 2000;
subsidiary has the meaning given by section 736 of the Companies Act 2006;
trustee appointment means an appointment as a trustee, personal representative, donee
of a power of attorney, receiver appointed by the Court of Protection, curator bonis, tutor
or judicial factor;
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2.3 Designated Professional Body Regulations
United Kingdom means the United Kingdom of Great Britain and Northern Ireland;
United Kingdom OEIC has the meaning as defined in the Open-ended Investment
Companies (Investment Companies with Variable Capital) Regulations 1996.
(2) Interpretation
(a) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(b) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
(c) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference
to a statutory provision or to regulations shall include that provision or, as the case
may be, regulations as from time to time modified or re-enacted so far as such
modification or re-enactment applies or is capable of applying to such reference.
(d) The Interpretation Act 1978 shall apply to these regulations in the same way as it
applies to an enactment.
Chapter 3 Eligibility
3. Eligibility to carry on regulated activities
Subject to regulation 1(3) the following eligibility criteria must be met in order for firms to
carry out any of the activities permitted by regulation 4(1).
(1) Sole practitioners
A sole practitioner will only be eligible to carry on regulated activities where:
(a) he is a member; and
(b) he holds a practising certificate; and
(c) the main business of his practice is the provision of public practice accountancy
services; and
(d) he is practising otherwise than in partnership.
(2) Partnerships
A partnership will only be eligible to carry on regulated activities where:
(a) at least one of the partners in the firm is a member and each partner who is not a
member is:
166
(i)
a member of another designated professional body and is entitled to practise
accountancy and is subject to the regulations of the Association; or
(ii)
entitled to practise accountancy and is subject to the regulations of the
Association; and
Designated Professional Body Regulations 2.3
(b) the partners who are members of the Association or of another designated
professional body (if any) manage or control the firm; and
(c) the main business of the partnership is the provision of public practice accountancy
services; and
(d) each partner who is a member holds a practising certificate.
Where this regulation is being applied in connection with a Limited Liability Partnership, the
reference to partner or partners should be construed as referring to a member or members of
the Limited Liability Partnership.
(3) Companies
A company will only be eligible to carry on regulated activities where:
(a) at least one director and controller is a member and each director who is not a
member is:
(i)
a member of another designated professional body and is entitled to practise
accountancy and is subject to the regulations of the Association; or
(ii)
entitled to practise accountancy and is subject to the regulations of the
Association; and
(b) the directors who are members of the Association or of another designated
professional body (if any) manage or control the firm; and
(c) its main business is the provision of public practice accountancy services; and
(d) each director who is a member holds a practising certificate.
Note on applicability of these regulations to members of the Association of Authorised
Public Accountants
The Association of Authorised Public Accountants (AAPA) is not a designated professional
body for the purposes of the Act, and AAPA members are therefore not eligible to carry
on exempt regulated activities. Consequently, these regulations are not of application to
AAPA members, save for any provisions concerning the handling of client monies linked to
exempt regulated activities, or execution-only business which AAPA members are obliged
to observe.
(4) Undertakings
Partners or directors who are not members of the Association shall be required to provide
undertakings to be bound by the regulations of the Association, under regulations 3(2)(a)
and 3(3)(a), in a manner prescribed by the Association and shall be accompanied by the
appropriate administration fee.
(5) Incidental manner
(a) In order for a firm to qualify as carrying on regulated activities in an incidental
manner:
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2.3 Designated Professional Body Regulations
(i)
the main activity of the firm must be the provision of public practice
accountancy services other than regulated activities; and
(ii)
the carrying on of the regulated activities is not isolated from other activities of
the firm so that it is in effect a separate business; and
(iii)
the firm does not carry on, or hold itself out as carrying on, a regulated activity
other than one which is allowed by these rules or one in relation to which the
firm is an exempt person.
(b) The following additional requirements are relevant in assessing whether the
requirement in regulation 3(5)(a)(ii) is met:
(i)
regulated activities should arise out of or be complementary to the provision by
the firm of a particular professional service to a particular client; and
(ii)
the firm should disclose to an existing client or a potential client that the firm
is an accountancy firm which may only carry on a limited range of investment
business activities; and
(iii)
the firm must not receive from a person other than its client any pecuniary
reward or other advantage, for which it does not account to its client (see 6
below), arising out of its carrying on of regulated activities; and
(iv)
the carrying on of regulated activities is within the scope of the general ethical
code or the rules governing the profession; and
(v)
the firm must not hold out that the exempt regulated activities are carried out
on a stand alone basis separate from the main activity of the firm.
(6) Receipt of any pecuniary reward or other advantage
(a) Regulation 3(5)(b)(iii) requires that any pecuniary reward or other advantage arising
out of carrying on exempt regulated activities can only be retained where the
member or firm accounts to the client for that pecuniary reward or other advantage.
“Accounts to the client” means remitting any pecuniary reward or advantage (such as
commissions received from product providers) to the client; or informing the client of
the pecuniary reward or advantage and that he has the right to require the firm to pay
the amount concerned to the client, thus allowing offsetting of the amount against
any fees charged to the client; or obtaining the client’s informed consent, in writing,
that the firm may retain the particular reward or advantage in question.
(b) In securing the consent of the client, the client must be informed clearly of the nature
of the pecuniary reward or advantage, including its amount and frequency, and that
the client has the right to require the firm to pay the amount concerned to the client.
Even if the client consents, the client must be informed each time a pecuniary reward
or advantage is received (for example, each time a commission is received, be it
initial commission or renewal commission). The exception to this is where the amount
and frequency of the pecuniary reward or advantage is predetermined (for example, a
fixed commission receivable once per month over the term of a life assurance policy).
(c) It is not considered sufficient for firms in, say, the letter of engagement to make a
general disclosure regarding the receipt of any pecuniary reward or advantage, or to
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Designated Professional Body Regulations 2.3
obtain a client’s general consent to the firm’s retention of such pecuniary reward or
advantage.
(d) Firms should agree with clients the manner in which any commission, fee or reward
is going to be dealt with. Firms are also reminded of the requirements of disclosure of
such commission, fee or reward, under the Code of Ethics and Conduct.
(7) Other restrictions
(a) A firm with a branch (or branches) or office (or offices) outside the United Kingdom
shall be eligible to undertake exempt regulated activities in the UK from its UK
branch (or branches) or office (or offices) (subject to the requirements of other
relevant regulations).
(b) A member or firm shall not be eligible to undertake any activity specified in any Order
made under the Financial Services and Markets Act 2000 (Professions)(Non-Exempt
Activities) Order 2001, as amended from time to time or any other Order made by
the Treasury under section 327(6) of the Act.
(c) Where the FSA exercises its powers under sections 328 and 329 of the Act,
members or firms cannot undertake the activity or activities specified in the direction
or order.
The powers of the FSA
(1) Directions
Section 328 of the Act enables the FSA to issue a direction that the exemption from the
general prohibition under section 327(1) of the Act does not apply either to a class of
person or to a specific regulated activity. The direction must be in writing.
(2) Orders
Section 329 of the Act enables the FSA to make an order that the exemption from the
general prohibition under section 327(1) does not apply if it appears to the FSA that the
person to whom the order will apply is not a fit and proper person to carry on exempt
regulated activities.
The powers of the FSA detailed above may be used separately, or in addition to, the
Association’s disciplinary procedures.
Chapter 4 Scope
4. Scope
(1) Exempt regulated activities
Subject to regulations 4(2) and 4(3), all firms that are eligible to conduct regulated activities
under regulation 3 may carry on, or agree to carry on, any of the activities set out in this
regulation (but no other activity constituting regulated activities).
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2.3 Designated Professional Body Regulations
In relation to designated investments, contracts of long-term insurance, contracts of longterm care insurance, regulated mortgage contracts, regulated home reversion plans and
regulated home purchase plans, firms may carry on:
(a) dealing as agent in investments within article 21 to the Regulated Activities Order:
(i)
as disclosed agent for a named client where the transaction is carried out with
or through a permitted third party; or
(ii)
where the client is an execution-only client except in respect of pension transfer
or opt-out business and pension fund withdrawals; or
(b) making arrangements within articles 25 (investments deals), 25A (regulated
mortgage contracts), 25B (regulated home reversion plans) and 25C (regulated home
purchase plans) of the Regulated Activities Order where:
(i)
the firm acts as disclosed agent for a named client and the arrangements are
carried out with or through a permitted third party; or
(ii)
the arrangements are made in consequence of advice given in relation thereto
by a permitted third party which if obtained by the firm has been obtained by
it acting as disclosed agent for a named client; or
(iii)
the client is an execution-only client except in respect of pension transfer or
opt-out business and pension fund withdrawals; or
(iv)
the arrangements are for the disposal of a packaged product by or for a
personal representative; or
(v)
the transaction involves the acquisition or disposal of an investment by
accepting an offer or responding to an invitation made to the public or to the
holders of securities of any body corporate or any class thereof or by exercising
any right conferred by an investment to acquire, dispose of or convert an
investment; or
(c) managing investments within article 37 of the Regulated Activities Order where:
(i)
that activity is performed on a non-discretionary basis;
(ii)
the firm or an officer or employee of the firm holds a trustee appointment and
acts on a discretionary basis; and
(aa) no remuneration is received for the discretionary management of the
investments in addition to the remuneration which the firm or the officer
or employee of it may receive in connection with their acting pursuant to
the trustee appointment; or
(bb) any decisions to buy, sell, subscribe for or underwrite a particular
investment are taken in accordance with the advice of a permitted third
party which, if obtained by the firm, has been obtained by him or it
having disclosed the basis on which he or it is acting; or
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Designated Professional Body Regulations 2.3
(d) advising within article 53 (investments), article 53A (regulated mortgage contracts),
article 53B (regulated home reversion plans) and article 53C (regulated home
purchase plans) of the Regulated Activities Order where:
(i)
such advice constitutes the advice of a permitted third party and, if obtained
by the firm, has been obtained by it acting as disclosed agent for a named
client; or
(ii)
in the case of investments the advice does not relate to listed securities; or
(iii)
such advice concerns the disposal of a packaged product for a personal
representative; or
(iv)
such advice constitutes a recommendation not to buy or subscribe for
investments, or a recommendation to vary the terms of, not to buy or not to
subscribe for regulated mortgage contracts, regulated home reversion plans
and regulated home purchase plans, or relates to the disposal of investments
other than rights under a personal pension scheme or relates to the acquisition
of investments issued by an unquoted company; or
(v)
such advice constitutes advice to clients to seek further information or
clarification from the authorised person; or
(vi)
such advice constitutes advice to clients on the merits of advice given by an
appropriately authorised or exempt person provided no recommendation is
made that the client purchases a particular investment or regulated mortgage
contract, regulated home reversion plans and regulated home purchase plans,
other than that recommended by the authorised or exempt person; or
(e) the provision of any designated investment business to:
(i)
an issuer, holder or owner of investments with regard to the offer, issue,
underwriting, repurchase, exchange or redemption of, or the variation of the
terms of, the investments, or any related matter; or
(ii)
any company or partnership which relates to the manner in which, or the terms
on which, or the persons by whom, any business, activities or undertakings
relating to it, or any associate, are to be financed, structured, managed,
controlled, regulated or reported upon; or
(iii)
any company in connection with a proposed or actual take-over by or on behalf
of that company or its holding company or subsidiary or a merger, de-merger,
re-organisation or reconstruction involving any investments issued by such a
company; or
(iv)
any shareholder or prospective shareholder of a company established or to be
established for the purpose of effecting a take-over.
In relation to contracts of insurance other than contracts of long-term insurance and
contracts of long-term care insurance, firms may carry on the following insurance mediation
activities provided they have first complied with regulation 4(3):
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2.3 Designated Professional Body Regulations
(f) dealing as agent in the manner specified by article 21 of the Regulated Activities
Order; or
(g) making arrangements in the manner specified by article 25 of the Regulated
Activities Order; or
(h) assisting in the administration and performance of contracts of insurance within
article 39A of the Regulated Activities Order; or
(i) advising in the manner specified by article 53 of the Regulated Activities Order.
(2) Prohibited activities
No firm may carry out any activity that relates to:
(a) accepting deposits of a kind specified by article 5 of the Regulated Activities Order;
(b) effecting and carrying out contracts of insurance as specified by article 10 of the
Regulated Activities Order;
(c) dealing as principal in investments within the meaning of article 14 of the Regulated
Activities Order;
(d) establishing, operating or winding up a collective investment scheme; act as a trustee
of an authorised unit trust scheme or act as the depository or sole director of an
open-ended investment company as specified within article 51 of the Regulated
Activities Order;
(e) establishing, operating or winding up a personal pension scheme or stakeholder
pension scheme within article 52 of the Regulated Activities Order;
(f) recommendations to buy or subscribe for securities or contractually based
investments which are admitted to dealing on an exchange or other market within
article 53 of the Regulated Activities Order;
(g) advising on the merits of entering into a regulated mortgage contract within article
53A, a regulated home reversion plan within article 53B and a regulated home
purchase plan within article 53C of the Regulated Activities Order;
(h) advising on the merits of entering into or varying the terms of a contract of longterm insurance, a contract of long-term care insurance or other insurance-based
investment in the manner specified by article 53 of the Regulated Activities Order;
(i) managing the underwriting capacity of a Lloyd’s syndicate as a managing agent at
Lloyd’s as specified under article 57 of the Regulated Activities Order;
(j) entering as provider into a funeral plan contract within article 59 of the Regulated
Activities Order;
(k) entering into or administering a regulated mortgage contract, regulated home
reversion plans and regulated home purchase plans within articles 61, 63B and 63F
of the Regulated Activities Order;
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Designated Professional Body Regulations 2.3
(l) advising a person to become a member of a particular Lloyd’s syndicate;
(m)holding, or receiving, any money belonging to a client in the course of carrying on
exempt regulated activities for a client which is not immediately due and payable on
demand to the firm for its own account;
(n) acting as a personal pension scheme or stakeholder pension scheme manager;
(o) managing investments as a plan manager of a PEP or an ISA;
(p) carrying on the activity of safeguarding and administering assets within article 40 of
the Regulated Activities Order;
(q) carrying on any investment activity relating to derivatives;
(r) promoting, issuing or approving any investment advertisements;
(s) undertaking any business involving pension transfers and pension fund withdrawals;
(t) entering into a broker funds arrangement;
(u) sponsoring or advising on issues of securities on the Stock Exchange, Alternative
Investment Market (AIM) or Off Exchange (OFEX).
In addition to the prohibition on firms from carrying out any of the above activities, firms may
not agree to carry on any activity contained in regulation 4(2).
This list will be reviewed from time to time and will be revised as necessary.
(3) Special requirements for firms intending to carry on, or agree to carry on, insurance
mediation activity
A firm wishing to carry on insurance mediation activity (i.e. the activities set out in
regulations 4(1)(a), (b) and (d) in relation to insurance-based investments and the activities
set out in regulations 4(1)(f) to (i)) must:
(a) effect professional indemnity insurance with minimum limits of indemnity1 equivalent
(at the time the policy is effected or renewed) to 1,120,200 euros in relation to each
and every claim and 1,680,300 euros in the aggregate per year for all claims, except
where the activity comprises providing information to a policyholder or potential
policyholder or a permitted third party in the context of making arrangements with
a view to transactions in the manner specified by article 25(2) of the Regulated
Activities Order;
(b) where the firm is not a sole practitioner, nominate an individual or individuals within
the management of the firm who will be responsible for such activities;
1 Article 4(7) of the Insurance Mediation Directive requires the limits of indemnity to be reviewed every
five years to take into account movements in European consumer prices. These limits will therefore be
subject to further adjustments on the basis of index movements advised by the European Commission.
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2.3 Designated Professional Body Regulations
(c) ensure that a reasonable proportion of the persons within the management structure
of the firm who are responsible for insurance mediation activity and all other persons
directly involved in insurance mediation activity demonstrate the knowledge and
ability necessary for the performance of their duties;
(d) where the firm intends to establish a branch in, or provide cross border services
to, another state of the European Economic Area (EEA), satisfy the conditions in
paragraph 19 or 20 (as appropriate) of Part III of Schedule 3 to the Act;
(e) satisfy the conditions that no person within the management structure of the firm or
within the staff directly involved in insurance mediation activity is an undischarged
bankrupt or has a criminal conviction for any serious offences relating to financial
activities or crimes against property;
(f) register with the Association for insurance mediation activity; and
(g) before carrying on such activities, ensure that the following details appear on the FSA
Register and have been updated, as informed by the firm to the Association:
(i)
the firm’s name and address;
(ii)
details of the individuals referred to within regulation 4(3)(b); and
(iii)
where relevant, each EEA state in which the firm has established a branch or
is providing cross border services under the Insurance Mediation Directive.
A firm which undertakes insurance mediation activity and whose details do not
appear on the FSA Register will be committing a criminal offence. While the
Association will pass a firm’s details to the FSA as part of its regulatory obligations,
it is the firm’s responsibility to ensure that its details appear on the FSA Register and
are correct and up to date.
(4) Activities which do not constitute insurance mediation activity
The following activities do not constitute insurance mediation activity and, as such, firms are
free to carry on such activities as they do not fall within the Designated Professional Body
Regulations:
(a) advising in general terms on the need for or level of insurance cover or providing
information to the policyholder or potential policyholder of a general nature on
insurance products, provided that no recommendation is made of particular contracts
of insurance, product providers or permitted third parties other than independent
financial advisers;
(b) carrying on insurance mediation activity where all of the following conditions are met:
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(i)
the principal activity of the person is other than insurance mediation activity;
(ii)
the contract of insurance is not a contract of long-term insurance;
(iii)
the contract of insurance has a total duration (or would have a total duration
were any right to renew conferred by the contract exercised) of five years or
less;
Designated Professional Body Regulations 2.3
(iv)
the contract of insurance has an annual premium (or, where the premium is
paid otherwise than by way of annual premium, the equivalent of an annual
premium) of 500 euros or less, or the equivalent amount in other currency;
(v)
the insurance covers non-motor goods or travel insurance;
(vi)
the contract of insurance does not cover any liability risks (except, in the case
of a contract which covers travel risks, where that cover is ancillary to the main
cover provided by the contract);
(vii) the insurance is complementary to the non-motor goods or service supplied by
any provider; and
(viii) the contract of insurance is of such a nature that the only information needed
is the cover provided;
(c) carrying on insurance mediation activity not by way of business. The “by way of
business” test comprises two elements:
(i)
whether the person receives remuneration for the activity (whether monetary,
non-monetary or in the form of an expectation of economic benefit);
(ii)
whether the person pursues the activity with a degree of regularity or for
commercial purposes.
Chapter 5 Conduct of business regulations
5. Independence
(1) Inducements
A firm must take reasonable steps to ensure that neither it nor any of its agents offers, gives,
solicits or accepts any inducement which is likely significantly to conflict with any duties of
the recipient or the recipient’s employer owed to clients in connection with the firm’s exempt
regulated activities.
(2) Material interest
Where a firm has a material interest in a transaction to be entered into with or for a client or
a relationship which gives rise to a conflict of interest in relation to such a transaction, the
firm must not knowingly advise in relation to that transaction unless it takes reasonable steps
to ensure fair treatment for the client.
(3) Arrangements with third parties
(a) A firm must not enter into any soft commission agreement whereunder a firm which
deals in securities on an advisory basis receives goods or services in return for an
assurance that not less than a certain amount of such business will be put through or
in the way of another person.
(b) A firm may only accept an appointment as another person’s appointed representative
where the appointing organisation is itself, and at all times continues to be, free
from any restriction which may result in the firm being constrained or induced to
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2.3 Designated Professional Body Regulations
recommend to a client transactions in some investments but not others, with some
persons but not others, or through the agency of some persons but not others, unless
constrained by law.
(c) A firm may only advise in relation to the disposal of packaged products as an
independent intermediary and, for the avoidance of doubt, to the extent such
activities constitute exempt regulated activities.
6. Relations with clients
(1) Fair and clear communications
(a) A firm must avoid any representation to a client that it is authorised under the Act
or regulated by the FSA or that the regulatory protections provided by the Act are
available. Where a firm is conducting insurance mediation activity, it is particularly
important that the client understands that the firm’s inclusion on the FSA Register is
not the same as being authorised under the Act.
(b) A firm may make a communication with another person which is designed to
promote the provision of exempt regulated activities only if it can show that it
believes on reasonable grounds that the communication is fair and not misleading.
(c) A firm must take reasonable steps to ensure that any agreement, written
communication, notification or information which it gives or sends to a client to
whom it provides exempt regulated activities is presented fairly and clearly.
(d) A firm must ensure that the client receives sufficient information about the
recommended investment so that he has an adequate basis on which to accept or
reject the recommendations. The firm must make clear that it will supply the client
with more detailed information if he so requires.
(2) Clients’ rights
(a) A firm must not, in any written communication or agreement, seek to exclude or
restrict any duty or liability to a client which it has under the Act, or under the
regulatory system.
(b) Similarly, unless it is reasonable to do so in the circumstances, a firm must not, in
any written communication or agreement, seek to exclude or restrict:
(i)
any other duty to act with the skill, care and diligence which is owed to a client
in connection with the provision to him of exempt regulated activities; or
(ii)
any liability owed to a client for failure to exercise the degree of skill, care and
diligence which may reasonably be expected of it in the provision of exempt
regulated activities.
(c) A firm must not seek unreasonably to rely on any provision seeking to exclude or
restrict any such duty or liability.
(3) Charges
The amount a firm charges to a client for the provision of exempt regulated activities must
not be unreasonable in the circumstances.
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Designated Professional Body Regulations 2.3
(4) Client agreements
(a) Where a firm provides exempt regulated activities to a client, the written agreement
which must be entered into before any business is conducted must set out in
adequate detail the basis on which those services are provided and must include,
inter alia, a statement of the following:
(i)
the firm’s name and address; and
(ii)
that the firm is regulated in the conduct of exempt regulated activities by the
Association (if a firm makes a reference to the FSA any such statement should
not lead the client to suppose that the FSA has direct regulatory responsibility
for that firm); and
(iii)
the nature of the regulated activities provided by the firm and the fact that
these are limited in scope and, where appropriate, the fact that the firm is
using the services of a permitted third party; and
(iv)
where the firm provides exempt regulated activities other than insurance
mediation activity, that the firm is not an authorised person; and
(v)
that the client will not have access to any compensation scheme in respect of
the firm’s services; and
(vi)
the client’s investment objectives; and
(vii) any restrictions on the investments which may be acquired or that there are no
restrictions; and
(viii) the nature of the complaints and redress procedures available to clients; and
(ix)
the basis on which the firm is to charge for its services.
(b) Where a firm provides insurance mediation activity services, the written agreement
must also provide the following information:
(i)
the following statement in a way that is clear, fair and not misleading and no
less prominent than any other information provided to the client at the same
time:
“[This firm is/We are] not authorised by the Financial Services Authority.
However, we are included on the register maintained by the Financial Services
Authority so that we can carry on insurance mediation activity, which is
broadly the advising on, selling and administration of insurance contracts.
This part of our business, including arrangements for complaints or redress if
something goes wrong, is regulated by the Association of Chartered Certified
Accountants. The register can be accessed via the Financial Services Authority
website at www.fsa.gov.uk/register.”;
(ii)
whether the firm has a holding, direct or indirect, representing more than 10%
of the voting rights or of the capital in a given insurance undertaking;
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2.3 Designated Professional Body Regulations
(iii)
whether a given insurance undertaking or parent undertaking of a given
insurance undertaking has a holding, direct or indirect, representing more than
10% of the voting rights or of the capital in the firm.
(c) Where a firm acts as a disclosed agent for a named client with or through a
permitted third party or relies upon the advice of a permitted third party in acting for
or advising a client, the firm must inform the permitted third party in writing of that
fact and that accordingly the permitted third party will be responsible to the client in
respect of its activities or advice.
(d) (i)
Where a firm is treating a client as an execution-only client it must:
(aa) notify the client accordingly and must obtain a written acknowledgement
from the client. In addition, written evidence of specific instructions from
execution-only clients must be made, including written confirmation
that the client did not seek or receive advice from the firm regarding a
transaction. The transaction must have been entered into on the client’s
explicit instructions; and
(bb) have reasonably assessed and concluded that the client can be expected
to understand the risks involved in the transaction.
(ii)
Copies of the written notification and acknowledgement and evidence of
instructions and assessment referred to in this regulation are required to be
retained for six years.
(5) Cessation of business
Where a firm withdraws from providing any exempt regulated activities to clients, the
firm must ensure that any such business which is outstanding is properly completed or is
transferred to another firm. In addition, where the interests of clients would be significantly
affected by the death or incapacity of an individual within the firm, the firm must make
arrangements to protect the interests of those clients in that event.
(6) Information about the firm
A firm may, in all its business letters, notices and other publications which relate to its
exempt regulated activities, state that it is regulated to conduct exempt regulated activities
by the Association. Any such statement should also comply with the requirements set out in
regulation 6(4) relating to client agreements.
Note on the use of statements on business letters, notices and other publications
Firms that are regulated by the Association for exempt regulated activities may use the
following statement on their professional stationery:
“Regulated for a range of investment business activities by the Association of Chartered
Certified Accountants.”
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Designated Professional Body Regulations 2.3
(7) Information about contracts of insurance
This regulation applies where a firm carries on insurance mediation activity.
Firms are reminded of the provisions of paragraph 10 of Code of Ethics and Conduct section
B7, Activities through corporate or non-corporate organisations, which provides that firms are
not permitted to enter into any association or arrangement which may adversely affect the
firm’s independence. As such, firms are not permitted to enter into contractual obligations to
conduct insurance mediation activity exclusively with one or more insurance undertakings.
(a) The client must be informed of the following in relation to each contract of insurance:
(i)
whether the advice is given based on the firm’s obligation to provide a fair
analysis (see regulation 6(7)(b) below); or
(ii)
whether even though the firm is not under a contractual obligation to
conduct insurance mediation activity exclusively with one or more insurance
undertakings, the firm does not give advice based on the firm’s obligation
to provide a fair analysis. In that case, the firm shall, at the client’s request,
provide the names of the insurance undertakings with which the firm may and
does conduct business.
Where information is to be provided solely at the client’s request, a firm must inform
the client that he has the right to request such information.
(b) Where a firm informs the client that the advice is given on the basis of a fair analysis,
the firm is obliged to give that advice on the basis of an analysis of a sufficiently large
number of contracts of insurance available on the market, to enable the firm to make
a recommendation, in accordance with professional criteria, regarding which contract
of insurance would be adequate to meet the customer’s needs.
(c) Prior to the conclusion of a contract of insurance, a firm must specify, in particular
on the basis of information provided by the client, the demands and needs of the
client as well as the underlying reasons for any advice given to the client on a specific
contract of insurance. These details must be modulated according to the complexity
of the insurance contract being proposed.
(8) Method of communicating with client
This regulation applies where a firm carries on insurance mediation activity.
(a) All information to be provided to clients under this regulation 6 must be
communicated:
(i)
(aa) on paper or any other durable medium available and accessible to the
client; or
(bb) orally, if the client requests it or where immediate cover is necessary,
in which case the information shall be provided in accordance with
regulation 6(8)(a)(i)(aa) immediately after the conclusion of the contract
of insurance; and
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2.3 Designated Professional Body Regulations
(ii)
in a clear and accurate manner, comprehensible to the client; and
(iii)
in an official language of the Member State of the commitment or in any other
language agreed with the client.
(b) Where a firm conducts insurance mediation activity over the telephone, the prior
information given to the client must comply with Article 3 of the Distance Marketing
Directive. Information must then be provided to the client in accordance with
regulation 6(8)(a) immediately after the conclusion of the contract of insurance.
(9) Life policies
When advising on the disposal of a life policy in accordance with regulation 4(1)(d)(iv), a firm
must advise its client on:
(a) the risks and costs of keeping the policy;
(b) the various means of disposal available to the client and the advantages and
disadvantages of each.
Surrendering the policy is unlikely to realise its full value. Examples of other means of
disposal are selling the policy on the second-hand market, converting a joint life policy to
single life, assigning the policy or making the policy paid up. If a firm is unable to fully advise
its client, it should obtain the advice of a permitted third party.
(10) Distance contracts
While firms are unlikely to be undertaking activities within the scope of regulation 4(1) by
way of a distance contract, firms should be aware that if they do so they must comply with
the provisions of the Distance Marketing Directive.
7. Compliance procedures
(1) Compliance
A firm must take reasonable steps, including the establishment and maintenance of
procedures, to ensure that its officers and employees act in conformity with all regulations
and regulations applicable to the conduct by the firm of exempt regulated activities.
(2) Records
(a) A firm must ensure that sufficient information is recorded and retained about its
exempt regulated activities as is necessary for the proper conduct of that business
and to enable it to demonstrate compliance with the regulatory system, including but
not limited to records:
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(i)
of the receipt of income from the client in respect of exempt regulated
activities;
(ii)
of the receipt of commissions, or any other pecuniary reward or advantage,
from product providers or any third parties, which are adequate to demonstrate
that the firm has accounted to the client for the commissions or other
pecuniary reward or advantage;
Designated Professional Body Regulations 2.3
(iii)
which are adequate to demonstrate that the firm has carried on only exempt
regulated activities; and
(iv)
records of complaints received and action taken.
(b) Any record required to be produced by this regulation should be retained for a
minimum of six years.
(3) Complaints
A firm must have procedures to ensure:
(a) the proper handling of complaints from clients and third parties relevant to its
compliance with the regulatory system;
(b) that any appropriate remedial action on those complaints is promptly taken; and
(c) where the complaint is not promptly remedied, that the client is advised of any
further avenue for complaint available to him under the regulatory system;
and those procedures must include provisions to ensure that:
(i)
complaints are acknowledged within a reasonable time of their being received
and in any event within 14 days;
(ii)
where a complaint has been made orally, the letter of acknowledgement states
the member’s understanding as to the nature of the complaint being made and
invites the complainant to confirm in writing the accuracy of that statement;
and
(iii)
complaints are investigated by a person of sufficient experience, seniority and
competence who, where possible, was not directly involved in the particular
act or omission giving rise to the complaint.
(4) Continuity
Firms shall enter into a continuity agreement in accordance with regulation 11 of The
Chartered Certified Accountants’ Global Practising Regulations 2003.
(5) Notification
A firm that becomes an authorised person to conduct any regulated activities or becomes an
appointed representative of another organisation should notify the Association immediately in
writing of this change of status.
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2.3 Designated Professional Body Regulations
Chapter 6 Enforcement
8. Enforcement
(1) Monitoring
Members and firms entitled to carry out exempt regulated activities shall be subject to a
monitoring visit from the Association in accordance with regulation 14 of The Chartered
Certified Accountants’ Global Practising Regulations 2003.
(2) Intervention Orders
(a) If it appears to the Admissions and Licensing Committee that it is desirable to take
measures for the protection of investors or for the protection of the Association or for
both reasons, and that:
(i)
it is desirable to prohibit a firm from disposing of or otherwise dealing with any
of its assets, or any specified assets; or
(ii)
a firm is not fit and proper to carry on exempt regulated activities either
generally or of a particular kind or to the extent to which it is or is intending to
carry on that business; or
(iii)
a firm has committed, or intends, or is likely to commit a breach of these
regulations or some other act of misconduct; or
(iv)
for more than one of these reasons;
the Admissions and Licensing Committee may make and serve on the firm concerned
a written Intervention Order (an “Order”).
(b) An Order may operate for a specified period or until the occurrence of a specified
event or until the firm complies with specified conditions and may, at the Admissions
and Licensing Committee’s discretion, come into effect either immediately on service
or at such later time as the Admissions and Licensing Committee may determine.
(c) An Order served on a firm may require the firm to take specified steps and/or may
forbid the firm:
182
(i)
in whole or in part, to carry on exempt regulated activities;
(ii)
to dispose of or otherwise deal with any assets or any specified assets
(whether held in the United Kingdom or outside the United Kingdom) or to act
otherwise than in the manner specified in the Order;
(iii)
to enter into transactions of a specified kind or enter into them except in
specified circumstances or to a specified extent;
(iv)
to solicit business from persons of a specified kind or otherwise than from such
persons or in a specified country or territory; and/or
(v)
to carry on business in a specified manner or otherwise than in a specified
manner.
Designated Professional Body Regulations 2.3
(d) An Order shall specify:
(i)
the reasons for its issue;
(ii)
the date and time at which the Order shall come into effect;
(iii)
the period for which the Order shall operate, which may be expressed to end
with the occurrence of a specified event or when the firm has complied with
the requirements of the Order;
(iv)
where relevant, in regard to an Order to which regulation 7(2)(a)(iii) above
applies, the act or omission which constituted or would constitute breach of
the regulations and the regulation which has been or would be contravened;
and
(v)
the officer of the Admissions and Licensing Committee to whom a request can
be made for a stay of execution of the Order.
(e) The Admissions and Licensing Committee, or the Chairman of the Admissions and
Licensing Committee acting on its behalf, may, at any time before or after an Order
comes into effect, revoke the Order or vary its terms, and where the terms of an
Order are varied the variation shall be effected by a new Order being served on the
firm concerned.
(f) Subject to regulation 7(3) the Association shall publish the Order at or after the time
it comes into effect.
(3) Application for stay of execution
After service of the Order, its recipient may apply to the Association for a stay of execution
of the Order or any part of it and/or of its publication. The application shall be considered by
the officer specified pursuant to regulation 2(d)(v) above who in his discretion may grant or
refuse the stay or grant it subject to conditions.
(4) Reference to the Appeal Committee
A firm served with an Order may appeal against the Order in the same way and subject to the
same limitations as it may appeal against any other decision of the Admissions and Licensing
Committee.
The Association may appeal against the Order in the same way and subject to the same
limitations as it may appeal against any other decision of the Admissions and Licensing
Committee.
9. Waivers and service
(1) Waivers and modifications
(a) A firm is entitled to apply in writing to the Admissions and Licensing Committee to
waive, vary or suspend the requirements of any of these regulations in order to adapt
it to the firm’s circumstances or to any particular kind of business which the firm is
carrying on or intends to carry on. The Admissions and Licensing Committee shall
not grant the application unless it appears that compliance with it would be unduly
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2.3 Designated Professional Body Regulations
burdensome having regard to the benefit which compliance would confer on investors
and the exercise of the power would not result in any undue risk to investors.
(b) The Admissions and Licensing Committee may grant such an application on
conditions. If it does so, the applicant firm must comply with any such conditions.
(c) Following an application under this regulation, or of its own volition, the Admissions
and Licensing Committee may modify or waive any of these regulations. Where it
does so, it may impose conditions and any firm which acts upon modification or
waiver extended to it must comply with any such condition.
(d) Any waiver given under this regulation shall apply for such period as the Admissions
and Licensing Committee shall specify.
(e) Any waiver or modification by the Admissions and Licensing Committee cannot vary
the conditions contained in section 327(2)–(7) of the Act or the effect of a direction
or Order made by the FSA under section 328 or section 329 of the Act.
(2) Consents
Where provided for in these regulations any consent to be given by the Admissions and
Licensing Committee may be given or withheld in its absolute discretion, but if withheld the
Admissions and Licensing Committee shall notify the firm of the reasons why it has been
withheld.
(3) Service
Except as otherwise provided in these regulations, any notice or other document required or
authorised by these regulations to be served on any firm may be served by leaving it at or
sending it by post to the firm’s address notified to the Association in accordance with these
regulations.
10. Liability
Neither the Association nor any of its officers or servants or agents nor any members of any
committee of Council shall be liable in damages or otherwise for anything done or omitted to
be done in the discharge or purported discharge of any function under the Act set out below
unless the act or omission is shown to have been in bad faith. The functions referred to
above are the functions of the Association so far as relating to or to matters arising out of:
(a) the bye-laws, regulations and arrangements of the Association so far as they relate to
or are applied in respect of the carrying on of exempt regulated activities or any other
matters concerning the Act and/or to which the requirements in section 325(4) of the
Act require the Association to comply;
(b) the obligations with which section 325(4) of the Act requires the Association to
comply;
(c) any guidance issued by the Association in respect of any matter dealt with by such
regulations as are mentioned in (a) above; or
(d) the obligations to which the Association is subject by virtue of the Act.
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Irish Investment Business Regulations 2.4
2.4
The Chartered Certified Accountants’ Irish
Investment Business Regulations 1999
Code of Conduct of the Financial Regulator
(1) Firms should:
(a) act honestly and fairly in conducting their business activities in the best interests of
their clients and the integrity of the market;
(b) act with due skill, care and diligence in the best interests of their clients and the
integrity of the market;
(c) have and employ effectively the resources and procedures that are necessary for the
proper performance of their business activities;
(d) seek from their clients information regarding their financial situations, investment
experience and objectives as regards the services requested;
(e) make adequate disclosure of relevant material information including commissions in
their dealings with their clients;
(f) make a reasonable effort to avoid conflicts of interests and, when they cannot be
avoided, ensure that their clients are fairly treated; and
(g) comply with all regulatory requirements applicable to the conduct of their business
activities so as to promote the best interests of their clients and the integrity of the
market;
and the Financial Regulator may impose conditions or requirements on a firm or any class of
firm in respect of compliance with the provisions of this code of conduct or any other code of
conduct or rules of like effect.
(2) This code of conduct shall not apply to any class of certified person specified by the
Financial Regulator in respect of which the Financial Regulator is satisfied that there are
sufficient provisions in the rules of an approved professional body or elsewhere governing the
conduct of such certified persons in respect of matters referred to in paragraphs (a) to (g) of
section (1) above or such other matters as the Financial Regulator deems necessary.
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2.4 Irish Investment Business Regulations
The Chartered Certified Accountants’ Irish
Investment Business Regulations 1999
Amended 1 January 2007
The Council of the Association of Chartered Certified Accountants, in exercise of all the
powers conferred on it by bye-laws 6 and 27 of the Association’s bye-laws and all other
powers enabling it, hereby makes the following regulations:
(Note: Words or phrases which are defined in regulation 2(1) are shown in italics in the text
of the regulations throughout.)
1. Citation, commencement and application
(1) Citation
These regulations may be cited as The Chartered Certified Accountants’ Irish Investment
Business Regulations 1999 as amended.
(2) Commencement
These regulations as amended shall come into force on 1 January 2007.
(3) Application
(a) These regulations, in so far as they are relevant, shall apply to all members, and to
firms, and to individuals who have agreed and undertaken to be bound by them. In
addition, to the extent provided for in the regulations, these regulations shall continue
to apply to members after they have ceased to be members and to firms and such
other persons after the investment business certificate (Ireland) issued to the firm, or
the firm in relation to which they are specified persons, has lapsed.
(b) Regulations 5 to 14 apply only to the provision of investment business services and
investment advice by a firm which are either:
186
(i)
carried on from the firm’s place of business in the Republic of Ireland for
clients in the Republic of Ireland; or
(ii)
carried on from a permanent place of business of the firm in the Republic of
Ireland for clients in the United Kingdom; or
(iii)
carried on from a permanent place of business of the firm in the United
Kingdom for clients in the Republic of Ireland.
In other words, where firms holding an investment business certificate (Ireland) have
a branch in the UK, that branch will not be bound by regulations 5 to 14 unless it is
providing investment business services or investment advice to clients based in the
Republic of Ireland. Such branches may instead be subject to UK legislation and The
Chartered Certified Accountants’ Designated Professional Body Regulations 2001.
Irish Investment Business Regulations 2.4
(c) Members and firms and all persons who have agreed and undertaken to be bound
by these regulations shall be subject to any provisions of the Act not specifically set
out in these regulations and shall comply with any such provisions, where necessary,
as if these provisions were specifically set out in these regulations. Where there is a
conflict between the provisions of these regulations and the provisions of the Act, the
provisions of the Act shall take precedence.
2. Interpretation
(1) Definitions
In these regulations, unless the context otherwise requires:
accounting year means a financial year of the firm;
Act means the Investment Intermediaries Act, 1995, as amended;
Admissions and Licensing Committee means the committee of Council responsible, inter
alia, for administering these regulations, or such other committee to whom Council may
delegate such responsibilities, or Council;
advertise includes cause to be advertised;
agent, in relation to a person, means any person (including an employee) who acts on
that person’s behalf;
Appeal Committee means the committee of Council responsible, inter alia, for hearing
appeals from decisions of the Admissions and Licensing Committee, or such other
committee to whom Council may delegate such responsibility, or Council;
applicant means a person who or which has applied or is in the course of applying to the
Association for or to renew or to amend an investment business certificate (Ireland);
approved professional body has the meaning given by section 55 of the Act;
associate, in relation to a person, shall be construed as follows:
(a) in relation to an individual, associate means:
(i)
that individual’s spouse or minor child or step-child;
(ii)
any body corporate of which that individual is a director; and
(iii)
any employee or partner of that individual;
(b) in relation to a body corporate, associate means:
(i)
any body corporate of which that body is a director;
(ii)
any body corporate in the same group as that body; and
(iii)
any employee or partner of that body or of any body corporate in the same
group;
Association means the Association of Chartered Certified Accountants incorporated by
Royal Charter issued to it in 1974 as amended from time to time;
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2.4 Irish Investment Business Regulations
BES investment means an investment which provides income tax relief as referred to in
section 489 (Part 16) of The Taxes Consolidation Act 1997;
bye-laws means the bye-laws from time to time of the Association;
certified person has the meaning given by section 55 of the Act;
client means a person to whom a firm provides investment business services or
investment advice and includes an indirect client but does not include a trust beneficiary;
collective investment scheme means any collective investment scheme subject to the
regulation of the Financial Regulator;
Companies Acts means The Companies Acts, 1963 to 2003 and Investment Funds,
Companies and Miscellaneous Provisions Act, 2005;
company includes any body corporate;
Compensation Act means the Investor Compensation Act, 1998;
controller means, in relation to any company, a person who either alone or with any
associate or associates is entitled to exercise or control the exercise of 15 per cent or
more of the rights to vote on all, or substantially all, matters at general meetings of the
company or another company of which it is a subsidiary;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
credit institution means a credit institution within the meaning of Article 1 of Council
Directive 77/780/EEC of 12 December, 1977(1) as amended by Council Directive
89/646/EEC of 15 December, 1989 but does not include the institutions referred to in
Article 2 (2) of that Directive;
deposit means a deposit with a credit institution and shall be construed as including a
shareholding in as well as a deposit with a building society;
deposit agent means any person who holds an appointment in writing from a single credit
institution enabling him to receive deposits on behalf of that institution and prohibiting
him from acting in a similar capacity on behalf of another credit institution;
deposit broker means any person who brings together with credit institutions persons
seeking to make deposits in return for a fee, commission or other reward;
derivatives means any investment falling within sub-paragraphs (d)–(h) of the definition of
“investment instruments” within section 2 of the Act (which is wider than the definition
at 4(2) of these regulations) and sub-paragraphs (k) and (1) to the extent the option or
hybrid instrument relates to such an instrument within sub-paragraphs (d)–(h);
distance contract for the supply of a financial service has the same meaning as that set
out in regulation 3 of European Communities (Distance Marketing of Consumer Financial
Services) Regulations 2004 (S.I. No. 853/2004);
Distance Marketing of Consumer Financial Services Regulations means the EU (Distance
Marketing of Consumer Financial Services) Regulations 2004 (S.I. No. 853/2004);
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Irish Investment Business Regulations 2.4
employee means an individual who is employed in connection with the firm’s investment
business under a contract of service or under a contract for services such that he is held
out as an employee or consultant of the firm;
execution-only means the effecting or arranging of a transaction by a firm for a client
in circumstances in which the firm can reasonably assume that the client is not relying
upon the firm to advise him on or to exercise any judgement on his behalf as to the
merits of or the suitability for him of the transaction and where the client has agreed
in writing that the firm has not provided and is not responsible for providing him with
investment advice or for exercising any judgement on his behalf as to the merits of or
the suitability for him of the transaction; and execution-only client shall be construed
accordingly;
film investment has the meaning given in section 481 of the Taxes Consolidation Act,
1997 (Relief for investment in films);
Financial Regulator means the Irish Financial Services Regulatory Authority (IFSRA);
firm means an individual (including a sole trader), partnership or company holding a
current, valid investment business certificate (Ireland) or, as the context requires, which
has held such a certificate;
group, in relation to a body corporate, means the body corporate, any other body
corporate which is its holding company or subsidiary and any other body corporate which
is a subsidiary of that holding company;
higher volatility investment means an investment instrument the risks in respect of which
are increased by reason of the investor’s holding being geared;
holding company has the meaning given by Section 155 of the Companies Act, 1963;
incidental manner has the meaning given by regulation 3(4) of these regulations;
indirect client means, where a client is known to be acting as agent, an identified
principal who would be a client if he were dealt with direct;
inducement does not include disclosable commission;
insurance mediation means any activity involved in proposing or undertaking preparatory
work for entering into insurance contracts, or assisting in the administration and
performance of insurance contracts that have been entered into (including dealing with
claims under insurance contracts), but does not include such an activity that:
(a) is undertaken by an insurance undertaking or an employee of such an undertaking in
the employee’s capacity as such, or
(b) involves the provision of information on an incidental basis in conjunction with some
other professional activity, so long as the purpose of the activity is not to assist a
person to enter into or perform an insurance contract, or
(c) involves the management of claims of an insurance undertaking on a professional
basis, or
(d) involves loss adjusting or expert appraisal of claims for reinsurance undertakings;
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2.4 Irish Investment Business Regulations
Insurance Mediation Regulations means the European Communities (Insurance
Mediation) Regulations 2005, S.I. No. 13 of 2005;
investment advice has the meaning given by regulation 4(2) of these regulations;
investment business certificate (Ireland) means a certificate issued by the Association
pursuant to section 55 of the Act;
investment business services has the meaning given by regulation 4(2) of these
regulations;
investment instrument has the meaning given in regulation 4(2) of these regulations;
investment instrument transaction means:
(a) the purchase or sale of an investment instrument; or
(b) the subscription for an investment instrument;
life assurance means assurance of a class specified in Part A of Annex 1 to the European
Communities (Life Assurance) Framework Regulations 1994 (which, for the avoidance of
doubt, includes pension policies);
member means an individual admitted to membership of the Association pursuant to the
bye-laws of the Association;
non-life insurance means insurance of a class specified in Part A of Annex 1 to the
European Communities (Non-life Insurance) Framework Regulations 1994;
non-private client means a person who is not a private client, or who has elected to be
treated as a non-private client and in respect of whom the requirements of regulation
9(5) of these regulations have been complied with;
offer includes an invitation to treat;
officer means, in relation to a firm which is a partnership, a partner, and in relation to a
firm which is a company, a director or shadow director;
order means an intervention order made pursuant to regulation 12;
ordinary business investor means:
(a) a government, local authority or public authority; or
(b) a company or partnership which satisfies any of the following size requirements:
190
(i)
that it is a body corporate which has more than 20 members (or is the
subsidiary of a company which has more than 20 members) and it (or any
of its holding companies or subsidiaries) has a called up share capital or net
assets of 635,000 euro or more; or
(ii)
that it is a body corporate and it (or any of its holding companies or
subsidiaries) has a called up share capital or net assets of 6,350,000 euro or
more; or
(iii)
if it is not a body corporate, it has net assets of 6,350,000 euro or more; or
Irish Investment Business Regulations 2.4
(c) a trustee of a trust which satisfies either of the following size requirements:
(i)
that the aggregate value of the cash and investments which form part of the
trust’s assets (before deducting the amount of its liabilities) is 12,700,000
euro or more; or
(ii)
that aggregate value has been 12,700,000 euro or more at any time during the
previous two years;
practising certificate means a practising certificate issued by the Association and
referred to in regulation 5(1) of The Chartered Certified Accountants’ Global Practising
Regulations 2003;
practising certificate (Ireland) means a practising certificate issued by the Association
relating to the carrying on of public practice in the Republic of Ireland issued only to
members who are eligible therefor;
private client means a client who is an individual and who is not acting in the course of
providing investment business services or investment advice or, unless he is reasonably
believed to be an ordinary business investor, a client who is a small business investor
and who is not acting in the course of providing investment business services or
investment advice;
product producer means a firm, institution, collective undertaking or investment company
of the kind referred to in section 26 (1) (i) to (vii) of the Act;
PRSA means Personal Retirement Savings Account;
public practice has the meaning given by regulation 4 of The Chartered Certified
Accountants’ Global Practising Regulations 2003;
RAIPI means a restricted activity investment product intermediary, in accordance with
Section 26 of the Investment Intermediaries Act 1995, as amended by Section 59 of the
Investor Compensation Act 1998 and Section 23 of the Insurance Act 2000;
readily realisable investment means a foreign exchange transaction or any investment
instrument which is traded frequently on or under the regulations of an investment
exchange;
regulatory system means the arrangements for regulating a firm under the Act and these
regulations;
small business investor means:
(a) a company, partnership or unincorporated association; or
(b) a trustee acting for a trust,
which does not satisfy a size requirement enabling the company, partnership or trustee
to be treated as an ordinary business investor and is not otherwise an ordinary business
investor;
specified person means, in relation to a firm which is a partnership any partner in that
firm and in relation to any firm which is a body corporate any director of that firm;
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2.4 Irish Investment Business Regulations
subsidiary means a subsidiary undertaking within the meaning of Regulation 4 of the
European Communities (Companies: Group Accounts) Regulations, 1992;
turnover means the total income of a firm for the accounting year in question;
United Kingdom means the United Kingdom of Great Britain and Northern Ireland;
unsolicited call means a personal visit or oral communication made without express
invitation.
(2) Interpretation
(a) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(b) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
(c) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference
to a statutory provision or regulation shall include that provision or regulation as from
time to time modified or re-enacted so far as such modification or re-enactment
applies or is capable of applying to such reference.
(d) All references to Acts are to Acts of the Republic of Ireland unless otherwise
specified.
(e) These regulations shall be interpreted in accordance with Irish law.
3. Eligibility for an investment business certificate (Ireland)
(1) Eligibility – Sole practitioners
A sole practitioner will only be eligible for an investment business certificate (Ireland) where:
(a) he is a member; and
(b) he holds a practising certificate (Ireland); and
(c) he provides investment business services or investment advice in an incidental
manner; and
(d) he holds minimum net business assets (see regulation 3(5) below) of 10,000 euro for
category A authorisation or nil euro for category B authorisation; and
(e) he is practising otherwise than in partnership or in a company.
(2) Eligibility – Partnerships
A partnership will only be eligible for an investment business certificate (Ireland) where:
(a) each of the partners is
(i)
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a member; or
Irish Investment Business Regulations 2.4
(ii)
a member of another approved professional body and has given an undertaking
to be bound by the regulations of the Association in such form as the
Admissions and Licensing Committee may require; or
(iii)
entitled to practise accountancy and is regulated by another professional body
and has given an undertaking to be bound by the regulations of the Association
in such form as the Admissions and Licensing Committee may require; and
(b) the partners who are neither members of the Association nor of another approved
professional body (if any) do not form a majority of the partners of the firm; and
(c) at least one of the partners in the firm is a member; and
(d) the partnership provides investment business services or investment advice in an
incidental manner; and
(e) the partnership holds minimum net business assets (see regulation 3(5) below) of
10,000 euro for category A authorisation or nil euro for category B authorisation; and
(f) each partner who is a member holds a practising certificate (Ireland) and each
partner who is not a member holds such other qualification as is deemed adequate
by the Admissions and Licensing Committee.
(3) Eligibility – Companies
A company will only be eligible for an investment business certificate (Ireland) where:
(a) each director and controller
(i)
is a member; or
(ii)
is a member of another approved professional body and has given an
undertaking to be bound by the regulations of the Association in such form as
the Admissions and Licensing Committee may require; or
(iii)
is entitled to practise accountancy and is regulated by another professional
body and has given an undertaking to be bound by the regulations of the
Association in such form as the Admissions and Licensing Committee may
require; and
(b) the directors who are neither members of the Association nor of another approved
professional body (if any) do not form a majority of the board; and
(c) at least one of the directors in the firm is a member; and
(d) the company provides investment business services or investment advice in an
incidental manner; and
(e) the company holds minimum net business assets (see regulation 3(5) below) of
10,000 euro for category A authorisation or nil euro for category B authorisation; and
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2.4 Irish Investment Business Regulations
(f) each director who is a member holds a practising certificate (Ireland) and each
director who is not a member holds such other qualification as is deemed adequate
by the Admissions and Licensing Committee.
(4) Meaning of incidental manner
(a) In order for a firm to qualify as providing investment business services or investment
advice in an incidental manner, the Admissions and Licensing Committee will need
to be satisfied that:
(i)
the main activity of the firm is public practice, other than the provision of
investment business services or investment advice; and
(ii)
the provision of the investment business services or investment advice is not
isolated from the other activities of the firm so that it is in effect a separate
business (this would, however, not exclude a firm operating specialist
departments within it).
(b) In relation to the “main activity” test in (a)(i) above, if less than 20 per cent of the
firm’s total turnover on an annual basis derives from investment business services or
investment advice, the test is satisfied.
(c) The test in (a)(ii) above can be assessed by reference to various indicators, such as:
(i)
It should be clear to a potential client when advertising investment business
services that the firm is an accountancy firm which also provides investment
business services and investment advice.
(ii)
The offices dealing with investment business services and investment advice
should be in the same location as the offices from which the accountancy
services are provided.
(iii)
The investment business services and investment advice should normally be
provided in conjunction with the accountancy services of the firm.
(iv)
The firm’s policy should be to endeavour to provide its full range of services to
its clients, where these services are appropriate.
(v)
The firm should fully accept that its provision of investment business services
and investment advice is within the scope of the general ethical code or the
rules governing the profession.
(vi)
It should be clear that in terms of the way the investment business services
and investment advice are managed by the firm, that this activity does not act
on a stand-alone basis separate from the main activities of the firm.
(vii) The provision of investment business services and investment advice should be
managed on a day-to-day basis by persons who are members of an approved
professional body.
(d) The question as to whether a firm complies with regulation 3(4)(a) will be determined
by the Admissions and Licensing Committee on the particular circumstances of each
case.
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Irish Investment Business Regulations 2.4
(5) Net business assets
The net business assets of a sole trader or partnership are defined as follows:
(a) Fixed assets plus current assets less “creditors” (including those due after more than
one year).
(b) Fixed assets are defined as assets that have been specified as being business assets
and are included on the balance sheet of the sole trader or partnership and are used
on a regular basis in the conduct of the business. Assets used mainly for the purpose
of entertainment and intangible assets are excluded from the definition of fixed assets
for the purpose of determining whether the capital adequacy requirements have been
satisfied.
(c) Current assets include those assets that would be included under this heading if the
business were incorporated except that the following are excluded:
(i) unbilled partner time included in work in progress;
(ii) amounts due to the firm from any individual connected with a principal of
the firm (a connected person is defined as a spouse, child or parent of the
principal); and
(iii) any bank account not designated as a business account.
(d) “Creditors” includes all liabilities incurred in conjunction with the operation of
the business, and for the purpose of establishing net business assets under this
regulation includes personal liabilities of a sole trader or his spouse, or a partner or
his spouse, incurred to enable funds to be introduced into the business.
The net business assets of a limited company are determined in accordance with generally
accepted accounting practice for the preparation of company accounts. For the avoidance of
doubt, “creditors” due after more than one year are to be deducted in the calculation of net
business assets.
Every firm shall keep accounting records which are sufficient to show and explain the
firm’s transactions and are such as to disclose with reasonable accuracy, at any time, the
financial position of the firm at that time, and its compliance with the requirements to have a
minimum level of net business assets on an ongoing basis.
(6) Main activity
For the purposes of regulations 3(1) to 3(3), where more than 20 per cent of a firm’s total
turnover on an annual basis derives from investment business services or investment advice,
this fact must be notified to the Association who will refer the matter to the Admissions and
Licensing Committee and to the Financial Regulator for its consideration.
(7) Other restrictions
(a) No applicant with a branch or office outside the Republic of Ireland and the United
Kingdom shall be issued with an investment business certificate (Ireland).
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2.4 Irish Investment Business Regulations
(b) An applicant shall not be eligible for an investment business certificate (Ireland) if he
or it is authorised to provide investment business services or investment advice other
than pursuant to these regulations.
4. Scope
(1) Prohibition on carrying on investment business
No member, nor any partnership or company in relation to which he is a specified person,
may act as an investment business firm otherwise than in compliance with the provisions of
section 9(1) of the Act.
(2) Category A authorisation
A Category A firm may carry on any activity for the provision of investment business services
or investment advice within the meaning of this regulation 4(2).
“Investment advice” means the giving, or offering or agreeing to give, to any person:
(a) advice on the purchasing, selling, or subscribing for an investment instrument or on
the making of a deposit or on the exercising of any right conferred by an investment
instrument to acquire, dispose of, or convert an investment instrument or deposit; or
(b) advice on choice of a person providing investment business services or investment
advice;
and includes advice on BES investments and film investments, but does not include any of
the following:
(a) advice given in a newspaper, journal, magazine or other publication, including
electronic publications, where the principal purpose of the publication taken as a
whole is not to lead persons to invest in any particular investment instrument or
deposit or to deal with any particular provider of investment business services;
(b) advice given in a lecture, seminar or similar event or series of such events, where
the principal purpose of the event or events taken as a whole is not to lead persons
to invest in any particular investment instrument or deposit or to deal with any
particular provider of investment business services and where persons engaged in the
organisation or presentation of such events will earn no remuneration, commission,
fee or other reward as a result of any particular decision, by a person attending
such event and arising out of such attendance, in relation to investment instruments
or deposits or in relation to the choice of a person providing investment business
services;
(c) advice given in sound or television broadcasts where the principal purpose of
such broadcasts taken as a whole is not to lead persons to invest in any particular
investment instrument or deposit or to deal with any particular provider of investment
business services;
(d) advice to undertakings on capital structure, industrial strategy and related matters
and advice relating to mergers and the purchase or sale of undertakings.
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Irish Investment Business Regulations 2.4
“Investment business services” includes all or any of the following services:
(a) receiving and transmitting, on behalf of investors, of orders in relation to one or more
investment instruments;
(b) execution of orders in relation to one or more investment instruments, other than for
own account;
(c) acting as a deposit broker (but not a deposit agent);
(d) undertaking insurance mediation activities.
“Investment instruments” includes:
(a) transferable securities including shares, warrants, debentures including debenture
stock, loan stock, bonds, certificates of deposits and other instruments creating or
acknowledging indebtedness issued by or on behalf of any body corporate or mutual
body; government and public securities, including loan stock, bonds and other
instruments creating or acknowledging indebtedness issued by or on behalf of a
government, local authority or public authority; bonds or other instruments creating
or acknowledging indebtedness; certificates representing securities; or money market
instruments;
(b) non-transferable securities creating or acknowledging indebtedness issued by or on
behalf of a government, local authority or public authority;
(c) units or shares in undertakings for collective investments in transferable securities
within the meaning of European Communities (Undertakings for Collective
Investments in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), and
any subsequent amendments thereto; units in a unit trust; shares in an investment
company; capital contributions to an investment limited partnership;
(d) agreements for the borrowing and lending of transferable securities;
(e) certificates or other instruments which confer all or any of the following rights,
namely:
(i)
property rights in respect of any investment instrument referred to in
paragraph (a) of this definition; or
(ii)
any right to acquire, dispose of, underwrite or convert an investment
instrument, being a right to which the holder would be entitled if he held any
such investment to which the certificate or instrument relates; or
(iii)
a contractual right (other than an option) to acquire any such investment
instrument otherwise than by subscription;
(f) tracker bonds or similar instruments;
(g) life assurance policies (for the avoidance of doubt, life assurance includes pensions);
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2.4 Irish Investment Business Regulations
(h) non-life insurance policies;
(i) PRSAs.
(3) Category B authorisation
(a) A Category B firm may carry out a limited number of Category A activities. Those
activities are all or any of the following:
(i)
receiving and transmitting orders on behalf of investors in the following
instruments:
(aa) units or shares in undertakings for collective investments in transferable
securities within the meaning of the European Communities
(Undertakings for Collective Investment in Transferable Securities)
Regulations 1989, and any subsequent amendments thereto;
(bb) units in a unit trust;
(cc) other collective investment scheme instruments;
(dd) shares in a company which are listed on a stock exchange or bonds so
listed;
(ee) prize bonds;
(ff)
tracker bonds;
(gg) life assurance policies (for the avoidance of doubt, life assurance
includes pensions);
(hh) non-life insurance policies;
(ii)
PRSAs; or
(ii)
acting as a deposit broker (but not a deposit agent); or
(iii)
giving, or offering or agreeing to give, to any person, advice on the purchasing,
selling, or subscribing for one of the instruments listed at regulation 4(3)(a)(i)
above or on the making of a deposit; or
(iv)
giving, or offering or agreeing to give, to any person, advice on choice of a
person providing investment business services.
(b) In the course of engaging in any of the activities listed at regulation 4(3)(a) above,
a category B firm may transmit orders only to all or any of the following product
producers, namely:
(i)
198
investment firms authorised in accordance with Directive 93/22/EEC of
10 May 1993 by a competent authority of another Member State, or to an
authorised investment business firm, not being a RAIPI or a certified person, or
to a member firm within the meaning of the Stock Exchange Act 1995 in the
State;
Irish Investment Business Regulations 2.4
(ii)
credit institutions authorised in accordance with Directives 77/780/EEC of 12
December 1977 and 89/646/EEC of 15 December 1989;
(iii)
such other branches of investment business firms or credit institutions
authorised in a third country as the Financial Regulator may approve from time
to time;
(iv)
collective investment undertakings authorised under the law of a Member State
of the European Union to market units in collective investments to the public
and to the managers of such undertakings;
(v)
investment companies with fixed capital as defined in Article 15(4) of Council
Directive 77/91/EEC of 13 December 1976 of the securities of which are listed
or dealt in on a regulated market in a Member State;
(vi)
the Prize Bond Company Ltd. Or any successor to it as operator of the Prize
Bond scheme;
(vii) insurance undertakings.
(4) Excluded activities
(a) No firm may:
(i)
deal in one or more investment instruments for own account as if it were
a market maker. A firm shall not act collectively for a client or clients and
on its own account. In no circumstances may the firm allocate to a client a
transaction originally effected for the firm’s own account or allocate for the
firm’s own account a bargain originally effected for a client;
(ii)
manage portfolios of investment instruments or deposits in accordance with
mandates given by investors on a discretionary client-by-client basis where
such portfolios include one or more investment instrument or one or more
deposit;
(iii)
underwrite in respect of issues of one or more investment instruments or the
placing of such issues or both;
(iv)
act as a deposit agent;
(v)
administer collective investment schemes, including the performance of
valuation services or fund accounting services or act as transfer agents or
registration agents for such funds;
(vi)
carry out custodial operations involving the safekeeping and administration of
investment instruments;
(vii) act as a manager of a designated investment fund within the meaning of the
Designated Investment Funds Act, 1985;
(viii) carry out any activity, including for this purpose the issue of an advertisement,
relating to derivatives;
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2.4 Irish Investment Business Regulations
(ix)
carry on any other activity constituting the provision of investment business
services or investment advice within the meaning of section 2 of the Act other
than an activity falling within regulation 4(2);
(x)
hold or receive any money belonging to a client, or any money received from
a client which belongs to a product producer, in the course of carrying on
investment business services for a client which is not immediately due and
payable on demand to the firm for its own account.
(b) A firm may not hold clients’ funds or securities nor funds received from a client
which belong to a product producer, such as insurance premiums. This shall not
prevent a firm from taking non-negotiable cheques or similar instruments made out to
a product producer for the purposes of the receipt and transmission of orders.
(c) Regulation 4(4)(a)(i) is designed to ensure that firms do not, for own account in a
personal capacity, buy investment instruments from, or sell investment instruments
to, a client with a view to making a personal profit or to cause loss to the client. The
rule prohibits personal own account trading with clients.
The requirements of regulations 5 to 11 apply to all clients, both private and non-private.
5. Independence
(1) Inducements
A firm must take reasonable steps to ensure that neither it nor any of its agents offers, gives,
solicits or accepts any inducement which is likely to conflict significantly with any duties of
the recipient or the recipient’s employer owed to clients in connection with the provision by
the firm of investment business services or investment advice.
(2) Material interest
Where a firm has a material interest in a transaction to be entered into with or for a client or
a relationship which gives rise to a conflict of interest in relation to such a transaction, the
firm must not knowingly advise in relation to that transaction unless it takes reasonable steps
to ensure fair treatment for the client.
(3) Arrangements with third parties
A firm shall not, unless constrained to do so by law, in connection with the provision by
the firm of investment business services or investment advice, have any association or
arrangement with any other person under which it will be constrained to recommend to its
clients or to effect with or for them (or refrain from doing so) transactions in some investment
instruments but not in others, with some persons but not with others, or through the
agencies of some persons but not of others.
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Irish Investment Business Regulations 2.4
6. Advertising
(1) General
(a) A firm shall not advertise, or supply, or offer to supply, investment business services
or investment advice, or make any other solicitation in respect of investment business
services or investment advice or hold itself out to be a firm authorised to undertake
such activities unless:
(i)
the requirements of this regulation 6 are complied with in relation to that
advertisement;
(ii)
the firm has applied appropriate expertise; and
(iii)
the firm is able to show that it believes on reasonable grounds that the
advertisement is fair and not misleading.
(b) Where the Association’s Code of Ethics and Conduct is more stringent than these
regulations (or vice versa), the more stringent requirements apply.
(c) “Appropriate expertise” means that the firm should have knowledge and
understanding of the type of matter covered by the advertisement.
(d) Any advertisement issued by a firm will be subject to the overriding requirement of
these regulations that the provision of investment business services or investment
advice is effected in an incidental manner.
(2) Advertisements regarding the firm’s services
(a) A firm may inform the public of the investment business services or investment
advice it is capable of providing by means of advertising provided that the
advertisement contains no other matter than any of the following:
(i)
the identity of the firm;
(ii)
the address of the firm;
(iii)
the telephone number of the firm;
(iv) a description of the firm’s business;
(v)
the fees charged by the firm for its services; or
(vi)
the names of investment instruments, prices indicative of those at which the
firm may arrange for the buying or selling of those investment instruments,
how those prices differ from or relate to previous prices for, and income yields
from, those investment instruments.
(b) In all advertisements, a firm must refer to its authorisation in accordance with
regulation 7(2).
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2.4 Irish Investment Business Regulations
(3) Advertisements promoting particular investment instruments
(a) Subject to sub-paragraph 6(3)(b), where a firm issues an advertisement promoting
particular investment instruments or investment business services, it must take
reasonable steps to ensure that the advertisement contains, where applicable, the
information set out in Appendix 2.
(b) Regulation 6(3)(a) shall not apply to advertisements which clearly state that the
investment instrument or investment business services which are the subject of the
advertisement are not available to private clients.
(c) All advertisements within the scope of this regulation should be prepared with care
and with the conscious aim of ensuring that members of the public fully grasp the
nature of any commitment into which they may enter as a result of responding to
an advertisement. Firms should take into account that the complexities of finance
may be beyond many of those to whom the opportunity they offer will appeal
and that therefore they bear a direct responsibility to ensure that in no sense do
their advertisements take advantage of inexperience or credulity. Firms inviting
an immediate commitment (e.g. by coupon) should take particular care to ensure
thorough comprehensibility.
(4) Offence
Firms should note that failure to comply with the requirements of this regulation 6 will
constitute a criminal offence under the Act.
7. Relations with clients
(1) Fair and clear communications
(a) A firm may make a communication with another person which is designed to
promote the provision of investment business services or investment advice only if it
can show that it believes on reasonable grounds that the communication is fair and
not misleading.
(b) A firm must take reasonable steps to ensure that any agreement, written
communication, notification or information which it gives or sends to a client to
whom it provides investment business services or investment advice is presented
fairly and clearly.
(2) Information about the firm
A firm must, in all its business letters, electronic communications, notices and other
publications including advertisements, state that it is authorised as a firm by the Association.
The required wording is as follows:
“Authorised to undertake investment business services in Ireland by the Association of
Chartered Certified Accountants.”
The authorisation statement must also be displayed in the public area of each office from
which the firm operates.
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Irish Investment Business Regulations 2.4
(3) Unsolicited calls
(a) A firm must not provide, and must not enter into an agreement to provide,
investment business services or investment advice in the course of or in consequence
of an unsolicited call unless the client has an existing relationship with the firm and
the client has signed a statement giving the firm permission to make personal visits
or oral communications.
(b) A visit or oral communication may only be made to a potential client where the
potential client has, within the last six months, signed a statement giving the firm
permission to make personal visits or oral communications.
(c) An “existing relationship” exists where the firm has dealt on behalf of the client or
has provided advice to the client within the immediately preceding two years.
(4) Clients’ rights
(a) A firm must not, in any written communication or agreement, seek to exclude or
restrict any duty or liability to a client which it has under the Act, or under the
regulatory system.
(b) Similarly, unless it is reasonable to do so in the circumstances, a firm must not, in
any written communication or agreement, seek to exclude or restrict:
(i)
any other duty to act with skill, care and diligence which is owed to a client
in connection with the provision to him of investment business services or
investment advice; or
(ii)
any liability owed to a client for failure to exercise the degree of skill, care and
diligence which may reasonably be expected of it in the provision of investment
business services or investment advice.
(c) A firm must not seek unreasonably to rely on any provision seeking to exclude or
restrict any such duty or liability.
(d) Where a firm provides investment business services or investment advice to a client
it must comply with any procedures set out in any relevant codes of conduct under
the Act. 
(5) Charges
(a) The amount of a firm’s charges to a client for the provision of investment business
services or investment advice to him must not be unfair or unreasonable in the
circumstances.
(b) Firms must comply with the requirements of paragraphs 7 to 10 of section 3.6,
Conflicts of interest, of the Association’s Code of Ethics and Conduct, which provide
among other things that where a firm receives commission in connection with a
transaction arranged by the firm, the firm shall disclose the total commission payable
in connection with the transaction in writing.
(c) If as a result of a subsequent variation of the proposed transaction, the amount of the
commission receivable is increased, this fact must be communicated in writing to the
client.
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2.4 Irish Investment Business Regulations
(6) Client agreements
(a) Where a firm provides investment business services or investment advice to a client,
it must do so on written contractual terms. The firm shall ensure that each client is
given a copy of the agreement not later than the time of providing the first service to
that client after the coming into force of these rules.
(b) The agreement shall set out in adequate detail the basis on which the firm’s services
are provided, and shall include at least the following:
(i) an outline of the services to be provided;
(ii)
an outline of the firm’s understanding of the client’s investment objectives and
investment restrictions, if any;
(iii)
details of the firm’s charges and any commission structures;
(iv)
an outline of the firm’s policies in relation to conflicts of interest;
(v)
a summary of the firm’s complaints procedure;
(vi)
details of the remedies available to the firm in the event of default by the
client;
(vii) confirmation that the firm is a member of a compensation scheme and the
nature and level of the protection available from such scheme.
(c) Where a firm changes the basis upon which its services are provided, it shall notify
the change to any client affected by it.
(d) A firm shall not be entitled to recommend to or undertake for a client any
transactions as the Financial Regulator may stipulate from time to time, unless the
client has previously signed a statement acknowledging the risks resulting from such
transactions. The Financial Regulator may from time to time issue guidance on the
contents of such statements. Any statement issued by a firm in accordance with
this paragraph shall explain the risks of the transaction at least as fully as any such
guidance.
(e) Where a firm accepts an order subject to any condition it shall maintain a written
note of the condition to which the instruction or order is subject.
(f) A firm or an agent of a firm shall not exert undue pressure or undue influence on a
client in order to induce him:
(i)
to purchase, sell or retain an investment; or
(ii)
to exercise, or refrain from exercising, any right conferred by an investment.
(7) Receipts
(a) Firms must issue a receipt for each non-negotiable or negotiable instrument or other
payment received for the purposes of transmitting an order or a deposit to a product
producer. By way of example, a receipt would have to be issued in respect of a
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cheque from a client made out to a product producer, or a share certificate in the
name of the client which is to be transmitted to a stockbroker.
(b) All receipts must comply with section 30 of the Act, the provisions of which are set
out at Appendix 1 for ease of reference.
(c) All receipts must be retained for at least six years after they are issued.
(d) Firms should note that failure to issue such receipts will constitute a criminal offence
under the Act.
(8) Cessation of business
Where a firm withdraws from providing any investment business services or investment
advice to clients, the firm must ensure that any such business which is outstanding is
properly completed or is transferred to another firm. In addition, where the interests of
clients would be significantly affected by the death or incapacity of an individual within the
firm, the firm must make arrangements to protect the interests of those clients in that event.
8. Effecting transactions for clients
(1) Clients’ best advantage
(a) A firm must take reasonable care in executing transactions for its clients to ensure
that it deals to the best advantage of those clients. In deciding whether or not a firm
has taken such reasonable care, regard will be had to all the relevant circumstances
of the transaction including:
(i) the nature of the transaction;
(ii)
the price and availability of the investment instrument, where appropriate, as
well as the general condition of the market at the time;
(iii)
the services which the firm holds itself out as providing;
(iv)
all charges which will be levied on the investment concerned;
(v)
the size of the order;
(vi)
the nature and extent of enquiries made by the firm in the market place;
(vii) the terms of the order given by the client, including the date on which the order
was placed.
(b) A firm may be required to justify its actions to the Association in order to show that it
has dealt to the best advantage of its client.
(c) Firms should record the time and date of dealing for all transactions for their clients
and, where appropriate, the time of receipt of order and should retain this information
in a readily accessible form.
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(d) Firms may aggregate a transaction for a client with transactions for other clients or
with own account transactions where it is reasonably unlikely that the aggregation
will operate to the disadvantage of any of the clients whose transactions have been
aggregated and where the firm discloses to any client who may be adversely affected
that aggregation may occur.
(2) Allocation of transactions between clients
A firm shall only act on behalf of a named or otherwise identifiable client. In any situation
where the firm finds itself obliged to allocate an investment instrument transaction between
different clients, and all cannot be satisfied, the investment instrument transaction shall as
soon as reasonably practicable thereafter be allocated between the clients:
(a) in a manner which the firm in good faith believes does not unfairly benefit one client
at the expense of another;
(b) so as to be reasonable in the interests of each client;
(c) so as not to conflict with any instructions a client may have given the firm;
(d) so as not to conflict with any limitations which may have been placed on the firm’s
discretion to act; and
(e) on a pro rata basis with a detailed explanation providing for any deviation from that
basis.
(3) Timely execution
(a) Once a firm has agreed to effect a transaction for a client, it must do so as soon as
reasonably practicable.
(b) A firm must ensure that, once it has transmitted an order to a product producer,
it obtains confirmation from the product producer that the transaction has been
processed properly and promptly.
(4) Notes containing the essential details of a transaction
A firm which effects a transaction for a client shall ensure that there is sent to the client as
soon as possible either:
(a) such contract note or statement as is received by the firm from any firm or a firm
regulated under the Stock Exchange Act 1995 involved in the transaction (or a copy
or relevant part thereof); or
(b) a note containing the essential details of the transaction (as set out in Appendix 3 to
these regulations), unless those details are already known to the client.
9. Advising clients
(1) Advice on choice of person providing investment business services or investment advice
(a) Firms may not refer a client to a person who will only advise on one particular
product or group of products. For example, firms may not refer a client to an adviser
who will advise only on the products of one product producer.
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(b) Firms must take reasonable steps to ensure that they refer clients to an independent
adviser. If a firm is unable to do so, it must be able to show that it took reasonable
steps to establish that the person was suitable and had access to a suitable range of
products.
(2) Know your client
(a) Subject to regulation 9(2)(d), a firm shall not provide any investment business
services or provide any investment advice to a client unless it has taken such
reasonable steps as are possible in the circumstances to ascertain from the client
such facts about his personal and financial situation as may reasonably be expected
to be relevant to the proper performance of those services in accordance with these
regulations. The firm shall keep a specific record of this information such as a
factfind.
(b) The record referred to in regulation 9(2)(a) should be kept for a minimum of six years
from the enquiry concerning the client’s personal and financial situation to which the
record relates. Firms should consider keeping each record until the expiry of the term
of the investment to which the record relates.
(c) A factfind includes details of the information relating to the personal and financial
circumstances both current and future that is necessary to provide comprehensive
investment advice.
(d) Where a firm gives advice to a client in relation to non-life insurance or on the choice
of a person providing investment business services or investment advice, regulations
9(2)(a)–(c) do not apply, but in the latter case the firm must comply with regulation
9(1).
(3) Suitability
(a) A firm must take reasonable steps to ensure that it does not make any personal
recommendation to or effect a transaction for a private client in relation to an
investment instrument or deposit unless the recommendation or transaction is
suitable for him having regard to the facts disclosed by that client and other relevant
facts about the client of which the firm is, or reasonably should be, aware. The firm
must supply the client with a statement of the reasons why the product is suitable for
the client.
(b) A firm must not effect a transaction for a private client which the client has
instructed the firm to effect if the firm believes that such a transaction is unsuitable
for that client unless the firm has advised the client not to proceed with his proposal
and the client, following the giving of that advice, has repeated his instructions.
(c) A firm shall not make a recommendation to a client to buy a policy of life assurance
(for the avoidance of doubt, life assurance includes pensions) or a collective
investment scheme instrument unless:
(i)
it has taken reasonable steps to inform itself about such products which are
generally available on the market; and
(ii)
it is not aware of another such product which would better meet the client’s
needs.
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(d) A firm must not make a personal recommendation to a private client to deal if the
dealing would reasonably be regarded as too frequent in the circumstances.
(e) A firm shall not effect transactions with or for a private client for whom the
firm exercises discretion as to how the private client’s funds are invested, with
unnecessary frequency or in excessive size.
(f) A firm shall not make recommendations to any client which are likely to lead to
transactions being effected by the firm or an associate of the firm with or for him
with unnecessary frequency or in excessive size.
(4) Understanding of risk (private clients)
(a) A firm must not recommend a transaction to a private client unless it has taken
reasonable steps to enable him to understand the nature of the risks involved. The
firm must provide the client with a statement setting out why the transaction is in the
best interests of the client.
(b) A firm must not recommend to a private client a transaction involving an investment
instrument which is not a readily realisable investment unless it warns him of the
difficulties in establishing a proper market price and, if the recommendation concerns
a purchase, in making a subsequent sale.
(c) In appropriate circumstances, one way of complying with this regulation 9(4) would
be to give similar warnings as are required in the case of advertisements, which
should be explained to the private client and set out in writing.
(5) Understanding of risk (non-private clients)
A firm shall not provide investment business services or investment advice for a non-private
client unless it has:
(a) reasonably concluded that the non-private client can be expected to understand the
risks involved in a transaction or a particular type of transaction;
(b) provided written notification to the non-private client that it regards him as such
a client and explained to the non-private client the consequences of his being so
treated; and
(c) obtained a written acknowledgement from the non-private client after he has had a
proper opportunity to consider that notice.
10. Additional requirements in certain circumstances
(1) Collective investment schemes
(a) Product particulars:
(i) 208
Before or when a firm recommends to a client to acquire or vary a holding in a
collective investment scheme, the firm must provide the client with a selfcontained statement of the particulars of the product.
Irish Investment Business Regulations 2.4
(ii) In the case of a variation from accumulation to income units or vice versa,
there is no need to provide further product particulars if the client has already
received them.
(iii) If the transaction is on an execution-only basis, the product particulars need
only be provided within five business days after the transaction and in any
event no later than the contract note relating to the transaction is issued.
(iv) In any event, if a product producer provides the firm with product particulars,
the firm must provide them to the client.
(b) Confirmations:
(i) Where a firm arranges a transaction relating to a collective investment scheme
where the client persists in wishing the transaction to be effected despite
advice from the firm, the firm shall send the client written confirmation that:
(aa) the client was given advice from the firm in connection with the
transaction but nevertheless persisted in wishing the transaction to be
effected; and
(bb) the transaction was entered into on the client’s explicit instructions;
and shall ensure that the confirmation is signed by a certified person and
retained for at least six years. Firms should consider keeping the confirmation
until the expiry of the term of the investment to which it relates.
(ii) Firms’ attention is also drawn to the provisions of regulation 10(5) relating to
the confirmations to be sent to execution-only clients, in particular regulations
10(5)(c)(iv) and 10(5)(e).
(2) Life assurance (for the avoidance of doubt, life assurance includes pensions)
(a) The schedules referred to in this regulation 10(2) are Schedules 1–6 of the Life
Assurance (Provision of Information) Regulations 2001 and are set out at Appendix 4
for ease of reference.
(b) Subject to regulation 10(2)(d) below, where life assurance policies are concerned a
firm must comply with the following:
(i) Before the client signs a proposal or application form for a policy of life
assurance, the firm must provide the client with information in the form
specified in Schedule 1.
(ii) The firm must ensure that the illustrative tables contained in Schedule 1:
(aa) are prepared by the insurer in accordance with Schedule 2, the advice of
the actuary and any guidance notes issued by the Society of Actuaries in
Ireland; and
(bb) contain values specific to the client and to the premium proposed to be
paid by the client; and
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(cc) do not deviate from the specified form unless subject to the advice of the
actuary.
(iii) If it is not practicable to use the specific values referred to in regulation
10(2)(b)(ii)(bb),
(aa) the values used must be those which apply to a standard policy of that
type and to the premium payable in respect of such standard policy; and
(bb) except in the case of industrial assurance policies, when the policy is
issued the insurer must provide illustrative tables which relate to the
proposal submitted by the client.
(iv) The firm must ensure that before the contract is concluded and during the term
of the policy the information specified in Schedule 3 is provided to the client
and to the policyholder.
(v) When the information in Schedules 1 and 3 is provided by the firm, the
firm must ensure that the client signs a declaration in the form specified in
Schedule 4.
(c) The certificate at Schedule 5 and declaration at Schedule 6 are provided for
information only, as it is the duty of the actuary and insurer respectively to sign
them on an annual basis and submit them to the Minister for Enterprise, Trade and
Employment.
(d) Regulation 10(2)(b) does not apply to a policy of life assurance where:
(i) none of the clients is an individual, unless it is a policy issued in connection
with a housing loan where the client is the lender or a person other than the
mortgagor; or
(ii) the policy is issued to the trustees of an occupational pension scheme within
the meaning of section 2 of the Pensions Act 1990; or
(iii) the policy is effected for the purpose of insuring the repayment of a loan,
where the lender is the policyholder or it is intended that the policy will
be assigned to or deposited with the lender, unless it is a policy issued in
connection with a housing loan.
(3) PRSAs
(a) A client-specific factfind must be completed for each client. Where the sale of a nonstandard PRSA is concerned, a more comprehensive factfind will be required than for
a standard PRSA.
(b) The client must be provided with:
(i) 210
a copy of the leaflet entitled PRSA (Personal Retirement Savings Account)
which is published by the Financial Regulator and is available from its website
at www.ifsra.ie; and
Irish Investment Business Regulations 2.4
(ii) a written statement of why the relevant PRSA is considered to be in the best
interests of the client. Generic statements may not be used. Where a nonstandard PRSA is recommended, the statement must demonstrate why the
non-standard PRSA is more appropriate than a relevant standard PRSA.
(c) Where a non-standard PRSA is recommended to a client, both the client and the
firm must complete a copy of a declaration in the form prescribed by the Financial
Regulator which is set out at Appendix 5.
(d) Firms must retain in their files a copy of the statement referred to in sub-paragraph
(b)(ii) and the original of the declaration referred to in sub-paragraph (c).
(4) Guarantees
A firm shall not itself give a guarantee (in any form) to a client of investment performance
in respect of any investment instrument or of any transaction relating to any investment
instruments.
Before recommending or effecting for a client a transaction relating to investment
instruments in respect of which a guarantee (in any form) of investment performance has
been or will be given, a firm shall notify the client in writing of the following:
(a) the precise nature and extent of the guarantee, including any limit of whatsoever kind
upon the guarantee;
(b) that no guarantee (in any form) of investment performance can be given by a firm in
respect of any investment instrument or any transaction relating to the investment
instrument; and
(c) that the client will not be able to bring a claim for compensation in respect of any
failure of investment performance to match a guarantee given or representation made
(whether in writing or not) by the guarantee.
(5) Execution-only clients
Where a firm is treating a client as an execution-only client it must:
(a) make written evidence of specific instructions from the client; and
(b) have reasonably assessed and concluded that the client can be expected to
understand the risks involved in the transaction; and
(c) send the client a written confirmation that:
(i)
the client is being treated as an execution-only client;
(ii) the client did not seek or receive any advice from the firm regarding the
transaction;
(iii)
the transaction was entered into on the client’s explicit instructions; and
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2.4 Irish Investment Business Regulations
(iv)
in the case of an investment instrument, that the client was clearly warned
that the value of such instruments can fall as well as rise, but the client
nevertheless wished the transaction to be effected; and
(d) ensure that the written confirmation referred to in regulation 10(5)(c) above is signed
by a certified person and retained for at least six years. Firms should consider
keeping each record until the expiry of the term of the investment to which the record
relates; and
(e) in the case of an investment instrument, ensure that the client signs the written
confirmation referred to in regulation 10(5)(c) above.
11. Compliance procedures
(1) Compliance
A firm must take reasonable steps, including the establishment and maintenance of
procedures, to ensure that its officers and agents act in conformity with all regulations
applicable to the provision by the firm of investment business services or investment advice.
(2) Records
(a) A firm must ensure that sufficient information is recorded and retained about its
investment business services or investment advice as is necessary for the proper
conduct of that business and to enable it to demonstrate compliance with the
regulatory system, including but not limited to records:
(i)
of the receipt of commissions;
(ii)
which are adequate to demonstrate the amount of its fees charged to clients
which are attributable to investment business services and investment advice
as permitted by regulation 4;
(iii)
of complaints received and action taken;
(iv)
of the names of clients to whom investment business services and investment
advice is provided and the agreement setting out the firm’s terms of business
issued to each;
(v)
of details of non-independent advisers and their product ranges to whom
clients have been referred, which adequately demonstrate that reasonable
steps have been taken regarding suitability in accordance with regulation
9(1)(b);
(vi)
of the facts obtained about clients pursuant to regulation 9(2);
(vii) of written notification and acknowledgement and evidence of instructions
relating to transactions, including records relating to execution-only clients and
collective investment scheme transactions maintained pursuant to regulations
10(5) and 10(1)(b) respectively;
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Irish Investment Business Regulations 2.4
(viii) of details of recommendations which adequately demonstrate that reasonable
steps have been taken regarding suitability in accordance with regulation
9(3)(a);
(ix) which are adequate to demonstrate that the client has been informed of the
risks attendant on a transaction pursuant to regulation 9(4);
(x)
of the date and, where appropriate, the time of both receipt and transmission
of all orders for clients, in a readily accessible form;
(xi)
of each receipt issued in accordance with regulation 7(7);
(xii) of the information provided to the client in accordance with regulations
10(2)(b)(i) and 10(2)(b)(iv);
(xiii) of the declarations signed by the client in accordance with regulation
10(2)(b)(v);
(xiv) of the factfind completed for the client in accordance with regulation 10(3)(a);
(xv) of the statement of best interests provided to the client in accordance with
regulation 10(3)(b)(ii);
(xvi) of the declaration completed by the firm and the client in accordance with
regulation 10(3)(c);
(xvii) of the information notified to the client of any guarantee in accordance with
regulation 10(4);
(xviii)of the firm’s own position as follows:
(aa) income and expenditure;
(bb) assets and liabilities, including off-balance sheet items and any
commitments including contingent liabilities;
(cc) correspondence with the Association.
(b) Each record maintained under this regulation shall be kept for six years from the
performance of any investment business services or the provision of any investment
advice to which the record relates. Firms should consider keeping each record until
the expiry of the term of the investment to which the record relates.
(c) Firms should note that:
(i) failure to keep such records, or any other records prescribed under the Act, will
constitute a criminal offence under the Act;
(ii) if a firm is wound up and is unable to pay its debts and it is found that
the prescribed records have not been kept, any or all of the officers and/or
beneficial owners of the firm may be personally liable for the firm’s debts and
liabilities.
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2.4 Irish Investment Business Regulations
(3) Complaints
(a) A firm must have procedures to ensure:
(i)
the proper handling of complaints from clients relevant to its compliance with
the regulatory system;
(ii)
that any appropriate remedial action on those complaints is promptly taken;
and
(iii)
where the complaint is not promptly remedied, that the client is advised of any
further avenue for complaint available to him under the regulatory system.
(b) The procedures established under this regulation must include adequate provisions to
ensure that:
(i)
complaints are acknowledged in writing within a reasonable time of their being
received and in any event within 14 days;
(ii)
where a complaint has been made orally the letter of acknowledgement states
the firm’s understanding as to the nature of the complaint being made and
invites the complainant to confirm in writing the accuracy of that statement;
(iii)
complaints are investigated by a person of sufficient experience, seniority and
competence who was not directly involved in the particular act or omission
giving rise to the complaint;
(iv)
subject to the requirements of a firm’s professional indemnity insurers,
the complainant receives regular written updates on the progress of the
investigation at intervals no greater than two months;
(v)
subject to the requirements of a firm’s professional indemnity insurers, within
seven days of completion of the investigation, the complainant is advised in
writing of the outcome and, if appropriate, an explanation of the terms of any
offer or settlement;
(vi)
where the complainant is not satisfied with the outcome of the investigation,
he is notified immediately of his right to refer the matter to the Association.
(4) Compensation scheme
(a) Firms shall not provide any investment business services unless they are either:
(i) contributors to the compensation scheme established by the Investor
Compensation Company Limited under the Compensation Act providing for
compensation to clients who have suffered losses, short details of which are
set out in regulation 11(4)(b) below; or
(ii) members of a compensation scheme set up by an approved professional body,
which scheme has been approved of by the Financial Regulator and provides
compensation to clients who have suffered losses, short details of which are
set out in regulation 11(4)(b) below.
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Irish Investment Business Regulations 2.4
(b) The compensation schemes referred to in regulation 11(4)(a) above provide for a sum
of money of not less than 90% of the amount of a client’s “net loss” or 20,000 euro,
whichever is the lesser. “Net loss” in this context means the amount of the liability of
the firm in respect of:
(i) money owed to or belonging to the client and held on behalf of the client by
the firm in connection with the provision of investment business services by
the firm; and
(ii) investment instruments belonging to the client and held, administered or
managed on behalf of the client by the firm in connection with the provision of
investment business services by the firm.
(5) Companies Act 1990
Each employee of a firm shall, as part of their contract of employment, be required to sign an
undertaking relating to the provisions of part V of the Companies Act, 1990 (Insider Dealing)
declaring that the employee has read and understood them and shall as part of their contract
comply with such procedures as may from time to time be introduced for the purpose of
ensuring compliance therewith.
12. Enforcement
(1) Intervention Orders
(a) If it appears to the Admissions and Licensing Committee that for the protection of
investors or for the protection of the Association or for both reasons, that:
(i)
it is desirable to prohibit a firm from disposing of or otherwise dealing with any
of its assets, or any specified assets; and/or
(ii)
a firm is not fit and proper to provide investment business services or
investment advice either generally or of a particular kind or to the extent to
which it is or is intending to carry on that business; and/or
(iii)
a firm has committed, or intends, or is likely to commit a breach of these
regulations or some other act of misconduct; and
(iv)
it is desirable to take protective measures,
the Admissions and Licensing Committee may make and serve on the firm
concerned a written Intervention Order (an “Order”).
(b) An Order may operate for a specified period or until the occurrence of a specified
event or until the firm complies with specified conditions and may, at the Admissions
and Licensing Committee’s discretion, come into effect either immediately on service
or at such later time as the Admissions and Licensing Committee may determine.
(c) An Order served on a firm may require the firm to take specified steps and/or may
forbid the firm:
(i)
in whole or in part, to provide investment business services or investment
advice;
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2.4 Irish Investment Business Regulations
(ii)
to dispose of or otherwise deal with any assets or any specified assets
(whether held in the Republic of Ireland or outside the Republic of Ireland) or
to act otherwise than in the manner specified in the Order;
(iii)
to enter into transactions of a specified kind or enter into them except in
specified circumstances or to a specified extent;
(iv)
to solicit business from persons of a specified kind or otherwise than from such
persons or in a specified country or territory; and/or
(v)
to carry on business in a specified manner or otherwise than in a specified
manner.
(d) An Order shall specify:
(i)
the reasons for its issue;
(ii)
the date and time at which the Order shall come into effect;
(iii)
the period for which the Order shall operate, which may be expressed to end
with the occurrence of a specified event or when the firm has complied with
the requirements of the Order;
(iv)
where relevant, in regard to an Order to which regulation 12(1)(a)(iii) applies,
the act or omission which constituted or would constitute breach of the
regulations and the regulation which has been or would be contravened; and
(v)
the officer of the Admissions and Licensing Committee to whom a request can
be made for a stay of execution of the Order.
(e) The Admissions and Licensing Committee, or the Chairman of the Admissions and
Licensing Committee acting on its behalf, may, at any time before or after an Order
comes into effect, revoke the Order or vary its terms; and where the terms of an
Order are varied the variation shall be effected by a new Order being served on the
firm concerned.
(f) Subject to regulation 12(2) the Association shall publish the Order at or after the time
it comes into effect and shall notify the Financial Regulator that an Order has been
published.
(2) Application for stay
After service of the Order, its recipient may apply to the Association for a stay of execution of
the Order or any part of it and/or of its publication. The application shall be considered by the
officer specified pursuant to regulation 12(1)(d)(v) who in his discretion may grant or refuse
the stay or grant it subject to conditions.
(3) Reference to the Appeal Committee
A firm served with an Order may appeal against the Order in the same way and subject
to the same limitations as it may appeal against any other decision of the Admissions and
Licensing Committee.
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Irish Investment Business Regulations 2.4
(4) Right of the Association to appeal against an Order
The Association may appeal against an Order in the same way and subject to the same
limitations as it may appeal against any other decision of the Admissions and Licensing
Committee.
(5) Offences
Firms should note that the Act prescribes penalties of varying severity for breaches of its
provisions:
(a) Section 74 of the Act lists the provisions which, if breached, would not amount to
a criminal offence but could attract a penalty of a reprimand, and/or a fine of up to
635,000 euro, and/or publicity, and/or payment of costs.
(b) Section 79 of the Act lists the provisions which, if breached, amount to a criminal
offence and could attract a penalty of a fine of up to 1,270,000 euro maximum
and/or imprisonment for up to 10 years. Some of those offences are referred to within
these regulations.
13. Waivers and service
(1) Waivers and modifications
(a) A firm is entitled to apply in writing to the Admissions and Licensing Committee to
waive, vary or suspend the requirements of any of these regulations in order to adapt
them to the firm’s circumstances or to any particular kind of business which the
firm is carrying on or intends to carry on. The Admissions and Licensing Committee
shall not grant the application unless it appears that compliance with the regulations
would be unduly burdensome having regard to the benefit which compliance would
confer on investors and the exercise of the power would not result in any undue
risk to investors. Any waiver, variation or suspension given by the Admissions and
Licensing Committee shall be granted subject to the prior approval of the Financial
Regulator.
(b) The Admissions and Licensing Committee may grant such an application on
conditions. If it does so, the applicant firm must comply with any such conditions.
(c) Following an application under this regulation, or of its own volition, the Admissions
and Licensing Committee may waive, vary or suspend any of these regulations.
Where it does so, it may impose conditions and any firm which acts upon the waiver,
variation or suspension extended to it must comply with any such condition.
(d) Any waiver, variation or suspension given under this regulation shall apply for such
period as the Admissions and Licensing Committee shall specify.
(2) Consents
Where provided for in these regulations any consent to be given by the Admissions and
Licensing Committee may be given or withheld in its absolute discretion but if withheld the
Admissions and Licensing Committee shall notify the firm of the reasons why it has been
withheld.
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2.4 Irish Investment Business Regulations
(3) Service
Except as otherwise provided in these regulations, any notice or other document required or
authorised by these regulations to be served on any firm may be served by leaving it at or
sending it by post to the firm’s address or faxing it to the number notified to the Association
in accordance with these regulations.
14. Liability
Neither the Association nor any of its officers or servants or agents nor any members of any
committee of Council shall be liable in damages or otherwise for anything done or omitted
to be done in the discharge or purported discharge of any function under the Act, or these
regulations, or any other rules or regulations referred to in these regulations unless the act or
omission is shown to have been in bad faith.
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Irish Investment Business Regulations 2.4
Appendix 1 (Regulation 7(7)(b))
Receipt in compliance with section 30 of the Act
(1) The receipt shall state succinctly the terms and conditions upon which the transaction
was entered into.
(2) The receipt shall state that it is issued pursuant to section 30 of the Act and shall, subject
to such alterations or additions as may be prescribed by the Financial Regulator, specify the
following:
(a) the name and address of the firm;
(b) the name and address of the client or other person furnishing the instrument or
payment, or an alternative form of identification approved by the Financial Regulator
for the purpose;
(c) the value of the instrument or payment received and the date on which it was
received;
(d) the purpose of the payment;
(e) the name of the product producer in whose favour the payment is made;
(f) where life assurance (for the avoidance of doubt, life assurance includes pensions)
or non-life insurance is concerned, that the acceptance by the firm of a completed
insurance proposal does not itself constitute the effecting of a policy of insurance.
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Appendix 2 (Regulation 6(3)(a))
Advertisements
Part 1: General contents requirements
(a) Clarity of purpose
The purpose of any promotional material included in the advertisement must not be disguised
in any way.
(b) Clarity of subject
The nature or type of the investment instrument or investment advice or the investment
business services to which the advertisement relates must be clear.
(c) Statements, promises or forecasts
Any statement, promise or forecast must be fair and not misleading in the form of and
context in which it appears, and where any promise or forecast is based on assumptions,
these must be stated within the advertisement.
(d) No false indications
The advertisement must not provide false indications, in particular as to:
(i) the firm’s independence;
(ii) the firm’s scale of activities;
(iii)the extent of the resources of the firm;
(iv)the services the firm intends to provide; or
(v) the scarcity of the investment instrument or investment business services or
investment advice concerned.
(e) Design and presentation
The design and presentation of advertisements should allow them to be easily and clearly
understood. Where footnotes are used they should be of sufficient size and prominence and
easily legible; where appropriate they should be linked to the relevant part of the main copy.
(f) Prescribed statements to be clearly visible
Any statements made or risk warnings given in the advertisement in accordance with this
regulation 6 must not be obscured or disguised in any way by the content, design or format
of the advertisement.
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(g) Disrepute
Advertisements should contain nothing which brings the law or these requirements into
disrepute.
(h) Understanding of firm’s proposal
The design and presentation of advertisements should be such as to allow each part of the
firm’s proposal to be easily grasped and clearly understood.
(i) Clarity of advertisement
An advertisement should not mislead clients or potential clients about any matter likely to
influence their attitudes to the advertised product or the firm either by inaccuracy, ambiguity,
exaggeration, omission or otherwise.
(j) Clarity of presentation
An advertisement should always be so designed and presented that anyone who looks at it
can see immediately that it is an advertisement.
(k) No undue pressure
A firm must not exert undue pressure or undue influence on a client in order to induce him:
(i) to purchase, sell or retain an investment, or
(ii) to exercise, or refrain from exercising, any right conferred by an investment.
Part 2: Specific contents requirements
(a) Guarantees
The advertisement must not describe an investment instrument as guaranteed unless
there is a legally enforceable arrangement with a third party who undertakes to meet in
full an investor’s claim under the guarantee and gives details about both the guarantor and
the guarantee sufficient for an investor to make a fair assessment about the value of the
guarantee.
(b) Commendations
Any commendations quoted must be:
(i) complete or a fair representation;
(ii) accurate and not misleading at the time of issue; and
(iii)relevant to the investment instrument or investment advice or the investment
business services advertised.
The author must have given his consent to the commendation and, if he is an associate or
employee of the issuer, the advertisement must state that fact.
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(c) Comparisons
Comparisons or contrasts must:
(i) be based either on facts verified by the issuer, or on assumptions stated within the
advertisement;
(ii) not mislead;
(iii)be presented in a fair and balanced way; and
(iv)not omit anything material to the comparison.
(d) Material interest
Where the firm knows that it or its associate:
(i) has or may have a position or holding in the investment instrument concerned or in a
related investment instrument; or
(ii) is providing or has provided within the previous 12 months significant advice or
investment business services in relation to the investment instrument concerned or a
related investment instrument,
it must include a statement to this effect in the advertisement.
(e) Past performance
Any information about the past performance of investment instruments or of a firm must:
(i) be relevant to the performance or the investment instrument or firm advertised;
(ii) be a complete record of, or a fair and not misleading representation of, the past
performance of the investment instrument or firm;
(iii)not be selected so as to exaggerate the success or disguise the lack of success of the
investment instrument or firm;
(iv)state the source of the information; and
(v) be based on the actual past performance of the investment or firm, and not be based
on simulated figures.
Any advertisement which contains information on past performance must also contain a
warning that neither past experience nor the current situation is necessarily a guide to future
performance.
(f) Taxation
If the advertisement contains any reference to the impact of taxation, it must:
(i) state the assumed rate of taxation on which any matter is based;
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(ii) state that tax reliefs are as those currently applying and state that the value of the tax
reliefs referred to in the advertisement apply directly to the investor, to the provider
of the investment instrument or to the fund in which the investor participates, as
appropriate;
(iii)state if it is the case, that the matters referred to are only relevant to a particular
class or classes of investor with particular tax liabilities, identifying the class or
classes and liabilities concerned;
(iv)not describe the investment instrument as being free from any liability to income tax
unless equal prominence is given to a statement, if applicable, that the income is
payable from a fund from which income tax has already been paid; and
(v) not describe the investment instrument as being free from any liability to capital
gains tax unless equal prominence is given to a statement, if applicable, that the
value of the investment instrument is linked to a fund which is liable to that tax.
Part 3: Risk warnings
A firm must take reasonable steps to ensure that the advertisement adequately explains any
unusual risks involved and, where appropriate contains the warnings about the investment
instrument or the investment business services as follows:
(a) Fluctuations in value
Where the investment instrument can fluctuate in price or value, a statement must be made
that prices, values or income may fall against the investor’s interests or, if applicable, a
warning must be made that the investor may get back less than he invested.
(b) Suitability
Where the advertisement contains or refers to a recommendation about a specific investment
instrument or investment business service, a statement must be made warning that the
investment instrument or investment business service may not be suitable for all recipients
of the advertisement and a recommendation that, if they have any doubts, they should seek
advice from their investment adviser.
(c) Investment income
Where an investment instrument is described as being likely to yield income, or as being
suitable for an investor particularly seeking income from his investment, the investor must be
warned, if it is the case, that:
(i) income from the investment may fluctuate; and
(ii) part of the capital invested may be used to pay that income.
(d) Foreign currency denominated investments
Where an investment instrument is denominated in a currency other than that of the country
in which the advertisement is issued, the investor must be warned that changes in rates
of exchange may have an adverse effect on the value, price or income of the investment
instrument.
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(e) Past performance
Where the advertisement contains information concerning the past performance, it must also
contain a warning that the past is not necessarily a guide to future performance.
(f) Taxation
Where the advertisement contains any reference to the impact of taxation it must also
contain a warning that the levels and bases of taxation can change.
(g) Investments which are not readily realisable investments
An advertisement for an investment instrument which is not a readily realisable investment
must state that it may be difficult:
(i) for the investor to sell or realise the investment instrument, and
(ii) to obtain reliable information about its value or the extent of the risks to which it is
exposed.
(h) Investments for which the market is restricted
An advertisement for a security (except units in a collective investment scheme) for which
a market is made by only one market maker must state that fact and, if it is the case, the
fact that the only market is the issuer of the advertisement or an associate of the firm of the
advertisement.
(i) Front-end loading
(i) An advertisement for an investment instrument subject to front-end loading must
state that deductions for charges and expenses are not made uniformly throughout
the life of the investment instrument, but are loaded disproportionately onto the early
years, and the investor must be warned that, if he withdraws from the investment
instrument in the early years, he may not get back the amount he has invested.
(ii) An advertisement for an investment instrument subject to charges which arise only
on the redemption of that investment instrument (redemption charges) must state
that deductions for charges and expenses are not made uniformly throughout the life
of the investment instrument, but are loaded disproportionately at the redemption of
the investment instrument, and the investor must be warned that this will impact on
the amount of money which he receives and that he may not get back the amount he
has invested.
(iii)In relation to an investment, “front-end loading” means one where deductions for
charges and expenses are not made uniformly throughout the life of the investment
but are charged disproportionately to the early years.
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(j) Cancellation
Where cancellation rights apply:
(i) the advertisement must state that upon cancellation the investor may not obtain a full
refund or the amount invested; and
(ii) if the advertisement relates to a higher volatility investment, the advertisement must
state, if it is the case, that the shortfall in the amount recovered by the investor on
cancellation may be large.
(k) Property funds
(i) An advertisement for a fund which invests in property, or which refers to the fact that
a fund may be invested in land or interests in land, must state that the value of the
property or land is a matter of a valuer’s opinion.
(ii) Where an advertisement for a fund which invests in property, or which refers to the
fact that a fund may be invested in land, is in respect of a fund which is not openended, the advertisement must state that the land and buildings may be difficult to
sell and there may be times when the units cannot be sold.
(l) Forecasts or projections
Where an advertisement contains any forecast or projections, whether of specific growth
rate or of a specific return or rate of return, it should make clear the basis upon which that
forecast or projection is made, explaining for instance:
(i) whether reinvestment of income is assumed;
(ii) whether account has been taken of the incidence of any taxes or duties and, if so,
how; and
(iii)whether the forecast or projected rate of return will be subject to any deduction either
upon premature realisation or otherwise.
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2.4 Irish Investment Business Regulations
Appendix 3 (Regulation 8(4)(b))
Essential details of a transaction
The essential details of a transaction effected by a firm to be sent to a client as referred to in
regulation 8(4)(b) are as follows:
(a) the name of the firm;
(b) the date of the transaction;
(c) the time at which the transaction was entered into or a statement that this will be
available on request;
(d) the investment instrument concerned, the size involved and whether the transaction
was a purchase or sale;
(e) the price at which the transaction was executed or averaged and the total
consideration due to or from the client;
(f) the settlement date;
(g) the amount of the firm’s charges to the client, if any, in connection with the
transaction except where the firm has been requested to issue the contract note on a
net basis by a professional client and has maintained a written note of such request;
(h) a statement, if this is the case, that any dividend, bonus or other right which has
been declared, but which has not been paid, allotted or otherwise become effective
in respect of the relevant investment instrument, will not pass to the purchaser under
the transaction;
(i) the amount or basis of any charges shared by the firm with another person (except
employees) or the fact that this will be made available on request;
(j) the amount or basis of any remuneration which the firm has received or will receive
from another person in connection with the transaction;
(k) if any interest which has accrued or will accrue on the relevant security is accounted
for separately from the transaction price, the aggregate amount of the interest which
the purchaser will receive or the number of days for which he or she will receive
interest and the applicable rate of interest accruing;
(l) the amount of any costs, including transaction taxes, which are incidental to the
transaction and which will not be paid by the firm out of the charges mentioned in
(g) above;
(m)if the transaction involved a foreign currency, the rate of exchange involved and the
date of calculation of such if other than the date of the transaction;
(n) a statement, if this is the case, that the firm has acted as principal.
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In addition, where the member and/or the firm has entered into a distance contract for
the supply of a financial service after 15 February 2005, the member or firm entering into
such contract shall comply with the Distance Marketing of Consumer Financial Services
Regulations 2004.
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2.4 Irish Investment Business Regulations
Appendix 4 (Regulation 10(2))
Schedules 1 to 6 of the Life Assurance (Provision of Information)
Regulations 2001
SCHEDULE 1 INFORMATION TO BE PROVIDED TO CLIENT BEFORE
CLIENT SIGNS A PROPOSAL OR APPLICATION FORM FOR A POLICY OF
LIFE ASSURANCE
A. INFORMATION ABOUT THE POLICY
The following information shall be provided to the client using the prominent titles indicated
in this paragraph.
(1) “MAKE SURE THE POLICY MEETS YOUR NEEDS!”
(i)
The purpose and intention of the policy (e.g. whether protection or savings or a
combination thereof).
(ii)
The type of policy (e.g. regular premium savings policy, regular premium protection
policy, term assurance policy, decreasing term assurance policy, regular premium
pensions policy, single premium investment policy, single premium annuity or
single premium pensions policy, whether critical illness cover or permanent health
insurance is included, whether convertible, whether index-linked).
(iii)
The long-term nature of the policy under which a commitment is given by the client
to pay a premium in the form of a lump sum, or a regular weekly, monthly, quarterly
or yearly premium, as the case may be and a statement indicating that unless the
client is fully satisfied as to the nature of the commitment, having regard to the
needs, resources and circumstances of that client, the client should not enter into
that commitment.
(iv)
Whether the proposed life assurance policy replaces in whole or in part an
existing policy with the insurer concerned or any other insurer which has been or
is to be cancelled or reduced and where an existing policy has been or is to be
cancelled or reduced, that the insurer or insurance intermediary, insofar as the
insurer or insurance intermediary is aware of or ought reasonably to be aware of
such an existing policy, has advised the client as to the financial consequences
of replacement and of possible financial loss as a result of replacement, and the
declaration referred to in Regulation 6(3) (the form of which is set out in Schedule
4) shall include in a prominent position the following warning:
“WARNING
If you propose to take out this policy in complete or partial replacement of an existing policy,
please take special care to satisfy yourself that this policy meets your needs. In particular,
please make sure that you are aware of the financial consequences of replacing your existing
policy. If you are in doubt about this, please contact your insurer or insurance intermediary.”
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(2) “WHAT HAPPENS IF YOU WANT TO CASH IN THE POLICY EARLY OR STOP PAYING
PREMIUMS?”
There shall be a statement in a prominent position indicating—
(i)
whether or not the policy acquires a surrender value,
(ii)
the consequences of non-payment of premium, and
(iii)
that early surrender of the policy (where a policy can be surrendered early), either
voluntarily or as a consequence of the non-payment of premiums, may result in a
return less than the amount of the premiums paid into the policy over the same
period.
(3) “WHAT ARE THE PROJECTED BENEFITS UNDER THE POLICY?”
(i) An Illustrative Table of Projected Benefits and Charges shall be provided to the
client in the form set out in the Table to this subparagraph.
(ii) Where the policy does not acquire a surrender or maturity value the client shall be
informed of this fact.
(iii) The Illustrative Table shall contain in a prominent position the following notice:
“IMPORTANT
THESE ILLUSTRATIONS ASSUME A RETURN OF (RATE)% PER ANNUM. THIS RATE IS
FOR ILLUSTRATION PURPOSES ONLY AND IS NOT GUARANTEED.
ACTUAL INVESTMENT GROWTH WILL DEPEND ON THE PERFORMANCE OF THE
UNDERLYING INVESTMENTS AND MAY BE MORE OR LESS THAN ILLUSTRATED.”
TABLE
ILLUSTRATIVE TABLE OF PROJECTED BENEFITS AND CHARGES
A
B
C
D
E=A+B-C-D
£
£
£
£
£
Year
    
1
Total amount
of premiums
paid into the
policy to date
Projected
investment
growth
to date
Projected
expenses
and charges
to date
Projected Projected
cost of
policy value
protection
benefits to date
2
3
4
5
10
15
20
MATURITY
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2.4 Irish Investment Business Regulations
(4) “WHAT INTERMEDIARY REMUNERATION OR SALES REMUNERATION IS PAYABLE?”
An Illustrative Table of Intermediary Remuneration or Sales Remuneration shall be provided
to the client in the form set out in the Table to this subparagraph.
TABLE
ILLUSTRATIVE TABLE OF
INTERMEDIARY REMUNERATION OR SALES REMUNERATION
Year
Premium payable in that year
£
Projected total intermediary/
sales remuneration/brokerage
fee payable in that year
£
1
2
3
4
5
10
15
20
Year of Maturity
(5) “ARE RETURNS GUARANTEED AND CAN THE PREMIUM BE REVIEWED?”
(i)
Where the premium shown is not guaranteed to provide the benefits as illustrated,
there shall be a statement in a prominent position to that effect accompanying the
illustration and, where appropriate, a statement—
(I) that the premium may need to be increased in order to achieve the benefits so
illustrated, or
(II) if the premium is not so increased, that the benefits illustrated may not be
achieved, should the investment return prove to be less than that assumed in
the illustration.
(ii) Where the policy is a unit-linked protection policy, under which the insurer may
increase the premium payable for the same level of cover or where cover can be
reduced by the insurer for the same premium, there shall be a statement in a
prominent position to that effect accompanying the illustration indicating the period,
if any, during which the insurer may not increase the premium payable for the same
level of cover or reduce cover for the same premium.
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Irish Investment Business Regulations 2.4
(6) “CAN THE POLICY BE CANCELLED OR AMENDED BY THE INSURER?”
(i)
Subject to the terms and conditions of the policy, the circumstances in which a
policy may be cancelled or materially amended at the option of the insurer, shall be
stated.
(ii)
A statement shall be included as to the consequences of failing to disclose material
facts and or providing incorrect information when completing a proposal or
application form for a policy of life assurance.
(7) “INFORMATION ON TAXATION ISSUES”
The following information shall be provided to the client in relation to taxation issues:
(i)
the circumstances under which tax reliefs are available on premiums and pension
product contributions and the extent of such tax reliefs;
(ii)
the circumstances and extent to which the proceeds or benefits are taxable (for
example, whether as income tax or capital gains tax, as appropriate).
B. INFORMATION ON SERVICE FEE
Where a service fee is charged by an insurer or insurance intermediary, the amount of the
service fee shall be disclosed in writing to the client and shall be expressed as a monetary
amount whether in relation to an initial service fee or in relation to an assumed renewal or
annual service fee.
C. INFORMATION ABOUT THE INSURER OR INSURANCE INTERMEDIARY OR
SALES EMPLOYEE
The following information shall be provided to the client:
(i)
(I) Names of the insurer and insurance intermediary in full including their legal
form and, where applicable, the name of the sales employee.
(II) In the case of tied insurance agents and insurance agents, the name or names
of every insurer for which that person or financial institution, as the case may
be, is a tied insurance agent or insurance agent, should be stated.
(ii)
Contact telephone, fax number, e-mail address and relevant address for
correspondence with the insurer and insurance intermediary or sales employee, as
the case may be.
(iii)
The Member State in which the head office of the insurer is situated and, where
appropriate, the Member State of the branch of the insurer which will enter into the
insurance contract.
(iv)
Where the client deals directly with an insurance intermediary, any delegated
authority or binding authority granted by the insurer, in relation to underwriting,
claims handling and claims settlement, to that insurance intermediary.
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2.4 Irish Investment Business Regulations
SCHEDULE 2 COMPLETION OF ILLUSTRATIVE TABLES
PART 1 ILLUSTRATIVE TABLE OF PROJECTED BENEFITS AND CHARGES
1. For the purposes of completing the Illustrative Tables set out in paragraph A(3) and (4) of
Schedule 1—
“projected investment growth to date” means the investment return earned on the policy
value in the period up to and including the year referred to, and shall include any bonuses
allocated to the policy;
“projected expenses and charges to date” means the projected total deductions to cover
expenses and charges of the insurer made in the period up to and including the year referred
to;
“projected cost of protection benefits to date” means the projected total deductions for the
cost of protection benefits made in the period up to and including the year referred to;
“projected policy value” means the amount projected to be payable as a surrender value or
a maturity value at the end of the year referred to, after deduction of any penalties applicable.
2. A rate not exceeding 8% per annum, before deduction of all anticipated expenses and
charges, intermediary remuneration and sales remuneration related to the policy and before
deduction of taxation, shall be used as the assumed projected rate of return in illustrating
projected future benefits under the policy. In addition, a second Illustrative Table of Projected
Benefits and Charges may be given to the client provided the basis of calculation of that
second illustration is specified.
3. The Illustrative Table, or Tables, as the case may be, of Projected Benefits and Charges
shall indicate the projected surrender or maturity value of the policy (Column E) after any
penalties where applicable—
(i)
at the end of each of the first 5 years following the inception of the policy, and
(ii)
at the end of 10, 15 and 20 years following such inception and at maturity, where
appropriate,
shown across from—
(I) the total amount of premiums paid into the policy to date (Column A),
(II) the projected investment growth to date (Column B),
(III) the projected expenses and charges to date (Column C), and
(IV) the projected cost of protection benefits to date (Column D),
so that the difference between the sum of the premiums paid and the projected investment
growth, and the corresponding projected surrender or maturity values (Column E) is
accounted for by the cost of either or both life assurance cover and other protection benefits
and the charges and management expenses associated with the policy and surrender
penalties.
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4. (i)
In illustrating the projected benefits of a unit-linked protection policy, the period of
time for which the cover can be maintained by the premium shown, based on the
assumptions underlying the illustration, shall be specified if this is less than the
term of the policy.
The illustration shall state that an increased premium would be required to sustain
the cover beyond the period of cover shown.
(ii)
5. Where the policy includes insurance cover in respect of either or both critical illness
and permanent health insurance, the effects of a claim under such insurance cover on the
projected surrender or maturity value shall be specified.
6. (i)
In the case of investment policies, the effect of all deductions, excluding the cost of
deductions for protection benefits, on the projected investment yield on the gross
premiums paid shall be stated in a prominent position below the Illustrative Table of
Projected Benefits and Charges.
For the purposes of this paragraph “investment policy” means a contract where
the projected maturity value in accordance with the Illustrative Table of Projected
Benefits and Charges at least exceeds the cumulative amount of premiums paid.
(ii)
7. Column C of the Illustrative Table of Projected Benefits and Charges shall include charges
and management expenses including deductions from the premium which do not contribute
to the value of any benefit such as “bid/offer” spread, annual fund management charge and
expense charges.
8. (i)
In the case of pension business contracts, an illustration shall be provided to the
client indicating—
(I) the projected tax free sum available at retirement, where relevant,
(II) the projected balance of the fund available to purchase an annuity, and
(III) examples of projected monthly or weekly annuity payable at the illustrative
rates of return.
(ii)
The illustration shall be accompanied by a warning in a prominent position that—
(I) the illustration assumes a rate of return of _____%* per annum,
* The rate applied by the insurer in the illustration
(II) the rate is for illustration purposes only and is not guaranteed, and
(III) actual investment growth will depend on how the investment performs and
may be more or less than illustrated.
9. A statement shall be included that the premium payable includes the cost of the
protection benefits, and all charges, expenses, intermediary remuneration and sales
remuneration, where applicable.
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2.4 Irish Investment Business Regulations
PART 2 ILLUSTRATIVE TABLE OF INTERMEDIARY REMUNERATION OR
SALES REMUNERATION
1. The Illustrative Table of Intermediary Remuneration or Sales Remuneration shall state the
projected premium payable and the projected cost of total payments, benefits and services
payable to insurance intermediaries or sales employees to cover intermediary remuneration or
sales remuneration in connection with the policy in the policy year in question.
2. Where an arrangement exists between an insurer and an insurance broker or an insurance
agent (other than a tied insurance agent) under which payments, benefits or services may be
provided by the insurer to the insurance broker or the insurance agent which are contingent
on the insurance broker or the insurance agent placing a minimum level of business with the
insurer, then, where a policy contributes to the achievement of such contingent payments,
benefits or services, a statement describing the arrangement that applies shall immediately
follow the Illustrative Table of Intermediary Remuneration or Sales Remuneration.
3. In the Table of Intermediary Remuneration or Sales Remuneration “intermediary
remuneration” may be described as a “brokerage fee”.
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Irish Investment Business Regulations 2.4
SCHEDULE 3 INFORMATION FOR POLICYHOLDERS
The following information, which is to be communicated to the policyholder before the
contract is concluded (A) and during the term of the contract (B), must be provided in a
clear and accurate manner, in writing, in an official language of the Member State of the
commitment.
However, such information may be in another language if the policyholder so requests
and the law of the Member State so permits or the policyholder is free to choose the law
applicable.
A. before concluding the contract
Information about the assurance
Information about the commitment
undertaking
(a)1. The name of the undertaking (a)4. Definition of each benefit
and its legal form
and each option
(a)2.
The name of the Member State in which the head office and, where
appropriate, the agency or branch
concluding the contract is situated
(a)5. Term of the contract
(a)3. The address of the head office and, (a)6. Means of terminating the
where appropriate, of the agency or contract
branch concluding the contract
     (a)7. Means of payment of premiums
and duration of payments
     (a)8. Means of calculation and
distribution of bonuses
(a)9. Indication of surrender and paid-up values and the extent to
which they are guaranteed
     (a)10.Information on the premiums
for each benefit, both main
benefits and supplementary
benefits, where appropriate
     (a)11.For unit-linked policies,
definition of the units to which
the benefits are linked
     (a)12.Indication of the nature of the
underlying assets for unit-linked
policies
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2.4 Irish Investment Business Regulations
     (a)13.Arrangements for application of
the cooling-off period
     (a)14.General information on the tax
arrangements applicable to the
type of policy
     (a)15.The arrangements for handling
complaints concerning contracts
by policyholders, lives assured
or beneficiaries under contracts
including, where appropriate,
the existence of a complaints
body, without prejudice to the
right to take legal proceedings
     (a)16.Law applicable to the contract
where the parties do not have a
free choice or, where the parties
are free to choose the law applicable,
the law the assurer proposes to choose
B. During the term of the contract
In addition to the policy conditions, both general and special, the policyholder must receive
the following information throughout the term of the contract.
Information about the assurance
Information about the commitment
undertaking
(b)1. Any change in the name of the (b)2. All the information listed in
undertaking, its legal form or the points (a)4 to (a)12 of A in the
address of its head office and, event of a change in the policy
where appropriate, of the agency or conditions or amendment of the
branch which concluded the contract
law applicable to the contract
(b)3. Every year, information on the
state of bonuses
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Irish Investment Business Regulations 2.4
SCHEDULE 4 DECLARATION TO BE SIGNED BY CLIENT
WARNING
If you propose to take out this policy in complete or partial replacement of an existing policy,
please take special care to satisfy yourself that this policy meets your needs. In particular,
please make sure that you are aware of the financial consequences of replacing your existing
policy. If you are in doubt about this, please contact your insurer or insurance intermediary.
Ref. Policy Number
Declaration of Insurer or Intermediary
I hereby declare that in accordance with Regulation 6(1) of the Life Assurance (Provision of
Information) Regulations, 2001,
* (the client) has been provided
with the information specified in Schedule 1 to those Regulations and that I have advised
the client as to the financial consequences of replacing an existing policy with this policy by
cancellation or reduction, and of possible financial loss as a result of such replacement.
* Insert client name and address
Signed
Name of insurer or insurance intermediary
Date
Declaration of Client
I confirm that I have received in writing the information specified in the above declaration.
Signed
Name of client
Date
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2.4 Irish Investment Business Regulations
SCHEDULE 5 CERTIFICATE OF ACTUARY
Name and address of Insurer:
Financial Year Ended:
Name and address of Actuary:
I hereby certify that, in respect of the above financial year, in preparing the illustrative
tables of projected benefits, expenses and charges, intermediary remuneration and sales
remuneration provided to clients by the above insurer pursuant to the Life Assurance
(Provision of Information) Regulations, 2001, the insurer has complied with my advice and
the relevant guidance notes issued by the Society of Actuaries in Ireland [subject to the
qualifications, amplifications or explanations in this certificate].*
* Delete where not applicable
I certify that no qualifications to, amplifications or explanations of this certificate are
necessary.*
* Delete where not applicable
This certificate is subject to the following qualifications, amplifications or explanations:*
* Delete where not applicable
Signed
Date
238
Name of actuary
Irish Investment Business Regulations 2.4
SCHEDULE 6 DECLARATION OF INSURER
Name and address of Insurer:
Financial Year Ended:
Names and addresses of Directors:
and
Name and address of Chief Executive:
OR WHERE APPLICABLE
Name and address of Authorised Agent:
and
Name of officer or employee of insurance undertaking:
We declare that the information requested by the actuary pursuant to his or her functions
under the Life Assurance (Provision of Information) Regulations, 2001, has been provided to
the actuary and is accurate [subject to the qualifications, amplifications and explanations set
out in this declaration].*
* Delete where not applicable
We declare that no qualifications, amplifications and explanations to this declaration are
necessary.*
* Delete where not applicable
This declaration is subject to the following qualifications, amplifications and explanations:*
* Delete where not applicable
Signed
director
director
chief executive
Date
OR
Signed chief executive
officer of employee
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2.4 Irish Investment Business Regulations
Appendix 5 (Regulation 10(3)(c))
Declaration – non-standard PRSAs
Non-Standard Personal Retirement Savings Account
DECLARATION
SECTION A
TO BE COMPLETED BY THE CONSUMER
• I declare that I understand that the charges payable on a non-standard PRSA may be
higher than those for a standard PRSA.
• I declare that I understand that the investment risks associated with a non-standard PRSA
may be higher than those for a standard PRSA.
• I declare that I understand that the Irish Financial Services Regulatory Authority
recommends that consumers should seek independent financial advice, before buying a
non-standard PRSA.
• I declare that I am satisfied that I require a pension product and that, having reviewed the
differences between standard and non-standard PRSAs, a non-standard PRSA is the most
appropriate pension product for me.
Signed: __________________________ Date: ____________________
SECTION B
TO BE COMPLETED BY THE VENDOR
(WHETHER PRODUCT PRODUCER OR INTERMEDIARY)
• I declare that in my opinion it is in the best interests of the above named to purchase a
non-standard PRSA rather than a standard PRSA.
• I declare that in my opinion the non-standard PRSA I propose to sell to the above named
is the product most suited to this consumer from among all those I am able to advise on.
• I declare that I have fully explained to this consumer the differences between this nonstandard PRSA and standard PRSAs, and, where this is the case, focussed on the fact
that the charges are higher and the investment risks are greater for this non-standard
PRSA.
Signed: __________________________
Date: _____________________
Name of Firm: ____________________
Position held: ______________
The Irish Financial Services Regulatory Authority requires that prior to the sale/purchase of a
non-standard Personal Retirement Savings Account (PRSA) both the consumer and the vendor
must complete this declaration.
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Regulatory Board and Committee Regulations 2.5
2.5
The Chartered Certified Accountants’
Regulatory Board and Committee
Regulations 2008
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 12 and 28 of the Association’s bye-laws and all other powers
enabling it, hereby makes the following regulations:
1. Citation, commencement and effect
(1) These regulations may be cited as The Chartered Certified Accountants’ Regulatory Board
and Committee Regulations 2008.
(2) These regulations as amended as set out herein shall come into force on 1 January 2011.
(3) These regulations specify the committees to which Council delegates certain of its
functions. Any meeting of a committee appointed pursuant to these regulations at which a
quorum is present shall be competent to discharge all the functions and to exercise all the
powers conferred on the committee by these regulations. Members and relevant persons
will be bound by the requirements and actions of committees so acting as if they were
requirements and actions of Council and must comply with any act or request of a committee
seeking to exercise any of its powers as specified or referred to in these regulations.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
Appeal Committee means the committee appointed by Council pursuant to regulations
made under bye-law 28;
Appointments Sub-Committee means the sub-committee appointed by the Regulatory
Board and referred to in these regulations;
assessor means an independent person so appointed by the Appointments SubCommittee with responsibility, inter alia, for carrying out the responsibilities and
exercising the powers of the assessor in accordance with The Chartered Certified
Accountants’ Complaints and Disciplinary Regulations 2010;
the Association means the Association of Chartered Certified Accountants incorporated
by Royal Charter issued to it in 1974 as amended from time to time;
bye-laws means the bye-laws from time to time of the Association;
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2.5 Regulatory Board and Committee Regulations
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
Disciplinary Committee means the committee appointed by Council pursuant to
regulations made under bye-law 28;
Disciplinary Regulations means The Chartered Certified Accountants’ Complaints and
Disciplinary Regulations 2010;
Financial Regulator means the Irish Financial Services Regulatory Authority (IFSRA);
investment advice has the meaning given in the Investment Intermediaries Act, 1995 of
the Republic of Ireland;
investment business services has the meaning given in the Investment Intermediaries
Act, 1995 of the Republic of Ireland;
member means an individual admitted to membership of the Association pursuant to the
bye-laws;
officer of the Association means any official, servant or agent of the Association, whether
employed by the Association or otherwise;
regulated activity means an activity included in the Financial Services and Markets Act
(Regulated Activities) Order 2001;
Regulations Review Sub-Committee means the sub-committee appointed by the
Regulatory Board and referred to in these regulations;
regulatory assessor means an independent person so appointed by the Appointments
Sub-Committee with responsibility, inter alia, for carrying out the responsibilities and
exercising the powers of the Admissions and Licensing Committee in accordance with
The Chartered Certified Accountants’ Authorisation Regulations 1998;
Regulatory Board means the board appointed by Council pursuant to regulations made
under bye-laws 12 and 28;
relevant person means a member and any other person (whether an individual or a firm
and (without limitation) including a registered student) who has undertaken with the
Association to abide by and be bound by, inter alia, the bye-laws and the regulations
made under them;
Secretary means the Secretary of the Association or any other person acting in such
capacity by the direction of the Council;
United Kingdom means the United Kingdom of Great Britain and Northern Ireland.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa.
(3) Any reference to regulations and standing orders of the Association shall be to regulations
and standing orders of the Association as amended from time to time.
(4) The Interpretation Act 1978 of the United Kingdom shall apply to these regulations in the
same way as it applies to an enactment, and, where the Regulations relate to a matter which
is derived from or related to the law of the Republic of Ireland, the Interpretation Act, 1937
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Regulatory Board and Committee Regulations 2.5
of the Republic of Ireland shall apply to these Regulations in the same way as it applies to an
enactment.
(5) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
3. Appointment of Regulatory Board, Appointments Sub-Committee and
Regulations Review Sub-Committee
(1) Council hereby appoints a Regulatory Board and shall appoint (and may also remove) the
individual members of the Regulatory Board in accordance with procedures, and on terms
and conditions, adopted by Council from time to time, and subject to any restrictions set out
in bye-law 12 and these regulations.
(2) The Regulatory Board shall consist of a lay chairman, six additional lay members and
three members of Council.
(3) The Regulatory Board shall have a quorum of six, with lay members being in a majority,
and shall determine its own procedures.
(4) The lay chairman and each lay member of the Regulatory Board shall be appointed for
an initial term of three years, which shall be renewed (if both the lay chairman/member
and Council so agree) for a further three years, subject to vacation of the appointment if
the member is by reason of mental disorder either detained in a hospital or made subject to
guardianship pursuant to Part II or III of the Mental Health Act 1983 or placed under similar
supervision in any other jurisdiction.
(5) Council may provide for the payment of remuneration to any member of the Regulatory
Board or its sub-committees who is not a member of Council, and the reasonable expenses
of any member of the Regulatory Board or its sub-committees, in each case in accordance
with the principles laid down by Council from time to time.
(6) Council may, in its absolute discretion, discharge the Regulatory Board in circumstances
where its actions may conflict with any of the Association’s obligations in respect of its
recognitions under statute and shall in such circumstances replace it with a differently
constituted Regulatory Board subject to any restrictions set out in bye-law 12 and these
regulations.
(7) The Regulatory Board shall, inter alia:
(a) report to Council not less than once a year on the operation of the Association’s
disciplinary and regulatory procedures adopted pursuant to or for the purposes of the
Association’s bye-laws and regulations and its recognition under statute;
(b) appoint an Appointments Sub-Committee, which shall only comprise lay members
of the Regulatory Board or other lay persons appointed by the Regulatory Board
(who may be appointed on such terms as the Regulatory Board determines), and
ensure that it discharges its responsibility to appoint a panel of committee members,
assessors and regulatory assessors as set out in regulation 4 of these regulations;
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2.5 Regulatory Board and Committee Regulations
(c) appoint a Regulations Review Sub-Committee, which shall comprise of lay and
Council members, and ensure that it carries out an annual review of the Association’s
regulations and makes recommendations to the Regulatory Board and Council for
changes thereto.
4. Appointment of committees, panel of committee members, assessors and
regulatory assessors
(1) Appointment
Council hereby appoints (or confirms the appointment of those committees which have
already been appointed at the date these regulations become effective) the Disciplinary
Committee, Admissions and Licensing Committee and Appeal Committee.
(2) Term of appointment
Each of the Disciplinary, Admissions and Licensing, and Appeal Committees shall remain in
existence until such time as Council determines to discharge it.
(3) The panel of committee members, assessors and regulatory assessors
The Appointments Sub-Committee shall, inter alia, appoint individual members to a panel
of committee members (hereafter referred to as “the Panel”) in accordance with procedures
determined by it from time to time and approved by the Regulatory Board, and the
Disciplinary, Admissions and Licensing, and the Appeal Committees shall each consist of
members of the Panel. The Appointments Sub-Committee shall, inter alia, have the power
to fill any vacancy on the Panel, appoint additional persons to the Panel and remove any
member of the Panel in the circumstances specified in regulation 4(4)(b) of these regulations.
The Appointments Sub-Committee shall also appoint chairmen, assessors and regulatory
assessors, in accordance with procedures determined by it from time to time and approved
by the Regulatory Board.
(4) Tenure and Code of Conduct of panel of committee members, assessors and regulatory
assessors
(a) Subject always to the operation of regulation 4(4)(b) of these regulations, each Panel
member, each assessor and each regulatory assessor shall be appointed for an initial
term of up to five years, which may be renewed (if both the Appointments SubCommittee and the Panel member, assessor or regulatory assessor so agree) for up
to a further five years, subject to vacation of the appointment if the Panel member,
chairman, assessor or regulatory assessor:
(i)
is by reason of mental disorder either detained in a hospital or made subject to
guardianship pursuant to Part II or III of the Mental Health Act 1983 or placed
under similar supervision in any other jurisdiction; or (in the case of a Panel
member only);
(ii)
fails on three consecutive occasions to comply with sitting requirements for
any committee without prior leave of absence from the Appointments SubCommittee.
(b) Each Panel member, each assessor and each regulatory assessor shall agree to
be bound by a Code of Conduct (hereafter referred to as “the Code”), which shall
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Regulatory Board and Committee Regulations 2.5
be in such form as approved by the Regulatory Board from time to time. Alleged
breaches of the Code shall be investigated and considered by the Appointments
Sub-Committee in accordance with the terms of the Code, and the Appointments
Sub-Committee shall, inter alia, have the power to remove any Panel member, any
assessor or any regulatory assessor if, in its sole discretion, it finds any alleged
breach to be proven.
(c) The Appointments Sub-Committee may, in its sole discretion, appoint for a further
term of up to three years a Panel member, chairman, assessor or regulatory assessor.
(5) Incompatibility
No member of Council shall be eligible for service to the Panel or service as an assessor
or regulatory assessor for the period of time during which he or she remains a member of
Council, and for three years thereafter.
5. Constitution of Disciplinary, Admissions and Licensing and Appeal
Committees and eligibility
(1) Disciplinary Committee, Admissions and Licensing Committee and Appeal Committee
shall each consist of members of the Panel.
(2) Disciplinary Committee shall have a quorum of four, including the Chairman or the
Deputy. Of the four, at least one must be a lawyer, at least two must be non-accountants
and at least one must be an accountant. A lawyer may count as a non-accountant. Nonaccountants shall be in the majority.
(3) Admissions and Licensing Committee shall have a quorum of four, including the Chairman
or the Deputy Chairman. Of the four, at least one must be a lawyer, at least two must be
non-accountants and at least one must be an accountant. A lawyer may count as a nonaccountant. Non-accountants shall be in the majority.
(4) Appeal Committee shall have a quorum of four, including the Chairman or the Deputy
Chairman (who shall be lawyers) and at least one other non-accountant and at least one
accountant. If both the Chairman and the Deputy Chairman are present, the Deputy
Chairman shall count as a non-accountant. Non-accountants shall be in the majority.
(5) Each Panel member shall be eligible to sit as a member of each of the Disciplinary,
Admissions and Licensing and Appeal Committees, save that no Panel member shall be
eligible to hear an appeal if he or she was a member of the committee which considered the
case at first instance.
6. Powers and responsibilities of Disciplinary, Admissions and Licensing and
Appeal Committees
Disciplinary Committee, Admissions and Licensing Committee and Appeal Committee
shall have the powers and responsibilities as set out in Appendix 1 to these regulations,
the powers and responsibilities included in the terms of reference for each committee as
specified in Council standing orders, and the powers and responsibilities as otherwise
provided in the bye-laws or in regulation or standing order (including these regulations) as
made or amended by Council from time to time.
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2.5 Regulatory Board and Committee Regulations
7. General
(1) Compliance with constitutional requirements
Each of the boards, committees and sub-committees appointed pursuant to these regulations
may continue to act, provided its meeting is quorate, notwithstanding that its composition
does not comply with the requirements of these regulations. In such a case, Council shall,
as soon as practicable, use its powers to ensure compliance with the requirements of these
regulations.
(2) Remuneration for assessors, regulatory assessors and committee members
Council may provide for the payment of remuneration to and the reasonable expenses of any
assessor, regulatory assessor and member of the Panel, in each case in accordance with the
principles laid down by Council from time to time.
(3) Telephone meetings
Meetings of any board, committee or sub-committee may be held by telephone conference,
video conference or by other similar means provided all persons notionally attending the
meeting are able to hear and be heard by all the other participants.
(4) Divisions
All committees appointed pursuant to regulation 4 of these regulations shall have power
to meet as divisions. Any division shall, provided it is quorate, have full power to act as
the committee in question. For the avoidance of doubt, more than one division of a single
committee may meet at the same time.
(5) Majority decisions
Except as otherwise provided by these regulations, all decisions of boards, committees and
sub-committees shall be determined by a majority of the votes of the members present,
with each member having one vote. In the case of an equality of votes, the Chairman of the
relevant board, committee or sub-committee shall have a second or casting vote.
(6) Duty to co-operate
Members and relevant persons shall promptly comply with any request made by, and cooperate with, any board, committee, sub-committee or person appointed pursuant to these
regulations in the performance of any of its responsibilities and the exercise of any of its
powers.
(7) Decisions between meetings
The Chairman of each of the boards, committees and sub-committees appointed pursuant
to these regulations shall have the power to take decisions, relating to procedural matters,
between meetings of his committee. Such decisions shall be reported to the next meeting of
the relevant board, committee and sub-committee.
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Regulatory Board and Committee Regulations 2.5
Appendix 1
1. Disciplinary Committee
The Disciplinary Committee shall have the powers and responsibilities set out in The
Chartered Certified Accountants’ Complaints and Disciplinary Regulations 2010 and shall
have the power to do anything which it deems to be necessary or desirable in connection
therewith.
2. Admissions and Licensing Committee
(1) Responsibilities
The Admissions and Licensing Committee shall be responsible for performing all the functions
ascribed to it in The Chartered Certified Accountants’ Membership Regulations 1996, The
Chartered Certified Accountants’ Authorisation Regulations 1998, The Chartered Certified
Accountants’ Global Practising Regulations 2003, The Chartered Certified Accountants’ Irish
Investment Business Regulations 1999, The Chartered Certified Accountants’ Designated
Professional Body Regulations 2001, The Chartered Certified Accountants’ Financial Services
Compensation Regulations 1996, and all matters related or incidental thereto.
(2) Powers
(a) For the purposes of discharging its responsibilities, the Admissions and Licensing
Committee shall have power to:
(i)
require any relevant person to produce, at a time and place to be fixed by the
Admissions and Licensing Committee, the accounting and other records of
the relevant person, any other necessary documents, and to supply any other
information and explanations relevant to the matter in question;
(ii)
enter the business premises of any relevant person on such notice (if any) as
the Admissions and Licensing Committee may think appropriate;
(iii)
interview any employee or officer of a relevant person;
(iv)
require the attendance at specified premises, upon reasonable notice, of any
employee or officer of a relevant person;
(v)
require any relevant person to attend before the Admissions and Licensing
Committee on reasonable notice;
(vi)
appoint any person as its agent or delegate for the purposes of carrying out any
of the matters as referred to in paragraph 2(a)(i) or (ii) above;
(vii) appoint any one or more of its members or any officer of the Association or any
regulatory assessor as its agent or delegate for the purpose of carrying out any
of its responsibilities and exercising any of its powers.
(b) Every requirement made by the Admissions and Licensing Committee under this
regulation shall be made in writing and given to him personally or served by email
or sent by post or courier to the relevant person at his or its registered or last known
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2.5 Regulatory Board and Committee Regulations
place of address and, when so made and sent, shall be deemed to have been
received by the relevant person within 72 hours (excluding Saturdays, Sundays, Bank
and Public Holidays) after the time of despatch.
3. Appeal Committee
(1) Responsibilities
The Appeal Committee shall be responsible for hearing and determining appeals from the
decisions of the Disciplinary and the Admissions and Licensing Committees in accordance
with The Chartered Certified Accountants’ Complaints and Disciplinary Regulations 2010,
The Chartered Certified Accountants’ Membership Regulations 1996, or any other regulations
and/or rules as may be relevant to the circumstances in question.
(2) Powers
The Appeal Committee shall have all the powers of the Disciplinary and the Admissions and
Licensing Committees in discharging its responsibilities under these regulations, or any other
regulations and/or rules as may be relevant to the circumstances in question.
4. Sharing of information and co-operation
(1) Any board, committee and sub-committee appointed under these regulations may
co-operate with other bodies in accordance with prevailing legislation, such co-operation
to include, without limitation, the sharing of information and the observance of board,
committee and sub-committee meetings. Such bodies include, without limitation:
(a) any bodies having statutory responsibility for the regulation of a relevant person;
(b) any bodies having statutory responsibility for the prevention or detection of crime, the
apprehension or prosecution of offenders, or the assessment or collection of any tax
or duty or of any imposition of a similar nature;
(c) any bodies having statutory responsibility for matters of public protection.
(2) Any board, committee and sub-committee appointed under these regulations may cooperate with Council and with any responsible officer or other board, committee or subcommittee of the Association; such co-operation to include, without limitation, the sharing of
information and the observance of board, committee and sub-committee meetings.
(3) Any board, committee and sub-committee appointed under these regulations may
share information with the relevant person’s professional indemnity and (if different) fidelity
guarantee insurers and, in the case of insolvency practice, the relevant person’s enabling
bond insurer, on the basis that the recipient treats the information as confidential.
(4) Save as provided by paragraphs 4(1) to (3), all records and other documents produced
to a board, committee and sub-committee in exercise by it of its powers hereunder shall be
treated by the board, committee and sub-committee as confidential.
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Authorisation Regulations 2.6
2.6
The Chartered Certified Accountants’
Authorisation Regulations 1998
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 4, 5, 6, 27 and 28 of the Association’s bye-laws and all other
powers enabling it, hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Authorisation
Regulations 1998.
(2) These regulations as amended as set out herein shall come into force on 1 January 2011.
(3) These regulations shall apply to all members and to all persons who otherwise agree to
be bound by them.
(4) These regulations may be amended by resolution of Council.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
affiliate means a registered student who has passed or obtained exemptions from all
papers of the Association’s examinations but has not progressed to membership;
Appeal Committee means the committee appointed by Council pursuant to regulations
made under bye-law 28;
applicant means a person who or which has applied or is in the course of applying to the
Association for or to renew a certificate;
application means an application for or to renew a certificate submitted by an applicant;
Appointments Sub-Committee means the committee appointed by the Regulatory
Board in accordance with The Chartered Certified Accountants’ Regulatory Board and
Committee Regulations 2008 and referred to in these regulations;
Association means the Association of Chartered Certified Accountants incorporated by
Royal Charter issued to it in 1974 as amended from time to time;
auditing certificate means a certificate issued by the Association and referred to in the
Practising Regulations;
bye-laws means the bye-laws from time to time of the Association;
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2.6 Authorisation Regulations
certificate means all or any of a practising certificate, auditing certificate, insolvency
licence, and investment business certificate (Ireland);
committee officer means any officer of the Association (whether official, servant or
agent, and whether employed by the Association or otherwise) with responsibility for the
administration of the Admissions and Licensing Committee;
company includes any body corporate;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
employee means an individual who is employed in connection with the firm’s business
under a contract of service or under a contract for services such that he is held out as an
employee or consultant of the firm and includes an appointed representative of the firm;
Financial Regulator means the Irish Financial Services Regulatory Authority (IFSRA);
firm means a sole practice, partnership, or body corporate including a limited liability
partnership;
insolvency licence means the licence granted by the Association to one of its members to
act as an insolvency practitioner;
insolvency practitioner means a person authorised to act as such in accordance with
section 390(2) of the Insolvency Act 1986 of the United Kingdom;
investment business certificate (Ireland) means the certificate referred to in the
Practising Regulations issued in accordance with The Chartered Certified Accountants’
Irish Investment Business Regulations 1999;
member means an individual admitted to membership of the Association pursuant to the
bye-laws;
officer means, in relation to a firm which is a partnership, a partner, in relation to a firm
which is a limited liability partnership, a member, and in relation to a firm which is a
company, a director;
practising certificate means a practising certificate issued by the Association and
referred to in regulation 5(1) of The Chartered Certified Accountants’ Global Practising
Regulations 2003;
Practising Regulations means The Chartered Certified Accountants’ Global Practising
Regulations 2003;
registered student has the meaning ascribed to it in The Chartered Certified Accountants’
Membership Regulations 1996;
regulatory assessor means an independent person so appointed by the Appointments
Sub-Committee in accordance with The Chartered Certified Accountants’ Regulatory
Board and Committee Regulations 2008 and referred to in these regulations;
relevant person means an individual and a firm who or which has undertaken with the
Association to abide by and be bound by, inter alia, all or some of these regulations;
Secretary means the Secretary of the Association (by whatever name known) or any other
person acting in such capacity by the direction of the Council;
United Kingdom means the United Kingdom of Great Britain and Northern Ireland.
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Authorisation Regulations 2.6
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa. References to “his” shall include “its” where the context
requires.
(3) The Interpretation Act 1978 of the United Kingdom shall apply to these regulations in the
same way as it applies to an enactment, and, where the regulations relate to a matter which
is derived from or related to the law of the Republic of Ireland, the Interpretation Act, 1937
of the Republic of Ireland shall apply to these regulations in the same way as it applies to an
enactment.
(4) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
(5) Any reference to a statutory provision shall include where the context permits the
subordinate legislation made from time to time under that provision and any reference to a
statutory provision or regulation shall include that provision or regulation as from time to time
modified or re-enacted so far as such modification or re-enactment applies or is capable of
applying to such reference.
3. Applications for certificates
(1) Form of application
(a) An applicant must apply in writing in such form and give such undertakings and pay
such fees as may be prescribed from time to time by Council.
(b) It shall be for an applicant to satisfy the Admissions and Licensing Committee that
he or it is eligible for the certificate applied for in accordance with the Practising
Regulations, or, in the case of an investment business certificate (Ireland), the Irish
Investment Business Regulations 1999.
(2) Procedure
(a) Applications for a certificate shall be considered by the Admissions and Licensing
Committee. The Admissions and Licensing Committee may require the applicant to
provide any additional information required at any time after receipt of the application
and before a decision is finally made in respect of the application.
(b) Any information provided by the applicant shall, if the Admissions and Licensing
Committee so requires, be verified in such a manner as the Admissions and Licensing
Committee may specify.
(c) The Admissions and Licensing Committee may additionally take into account any
other information which it considers appropriate in relation to the applicant, provided
such information is disclosed to the applicant where such a disclosure does not
constitute a breach by the Admissions and Licensing Committee of any duty to any
other person.
(d) The applicant may, not less than 7 days (or such shorter time as the Admissions and
Licensing Committee may, in exceptional circumstances, accept) prior to the time the
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2.6 Authorisation Regulations
Admissions and Licensing Committee is due to make a decision on the application,
serve on the Admissions and Licensing Committee any additional information and/or
written comments or submissions for the Admissions and Licensing Committee’s
consideration.
(e) Where the Admissions and Licensing Committee deems it appropriate to have regard
to the finding of any other body in its consideration of an application, any finding
which has not been set aside on appeal or otherwise shall be regarded as conclusive
proof of the fact that it has been made and shall not be re-opened by the Admissions
and Licensing Committee unless the Admissions and Licensing Committee in its
absolute discretion determines otherwise.
(f) After consideration of all of the information provided by the applicant and/or the
applicant’s comments or submissions, the Admissions and Licensing Committee shall
make a decision on the application.
(3) The Admissions and Licensing Committee’s decision
(a) The Admissions and Licensing Committee may:
(i)
grant the application;
(ii)
refuse the application;
(iii)
grant the application subject to such condition(s) as it considers appropriate; or
(iv)
adjourn consideration of the application.
(b) The Admissions and Licensing Committee may accept undertakings from any person
as a condition of issuing a certificate.
(4) The hearing
(a) Before making a decision under regulation 3(3), the Admissions and Licensing
Committee shall consider the matter at a hearing. It shall determine the date of
the hearing and shall give the applicant at least 21 days prior written notice of the
date set unless a shorter period of notice is agreed between the applicant and the
Association.
(b) The applicant and the Association may appear at the hearing in person and/or by
solicitor, counsel or other representative and may call witnesses who may give
evidence and be cross-examined. The Admissions and Licensing Committee may, at
any time, ask questions of the applicant, the Association, any representative or any
witness, and shall announce its decision at the hearing.
(5) Communication of the decision
The Admissions and Licensing Committee shall notify the applicant in writing within 14 days
of its decision, and a written statement of the reasons for the decision shall be given to the
applicant within 21 days, or such longer period as shall be necessary in the circumstances.
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(6) Application granted
(a) When an application is granted, the applicant shall be issued with the certificate
applied for. Where an application is granted subject to conditions, the applicant shall
be issued with a certificate once any conditions attaching to its grant have been
satisfied or issued with a certificate with the conditions noted on the certificate as
appropriate, or issued with a certificate subject to conditions otherwise notified to the
applicant in writing.
(b) A certificate issued to a firm shall be in the name in which he or it carries on his or
its practice and shall authorise the carrying on by him or it of the activities to which
the certificate relates. A certificate issued to a partnership shall be issued in the
partnership name and shall authorise the carrying on of the activities to which the
certificate relates in that name:
(i)
by the partnership to which the certificate is issued; and
(ii)
by any partnership which succeeds to that business;
(iii)
by any person who succeeds to that business having previously carried it on in
partnership.
(c) If there is a dissolution of a partnership to which a certificate has been issued and
more than one firm subsequently claims to be the successor to the business of
the partnership, the certificate shall be treated as having been withdrawn at the
expiration of 28 days from the date of dissolution.
(d) The authority conferred by a certificate shall, subject to these regulations, extend to
the activities to which the certificate relates which are conducted by any individual in
his capacity as an officer, employee or appointed representative of the firm.
(7) Certificates
(a) Certificates shall be in such form as Council shall determine subject to compliance
with any specific requirements of the Financial Regulator in respect of an investment
business certificate (Ireland).
(b) Certificates shall not be invalidated solely by reason of a clerical error on behalf of
the Association or by reason of any failure to follow any procedural requirements of
these regulations.
(8) Administration charge
If an application is withdrawn by the applicant, the Admissions and Licensing Committee
may charge the applicant such sum as seems reasonable to it to pay or contribute towards
the cost of processing the application between its receipt by the Admissions and Licensing
Committee and its withdrawal by the applicant but, subject to this, shall return any fee
submitted with the application.
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4. Validity and renewal
(1) Validity
Certificates shall be valid only from the date of issue to the date specified on the certificate
unless the Admissions and Licensing Committee otherwise directs or unless, in the case
of an investment business certificate (Ireland), the Admissions and Licensing Committee
otherwise directs with the agreement of the Financial Regulator.
(2) Renewal
(a) All certificates are renewable annually and any person wishing to renew a certificate
held by him must make an application to do so in accordance with regulation 3.
(b) Any person who holds a certificate in relation to a particular territory and who wishes
to apply for the same type of certificate in respect of another territory will be entitled
to a certificate relating to the new territory provided that:
(i)
the eligibility criteria, as referred to in the Practising Regulations, relating to the
new territory are no more onerous than the eligibility criteria in the area that
the person currently practises; and
(ii)
the person notifies the Admissions and Licensing Committee at least 28 days
in advance of his application for a certificate in the new territory.
If the eligibility criteria in the new territory are more onerous than the criteria in the
area in which the person currently practises, the person will be required to apply for
a certificate as if he were making a new application.
5. Withdrawal of, suspension of, or imposition of conditions on certificates
(1) Discretionary grounds
The Admissions and Licensing Committee may, if in its absolute discretion it thinks fit,
withdraw, suspend or impose conditions upon a certificate if:
(a) the holder of the certificate so requests;
(b) it appears that any false, inaccurate or misleading information concerning the holder
of the certificate or any of his, or its partners, directors or controllers, as the case
may be, has been supplied to the Association;
(c) the holder of the certificate has failed to submit a properly completed application
for renewal as required by regulation 4(2) or fails to comply with a request for
information or otherwise to co-operate with the Admissions and Licensing Committee
in the exercise of its powers and responsibilities under these regulations;
(d) the holder of the certificate fails to comply with any condition imposed by the
Association pursuant to these regulations;
(e) where the holder of the certificate is a partnership, following its dissolution there
is any doubt in the opinion of the Admissions and Licensing Committee as to the
identity or existence of a successor firm;
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(f) it is notified or becomes aware that a holder of a certificate or any of its partners,
members, directors or controllers has committed a material breach of any of these
regulations or other rules and regulations or codes of practice to which he or they are
subject (or were subject prior to 1 January 1998) in the carrying on of the activities
to which the certificate relates or authorises; or
(g) the holder of the certificate is not a fit and proper person to hold the certificate in
question within the meaning of the Practising Regulations.
In determining whether to exercise its powers under regulation 5(1) the Admissions and
Licensing Committee shall have regard to such matters as it considers relevant. Without
limitation, in determining whether the holder of a certificate is a fit and proper person, the
Admissions and Licensing Committee shall have regard to all or any of the matters referred to
in the Practising Regulations.
(2) Withdrawal
The Admissions and Licensing Committee shall withdraw a certificate if:
(a) it is notified or becomes aware that the holder of the certificate has ceased to be, or
never was, eligible to be issued with the certificate and:
(i)
if the Admissions and Licensing Committee considers, in its absolute
discretion, that the situation is remediable and it is appropriate to do so, and
the holder has been notified of this situation in writing and the situation has
not been remedied within the period of time specified in the notice; and
(ii)
for holders of auditing certificates only, if the holder is a firm which has ceased
to be “controlled by qualified persons” within the meaning of the Practising
Regulations, the period of three months has elapsed from the date it ceased to
be so controlled;
(b) where the holder is a partnership, it has been dissolved without succession, and
where it is a body corporate, it has been liquidated or dissolved.
(3) The hearing
(a) Before making a decision to withdraw or suspend a certificate under regulations
5(1) or 5(2), the Admissions and Licensing Committee shall consider the matter at
a hearing. It shall determine the date of the hearing and shall give the holder of the
certificate at least 21 days prior written notice of the date set unless a shorter period
of notice is agreed between the holder of the certificate and the Association.
(b) The holder of the certificate and the Association may appear at the hearing in person
and/or by solicitor, counsel or other representative and may call witnesses who may
give evidence and be cross-examined. The Admissions and Licensing Committee
may, at any time, ask questions of the holder of the certificate, the Association, any
representative or any witness, and shall announce its decision at the hearing.
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2.6 Authorisation Regulations
(c) The holder of the certificate may, not less than 7 days (or such shorter time as the
Admissions and Licensing Committee may, in exceptional circumstances, accept)
prior to the hearing, serve on the Admissions and Licensing Committee such
information, written comments, submissions and/or documents as he may wish to be
drawn to the Admissions and Licensing Committee’s attention.
(d) The procedure to be adopted in relation to any hearing shall, subject to the foregoing
paragraphs of this regulation 5(3), be such as the Admissions and Licensing
Committee shall, in its absolute discretion, determine.
(4) Short notice hearings
(a) In exceptional circumstances, the Association may request the Admissions and
Licensing Committee to convene a hearing at less than 21 days’ prior notice (“a short
notice hearing”).
(b) At a short notice hearing, the Admissions and Licensing Committee shall consider at
the outset the appropriateness of short notice, including without limitation whether
there is sufficient evidence to demonstrate a real risk of damage to the interests of
clients, creditors and/or the general public if action is not taken at short notice.
(c) If it is of the view that it is justified in all the circumstances, the Admissions and
Licensing Committee may in its absolute discretion order that the hearing either
proceed (whether or not the holder of the certificate is present) or be adjourned for
such period and under such directions as it sees fit.
(d) If the hearing proceeds at short notice, the Admissions and Licensing Committee may
suspend or impose conditions upon the certificate. It may not withdraw a certificate
until such time as a hearing on normal notice has taken place, which shall be no
later than 30 days after the date of the short notice hearing unless a longer period is
agreed between the holder of the certificate and the Association.
(5) Suspension
The suspension of a certificate pursuant to regulation 5(1) shall be for a specified period
or until the occurrence of a specified event or until specified conditions are complied with.
While the certificate is suspended, it shall be deemed not to be held.
(6) Conditions
(a) Conditions may be imposed upon a certificate under regulation 5(1) of a type and for
as long as the Admissions and Licensing Committee considers appropriate.
(b) The Admissions and Licensing Committee may, in accordance with regulation
2(2)(a)(vii) of Appendix 1 to The Chartered Certified Accountants’ Regulatory Board
and Committee Regulations 2008, appoint any regulatory assessor as its agent or
delegate for the purpose of carrying out any of its responsibilities and exercising any
of its powers to impose conditions on certificates.
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(7) Continuity
(a) Where a certificate has been suspended or withdrawn, the Admissions and Licensing
Committee may order that the holder of the certificate request his continuity nominee
to take responsibility for his practice.
(b) In addition, where an insolvency licence has been suspended or withdrawn, the
Admissions and Licensing Committee may order that the Association procure that an
application is made to the Court to transfer any appointments held by the practitioner
to his continuity nominee or other individual.
(8) Consideration of future applications
In addition to or in place of the withdrawal of, suspension of, or attachment of conditions
to a certificate under regulation 5(1), the Admissions and Licensing Committee may specify
that no future application for a certificate by the applicant will be entertained for a specified
period or until the occurrence of a specified event.
(9) Notification
Formal written notice of any decision made by the Admissions and Licensing Committee
under regulation 5 shall be given to the relevant person within 14 days of the decision, and a
written statement of the reasons for the decision of the Admissions and Licensing Committee
shall be given to the relevant person within 21 days, or such longer period as shall be
necessary in the circumstances.
(10) Guidance
The Admissions and Licensing Committee may take instructions from the Financial Regulator
concerning any of the matters listed in Part VII of the Investment Intermediaries Act, 1995
of the Republic of Ireland in respect of its responsibility for the issue or withdrawal of an
investment business certificate (Ireland).
6. Imposition of conditions on certificates by a regulatory assessor
(1) Referral to a regulatory assessor
The regulatory assessor may, under regulation 5(6)(b) for the purpose of carrying out any of
the Admissions and Licensing Committee’s responsibilities and exercising any of its powers,
impose conditions on certificates.
(2) Imposition of conditions on certificates by a regulatory assessor
The regulatory assessor may, if in his absolute discretion he thinks fit, impose conditions
upon a certificate if:
(a) the holder of the certificate so requests;
(b) it appears that any false, inaccurate or misleading information concerning the holder
of the certificate or any of his or its partners, directors, controllers or members, as
the case may be, has been supplied to the Association;
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(c) the holder of the certificate has failed to submit a properly completed application
for renewal as required by regulation 4(2) or fails to comply with a request for
information or otherwise to co-operate with the regulatory assessor in the exercise of
its powers and responsibilities under these regulations;
(d) the holder of the certificate fails to comply with any condition imposed by the
Association pursuant to these regulations;
(e) where the holder of the certificate is a partnership, following its dissolution there is
any doubt in the opinion of the regulatory assessor as to the identity or existence of a
successor firm;
(f) the Association is notified or becomes aware that a holder of a certificate or any of its
partners, members, directors or controllers has committed a material breach of any
of these regulations or other rules and regulations or codes of practice to which he or
they are subject (or were subject prior to 1 January 1998) in the carrying on of the
activities to which the certificate relates or authorises; or
(g) the holder of the certificate is not a fit and proper person to hold the certificate in
question within the meaning of the Practising Regulations.
In determining whether to exercise his powers under regulation 6(2) the regulatory assessor
shall have regard to such matters as he considers relevant. Without limitation, in determining
whether the holder of a certificate is a fit and proper person, the regulatory assessor shall
have regard to all or any of the matters referred to in the Practising Regulations.
(3) The regulatory assessor’s decision
The regulatory assessor may:
(a) consider no regulatory action is necessary; or
(b) impose conditions on the holder of a certificate; or
(c) refer the case to the Admissions and Licensing Committee.
(4) Communication of the decision
The regulatory assessor’s decision shall be notified to the holder of a certificate and shall
include a written statement of the reasons for his decision.
(5) Right of referral to the Admissions and Licensing Committee
(a) The holder of a certificate shall have the right to have his case referred to the
Admissions and Licensing Committee for its consideration at a hearing if he disagrees
with the decision of the regulatory assessor to impose conditions on a certificate.
(b) If the holder of a certificate wishes to exercise his rights under sub-paragraph (a)
above, he shall notify the Association in writing within 30 days of receiving the
notification of the regulatory assessor’s decision. Such notification shall include a
description of the aspects of the decision the holder of a certificate disagrees with
and why.
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(c) The Association shall have the right to have the case referred to the Admissions and
Licensing Committee for its consideration at a hearing if it disagrees with the decision
of the regulatory assessor.
(d) If the Association wishes to exercise its rights under sub-paragraph (c) above,
the Association shall notify the holder of a certificate in writing within 30 days of
receiving the notification of the regulatory assessor’s decision. Such notification shall
include which aspects of the decision the Association disagrees with and why.
(e) Regulations 5(3) to 5(4) shall apply to a hearing convened pursuant to regulations
6(5)(a) or 6(5)(c).
7. Correction of errors
(1) Where the order and/or written statement of the reasons for the decision of the
Admissions and Licensing Committee contains an accidental error or omission, a party may
apply by way of an application notice for it to be corrected. The application notice shall
describe the error or omission and state the correction required.
(2) The Chairman of the Admissions and Licensing Committee may deal with the application
without notice if the error or omission is obvious, or may direct that notice of the application
be given to the other party.
(3) The application may be considered without a hearing with the consent of the parties,
such consent not to be unreasonably withheld.
(4) If the application is opposed, it should be heard by the same Admissions and Licensing
Committee which made the order and/or written statement of reasons for the decision which
are the subject of the application.
(5) The Admissions and Licensing Committee may of its own volition vary its own order
and/or written statement of reasons for the decision for the purpose of making the meaning
and intention clear.
8. Appeals, effective date and publicity
(1) Appeals procedure
A person (“the appellant”) aggrieved by any decision of the Admissions and Licensing
Committee notified to him or it or made pursuant to regulations 3(3) and 5 of these
regulations may appeal to the Appeal Committee in accordance with the Association’s appeal
procedures as set out in The Chartered Certified Accountants’ Appeal Regulations 2006
(hereafter referred to as “the Appeal Regulations”). Any such appeal shall be dealt with in
accordance with the Appeal Regulations.
The Association may appeal against a decision of the Admissions and Licensing Committee
in accordance with the Appeal Regulations.
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2.6 Authorisation Regulations
(2) Effective date
Any decision made by the Admissions and Licensing Committee pursuant to regulations 3 or
5 shall take effect from the date of the expiry of the appeal period referred to in the Appeal
Regulations unless:
(i) the appellant shall duly give notice of appeal prior to the expiry of such period in
which case it shall become effective (if at all) as described in the Appeal Regulations;
or
(ii) the Admissions and Licensing Committee directs that, in the interests of the public,
the order should have immediate effect, subject to its being varied or rescinded on
appeal as described in the Appeal Regulations.
(3) Publicity
The Admissions and Licensing Committee shall give advance publicity of any oral hearing
taking place in accordance with these regulations in such terms and manner as it thinks fit,
save that in any such advance publication no relevant person shall be named.
Where the Admissions and Licensing Committee has withdrawn or suspended a certificate
or certificates pursuant to these regulations, the decision shall, as soon as it has become
effective, be published in such a manner as it thinks fit and, unless in exceptional
circumstances the Admissions and Licensing Committee otherwise directs, in such
publication the relevant person shall be named and the decision made stated.
The decision shall be sent to such publications as the Admissions and Licensing Committee
thinks fit, save that if the relevant person is not named it shall not be sent to any publications
local to the relevant person’s place of business or residence.
The Insolvency Service may publish the names of holders or former holders of the
Association’s insolvency licence who are subject to a decision of the regulatory assessor or
Admissions and Licensing Committee, and details of the decision made, in such publications
and in such a manner as it thinks fit.
(4) Open hearings
Oral hearings before the Admissions and Licensing Committee shall be open to the public
unless the Admissions and Licensing Committee determines that the public shall be excluded
from all or any part of the hearing on any one or more of the following grounds:
(i) in the interests of morals, public order or national security in a democratic society;
(ii) where the interests of juveniles or the protection of the private lives of the parties so
require; or
(iii) to the extent strictly necessary in the opinion of the Admissions and Licensing
Committee in special circumstances, where publicity would prejudice the interests of
justice.
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9. Re-application
(1) Any former certificate holder may re-apply for a certificate. Such application should
be made in the same manner as the original application and will be considered by the
Admissions and Licensing Committee in the ordinary way, and in accordance with regulation
3 above, save that:
(a) the Admissions and Licensing Committee shall have specific regard to the
circumstances in which he previously ceased to be a certificate holder, and
(b) the Admissions and Licensing Committee may, in its absolute discretion, require him
to pass further examinations and/or tests and/or satisfy other requirements before it
considers his application for a new certificate.
(2) No former certificate holder who has been the subject of a decision made pursuant to
these regulations specifying that no future application for a certificate by the applicant will be
entertained for a specific period or until the occurrence of a specified event, may do so prior
to the expiry of such period or the occurrence of such event.
10. General
(1) Notices
(a) Any notice or other document required to be given to or served on a relevant person
may be provided to him personally, sent by post or courier to his or its registered
place of address, or sent by email as provided for under regulation 10(2) below. If the
relevant person has no registered address any notice or document should be sent by
post or courier to the relevant person’s address last known to the Association.
(b) Any notice or document required to be given to or served on the Association may be
provided by sending it by post or courier to the Committee Officer at the principal
office of the Association or sending it by email as provided for under regulation 10(2)
below.
Subject to regulation 10(2) below, any such notice or document so sent shall be deemed to
have been given or served within 72 hours (excluding Saturdays, Sundays and Public and
Bank Holidays) of despatch.
(2) Service by email
(a) Subject to the following provisions of regulation 10(2), where a notice or document
is to be served by the Association on a relevant person it may be served by
email provided that the relevant person has previously indicated in writing to the
Association that he is willing to accept service by email, has provided his email
address to the Association in whatever form the Association deems appropriate, and
has stipulated whether there are any limitations to his agreement to accept service by
electronic means (for example, the format in which documents are to be sent and the
maximum size of attachments that may be received).
(b) For the purposes of regulation 10(2)(a) above, notice of willingness to accept service
by email may be sent by the relevant person to the email address specified in the
Association’s communication to the relevant person. Unless and until the relevant
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person sends a further notice stating that he is no longer willing to accept service
by email, service by the Association of any notice or document to the email address
stipulated by the relevant person shall be deemed to be valid service for the purposes
of this regulation.
(c) The Association is willing to accept service of any notice or document by email to the
email address specified in the Association’s communication to the relevant person.
Any email attachment must not exceed 20,000 KB in size.
(d) Where a document is served by electronic means, the party serving the document (be
it the Association or the relevant person, as the case may be) need not in addition
send or deliver a hard copy.
(e) The email address given by the relevant person and/or the Association for the
purposes of this regulation will be deemed to be at the address for service.
(f) Service by email is deemed to be effective on the working day it was sent. For the
avoidance of doubt, any email sent after 5 pm will be deemed to have been served
on the following working day.
(g) For the avoidance of doubt, service by email may only validly be effected under
regulation 10(2) for the purposes of the current or concurrent admissions and
licensing proceedings and any appeal.
(3) Hearings
Where a matter is to proceed by way of a hearing in accordance with these regulations, and
is of particular interest to a specific government or government agency, or primarily affects
persons resident in a specific country, either the Admissions and Licensing Committee or
the Secretary may, at their discretion, direct that any hearing before the Admissions and
Licensing Committee take place in that country. In the absence of any such direction,
hearings before the Admissions and Licensing Committee shall take place in London.
(4) Legal adviser
The Admissions and Licensing Committee may, at any time, instruct a solicitor or barrister to
act as its legal adviser, and the legal adviser shall be entitled to attend any hearing.
(5) Waivers
Pursuant to various regulations of the Association, the Admissions and Licensing Committee
may consider applications for waivers, variations or suspensions of such regulations.
(6) Adjournments
(a) Either party to a hearing may make a written request to the Admissions and
Licensing Committee that the application be adjourned to a future meeting. Such
a request will be considered at the outset of the hearing and the Admissions and
Licensing Committee may, in its absolute discretion, agree to the request.
(b) Any such request made in advance of the hearing shall be considered by the
Chairman of the Admissions and Licensing Committee, who may in his absolute
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discretion agree to the request. If such a request is denied by the Chairman, it shall
be considered at the outset of the hearing by the other members of the Admissions
and Licensing Committee in accordance with regulation 10(6)(a) above.
(c) In advance of the hearing, at the outset of the hearing, or at any time during the
hearing, the Admissions and Licensing Committee may itself direct that the case
should be adjourned.
(d) The Admissions and Licensing Committee may impose such conditions as it may
determine upon the grant of an adjournment.
(e) The Admissions and Licensing Committee may (but need not) agree to or direct an
adjournment where criminal or civil proceedings concerning a relevant matter are
pending to which the applicant is a party.
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Complaints and Disciplinary Regulations 2.7
2.7
The Chartered Certified Accountants’
Complaints and Disciplinary Regulations
2010
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-law 9 of the Association’s bye-laws and all other powers enabling it,
hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Complaints and
Disciplinary Regulations 2010.
(2) These regulations as amended as set out herein shall come into force on 1 January 2011.
(3) These regulations shall apply to all persons subject to bye-laws 8 to 11.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
AADB means the Accountancy and Actuarial Discipline Board;
Admissions and Licensing Committee means the committee appointed by Council
pursuant to regulations made under bye-law 28;
affiliate means a registered student who has passed or obtained exemptions from all
papers of the Association’s examinations but has not progressed to membership;
Appointments Sub-Committee means the committee appointed by the Regulatory
Board in accordance with The Chartered Certified Accountants’ Regulatory Board and
Committee Regulations 2008 and referred to in these regulations;
assessor means an independent person so appointed by the Appointments SubCommittee in accordance with The Chartered Certified Accountants’ Regulatory Board
and Committee Regulations 2008 and referred to in these regulations;
the Association means the Association of Chartered Certified Accountants incorporated
by Royal Charter issued to it in 1974 as amended from time to time;
bye-laws means the bye-laws from time to time of the Association;
case presenter has the meaning ascribed to it in regulation 5(4)(c);
certificate means all or any of a practising certificate, auditing certificate, insolvency
licence, and investment business certificate (Ireland);
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2.7 Complaints and Disciplinary Regulations
Chairman means any person carrying out the function of Chairman of the Disciplinary
Committee;
complainant means any person or persons who bring a complaint to the attention of
the Association, excluding any person or persons who have withdrawn a complaint or
withheld their identity from the Association or from the relevant person;
complaint means any matters, acts or circumstances which appear to render a relevant
person liable to disciplinary action;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
Designated Professional Body Regulations means The Chartered Certified Accountants’
Designated Professional Body Regulations 2001;
disciplinary bye-laws means bye-laws 8 to 11 as amended from time to time;
Disciplinary Committee and Appeal Committee mean the committees of Council
appointed pursuant to regulations made under bye-law 28;
IAASA means the Irish Auditing and Accounting Supervisory Authority;
investigating officer means the Secretary or other officer of the Association charged with
the responsibility of considering, conciliating and investigating complaints and performing
the other functions described in these regulations;
investment business certificate (Ireland) means the certificate referred to in the
Practising Regulations issued in accordance with The Chartered Certified Accountants’
Irish Investment Business Regulations 1999;
liable to disciplinary action means liable to disciplinary action under bye-law 8(a);
officer of the Association means any official, servant or agent of the Association, whether
employed by the Association or otherwise;
order means any order of the Disciplinary Committee made under regulation 5, and
includes any direction as to the payment of a sum in respect of costs to or by the
Association and as to the publicity to be given to such an order and shall include any
finding, term or condition in consequence of or upon which the order is made and shall
include where the context requires more than one such order;
practising certificate means a practising certificate issued by the Association and referred
to in regulation 5(1) of the Chartered Certified Accountants’ Global Practising Regulations
2003;
privileged material means communications between a legal adviser, his client or any
person representing his client and any other person together with any enclosure or
attachment with such communication created either (a) in connection with the giving
of legal advice to the client, or (b) in connection with or in contemplation of legal
proceedings and for the purposes of those proceedings: save that a communication or
item shall not be privileged material if it is created or held with the intention of furthering
a criminal purpose;
registered student has the meaning ascribed to it in The Chartered Certified Accountants’
Membership Regulations 1996;
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Complaints and Disciplinary Regulations 2.7
relevant person means a member and any other person (whether an individual or a firm
and (without limitation) including a registered student) who has undertaken with the
Association to abide by and be bound by, inter alia, the bye-laws and these regulations;
report means a statement of the allegations together with a summary of the relevant facts
and provisions of the rules, together with such documentary evidence in the possession
of the investigating officer as he may consider to be relevant to the allegations;
Secretary means the Secretary of the Association (by whatever name known) or any other
person acting in such capacity by the direction of the Council;
specified person means, in relation to a firm which is a partnership, any partner in that
firm, in relation to a firm which is a limited liability partnership, any member in that firm,
and in relation to a firm which is a body corporate, any director of that firm.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa. References to “his” shall include “its” where the context
requires.
(3) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
3. Consideration of complaint
(1) Initial review
(a) The investigating officer shall consider any complaint that may come to his attention
and decide whether it is appropriate for the Association to refer the complaint for
conciliation or investigation.
(b) When the decision has been made, the investigating officer shall either:
(i) refer the complaint for conciliation or investigation; or
(ii)
procure that the complainant is notified of the reasons why the Association
is unable to refer the complaint for conciliation or investigation. The reasons
may be notified orally if the complaint was brought to the attention of the
Association by telephone only.
(c) Within 30 days of receiving any such notification, the complainant may notify the
Association of any further representations he wishes to make in relation to the
complaint. Such further representations must be notified to the Association in writing.
(d) The investigating officer shall reconsider his decision in light of any such further
representations. The investigating officer’s decision shall be final.
(2) Conciliation
(a) The investigating officer may attempt to conciliate all or any parts of a complaint
which has been referred for conciliation pursuant to regulation 3(1). The relevant
person is not obliged to submit to the conciliation process.
(b) At the conclusion of the conciliation process, the investigating officer shall decide
whether in all the circumstances:
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2.7 Complaints and Disciplinary Regulations
(i) any parts of the complaint should be referred for investigation; or
(ii)
the case should be closed.
(c) Where the investigating officer decides that the case should be closed, and in his
opinion that conciliation was unsuccessful, he shall notify the relevant person and
the complainant accordingly, giving reasons for his decision. Such notification may
be provided orally if the complaint was brought to the attention of the Association by
telephone only.
(d) Where the investigating officer decides that the case should be closed, and in
his opinion that conciliation was unsuccessful, the complainant may request that
the decision be reviewed by an assessor in accordance with regulation 4(1). For
the avoidance of doubt, the complainant is not entitled to request a review by an
assessor in circumstances where the investigating officer has not decided that
conciliation was unsuccessful.
(3) Investigation
(a) The investigating officer shall investigate any complaint which is referred for
investigation pursuant to regulations 3(1) or 3(2).
(b) The investigating officer shall notify the relevant person of the matters, acts or
circumstances he is minded to investigate in light of the complaint and invite the
relevant person to comment in writing upon them.
(c) At the conclusion of the investigation, the investigating officer shall decide whether in
all the circumstances:
(i) a report of disciplinary allegations should be referred to an assessor, or direct
to the Disciplinary Committee, in which case he shall cause a report to be
prepared and shall invite the relevant person to comment in writing upon the
report; or
(ii)
the case should be closed, in which case the investigating officer shall notify
the relevant person and the complainant accordingly, giving reasons for his
decision. Any matters, acts or circumstances which have been identified in the
course of the investigation may be taken into account by the Association in
the course of dealing with any subsequent complaint concerning the relevant
person.
(d) Where a report of disciplinary allegations has been prepared pursuant to regulation
3(3)(c)(i), the report shall be referred by the investigating officer to an assessor
unless the investigating officer determines that it is in the public interest for
the allegations to be adjudicated upon urgently. Where the investigating officer
determines that it is in the public interest for the allegations to be adjudicated upon
urgently, the investigating officer shall not refer the report to an assessor but shall
refer the report direct to the Disciplinary Committee for consideration at the next
available hearing for a substantive determination of the case, upon notice being given
in accordance with regulation 5(1).
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(e) Where the investigating officer decides that the case should be closed, the
complainant may request that the decision be reviewed by an assessor in accordance
with regulation 4(1).
(4) Further enquiries
The investigating officer may seek such further information or legal, technical or other
advice as may seem to him appropriate to assist him in the consideration, conciliation or
investigation of the complaint. Any such information or advice may be included as evidence
in the case.
(5) Duty to co-operate
(a) Every relevant person is under a duty to co-operate with the consideration and
investigation of the complaint. Co-operation includes providing promptly such
information, books, papers or records as the investigating officer may from time to
time request to assist him.
(b) A failure or partial failure to co-operate fully with the consideration or investigation
of a complaint shall constitute a breach of these regulations and may render the
relevant person liable to disciplinary action.
(c) A relevant person is not permitted to make a charge to the complainant for the cost
of co-operating with the consideration or investigation of the complaint.
(6) Privileged material
Nothing in these regulations shall require the relevant person to produce, disclose or permit
inspection of privileged material.
(7) Deferral
The consideration, conciliation or investigation of the complaint may, if the investigating
officer so decides, be deferred if the relevant person so requests or the investigating officer
otherwise decides it is appropriate to do so, such as where criminal or civil proceedings
concerning a relevant matter are pending to which a relevant person is a party.
4. Decision of assessor
(1) Review by assessor of a decision by the investigating officer that the case should be
closed
(a) The complainant shall have the right to have the investigating officer’s decision
reviewed by an assessor in the circumstances described in regulations 3(2)(d) and
3(3)(e).
(b) If the complainant wishes to exercise the right, he shall notify the Association in
writing within 30 days of receiving notification of the decision, providing detailed
grounds for review setting out which aspects of the decision he disagrees with and
why.
(c) The investigating officer shall procure that the relevant person is notified that a
review of the decision has been requested by the complainant and that accordingly
the decision will be reviewed in accordance with this regulation 4(1).
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(d) The following procedures will apply to the assessor’s review:
(i) The relevant person is under a duty to co-operate with the assessor in his
review of the investigating officer’s decision. Co-operation includes providing
promptly such information, books, papers or records as the assessor may from
time to time request to assist him in his review.
(ii)
A failure or partial failure to co-operate fully with the assessor shall constitute
a breach of these regulations and may render the relevant person liable to
disciplinary action.
(iii)
Before concluding his review, the assessor may, if he so chooses:
(aa) invite the relevant person to comment on the complainant’s grounds for
review;
(bb) direct the investigating officer to make further enquiries and/or carry out
further investigation;
(cc) seek further information or evidence; and/or
(dd) seek such written legal, technical or other advice as may from time
to time seem to him appropriate to assist him in his review, including
advice from one or more other assessors;
and the assessor may adjourn his review for such purposes.
(iv)
At the conclusion of his review, the assessor shall decide either:
(aa) that the case should be closed; or
(bb) that a report of disciplinary allegations should be referred to a second
assessor in accordance with regulations 3(3)(c)(i) and 3(3)(d), in which
case he shall specify the allegations which should be the subject of the
report.
(v)
The assessor shall give written reasons for his decision, which the investigating
officer shall procure are provided to the relevant person and to the
complainant.
(vi)
If a decision has been made under regulation 4(1)(d)(iv)(bb), the second
assessor shall also be provided with the investigating officer’s reasons for
his decision that the case should be closed and the assessor’s reasons for
his decision that a report of disciplinary allegations should be prepared for
consideration by a second assessor.
(vii) During the course of a report of disciplinary allegations being prepared for
referral to a second assessor, the case may be referred back to the first
assessor if in the view of the case presenter it is appropriate in the interests
of fairness for the first assessor to be invited to reconsider his decision. In that
event, the first assessor shall be provided with any new information that has
been obtained and shall have the same powers as he had in respect of his
initial consideration of the case.
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(2) Decision of the assessor upon a report of disciplinary allegations
(a) Where a report of disciplinary allegations has been referred to an assessor pursuant
to regulations 3(3)(c)(i) and 3(3)(d), the assessor shall consider the report and shall
determine whether or not there is a case to answer against the relevant person.
The assessor may, in his discretion, amend, add to and/or delete any or all of the
allegations made against the relevant person.
(b) The assessor may, if he so chooses, direct the investigating officer to make further
enquiries and/or carry out further investigation, or may seek further information or
evidence or such written legal, technical or other advice as may from time to time
seem to him appropriate to assist him in his review, including advice from one or
more other assessors, and may adjourn his review for that purpose.
(c) The relevant person against whom the allegations are made is under a duty to
co-operate with the assessor in his review of the allegations. Co-operation includes
providing promptly such information, books, papers or records as the assessor may
from time to time request to assist him in his review.
(d) A failure or partial failure to co-operate fully with the assessor shall constitute a
breach of these regulations and may render the relevant person liable to disciplinary
action.
(e) Before reaching his decision, the assessor shall be satisfied that the relevant person
has been invited to comment in writing upon the allegations against him and upon
the report prepared by the investigating officer.
(3) No case to answer
If, pursuant to regulation 4(2)(a), the assessor determines that there is no case to answer
against a relevant person, he shall give reasons for his decision and the relevant person and
the complainant shall be notified accordingly.
(4) Case to answer
(a) If, pursuant to regulation 4(2)(a), the assessor determines that there is a case to
answer against a relevant person, the assessor shall decide whether:
(i) the case should be referred to the Disciplinary Committee and, if so, what
allegations should be proceeded with; or
(ii) the allegations should rest on the relevant person’s file, in which case he shall
give reasons for his decision.
(b) In addition, the assessor may refer an issue in the case to the practice monitoring
department of the Association, in which case he shall give reasons for his decision.
(c) Without limitation, in reaching his decision, an assessor shall be entitled to take into
account any matters, acts or circumstances which have been identified in the course
of dealing with any previous complaint concerning the relevant person.
(d) The assessor’s decision shall be notified to the relevant person and to the
complainant.
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(5) Complainant’s right of review
(a) Where the assessor, pursuant to regulations 4(2)(a) or 4(4)(a)(ii), decides that either
there is no case to answer or there is a case to answer but the allegations should
rest on file, the complainant shall have the right to have the decision reviewed by
a further assessor. If the complainant wishes to exercise the right, he shall notify
the Association in writing within 30 days of receiving notification of the decision,
providing detailed grounds for review setting out which aspects of the decision he
disagrees with and why.
(b) The investigating officer shall procure that the relevant person is notified that a
review of the decision has been requested by the complainant and that accordingly
the decision will be reviewed in accordance with this regulation.
(c) The further assessor shall be provided with the report of disciplinary allegations
which was provided to the first assessor, the first assessor’s reasons for his decision,
the complainant’s grounds for review and any further documentary evidence that
has been obtained. The further assessor shall consider the report in accordance with
regulations 4(2) to 4(4) and his decision shall be final.
(6) Referral to Disciplinary Committee
(a) If an assessor decides to refer a case to the Disciplinary Committee, he shall
procure that (1) a notice of the allegations and (2) a summary of the case setting
out the relevant facts and matters relied on in support of the case and (3) a copy
of the evidence are sent to the relevant person and placed before the Disciplinary
Committee as soon as practicable.
(b) A case referred to the Disciplinary Committee may be referred back to the assessor
if in the view of the case presenter it is appropriate in the interests of fairness for the
assessor to be invited to reconsider his decision. In that event, the assessor shall be
provided with any new information that has been obtained and shall have the same
powers as he had in respect of his initial consideration of the case.
(c) The case presenter may at any time elect not to proceed with any of the allegations
made against a relevant person, or defer proceeding with the allegations for a period
of time, and shall endeavour to notify the relevant person of any such decision as
soon as possible.
(7) Rest on file
If the assessor decides to rest a case on the relevant person’s file, he shall notify the relevant
person of the following:
(a) the allegation(s) in respect of which he found a case to answer against the relevant
person;
(b) the fact that he has determined in all the circumstances not to refer the matter to the
Disciplinary Committee but rather to rest the matter on the relevant person’s file;
(c) that whilst no disciplinary action in respect of the allegation(s) will be taken on this
occasion, they may be taken into account by the Association in the course of dealing
with any subsequent complaint concerning the relevant person;
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Complaints and Disciplinary Regulations 2.7
(d) that the relevant person may request that the allegation(s) be referred to the
Disciplinary Committee if he so wishes and notifies the assessor accordingly within
30 days of his being so notified, in which case the assessor will refer the allegation(s)
to the Disciplinary Committee and regulation 4(6)(a) shall apply.
(8) Further enquiries
After any case has been referred to the Disciplinary Committee, an assessor or investigating
officer may make such further enquiries as he/they shall consider appropriate in order to
assist in the preparation of the case to the Disciplinary Committee. It shall be the duty of the
relevant person to co-operate fully with such enquiries and a failure or partial failure by the
relevant person to do so shall constitute a breach of these regulations and may render him
liable to disciplinary action.
5. Disciplinary Committee
(1) Provision of documents and information by the Association
(a) On a case being referred to the Disciplinary Committee, the Association shall
determine the date the case is to be heard and no later than 42 days before the date
set the relevant person shall be provided with the following documents
(i) a notice describing the allegations against him and notifying him of the time
and place fixed for the hearing of the case;
(ii) a summary of the case setting out the relevant facts and matters relied
on in support of the case and a copy of the evidence to be relied on in the
presentation of the case;
(iii)
a list of witnesses whose evidence is relied upon by the Association, indicating
those who have provided documentary evidence and those who have provided
witness statements, whether in formal form or otherwise, or letters;
(iv)
the names of any witnesses for the relevant person whose details have already
been disclosed to the Association by the relevant person whom the Association
requires to attend the hearing for cross-examination, identifying to what extent
the Association disputes their evidence;
(v) a paper summarising the procedure before the Disciplinary Committee and the
Association’s disciplinary process; and
(vi) a letter inviting the relevant person to indicate whether or not he accepts all
or any of the allegations made and whether or not he intends to attend the
hearing and be represented and, if he accepts any of the allegations, inviting
him to make such statements in mitigation as he may wish to be drawn to the
Disciplinary Committee’s attention.
(b) Such information may be provided at different times and supplemented as necessary
from time to time.
(c) In the event that the Association has not complied with the requirement to provide
the relevant person with the documents no later than 42 days before the date set for
the hearing, the Disciplinary Committee may, in its absolute discretion, provided that
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it is satisfied that the relevant person has received the documents and has not been
prejudiced in the conduct of his case, order that the hearing shall proceed.
(d) In exceptional circumstances, the Association may provide the documents above to
the relevant person less than 42 days before the date set for the hearing (“an urgent
hearing”). At an urgent hearing, the Disciplinary Committee shall consider at the
outset the appropriateness of short notice and may in its absolute discretion, if it is of
the view that it is justified in all the circumstances, order that the hearing proceed or
be adjourned for such period and under such directions as it sees fit.
(2) Submission of documents and information by the relevant person
(a) No later than 21 days prior to the hearing of his case, the relevant person must
submit:
(i)
if the allegation(s) are denied, a statement of defence;
(ii)
such additional documentary evidence and witness statements, whether in
formal form or otherwise, as he may wish to be drawn to the Disciplinary
Committee’s attention;
(iii)
the names of any witnesses from the list provided by the Association that he
requires to attend the hearing for cross-examination, explaining to what extent
he disputes their evidence;
(iv)
the names and addresses of any other witnesses whom he wishes to call in
his defence and, if a witness statement has not already been provided, an
explanation of the nature of the evidence they will be giving. For the avoidance
of doubt, if any of the information provided pursuant to this regulation relates
to a new witness, or new evidence of an existing witness, the Association will
require such witnesses to attend the hearing for cross-examination unless it
indicates otherwise; and
(v)
confirmation as to whether he wishes to attend the hearing of the case against
him.
(b) If there is a dispute as to whether a witness is required to attend to give oral
evidence, the parties shall make written submissions to the Chairman who shall have
the power to order the attendance of a witness or to make such other order as in his
discretion he thinks fit. The decision of the Chairman shall be final.
(c) Evidence submitted less than 21 days prior to the hearing will only be considered by
the Disciplinary Committee in exceptional circumstances.
(d) If the relevant person fails to comply with regulations 5(2)(a)(ii), (iii) and/or (iv), he
shall forego the right to have witnesses attend the hearing save with the agreement
of the case presenter or by order of the Chairman who shall give both parties an
opportunity to make submissions on the point. The decision of the Chairman shall be
final.
(e) If the relevant person indicates that he does not wish to attend, or fails to give an
indication within the required deadline, the Association shall not be obliged to ensure
the attendance of any witness at the hearing.
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(3) Defects
At any stage in the proceedings the Disciplinary Committee may order that defects in one
or more allegations be amended provided that the relevant person is not prejudiced in the
conduct of his defence.
(4) Hearings, representation and adjournments
(a) Representation
At the hearing of his case, the relevant person shall be entitled to be heard before the
Disciplinary Committee and/or to be represented by such person as he may wish.
(b) Proceeding in the absence of the relevant person
Where the relevant person fails to attend a hearing, the case may be heard in his
absence provided the Disciplinary Committee is satisfied that he has been served
with the documents referred to in regulation 5(1) in accordance with regulation 7(1).
(c) Case presenter
The case against the relevant person shall be presented to the Disciplinary
Committee on behalf of the Association by such person as the latter may at any time
nominate (the “case presenter”).
(d) Advisers to the Disciplinary Committee
The Disciplinary Committee may also instruct a solicitor or barrister to act as its legal
adviser at the hearing of any case. At a hearing concerning a relevant person’s state
of health as described in regulation 6, the Disciplinary Committee may instruct a
medical expert to act as its medical adviser.
(e) Adjournments
(i) The relevant person or the case presenter may make a written request to the
Disciplinary Committee that the hearing be adjourned to a future meeting. Such
request shall be considered at the outset of the hearing and the Disciplinary
Committee may in its absolute discretion agree to the request if it is of the view
that it is justified in all the circumstances.
(ii) Any such request made in advance of the hearing shall be considered as
follows.
If the request is made after the provision of documents in accordance with
regulation 5(1), it shall be considered by the Chairman, who may in his
absolute discretion agree to the request if he is of the view that it is justified
in all the circumstances. If such request is denied by the Chairman, it shall
be reconsidered at the outset of the hearing by the other members of the
Disciplinary Committee in accordance with regulation 5(4)(e)(i).
If the request is made by the relevant person before the provision of documents
in accordance with regulation 5(1), the Association may agree to the request. If
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the Association opposes the request, it shall be considered by the Chairman in
accordance with this regulation. If such request is denied by the Chairman, it
shall be reconsidered at the outset of the hearing by the other members of the
Disciplinary Committee in accordance with regulation 5(4)(e)(i).
(iii) In advance of the hearing, at the outset of the hearing, or at any time during
the hearing, the Disciplinary Committee may itself direct that the case should
be adjourned.
(iv) The Disciplinary Committee may impose such conditions as it may determine
upon the grant of an adjournment.
(v)
The Disciplinary Committee may (but need not) agree to or direct an
adjournment where criminal or civil proceedings concerning the allegations are
pending to which the relevant person is a party.
(vi) Before making a decision, the Chairman or Disciplinary Committee as
appropriate shall invite representations from the other party.
(vii) The Chairman and the Disciplinary Committee shall give written reasons for a
decision to refuse or grant a request for an adjournment.
(f) Interim orders
Where the hearing of the case has been adjourned, the Disciplinary Committee may
make any one or more of the following interim orders against the relevant person:
(i) that the relevant person produce any necessary documents and supply any
other information and explanations relevant to the matter in question, whether
by attendance upon reasonable notice before the Disciplinary Committee or
otherwise;
(ii) that the relevant person allow any officer of the Association to enter the
business premises of the relevant person on such notice (if any) as the
Disciplinary Committee may think appropriate and interview any employee of
the relevant person;
276
(iii)
that the relevant person procure the attendance of any of his employees at
specific premises, upon reasonable notice;
(iv)
in the case of a relevant person who is an individual, that the relevant person’s
membership, registered student or affiliate status be suspended until further
order of the Disciplinary Committee;
(v)
that the matter of the relevant person’s fitness and propriety to hold a
certificate and/or licence issued by the Association, and/or his or its eligibility
to conduct exempt regulated activities in accordance with the Designated
Professional Body Regulations, be referred to the Admissions and Licensing
Committee by a specified date, such date to be no later than twelve months
from the date of the order;
Complaints and Disciplinary Regulations 2.7
(vi)
that the relevant person’s practising certificate, insolvency licence, investment
business certificate (Ireland) and/or other certificate issued by the Association,
and/or his or its eligibility to conduct exempt regulated activities in accordance
with the Designated Professional Body Regulations, be suspended, or made
subject to such conditions as are specified in the order, until further order
of the Disciplinary Committee or, only in conjunction with an order under
regulation 5(4)(f)(v), until an order of the Admissions and Licensing Committee
has been made.
(5) Indication whether allegations admitted
(a) At the hearing of his case, if the relevant person is in attendance he shall be invited
to indicate whether or not he admits each of the allegations made against him.
(b) If the relevant person is not in attendance, the Disciplinary Committee shall refer
to any written response to the letter referred to in regulation 5(1)(a)(vi) or other
correspondence or note of conversation indicating his admission or otherwise of the
allegations made against him.
(6) Presentations where all allegations admitted
(a) If the relevant person admits or (if he is not in attendance) the Disciplinary
Committee finds that he has admitted all of the allegations made against him, the
case against him will be presented in abbreviated form with the object of assisting
the Disciplinary Committee in determining the seriousness of the case. If the relevant
person is in attendance he will then be invited to respond to any of the comments
made by the case presenter. The Disciplinary Committee will then make a formal
finding as to whether all the allegations made against the relevant person have been
proved.
(b) If the relevant person is in attendance he will then be invited to put forward any
statement in mitigation. If he is not in attendance, reference will then be made to any
statement in mitigation which he has previously made.
(c) The Disciplinary Committee may at any time ask any question of the case presenter
or the relevant person and, if the Disciplinary Committee considers it appropriate,
may invite the complainant (if present) to comment.
(7) Presentations where one or more allegations not admitted
(a) If the relevant person does not or (if he is not in attendance) has not admitted all of
the allegations made against him, the case against him will be presented and the
case presenter shall be entitled to call witnesses in support, who may include the
complainant.
(b) The relevant person may ask questions of the case presenter in order to clarify the
case against him.
(c) The relevant person shall then be invited to respond by presenting his defence and
may also call witnesses in support.
(d) Witnesses may be cross-examined by the relevant person and the case presenter.
The case presenter may cross-examine the relevant person.
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(e) The case presenter and the relevant person may present closing submissions.
(f) At the conclusion of the presentations, the Disciplinary Committee will retire to
consider its verdict and return to announce its findings in respect of each of the
allegations.
(g) In deciding whether any of the allegations have been proved, the standard of proof to
be applied by the Disciplinary Committee shall be the balance of probabilities.
(h) If the Disciplinary Committee has found that any of the allegations has been proved,
the relevant person will be invited (if he is in attendance) to make any statement
in mitigation. If he is not in attendance reference will be made to any statement in
mitigation previously provided by the relevant person. The Disciplinary Committee
may at any time ask questions of the case presenter, the relevant person or any
witness and, if the Disciplinary Committee considers it appropriate, may invite the
complainant (if present) to comment.
(8) Evidential material
(a) Where a witness who has been required to attend for cross-examination is not
in attendance, the Disciplinary Committee shall continue to hear the case on the
available evidence but shall attach such weight to the written evidence of the witness
as it considers appropriate, taking into account the lack of opportunity given to
challenge the contested evidence of the witness.
(b) The Disciplinary Committee shall be entitled to treat the judgment of any court
(whether of a civil or criminal jurisdiction) as conclusive evidence of any findings
of facts made in the judgment for the purpose of determining whether the relevant
person has participated in any type of activity, whether of a professional nature or
not, which is disreputable to the relevant person, the Association or the profession of
accountancy as a whole.
(9) Orders
Once the Disciplinary Committee has announced its findings in relation to each of the
allegations made against the relevant person, it shall be informed of any other matter in
respect of which he has been disciplined by the Association.
When considering what orders to make, the Disciplinary Committee may also take account
of the arguments presented to it by the parties and the circumstances surrounding the
misconduct or breach.
The Disciplinary Committee may make any one or more of the following orders against the
relevant person or may order that no further action be taken where it determines that none of
the following orders is appropriate in the circumstances:
(a) if the relevant person is a member:
(i) 278
that he be excluded from membership, which may be combined with an order
that no application for readmission may be considered until the expiry of a
specified period after the effective date of the order, which period may not be
longer than five years;
Complaints and Disciplinary Regulations 2.7
(ii) that he be severely reprimanded, reprimanded or admonished;
(iii) that he be fined a sum not exceeding £50,000;
(iv)
that he pay compensation to the complainant of a sum not exceeding £5,000;
(v)
that he waive or reduce his fees to the complainant by such sum as shall be
specified in the order and which relates directly to the proven allegation;
(vi)
any of the orders set out in regulation 5(9)(h) where applicable;
(b) if the relevant person is a firm:
(i) that it be severely reprimanded, reprimanded or admonished;
(ii) that it be fined a sum not exceeding £50,000;
(iii)
that it pay compensation to the complainant of a sum not exceeding £5,000;
(iv)
that it waive or reduce its fees to the complainant by such sum as shall be
specified in the order and which relates directly to the proven allegation;
(v)
any of the orders set out in regulation 5(9)(h) where applicable;
(c) if the relevant person is a registered student:
(i) that he be removed from the student register, which may be combined with an
order that no application for readmission may be considered until the expiry of
a specifed period after the effective date of the order, which period may not be
longer than five years;
(ii) that the period as shall be specified in the order shall not be reckoned as part
of the student’s approved accountancy experience for the purposes of bye-law
2 and any regulations made pursuant thereto;
(iii) that he be declared ineligible for such period as shall respectively be specified
in the order to sit for such examination or examinations of the Association (or
such part or parts thereof) as shall be specified in the order;
(iv) that he be disqualified from such examination or examinations of the
Association (or such part or parts thereof) as shall be specified in the order not
being an examination (or a part thereof) the result of which shall have been
duly notified to him by the Association prior to the date of the order;
(v) that he be severely reprimanded, reprimanded or admonished;
(vi)
any of the orders set out in regulation 5(9)(h) where applicable;
(d) if the relevant person is an affiliate:
(i) that he be removed from the affiliate register, which may be combined with an
order that no application for readmission may be considered until the expiry of
a specifed period after the effective date of the order, which period may not be
longer than five years;
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2.7 Complaints and Disciplinary Regulations
(ii) that the period as shall be specified in the order shall not be reckoned as part
of the affiliate’s approved accountancy experience for the purposes of bye-law
2 and any regulations made pursuant thereto;
(iii) that he be declared ineligible to be admitted to membership for such period as
shall be specified in the order;
(iv) that he be severely reprimanded, reprimanded or admonished;
(v)
any of the orders set out in regulation 5(9)(h) where applicable;
(e) if the relevant person is a former member or former firm or non-member who has
undertaken to be bound by these regulations:
(i) that he be severely reprimanded, reprimanded or admonished;
(ii) that he be fined a sum not exceeding £50,000;
(iii) that he pay compensation to the complainant of a sum not exceeding £5,000;
(iv) that he waive or reduce his fees to the complainant by such sum as shall be
specified in the order and which relates directly to the proven allegation;
(v)
any of the orders set out in regulation 5(9)(h) where applicable;
(f) if the relevant person is a former registered student:
(i) that he be severely reprimanded, reprimanded or admonished;
(ii) that he be disqualified from such examination or examinations of the
Association (or such part or parts thereof) as shall be specified in the order not
being an examination (or a part thereof) the result of which shall have been
duly notified to him by the Association prior to the date of the order;
(iii)
any of the orders set out in regulation 5(9)(h) where applicable;
(g) if the relevant person is a former affiliate:
(i) that he be severely reprimanded, reprimanded or admonished;
(ii)
any of the orders set out in regulation 5(9)(h) where applicable;
(h) in all cases:
280
(i)
that the matter of the relevant person’s fitness and propriety to hold a
certificate and/or licence issued by the Association, and/or his or its eligibility
to conduct exempt regulated activities in accordance with the Designated
Professional Body Regulations, be referred to the Admissions and Licensing
Committee by a specified date, such date to be no later than twelve months
from the date of the order;
(ii)
only in conjunction with an order under regulation 5(9)(h)(i), that the relevant
person’s practising certificate, insolvency licence, investment business
Complaints and Disciplinary Regulations 2.7
certificate (Ireland) and/or other certificate issued by the Association, and/
or his or its eligibility to conduct exempt regulated activities in accordance
with the Designated Professional Body Regulations, be suspended, or made
subject to such conditions as are specified in the order, until an order of the
Admissions and Licensing Committee has been made;
(iii)
that any future application by the relevant person for any certificate or
licence issued by the Association, or to conduct exempt regulated activities in
accordance with the Designated Professional Body Regulations, be referred to
the Admissions and Licensing Committee;
(iv)
in the case of a relevant person who is an affiliate or registered student, that
any future application for membership be referred to the Admissions and
Licensing Committee;
(i) in all cases, that the hearing be adjourned and referred to a health hearing before a
differently constituted Disciplinary Committee.
(10) Conditions and costs
(a) Conditional order
Any order made by the Disciplinary Committee may be made upon such terms and
conditions as the Disciplinary Committee may consider appropriate.
(b) Compensation to be paid by the relevant person to the complainant
Any compensation to be paid to the complainant shall be remitted to the Association,
for onward transmission to the complainant.
(c) Costs to be paid by the relevant person to the Association
The Disciplinary Committee may direct that the relevant person pay such sum by
way of costs to the Association as the Disciplinary Committee considers appropriate.
In considering what sum shall be paid by way of costs, if any, the Disciplinary
Committee shall take into account any effect the relevant person’s actions in relation
to the conduct of the case have had upon the costs of dealing with the case, whether
beneficial or otherwise.
(d) Costs to be paid by the Association to the relevant person
Where none of the allegations against a relevant person have been found proved,
the Disciplinary Committee may direct the Association to pay a sum to the relevant
person by way of contribution to his costs incurred in connection with the case in
such amount as the Disciplinary Committee shall in its discretion think fit.
(e) Costs to be paid by the Association to the complainant
In exceptional circumstances, the Disciplinary Committee may direct the Association
to pay a sum to the complainant by way of contribution to his costs incurred with the
case in such amount as the Disciplinary Committee shall in its discretion think fit.
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(11) Notification
The Disciplinary Committee shall announce its decision at the hearing and, where the
relevant person is in attendance, shall inform him of his right to appeal to the Appeal
Committee in respect thereof. Formal written notice of the terms of the order shall be notified
to the relevant person within 14 days of the hearing and a written statement of the reasons
for the decision of the Disciplinary Committee shall be given to the relevant person within 21
days or such longer period as shall be necessary in the circumstances.
(12) Appeal
(a) A relevant person against whom any order has been made by the Disciplinary
Committee may appeal to the Appeal Committee in accordance with the
Association’s appeal procedures as set out in The Chartered Certified Accountants’
Appeal Regulations 2006 (hereafter referred to as “the Appeal Regulations”), save
that no appeal shall lie solely on the question of costs. Any such appeal shall be dealt
with in accordance with the Appeal Regulations.
(b) The Association may appeal against a decision of the Disciplinary Committee, subject
to the conditions and procedures set out in the Appeal Regulations.
(13) Correction of errors
(a) Where the order and/or written statement of the reasons for the decision of the
Disciplinary Committee contains an accidental error or omission, a party may apply
by way of an application notice for it to be corrected. The application notice shall
describe the error or omission and state the correction required.
(b) The Chairman may deal with the application without notice if the error or omission is
obvious, or may direct that notice of the application be given to the other party.
(c) If notice of the application is given to the other party, the application may be
considered without a hearing with the consent of the parties, such consent not to be
unreasonably withheld.
(d) If the application is opposed, it should be heard by the same Disciplinary Committee
which made the order and/or written statement of reasons for the decision which are
the subject of the application. The Appeal Committee may not conduct a re-hearing
of the case or a reconsideration of the orders made.
(e) The Disciplinary Committee may of its own volition amend the wording of its own
order and/or written statement of reasons for the decision for the purpose of making
the meaning and intention clear.
(14) Effective date
An order made by the Disciplinary Committee shall take effect from the date of the expiry of
the appeal period referred to in the Appeal Regulations unless:
(a) the relevant person shall duly give notice of appeal prior to the expiry of such
period in which case it shall become effective (if at all) as described in the Appeal
Regulations; or
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(b) the order is made under regulation 5(9)(a)(i), 5(9)(a)(iii), 5(9)(b)(ii) or 5(9)(c)(i) and
the Disciplinary Committee directs that, in the interests of the public, the order
should have immediate effect, in which case it shall have immediate effect, subject to
the order being varied or rescinded on appeal as described in the Appeal Regulations.
(15) Publicity
(a) The Disciplinary Committee shall give advance publicity of its meetings, and of the
hearing of any case by it, in such terms and manner as it thinks fit, save that in any
such advance publication no relevant person shall be named.
(b) (i)
The findings and order of the Disciplinary Committee shall, as soon as the
order has become effective, be published, provided that where the order is that
no further action be taken, the findings and order shall only be published if the
relevant person so requests.
(ii)
Unless in exceptional circumstances the Disciplinary Committee otherwise
directs, in such publicity the relevant person shall be named and the findings
and order made against him stated.
(iii)
The findings and order shall be sent to such publications as the Disciplinary
Committee thinks fit, provided that if the relevant person is not named they
shall not be sent to any publications local to the relevant person’s place of
business or residence.
(iv)
The Association may publish the reasons for the Disciplinary Committee’s
decision and may do so in whole or in summary form.
(c) The Insolvency Service may publish the names of holders or former holders of the
Association’s insolvency licence who are subject to a decision of the Disciplinary
Committee, and details of the decision made, in such publications and in such a
manner as it thinks fit. For the avoidance of doubt, the details contained in such
publicity are not limited to those published by the Association pursuant to regulation
5(15)(b).
(16) Open hearings
(a) Meetings of the Disciplinary Committee shall be open to the public unless the
Committee determines that the public shall be excluded from attending all or part of
any meeting at any time, including during the hearing of any case by it, on any of any
one or more of the following grounds:
(i)
in the interests of morals, public order or national security in a democratic
society;
(ii)
where the interests of juveniles or the protection of the private lives of the
parties so require; or
(iii)
to the extent strictly necessary in the opinion of the Disciplinary Committee in
special circumstances, where publicity would prejudice the interests of justice.
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(b) The Disciplinary Committee may establish such procedures as it deems necessary
or desirable in connection with the attendance by the public at its meetings and the
procedure to be adopted in respect of any meeting shall, subject to the foregoing
paragraphs of this regulation, be such as the Disciplinary Committee in its absolute
discretion shall determine.
(17) Advice
In addition to any of the other things or acts the Disciplinary Committee may do, it may
communicate with any relevant person with a view to assisting him with or alerting him to
problems identified by the Disciplinary Committee and may advise him to obtain advice from
a source specified by the Disciplinary Committee. Any failure by a relevant person to act in
accordance with such a communication or advice may be noted on the relevant person’s file.
6. Ill health
Where it is asserted on behalf of a relevant person, either during the course of an
investigation or after a case has been referred to the Disciplinary Committee, that he is too
ill to participate in the process (“the disciplinary process”), the relevant person may apply for
an adjournment and the following regulations apply.
(1) Submission of evidence
(a) Within seven days of the assertion that he is too ill to participate in the disciplinary
process, the relevant person shall submit:
(i)
medical evidence to support the assertion, including a prognosis and indication
as to when, if at all, the relevant person would be well enough to participate in
the disciplinary process; and
(ii)
details of the arrangements he has made for the continuity of his practice
during the period of his ill health.
(2) Deferral or withdrawal of the disciplinary process
(a) The investigating officer shall have a discretion to defer the investigation, in
accordance with regulation 3(7).
(b) The case presenter shall have a discretion not to proceed with the allegations against
the relevant person, in accordance with regulation 4(6)(c). For the purpose of this
regulation, the decision may be to withdraw the allegations completely or defer
proceeding with the allegations for a period of time.
(3) Right to require relevant person to be examined
At any time, the Association shall have the right to require the relevant person to be
examined by a doctor or other medical professional of the Association’s choice.
(4) Referral to health hearing
At any time, at the request of the Association or by order of the Disciplinary Committee, the
question of the relevant person’s fitness to participate in the disciplinary process shall be
considered by the Disciplinary Committee at a health hearing (see regulation 6(5) below).
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Complaints and Disciplinary Regulations 2.7
This should be done in any event where the disciplinary process has, in the Association’s
view, been deferred for an unreasonable period of time with no agreement between the
relevant person and the Association as to how to proceed. What will be an unreasonable
period of time will depend on the circumstances of each case.
(5) Health hearing
(a) It shall be for the relevant person to satisfy the Disciplinary Committee that he is
unfit to participate in the disciplinary process.
(b) If the relevant person is too ill to be present at the hearing, he may attend by way of
telephone or video link.
(c) The Association and the relevant person may submit documentary evidence (medical
or otherwise) not less than seven days prior to the health hearing. Documents
submitted less than seven days prior to the hearing will only be considered by the
Disciplinary Committee in exceptional circumstances.
(d) During the health hearing, the Disciplinary Committee shall be entitled to make a
determination on the evidence before it of the allegations against the relevant person,
for the purpose of deciding whether the seriousness of the allegations is such that it
would be in the public interest to make an order under regulation 6(5)(e) and/or that
the disciplinary process should be resumed notwithstanding the relevant person’s
assertion of ill health. Such determination shall be disregarded for the purposes
of any subsequent disciplinary or appeal hearing before a differently constituted
Committee.
(e) The Disciplinary Committee may order that any certificate and/or licence issued
to the relevant person by the Association and/or the relevant person’s eligibility to
conduct exempt regulated activities in accordance with the Designated Professional
Body Regulations be suspended or made subject to conditions for a specified period
or until further order of the Disciplinary Committee or Appeal Committee. Such
conditions may include, in the case of a sole practitioner, that the relevant person’s
continuity provider step in to run the practice and, in the case of a partner or codirector, that the relevant person take no part in the client work of the practice or
business.
(f) The Disciplinary Committee shall make an order as to whether the disciplinary
process shall be resumed, withdrawn, or deferred for such period as it sees fit (but
for no longer than six months) and brought before a further health hearing at that
time if there has been no agreement between the Association and the relevant person
as to how to proceed.
(g) In addition to its powers under this regulation 6, the Disciplinary Committee shall
have the power to make any one or more of the orders set out in regulation 5(9)(h)
at a health hearing. It shall not have the power to make any of the orders set out in
regulation 5(9)(a)–(g) at a health hearing.
(h) The Disciplinary Committee shall specify whether any elements of its orders in subparagraphs (e) or (g) above are to have immediate effect regardless of any appeal
that may be made by the relevant person. The Disciplinary Committee may not so
specify in relation to an order under sub-paragraph (f).
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2.7 Complaints and Disciplinary Regulations
(6) Publicity
Health hearings shall be heard in private, but the Disciplinary Committee’s decision shall be
subject to publicity in accordance with regulation 5(15).
(7) Right of appeal
There shall be a right of appeal from a decision of the Disciplinary Committee at a health
hearing, in accordance with regulation 5(12).
(8) Applicability of Disciplinary Regulations
The other Disciplinary Regulations will apply to health hearings unless they conflict with any
paragraph within regulation 6, in which case the relevant provision of regulation 6 shall take
precedence.
7. General
(1) Notices
(a) Any notice or other document required to be given to or served on a relevant person
may be provided to him personally, sent by post or courier to his or its registered
place of address, or sent by email as provided for under regulation 7(2) below. If the
relevant person has no registered address any notice or document should be sent by
post or courier to the relevant person’s address last known to the Association.
(b) Any notice or document required to be given to or served on the Association may be
provided by sending it by post or courier to the investigating officer at the principal
office of the Association or sending it by email as provided for under regulation 7(2)
below.
Subject to regulation 7(2) below, any such notice or document so sent shall be deemed to
have been given or served within 72 hours (excluding Saturdays, Sundays and Public and
Bank Holidays) of despatch.
(2) Service by email
(a) Subject to the following provisions of regulation 7(2), where a notice or document
is to be served by the Association on a relevant person it may be served by
email provided that the relevant person has previously indicated in writing to the
Association that he is willing to accept service by email, has provided his email
address to the Association in whatever form the Association deems appropriate, and
has stipulated whether there are any limitations to his agreement to accept service by
electronic means (for example, the format in which documents are to be sent and the
maximum size of attachments that may be received).
(b) For the purposes of regulation 7(2)(a) above, notice of willingness to accept service
by email may be sent by the relevant person to the email address specified in the
Association’s communication to the relevant person. Unless and until the relevant
person sends a further notice stating that he is no longer willing to accept service
by email, service by the Association of any notice or document to the email address
stipulated by the relevant person shall be deemed to be valid service for the purposes
of this regulation.
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Complaints and Disciplinary Regulations 2.7
(c) The Association is willing to accept service of any notice or document by email to the
email address specified in the Association’s communication to the relevant person.
Any email attachment must not exceed 20,000 KB in size.
(d) Where a document is served by electronic means, the party serving the document (be
it the Association or the relevant person, as the case may be) need not in addition
send or deliver a hard copy.
(e) The email address given by the relevant person and/or the Association for the
purposes of this regulation will be deemed to be at the address for service.
(f) Service by email is deemed to be effective on the working day it was sent. For the
avoidance of doubt, any email sent after 5 pm will be deemed to have been served
on the following working day.
(g) For the avoidance of doubt, service by email may only validly be effected under
regulation 7(2) for the purposes of the current or concurrent disciplinary proceedings
and any appeal.
(3) Payment
Any order that a sum be paid to the Association or the complainant must be complied with
within 21 days from the date the order becomes effective (unless Council otherwise agrees)
and, where the relevant person the subject of the order is a firm, shall be jointly and severally
due from, and shall be paid by, the persons who are specified persons in relation to the firm
on the date of the order.
(4) Attendance
A relevant person may attend a hearing of the Disciplinary Committee where he is the
relevant person concerned notwithstanding that he may have previously indicated that he did
not intend to attend.
(5) Hearings
Where a case is of particular interest to a specific government or government agency, or
primarily affects persons resident in a specific country, either the Disciplinary Committee
or the Secretary may direct that the hearing before the Disciplinary Committee take place
in that country. In the absence of any such direction, hearings before the Disciplinary
Committee shall take place in London.
(6) Public interest cases
(a) The Association shall refer a case to AADB where:
(i)
it considers that the case raises or appears to raise serious issues affecting the
public interest in the United Kingdom; and
(ii)
it considers that a relevant person may have committed an act of misconduct
in relation to the case; and
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2.7 Complaints and Disciplinary Regulations
(iii)
it is satisfied that no disciplinary proceedings going beyond an investigation
have been instituted by the Association or any other AADB participant in
relation to the conduct in question.
(b) Where the Association receives notice that AADB has decided to deal with a case
relating to a relevant person, either in response to a referral under regulation 7(6)(a)
or of its own volition, the Association shall suspend any investigation relating to the
case and, upon AADB’s request, provide to AADB any such documentary information
in its possession or control which it can lawfully provide.
(c) IAASA may undertake its own investigation into a case relating to a relevant person,
if IAASA forms the opinion that it is appropriate or in the public interest to do so. In
such circumstances, the Association shall suspend any investigation relating to the
case and, upon IAASA’s request, provide to IAASA any such documentary information
in its possession or control which it can lawfully provide.
(d) It is the duty of all relevant persons to co-operate with the AADB and IAASA during
the course of any investigations they may undertake. A failure or partial failure to cooperate fully with the AADB or IAASA shall constitute a breach of these regulations
and may render the relevant person liable to disciplinary action.
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Appeal Regulations 2.8
2.8
The Chartered Certified Accountants’ Appeal
Regulations 2006
Amended 1 January 2011
The Council of the Association of Chartered Certified Accountants, in exercise of the powers
conferred on it by bye-laws 2 to 6, 9, 27 and 28 of the Association’s bye-laws and all other
powers enabling it, hereby makes the following regulations:
1. Citation, commencement and application
(1) These regulations may be cited as The Chartered Certified Accountants’ Appeal
Regulations 2006.
(2) These regulations as amended as set out herein shall come into force on 1 January 2011.
(3) These regulations shall apply to:
(a) all members, affiliates and registered students and, to the extent that they are
relevant, to former members, affiliates and registered students;
(b) all persons subject to bye-laws 8 to 11; and
(c) all persons who otherwise agree to be bound by them.
2. Interpretation
(1) In these regulations, unless the context otherwise requires:
AADB means the Accountancy and Actuarial Discipline Board;
Admissions and Licensing Committee, Disciplinary Committee and Appeal Committee
mean the committees appointed by Council pursuant to regulations made under bye-law
28;
affiliate means a registered student who has passed or obtained exemptions from all
papers of the Association’s examinations but has not progressed to membership;
appellant means a party applying for or having been granted permission to appeal against
a decision made by the Disciplinary Committee or Admissions and Licensing Committee;
assessor means an independent person so appointed by the Appointments SubCommittee in accordance with The Chartered Certified Accountants’ Regulatory Board
and Committee Regulations 2008 and referred to in these regulations;
the Association means the Association of Chartered Certified Accountants incorporated
by Royal Charter issued to it in 1974 as amended from time to time;
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2.8 Appeal Regulations
Authorisation Regulations means The Chartered Certified Accountants’ Authorisation
Regulations 1998;
bye-laws means the bye-laws from time to time of the Association;
case presenter has the meaning ascribed to it in regulation 9(3);
Chairman means any person carrying out the function of Chairman of the Appeal
Committee;
committee officer means any officer of the Association with responsibility for the
administration of the Disciplinary Committee or Admissions and Licensing Committee;
complainant means any person or persons who bring to the attention of the Association
any matters, acts or circumstances which appear to render a relevant person liable to
disciplinary action;
Complaints and Disciplinary Regulations means The Chartered Certified Accountants’
Complaints and Disciplinary Regulations 2010;
Council means the Council of the Association from time to time and includes any duly
authorised committee of Council;
decision means any decision of the Admissions and Licensing Committee made under the
Authorisation Regulations or Membership Regulations, or any decision of the Disciplinary
Committee made under the Complaints and Disciplinary Regulations, and shall include
where the context requires more than one such decision;
disciplinary bye-laws means bye-laws 8 to 11 as amended from time to time;
IAASA means the Irish Auditing and Accounting Supervisory Authority;
investigating officer means the Secretary or any other officer of the Association charged
with the responsibility of investigating matters and performing the other functions
described in the Complaints and Disciplinary Regulations;
liable to disciplinary action means liable to disciplinary action under bye-law 8(a);
Membership Regulations means The Chartered Certified Accountants’ Membership
Regulations 1996;
officer of the Association means any official, servant or agent of the Association, whether
employed by the Association or otherwise;
order means any order of the Disciplinary Committee made under regulation 5 of the
Complaints and Disciplinary Regulations and any order of the Appeal Committee made
under these regulations and includes any direction as to the payment of a sum in respect
of costs to or by the Association and as to the publicity to be given to such an order and
shall include any finding, term or condition in consequence of or upon which the order is
made and shall include where the context requires more than one such order;
relevant person means a member and any other person (whether an individual or a firm
and, without limitation, including a registered student) who has undertaken with the
Association to abide by and be bound by, inter alia, the bye-laws and these regulations;
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Appeal Regulations 2.8
respondent means the person who is the opposite party in the appeal brought by the
appellant;
Secretary means the Secretary of the Association (by whatever name known) or any other
person acting in such capacity by the direction of the Council.
(2) Words importing the masculine gender include the feminine and words in the singular
include the plural and vice versa. References to “his” shall include “its” where the context
requires.
(3) Headings and sub-headings are for convenience only and shall not affect the
interpretation of these regulations.
3. Appeal
(1) Any relevant person who is the subject of a decision made by the Disciplinary Committee
or the Admissions and Licensing Committee may apply for permission to appeal within 21
days after service of the written statement of the reasons for the decision of such Committee
(or such longer period as the Chairman of the Appeal Committee may allow where there is
good reason for the appellant having failed to meet the time limit).
(2) In exceptional circumstances, where there is a clear public interest in the decision being
reviewed, the Association may apply for permission to appeal against a decision made by the
Disciplinary Committee or Admissions and Licensing Committee within 14 days after service
of the written statement of the reasons for the decision of such Committee.
(3) No appeal shall lie solely on the question of costs unless the decision was perverse or
unreasonable, or compliance with it would result in severe financial hardship to the relevant
person.
4. Applying for permission to appeal
(1) An application for permission to appeal shall be made by filing with the committee officer
an application notice in the form specified in regulation 5(1).
(2) Where an application notice is filed by the Association, the committee officer shall
notify the respondent and supply a copy to him within 14 days. The respondent may submit
grounds of opposition within 21 days thereafter.
5. Form of application notice and grounds of appeal
(1) The application notice:
(a) shall be in writing addressed to the committee officer;
(b) shall state the appellant’s name and address;
(c) shall state whether the appellant has authorised a representative to act for him in the
appeal and, if so, state the representative’s name and address;
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2.8 Appeal Regulations
(d) shall state whether the appellant intends to appear at the hearing of the appeal if
permission is granted;
(e) in the case of an appeal from a decision made by the Disciplinary Committee, shall
state whether the appellant appeals against one or more of its findings and orders or
one or more of its orders only. An appeal against an order may be made conditionally
upon an appeal against a finding of the Disciplinary Committee failing;
(f) in the case of an appeal from a decision made by the Admissions and Licensing
Committee, shall state which of the orders is appealed and shall state the orders
which the appellant wishes the Appeal Committee to make;
(g) shall state which of the grounds of appeal set out in this regulation 5 the appellant
is putting forward in support of his application (and the grounds so stated shall not
thereafter be amended except with the leave of the Appeal Committee);
(h) shall state the reasons in support of each ground of appeal; and
(i) may include any documents which the appellant wishes the Appeal Committee to
take into account.
(2) An appeal by a person who is the subject of a decision made by the Disciplinary
Committee or the Admissions and Licensing Committee may be successful only upon one or
more of the following grounds:
(a) the Committee made an error of fact or law, which would have altered one or more of
the findings or orders made in the case;
(b) the Committee misinterpreted any of the Association’s bye-laws or regulations or any
relevant guidance or technical standards, which would have altered one or more of
the findings or orders made in the case;
(c) the Committee failed to take into account certain relevant evidence, which would
have altered one or more of the findings or orders made in the case;
(d) there is new evidence not previously available, which would have altered one or more
of the findings or orders made in the case;
(e) the Committee’s order is disproportionate and/or unreasonable in light of its findings;
(f) the Committee’s findings and/or order are unjust because of a serious procedural
irregularity in the proceedings.
(3) An appeal by the Association against a decision of the Disciplinary Committee or
Admissions and Licensing Committee may be successful only upon the ground that the
decision was one that no Committee acting reasonably would have made.
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Appeal Regulations 2.8
6. Permission to appeal
(1) Decision where the appellant is a person who is the subject of a decision made by the
Disciplinary Committee or the Admissions and Licensing Committee
Where the application notice has been filed by a person who is the subject of a decision
made by the Disciplinary Committee or the Admissions and Licensing Committee, permission
to appeal may be granted only if the appeal would have a real prospect of success on one
or more of the grounds under regulation 5(2) that are set out in the appellant’s application
notice.
(2) Decision where the appellant is the Association
Where the application notice has been filed by the Association, permission to appeal may be
granted only if:
(a) there is a clear public interest in the decision being reviewed; and
(b) the appeal would have a real prospect of success on the ground set out in regulation
5(3).
(3) Initial consideration of the application notice
(a) An application notice, whether filed by the Association or by any other party, shall be
considered by the Chairman.
(b) The Chairman may grant or refuse permission to appeal. If permission is granted, the
Chairman must specify the grounds upon which permission has been granted.
(c) Before making a decision under this regulation 6(3), or in conjunction with such a
decision, the Chairman may make such directions as he deems to be necessary or
desirable. Failure by a party to comply with one or more of the Chairman’s directions
may result in a costs order against that party pursuant to regulation 12.
(d) The Chairman may not grant permission to appeal solely on the question of costs
unless, in addition to satisfying regulations 6(1) or (2), the decision was perverse or
unreasonable or compliance with it would result in severe financial hardship to the
relevant person.
(e) The Chairman may of his own motion amend the application notice to add one or
more of the grounds of appeal set out in regulation 5(2).
(f) The Chairman must give written reasons at the time his decision is made, which shall
address each of the grounds of appeal set out in the application notice. The written
reasons shall be provided to the parties by the committee officer within 21 days
thereafter.
(g) If the Chairman refuses permission to appeal:
(i)
where the application notice filed pursuant to regulation 4(1) related solely to
the question of costs, the Chairman’s decision is final;
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2.8 Appeal Regulations
(ii)
in all other cases, the appellant may request that his application notice
be reconsidered by the Appeal Committee in accordance with regulation
6(4). Such request must be filed with the committee officer within 28 days
after service of the Chairman’s written reasons for refusing permission (or
such longer period as the Chairman of the Appeal Committee which would
reconsider the application notice may allow where there is good reason for
the appellant having failed to meet the time limit) and must be supported by
written grounds. The Chairman shall not be permitted to sit on any Appeal
Committee convened pursuant to this regulation, nor shall he be permitted to
sit on any Appeal Committee in relation to the case thereafter.
For the avoidance of doubt, this regulation does not apply if permission has been
granted in relation to any of the grounds of appeal set out in regulation 5(2).
(h) If the Chairman grants permission to appeal:
(i)
where permission is granted solely on the question of costs, and there is no
reconsideration of the application notice by the Appeal Committee pursuant
to regulation 6(3)(g)(ii), the Chairman shall proceed to make a decision on the
appeal and his decision shall be final;
(ii)
in all other cases, the appeal shall be heard by the Appeal Committee in
accordance with regulation 7 and the Chairman may sit on that Appeal
Committee.
For the avoidance of doubt, this regulation does not apply if permission has been
granted in relation to any of the grounds of appeal set out in regulation 5(2).
(4) Reconsideration of the application notice by the Appeal Committee
(a) In the event that a request is filed under regulation 6(3)(g)(ii) above, the application
notice shall be reconsidered by the Appeal Committee on the papers in private
without a hearing; or, if the appellant or respondent requests to be heard, at a
hearing. If the application notice is being reconsidered on the papers, the Appeal
Committee may at any time direct that the matter should be adjourned for
reconsideration at a hearing in order to give the parties an opportunity to make oral
submissions.
(b) The Appeal Committee shall be supplied with:
294
(i)
all the documents which had been placed before the Committee whose
decision is the subject of the application notice;
(ii)
the notice of the Committee’s decision;
(iii)
the statement of the Committee’s reasons for its decision;
(iv)
the application notice and any documents submitted with it;
(v)
the Chairman’s reasons for refusing permission;
(vi)
the applicant’s grounds for asking the Appeal Committee to reconsider the
application notice;
Appeal Regulations 2.8
(vii) any written submissions that may have been made by the respondent at this
time;
(viii) any other documents or information which the Appeal Committee may request.
(c) The Appeal Committee may grant or refuse permission to appeal. If permission is
granted, the Appeal Committee must specify the grounds upon which permission has
been granted.
(d) Before making a decision under this regulation 6(4), or in conjunction with such
a decision, the Appeal Committee may make such directions as it deems to be
necessary or desirable. Failure by a party to comply with one or more of the Appeal
Committee’s directions may result in a costs order against that party pursuant to
regulation 12.
(e) The Appeal Committee may not grant permission to appeal solely on the question
of costs unless, in addition to satisfying regulations 6(1) or 6(2), the decision was
perverse or unreasonable or compliance with it would result in severe financial
hardship to the relevant person.
(f) If the appellant so requests, the Appeal Committee may grant permission to
substitute one or more of the grounds of appeal set out in regulation 5(2) for any
ground of appeal submitted by the appellant.
(g) The Appeal Committee may of its own motion amend the application notice to add
one or more of the grounds of appeal set out in regulation 5(2).
(h) If the Appeal Committee refuses permission to appeal, the Committee’s decision is
final.
(i) If the Appeal Committee grants permission to appeal, that same Committee may
proceed to hear the appeal immediately thereafter, or at such convenient time as
the Committee may direct, provided that all parties to the appeal give their explicit
consent. Failure by a party to give such consent shall not in itself result in a costs
order against that party pursuant to regulation 12.
(5) Notice of the decision
(a) Within 14 days after the Appeal Committee’s decision to grant or refuse permission,
formal written notice of the decision shall be given to the parties. Where permission
to appeal has been granted, the notice shall state upon which of the grounds within
regulation 5(2) permission has been granted.
(b) Within 14 days after the Appeal Committee’s decision, the parties shall be given
copies of the documents supplied to the Appeal Committee under regulation 6(4)(b) if
they have not already been supplied.
(c) A statement of the reasons for the Appeal Committee’s decision, which shall address
each of the grounds of appeal set out in the application notice, shall be given to the
parties within 21 days after the decision, or such longer period as shall be necessary
in the circumstances.
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7. The appeal
The grounds of appeal upon which permission to appeal has been granted, and the reasons
for granting permission, shall be considered by the Appeal Committee at a hearing except
where the appeal is withdrawn by the appellant.
8. Preparation for the appeal hearing
(1) Further enquiries
Where the appeal is from a decision of the Disciplinary Committee, an investigating officer
may make such further enquiries as he shall consider appropriate in order to assist in the
preparation of the case to the Appeal Committee. It shall be the duty of the person who is
the subject of the decision under appeal to co-operate fully with such enquiries and a failure
or partial failure by him to do so shall constitute a breach of these regulations and may
render the relevant person liable to disciplinary action.
(2) Submissions, documents and evidence
(a) The appellant and respondent may submit such written submissions and additional
documentary evidence as they may wish to be drawn to the Appeal Committee’s
attention, provided that any such written submissions and documentary evidence
must be submitted not less than 21 days prior to the hearing of the appeal.
(b) Written submissions and documents submitted less than 21 days prior to the hearing
will only be considered by the Appeal Committee in exceptional circumstances.
(c) No later than 21 days prior to the hearing of his case the appellant must confirm
whether he wishes to attend the appeal hearing.
(3) Witnesses
(a) Where permission to appeal has been granted upon the ground set out in regulation
5(2)(d), no later than 21 days prior to the hearing of his case the appellant must
submit:
(i)
the names of any witnesses on behalf of ACCA that he requires to attend for
cross-examination, explaining to what extent he disputes their evidence in light
of the new evidence; and
(ii)
the names of any witnesses on his behalf that he wishes to call, explaining
the nature of the new evidence they will be giving. For the avoidance of doubt,
the Association will require such witnesses to attend the hearing for crossexamination unless it indicates otherwise.
(b) If there is a dispute as to whether a witness is required to attend, the parties shall
make written submissions to the Chairman who shall have the power to order the
attendance of a witness or to make such other order as in his discretion he thinks fit.
The decision of the Chairman shall be final.
(c) If the appellant fails to comply with regulation 8(3)(a)(i) and/or (ii), he shall forego
the right to have witnesses attend the hearing save at the discretion of the parties
or by order of the Chairman who shall give both parties an opportunity to make
submissions on the point. The decision of the Chairman shall be final.
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(d) If the appellant indicates that he does not wish to attend, or fails to give an indication
within the required deadline, the Association shall not be obliged to ensure the
attendance of any witness at the hearing.
9. Notice, representation and adjournments
(1) Notice
The Association shall provide the parties with no less than 42 days prior written notice
of the time and place of the hearing of the appeal. In the event that the Association has
not complied with this requirement the Appeal Committee may, in its absolute discretion,
provided that it is satisfied that the appellant has received written notice of the time and
place of the hearing of the appeal and that the appellant has not been prejudiced in the
conduct of his appeal, order that the hearing shall proceed.
In exceptional circumstances, the parties may be provided with less than 42 days prior
written notice of the hearing (“an urgent hearing”). At an urgent hearing, the Appeal
Committee shall consider at the outset the appropriateness of short notice and may, in its
absolute discretion, if it is of the view that it is justified in all the circumstances, order that
the hearing proceed or be adjourned for such period and under such directions as it sees fit.
(2) Proceeding in the absence of a party
The appeal may be heard in the absence of a party provided that the Appeal Committee is
satisfied that he has been served with no less than 42 days prior written notice of the date
set for the hearing or, in the case of an urgent hearing, that proceeding with the hearing is
justified in all the circumstances.
(3) Representation
(a) At the hearing of the appeal, the person who is the subject of the decision under
appeal shall be entitled to be heard before the Appeal Committee and/or to be
represented by such person as he may wish.
(b) The Association shall be represented by such person as it may nominate (the “case
presenter”).
(4) Advisers to the Appeal Committee
The Appeal Committee may also instruct a solicitor or barrister to act as its legal adviser on
the hearing of any appeal. At a hearing concerning a party’s state of health as described in
regulation 19, the Appeal Committee may instruct a medical expert to act as its medical
adviser.
(5) Adjournments
(a) A party may make a written request to the Appeal Committee that the hearing be
adjourned to a future meeting. Such request will be considered at the outset of
the hearing and the Appeal Committee may, in its absolute discretion, agree to the
request.
(b) Any such request made in advance of the hearing shall be considered as follows.
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If the request is made after the provision of notice in accordance with regulation 9(1),
it shall be considered by the Chairman, who may in his absolute discretion agree to
the request. If such request is denied by the Chairman, it shall be considered at the
outset of the hearing by the other members of the Appeal Committee in accordance
with regulation 9(5)(a).
If the request is made by the person who is the subject of the decision under appeal
before the provision of notice in accordance with regulation 9(1), the Association may
agree to the request. If the Association opposes the request, it shall be considered
by the Chairman in accordance with this regulation. If such request is denied by the
Chairman, it shall be considered at the outset of the hearing by the other members of
the Appeal Committee in accordance with regulation 9(5)(a).
(c) In advance of the hearing, at the outset of the hearing, or at any time during the
hearing, the Appeal Committee may itself direct that the case should be adjourned.
(d) The Appeal Committee may impose such conditions as it may determine upon the
grant of an adjournment.
(e) The Appeal Committee may (but need not) agree to or direct an adjournment where
criminal or civil proceedings concerning a relevant matter are pending to which the
person who is the subject of the decision under appeal is a party.
(f) Before making a decision, the Chairman or Appeal Committee as appropriate shall
invite representations from the other party.
(g) The Chairman and the Appeal Committee shall give written reasons for a decision to
refuse or grant a request for an adjournment.
10. The hearing
(1) Constitution of Appeal Committee
The Chairman who considered the application notice in accordance with regulation 6(3) may
hear the appeal if he had granted permission to appeal. He shall not be permitted to hear the
appeal if he had refused permission to appeal.
(2) Burden and standard of proof
On the hearing of any appeal it shall be for the appellant to satisfy the Appeal Committee
that the grounds of the appeal are made out. The standard of proof to be applied by the
Appeal Committee shall be the balance of probabilities.
(3) Amendment of grounds of appeal
If the appellant so requests, or of its own motion, at any time during the hearing the Appeal
Committee may amend the application notice to:
(a) replace any ground of appeal upon which permission to appeal had been granted
with one or more of the grounds of appeal set out in regulation 5(2);
(b) add one or more of the grounds of appeal set out in regulation 5(2), including any
ground upon which permission to appeal had not been granted.
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(4) Presentations
The appellant shall present his case first, followed by the respondent. The appellant then has
a right of reply.
(5) Witnesses
Pursuant to regulation 8(3), witnesses may only be called if permission to appeal has been
granted upon the ground set out in regulation 5(2)(d). Any such witnesses shall be liable to
cross-examination by the other party. The Appeal Committee may ask questions of either
party and their witnesses (if any), at any time.
11. Orders of Appeal Committee
(1) On the conclusion of the hearing of the appeal, the Appeal Committee shall consider the
appeal.
(2) In the case of an appeal against one or more of the findings and orders of the Disciplinary
Committee, the Appeal Committee may do any one or more of the following:
(a) affirm or vary any findings of the Disciplinary Committee;
(b) affirm, vary or rescind any order of the Disciplinary Committee;
(c) substitute any other order which the Disciplinary Committee could have made;
(d) order that the case be heard afresh by the Disciplinary Committee.
(3) In the case of an appeal against one or more of the orders, but not the findings, of the
Disciplinary Committee, the Appeal Committee may do either or both of the following:
(a) affirm, vary or rescind any order of the Disciplinary Committee;
(b) substitute any other order which the Disciplinary Committee could have made.
(4) In the case of an appeal against the decision of the Admissions and Licensing Committee,
the Appeal Committee may make such order as it sees fit in respect of the appeal.
12. Costs
In this regulation 12, reference to “the appeal” includes consideration of the application
notice by the Appeal Committee in accordance with regulation 6(4).
(1) Costs to be paid by the appellant to the Association
Where the appellant is a person who is the subject of a decision made by the Disciplinary
Committee or the Admissions and Licensing Committee, the Appeal Committee may direct
the appellant to pay to the Association by way of costs of the appeal such sum as the Appeal
Committee shall consider appropriate. In considering what sum shall be paid by way of costs,
if any, the Appeal Committee shall take into account (and without limiting its discretion in
any way) any effect the appellant’s actions in relation to the conduct of the appeal have had
upon the costs of dealing with the appeal, whether beneficial or otherwise.
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2.8 Appeal Regulations
(2) Costs to be paid by the Association to the appellant
Where the appellant is a person who is the subject of a decision made by the Disciplinary
Committee, and the Appeal Committee has wholly rescinded a finding of the Disciplinary
Committee in respect of an allegation and has itself found the allegation not proved, the
Appeal Committee may direct the Association to pay a sum to the appellant by way of
contribution to his costs incurred in connection with the case and the appeal in such amount
as the Appeal Committee shall in its discretion decide.
(3) Costs to be paid by the Association to the complainant
Where the appeal is against a decision of the Disciplinary Committee, the Appeal Committee
may in exceptional circumstances direct the Association to pay a sum to a complainant
by way of contribution to his costs incurred with the case in such amount as the Appeal
Committee shall in its discretion think fit.
(4) Costs to be paid by the Association to the respondent
Where the Association is the appellant and has not been successful on all the grounds of its
appeal, the Appeal Committee may direct that the Association pay to the respondent by way
of costs of the appeal such sum as the Appeal Committee shall consider appropriate.
13. Effect on costs of withdrawal of appeal
(1) Costs of the complainant
Where the appeal is against a decision of the Disciplinary Committee, the Appeal Committee
may in exceptional circumstances direct the Association to pay a sum to the complainant
by way of contribution to his costs incurred in the case in such amount as the Appeal
Committee shall in its discretion think fit.
(2) Costs of the respondent to be covered by the appellant
If at any time prior to the conclusion of the hearing of the appeal the appellant makes a
request to withdraw the appeal, the Appeal Committee shall make such order as it sees fit in
respect of costs. In particular, the Appeal Committee may order the appellant to pay to the
respondent by way of costs of the appeal such sum as the Appeal Committee shall consider
appropriate. In considering what sum shall be paid by way of costs, if any, the Appeal
Committee shall take into account (but without limiting its discretion in any way) any effect
that the appellant’s actions in relation to the conduct of the appeal and its withdrawal have
had upon the costs of dealing with the appeal up to the time of the withdrawal, whether
beneficial or otherwise.
14. Notification
The Appeal Committee shall announce its decision at the hearing. Formal written notice of
the order made shall be notified to the parties within 14 days after the hearing, and a written
statement of the reasons for the decision of the Appeal Committee shall be given to the
parties within 21 days after the hearing, or such longer period as shall be necessary in the
circumstances.
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15. Correction of errors
(1) Where the order and/or written statement of the reasons for the decision of the Appeal
Committee contains an accidental error or omission, a party may apply by way of an
application notice for it to be corrected. The application notice shall describe the error or
omission and state the correction required.
(2) The Chairman may deal with the application without notice if the error or omission is
obvious, or may direct that notice of the application be given to the other party.
(3) If notice of the application is given to the other party, the application may be considered
without a hearing with the consent of the parties, such consent not to be unreasonably
withheld.
(4) If the application is opposed, it should be heard by the same Appeal Committee which
made the order and/or written statement of reasons for the decision which are the subject
of the application. The Appeal Committee may not conduct a re-hearing of the case or a
reconsideration of the orders made.
(5) The Appeal Committee may of its own motion amend the wording of its own order and/
or written statement of reasons for the decision for the purpose of making the meaning and
intention clear.
16. Effective date
(1) An order of the Disciplinary Committee in respect of which the Chairman has refused
permission to appeal shall take effect as follows:
(a) where the Chairman’s decision is final pursuant to regulation 6(3)(g)(i), on the date of
the Chairman’s decision;
(b) in all other cases, 28 days after service of the Chairman’s written reasons for refusing
permission, unless pursuant to regulation 6(3)(g)(ii) the appellant has by that date
filed a request that his application notice be reconsidered by the Appeal Committee.
(2) Any order made by the Appeal Committee shall take effect from the date it is made
(that is, for the avoidance of doubt, the date its decision is announced and not the date it is
formally notified to the appellant) unless the Appeal Committee, in its absolute discretion,
directs that it shall take effect as from some other date (not being earlier than the date of the
decision under appeal) as shall be specified in the order of the Appeal Committee.
17. Publicity
(1) The Appeal Committee shall give advance publicity of its meetings, and of the hearing
of any case by it, in such terms and manner as it thinks fit, save that in any such advance
publication no appellant shall be named.
(2) In the case of an appeal against a decision of the Disciplinary Committee:
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2.8 Appeal Regulations
(a) any finding and/or order of the Appeal Committee shall, as soon as it has become
effective, be published, provided that where the order is that no further action be
taken any finding and/or order shall only be published if the appellant so requests;
(b) unless in exceptional circumstances the Appeal Committee otherwise directs, in such
publicity the appellant shall be named and any finding and/or order made against him
stated;
(c) any finding and/or order shall be sent to such publications as the Appeal Committee
thinks fit, provided that if the relevant person is not named they shall not be sent to
any publications local to the relevant person’s place of business or residence;
(d) the Association may publish the reasons for the Appeal Committee’s decision and
may do so in whole or in summary form.
(3) In the case of an appeal against the decision of the Admissions and Licensing Committee:
(a) where the Appeal Committee has ordered the withdrawal of a certificate or
certificates pursuant to the Authorisation Regulations, the order shall, as soon as it
has become effective, be published;
(b) unless in exceptional circumstances the Appeal Committee otherwise directs, in such
publicity the appellant shall be named and the order made against him stated;
(c) the order shall be sent to such publications as the Appeal Committee thinks fit,
provided that if the relevant person is not named they shall not be sent to any
publications local to the relevant person’s place of business or residence.
(4) The Insolvency Service may publish the names of holders or former holders of the
Association’s insolvency licence who are subject to a decision of the Appeal Committee,
and details of the decision made, in such publications and in such a manner as it thinks fit.
For the avoidance of doubt, the details contained in such publicity are not limited to those
published by the Association pursuant to regulation 17(2) and (3).
18. Open hearings
Save where otherwise specified in these regulations, meetings of the Appeal Committee
shall be open to the public, unless the Appeal Committee determines that the public shall be
excluded from attending all or part of any meeting at any time, including during the hearing of
any case by it, on any one or more of the following grounds:
(a) (i)
in the interests of morals, public order or national security in a democratic
society;
(ii)
where the interests of juveniles or the protection of the private lives of the
parties so requires; or
(iii)
to the extent strictly necessary in the opinion of the Appeal Committee in
special circumstances where publicity would prejudice the interests of justice.
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(b) The Appeal Committee may establish such procedures as it deems necessary
or desirable in connection with attendance by the public at its meetings and the
procedure to be adopted in respect of any meeting shall, subject to the foregoing
paragraphs of this regulation, be such as the Appeal Committee, in its absolute
discretion, so determines.
19. Ill health
Where it is asserted on behalf of an appellant, after a case has been referred to the Appeal
Committee, that he is too ill to participate in the process (“the appeal process”) but does not
wish to withdraw his appeal, the appellant may apply for an adjournment and the following
regulations apply.
(1) Submission of evidence
(a) Within seven days of the assertion that he is too ill to participate in the appeal
process, the appellant shall submit:
(i)
medical evidence to support the assertion, including a prognosis and indication
as to when, if at all, the appellant would be well enough to participate in the
appeal process; and
(ii)
details of the arrangements he has made for the continuity of his practice
during the period of his ill health.
(2) Right to require appellant to be examined
At any time, the Association shall have the right to require the appellant to be examined by a
doctor or other medical professional of the Association’s choice.
(3) Referral to health hearing
(a) At any time, at the request of the Association or by order of the Appeal Committee,
the question of the appellant’s fitness to participate in the appeal process shall
be considered by the Appeal Committee at a health hearing (see regulation 19(4)
below). This should be done in any event where the appeal process has, in the
Association’s view, been deferred for an unreasonable period of time with no
sufficient improvement in the appellant’s health nor any agreement between the
appellant and the Association as to how to proceed. What will be an unreasonable
period of time will depend on the circumstances of each case.
(b) Reviews of a decision of the Disciplinary Committee or Appeal Committee made at a
first health hearing shall be referred to a differently constituted Appeal Committee.
(4) Health hearing
(a) At a hearing under regulation 19(3)(a), it shall be for the appellant to satisfy the
Appeal Committee that he is unfit to participate in the appeal process. At a review
hearing under regulation 19(3)(b), it shall be for the appellant to satisfy the Appeal
Committee on the grounds of the review.
(b) If the appellant is too ill to be present at the hearing, he may attend by way of
telephone or video link.
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2.8 Appeal Regulations
(c) The respondent and the appellant may submit documentary evidence (medical or
otherwise) not less than seven days prior to the health hearing. Documents submitted
less than seven days prior to the hearing will only be considered by the Appeal
Committee in exceptional circumstances.
(d) During the health hearing, the Appeal Committee shall be entitled to make a
determination on the evidence before it of the allegations against the appellant, for
the purpose of deciding whether the seriousness of the allegations is such that it
would be in the public interest to make an order under Complaints and Disciplinary
Regulation 6(5)(e) and/or an order that the disciplinary or appeal process should be
resumed notwithstanding the appellant’s assertion of ill health. Such determination
shall be disregarded for the purposes of any subsequent disciplinary or appeal
hearing before a differently constituted Committee.
(e) The Appeal Committee has the power to make any order which the Disciplinary
Committee could have made at a health hearing, save that it may not order that the
appeal process be withdrawn. Where the Appeal Committee is reviewing a decision
of the Disciplinary Committee made at a health hearing, it may do any one or more of
the following:
(i) affirm, vary or rescind the order of the Disciplinary Committee;
(ii)
substitute any other order which the Disciplinary Committee could have made.
(f) Where the Appeal Committee is hearing a case other than a review of a decision of
the Disciplinary Committee, it shall specify whether any elements of its orders are to
have immediate effect regardless of any request for review that may be made by the
appellant. The Appeal Committee may not so specify in relation to an order directing
that the appeal process be resumed or deferred.
(5) Publicity
Health hearings shall be heard in private, but the Appeal Committee’s decision shall be
subject to publicity in accordance with regulations 17(1), 17(2) and 17(3).
(6) Right of appeal
There shall be a right of review of a decision of the Appeal Committee made following a
referral under regulation 19(3)(a). There shall be no right of review of a decision of the
Appeal Committee made following a review under regulation 19(3)(b).
(7) Applicability of Appeal Regulations
The other Appeal Regulations will apply to health hearings unless they conflict with any
paragraph within regulation 19, in which case the relevant provision of regulation 19 shall
take precedence.
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20. General
(1) General procedure
The procedures to be adopted in relation to any meeting of the Appeal Committee shall,
subject to the foregoing regulations, be such as the Appeal Committee shall, in its absolute
discretion, determine. In particular, the Appeal Committee may establish such procedures
as it deems necessary or desirable in connection with the attendance by the public at its
meetings.
(2) Notices
(a) Any notice or other document required to be given to or served on a party may be
provided to him personally, sent by post or courier to his or its registered place of
address, or sent by email as provided for under regulation 20(3) below. If the party
has no registered address any notice or document should be sent by post or courier
to his address last known to the Association.
(b) Any notice or document required to be given to or served on the Association may
be provided by sending it by post or courier to the principal office of the Association
addressed to the Committee Officer or sending it by email as provided for under
regulation 20(3) below.
Subject to regulation 20(3) below, any such notice or document so sent shall be deemed to
have been given or served within 72 hours (excluding Saturdays, Sundays and Public and
Bank Holidays) of despatch.
(3) Service by email
(a) Subject to the following provisions of regulation 20(3), where a notice or document
is to be served by the Association on a relevant person it may be served by
email provided that the relevant person has previously indicated in writing to the
Association that he is willing to accept service by email, has provided his email
address to the Association in whatever form the Association deems appropriate, and
has stipulated whether there are any limitations to his agreement to accept service by
electronic means (for example, the format in which documents are to be sent and the
maximum size of attachments that may be received).
(b) For the purposes of regulation 20(3)(a) above, notice of willingness to accept service
by email may be sent by the relevant person to the email address specified in the
Association’s communication to the relevant person. Unless and until the relevant
person sends a further notice stating that he is no longer willing to accept service
by email, service by the Association of any notice or document to the email address
stipulated by the relevant person shall be deemed to be valid service for the purposes
of this regulation.
(c) The Association is willing to accept service of any notice or document by email to the
email address specified in the Association’s communication to the relevant person.
Any email attachment must not exceed 20,000 KB in size.
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2.8 Appeal Regulations
(d) Where a document is served by electronic means, the party serving the document (be
it the Association or the relevant person, as the case may be) need not in addition
send or deliver a hard copy.
(e) The email address given by the relevant person and/or the Association for the
purposes of this regulation will be deemed to be at the address for service.
(f) Service by email is deemed to be effective on the working day it was sent. For the
avoidance of doubt, any email sent after 5 pm will be deemed to have been served
on the following working day.
(g) For the avoidance of doubt, service by email may only validly be effected under
regulation 20(3) for the purposes of the current or concurrent appeal proceedings,
but in the event that the relevant person previously indicated his willingness to accept
service by email in relation to the current or concurrent admissions and licensing or
disciplinary proceedings appealed from, no additional indication of such willingness is
required for the purposes of regulation 20(3)(a).
(4) Payment
Any order that a sum be paid to the Association or the complainant must be complied with
within 21 days from the date the order becomes effective (unless Council otherwise agrees)
and, where the appellant who is the subject of the order is a firm, shall be jointly and
severally due from, and shall be paid by, the persons who are specified persons in relation to
the firm on the date of the order.
(5) Attendance
A party may attend a hearing of the Appeal Committee where he is a party concerned
notwithstanding that he may have previously indicated that he did not intend to attend.
(6) Hearings
Where a case is of particular interest to a specific government or government agency, or
primarily affects persons resident in a specific country, either the Appeal Committee or
the Secretary may direct that the hearing before the Appeal Committee take place in that
country. In the absence of any such direction, hearings before the Appeal Committee shall
take place in London.
(7) Public interest cases
(a) The Association shall refer a case to the AADB where:
(i) it considers that the case raises or appears to raise serious issues affecting the
public interest in the United Kingdom; and
(ii) it considers that a relevant person may have committed an act of misconduct
in relation to the case; and
(iii)
306
it is satisfied that no disciplinary proceedings going beyond an investigation
have been instituted by the Association or any other AADB participant in
relation to the conduct in question. This regulation 20(7)(a)(iii) is unlikely to be
Appeal Regulations 2.8
satisfied in the case of an appeal unless evidence of the conduct in question
was not available prior to the hearing of the Disciplinary Committee.
(b) Where the Association receives notice that AADB has decided to deal with a case
relating to a relevant person, either in response to a referral under regulation 20(7)(a)
or of its own volition, the Association shall suspend any investigation relating to the
case and, upon AADB’s request, provide to AADB any such documentary information
in its possession or control which it can lawfully provide.
(c) IAASA may undertake its own investigation into a case relating to a relevant person
if IAASA forms the opinion that it is appropriate or in the public interest to do so. In
such circumstances, the Association shall suspend any investigation relating to the
case and, upon IAASA’s request, provide to IAASA any such documentary information
in its possession or control which it can lawfully provide.
(d) It is the duty of all relevant persons to co-operate with the AADB and IAASA during
the course of any investigations they may undertake. A failure or partial failure to cooperate fully with the AADB or IAASA shall constitute a breach of these regulations
and may render the relevant person liable to disciplinary action.
(8) Transitional provisions
(a) The grounds of appeal available to the appellant shall be those in force at the date of
the decision which is the subject of the application notice.
(b) The test to be applied when considering whether permission to appeal should be
granted shall be the test in force at the date of the application notice.
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Section 3
Code of Ethics and Conduct
309
Contents
Contents
PREFACE TO THE ACCA CODE OF ETHICS AND CONDUCT
PART A: GENERAL APPLICATION OF THE CODE
100 Introduction and fundamental principles
110 Integrity
120 Objectivity
130 Professional competence and due care
140 Confidentiality
150 Professional behavior
PART B: PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE
200 Introduction
210 Professional appointment
220 Conflicts of interest
230 Second opinions
240 Fees and other types of remuneration
250 Marketing professional services
260 Gifts and hospitality
270 Custody of client assets
280 Objectivity – All services
290 Independence – Audit and review engagements
291 Independence – Other assurance engagements
Interpretation 2005-01
Supplementary requirements and guidance:
B1 Professional duty of confidence in relation to defaults and unlawful acts of
clients and others
B2 Money laundering
B3 Whistleblowing responsibilities placed on auditors
B4 Descriptions of professional accountants and firms and the names of
practising firms
B5 Legal ownership of, and rights of access to, books, files, working papers and
other documents
B6 Retention periods for books, files, working papers and other documents
B7 Activities through corporate or non-corporate organisations
B8 The obligations of consultants
B9 Professional liability of accountants and auditors
B10 The incapacity or death of a practitioner
B11 Estates of deceased persons
B12 Corporate finance advice including take-overs
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Contents
PART
300
310
320
330
340
350
C: PROFESSIONAL ACCOUNTANTS IN BUSINESS
Introduction
Potential conflicts
Preparation and reporting of information
Acting with sufficient expertise
Financial interests
Inducements
498
499
503
504
506
507
509
Supplementary requirements and guidance:
C1 Disclosing confidential information
C2 Whistleblowing
511
512
PART D: INSOLVENCY CODE OF ETHICS
Code of Ethics for Insolvency Practitioners
Part 1 General application of the Code
Part 2 Specific application of the Code
The application of the framework to specific situations
513
514
515
520
529
DEFINITIONS
533
EFFECTIVE DATE
539
311
Preface to the ACCA Code of Ethics and Conduct
Preface to the ACCA Code of Ethics and
Conduct
1. Throughout this Code of Ethics and Conduct, use of the word “Code” refers to the ACCA
Code of Ethics and Conduct, unless there is an explicit indication to the contrary. In creating
this Code, ACCA has adopted the Code of Ethics for Professional Accountants issued by
the International Ethics Standards Board for Accountants (IESBA). The IESBA code was
previously issued by the IFAC Ethics Committee, and so was commonly referred to as “the
IFAC code”.
2. Where necessary, ACCA has augmented the IESBA code with additional requirements
and guidance that are appropriate to ACCA and its members. This additional material
is clearly differentiated from the original text of the IESBA code by the use of italics. In
adopting the IESBA code, ACCA has not changed any of the IESBA text, and has reproduced
it in exactly the form issued by the IESBA.
Scope and authority of the Code
3. The IESBA code establishes ethical requirements for members of IFAC member bodies,
and requires ACCA to apply ethical standards that are no less stringent than those stated
in the IESBA code. Therefore, in adopting the IESBA code, it has been necessary to amend
the wording to ensure that it remains relevant to members, students, affiliates and member
firms of ACCA. Accordingly, several references in the IESBA code to “a member body”, “a
professional body” or “the relevant professional body” have been changed to “ACCA”.
4. Where there may be perceived to be any conflict between the requirements of the IESBA
code and the ACCA augmentations in italics (including this preface), the more stringent
requirements shall apply.
5. Where statutory and regulatory requirements are concerned, ACCA registered students,
affiliates and members are reminded that they must also refer to, and comply with, the
legislation and regulatory requirements of the countries in which they work.
6. In some specialist areas of work, such as audit, insolvency and financial services,
professional accountants are subject to a variety of statutory and regulatory requirements.
Where this Code imposes a more stringent requirement than statutory and regulatory
requirements, or vice versa, the more stringent requirement will apply, unless prohibited by
law or regulation.
How to use the Code
7. This Code is set out in four parts - Part A being applicable to all professional accountants,
Part B to professional accountants working in public practice, Part C to professional
accountants in business, and Part D to professional accountants in the United Kingdom who
are insolvency practitioners. However, professional accountants may find the guidance in
any Part of the Code applicable to their specific circumstances.
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Preface to the ACCA Code of Ethics and Conduct
8. Throughout this Code, specific requirements are indicated by the use of the word “shall”;
alternative appropriate wording is used to indicate guidance material.
9. Throughout this Code, examples are included that are intended to illustrate how the
conceptual framework is to be applied. The examples are not intended to be, nor shall
they be interpreted as, an exhaustive list of all circumstances experienced by professional
accountants that may create threats to compliance with the fundamental principles.
Consequently, it is not sufficient for professional accountants to merely comply with the
examples presented; rather, the framework shall be applied to the particular circumstances
encountered.
10. ACCA registered students, affiliates and members who are in doubt as to their correct
course of action in particular cases may obtain further guidance from ACCA. It is advisable
to seek guidance prior to embarking on a course of action.
To whom does the Code apply?
11. Reference throughout this Code will be made to “professional accountants”, which is
interpreted in the context of the ACCA Code of Ethics and Conduct as members or, where
appropriate, students, affiliates or member firms of ACCA.
12. ACCA registered students, affiliates and members are required to observe proper
standards of conduct. The Code applies to all ACCA registered students, affiliates and
members in relation to all matters connected to their professional lives. This means that in
matters connected to their professional lives, they must refrain from taking any action which
amounts to a departure from the standards set out in this Code. In both their professional
and personal lives, they must also refrain from what is described in ACCA’s bye-law 8 as
misconduct.
13. Registered students and affiliates are bound by the ethical requirements of ACCA, as
affirmed by their signature on the application forms to be enrolled as registered students.
14. Registered students remain bound by ACCA’s ethical requirements during the period
between successful completion of the examinations and their admission to membership (i.e.
those having affiliate status). On admission to membership they become subject to the same
requirements in their new capacity.
Non-compliance with the Code
15. An ACCA registered student, affiliate or member who fails to comply with this Code will
be liable to disciplinary action. Two committees have been appointed by Council to enforce
ACCA’s ethical standards: Disciplinary Committee and Appeal Committee. The committees
derive their powers from the bye-laws. Those failing to observe the standards expected of
them may be required to answer a complaint before ACCA’s Disciplinary Committee.
16. It is not possible to specify all those combinations of circumstances in which a
professional accountant may be held by Disciplinary Committee to have fallen below the
standard expected. However, this section of the Rulebook (which may be added to or varied
from time to time) sets out ACCA’s ethical requirements in relation to those professional
situations that most commonly arise.
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The ACCA Code of Ethics and Conduct
Part A – General Application of the Code
Section
Section
Section
Section
Section
Section
314
100
110
120
130
140
150
Introduction and fundamental principles
Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behavior
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Introduction and fundamental principles 100
SECTION 100
Introduction and fundamental principles
100.1
A distinguishing mark of the accountancy profession is its acceptance of the
responsibility to act in the public interest. Therefore, a professional accountant’s
responsibility is not exclusively to satisfy the needs of an individual client or
employer. In acting in the public interest, a professional accountant shall observe
and comply with this Code. If a professional accountant is prohibited from
complying with certain parts of this Code by law or regulation, the professional
accountant shall comply with all other parts of this Code.
100.2
This Code contains three parts. Part A establishes the fundamental principles
of professional ethics for professional accountants and provides a conceptual
framework that professional accountants shall apply to:
(a) Identify threats to compliance with the fundamental principles;
(b) Evaluate the significance of the threats identified; and
(c) Apply safeguards, when necessary, to eliminate the threats or reduce them
to an acceptable level. Safeguards are necessary when the professional
accountant determines that the threats are not at a level at which a reasonable
and informed third party would be likely to conclude, weighing all the specific
facts and circumstances available to the professional accountant at that time,
that compliance with the fundamental principles is not compromised.
A professional accountant shall use professional judgment in applying this
conceptual framework.
100.3
Parts B and C describe how the conceptual framework applies in certain situations.
They provide examples of safeguards that may be appropriate to address threats
to compliance with the fundamental principles. They also describe situations
where safeguards are not available to address the threats, and consequently, the
circumstance or relationship creating the threats shall be avoided. Part B applies
to professional accountants in public practice. Part C applies to professional
accountants in business. Professional accountants in public practice may also find
Part C relevant to their particular circumstances.
100.4
The use of the word “shall” in this Code imposes a requirement on the professional
accountant or firm to comply with the specific provision in which “shall” has been
used. Compliance is required unless an exception is permitted by this Code.
Fundamental principles
100.5
A professional accountant shall comply with the following fundamental principles:
(a) Integrity – to be straightforward and honest in all professional and business
relationships.
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100 Introduction and fundamental principles
(b) Objectivity – to not allow bias, conflict of interest or undue influence of others to
override professional or business judgments.
(c) Professional Competence and Due Care – to maintain professional knowledge
and skill at the level required to ensure that a client or employer receives
competent professional services based on current developments in practice,
legislation and techniques and act diligently and in accordance with applicable
technical and professional standards.
(d) Confidentiality – to respect the confidentiality of information acquired as a result
of professional and business relationships and, therefore, not disclose any such
information to third parties without proper and specific authority, unless there is
a legal or professional right or duty to disclose, nor use the information for the
personal advantage of the professional accountant or third parties.
(e) Professional Behavior – to comply with relevant laws and regulations and avoid
any action that discredits the profession.
Each of these fundamental principles is discussed in more detail in Sections 110–
150.
Conceptual framework approach
100.6
The circumstances in which professional accountants operate may create specific
threats to compliance with the fundamental principles. It is impossible to define
every situation that creates threats to compliance with the fundamental principles
and specify the appropriate action. In addition, the nature of engagements and
work assignments may differ and, consequently, different threats may be created,
requiring the application of different safeguards. Therefore, this Code establishes
a conceptual framework that requires a professional accountant to identify,
evaluate, and address threats to compliance with the fundamental principles. The
conceptual framework approach assists professional accountants in complying
with the ethical requirements of this Code and meeting their responsibility to act in
the public interest. It accommodates many variations in circumstances that create
threats to compliance with the fundamental principles and can deter a professional
accountant from concluding that a situation is permitted if it is not specifically
prohibited.
100.7
When a professional accountant identifies threats to compliance with the
fundamental principles and, based on an evaluation of those threats, determines
that they are not at an acceptable level, the professional accountant shall determine
whether appropriate safeguards are available and can be applied to eliminate the
threats or reduce them to an acceptable level. In making that determination, the
professional accountant shall exercise professional judgment and take into account
whether a reasonable and informed third party, weighing all the specific facts
and circumstances available to the professional accountant at the time, would be
likely to conclude that the threats would be eliminated or reduced to an acceptable
level by the application of the safeguards, such that compliance with the
fundamental principles is not compromised.
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Introduction and fundamental principles 100
100.8
A professional accountant shall evaluate any threats to compliance with the
fundamental principles when the professional accountant knows, or could
reasonably be expected to know, of circumstances or relationships that may
compromise compliance with the fundamental principles.
100.9
A professional accountant shall take qualitative as well as quantitative factors into
account when evaluating the significance of a threat. When applying the conceptual
framework, a professional accountant may encounter situations in which threats
cannot be eliminated or reduced to an acceptable level, either because the threat
is too significant or because appropriate safeguards are not available or cannot be
applied. In such situations, the professional accountant shall decline or discontinue
the specific professional service involved or, when necessary, resign from the
engagement (in the case of a professional accountant in public practice) or the
employing organization (in the case of a professional accountant in business).
100.10 A professional accountant may inadvertently violate a provision of this Code.
Depending on the nature and significance of the matter, such an inadvertent
violation may be deemed not to compromise compliance with the fundamental
principles provided, once the violation is discovered, the violation is corrected
promptly and any necessary safeguards are applied.
100.11 When a professional accountant encounters unusual circumstances in which the
application of a specific requirement of the Code would result in a disproportionate
outcome or an outcome that may not be in the public interest, it is recommended
that the professional accountant consult with ACCA or the relevant regulator.
Threats and safeguards
100.12 Threats may be created by a broad range of relationships and circumstances. When
a relationship or circumstance creates a threat, such a threat could compromise,
or could be perceived to compromise, a professional accountant’s compliance with
the fundamental principles. A circumstance or relationship may create more than
one threat, and a threat may affect compliance with more than one fundamental
principle. Threats fall into one or more of the following categories:
(a) Self-interest threat – the threat that a financial or other interest will
inappropriately influence the professional accountant’s judgment or behavior;
(b) Self-review threat – the threat that a professional accountant will not
appropriately evaluate the results of a previous judgment made or service
performed by the professional accountant, or by another individual within
the professional accountant’s firm or employing organization, on which the
accountant will rely when forming a judgment as part of providing a current
service;
(c) Advocacy threat – the threat that a professional accountant will promote a
client’s or employer’s position to the point that the professional accountant’s
objectivity is compromised;
(d) Familiarity threat – the threat that due to a long or close relationship with a
client or employer, a professional accountant will be too sympathetic to their
interests or too accepting of their work; and
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100 Introduction and fundamental principles
(e) Intimidation threat – the threat that a professional accountant will be deterred
from acting objectively because of actual or perceived pressures, including
attempts to exercise undue influence over the professional accountant.
Parts B and C of this Code explain how these categories of threats may be created
for professional accountants in public practice and professional accountants in
business, respectively. Professional accountants in public practice may also find
Part C relevant to their particular circumstances.
100.13 Safeguards are actions or other measures that may eliminate threats or reduce them
to an acceptable level. They fall into two broad categories:
(a) Safeguards created by the profession, legislation or regulation; and
(b) Safeguards in the work environment.
100.14 Safeguards created by the profession, legislation or regulation include:
• Educational, training and experience requirements for entry into the profession.
• Continuing professional development requirements.
• Corporate governance regulations.
• Professional standards.
• Professional or regulatory monitoring and disciplinary procedures.
• External review by a legally empowered third party of the reports, returns,
communications or information produced by a professional accountant.
100.15 Parts B and C of this Code discuss safeguards in the work environment for
professional accountants in public practice and professional accountants in
business, respectively.
100.16 Certain safeguards may increase the likelihood of identifying or deterring unethical
behavior. Such safeguards, which may be created by the accounting profession,
legislation, regulation, or an employing organization, include:
• Effective, well-publicized complaint systems operated by the employing
organization, the profession or a regulator, which enable colleagues, employers
and members of the public to draw attention to unprofessional or unethical
behavior.
• An explicitly stated duty to report breaches of ethical requirements.
Ethical conflict resolution
100.17 A professional accountant may be required to resolve a conflict in complying with
the fundamental principles.
100.18 When initiating either a formal or informal conflict resolution process, the following
factors, either individually or together with other factors, may be relevant to the
resolution process:
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Introduction and fundamental principles 100
(a) Relevant facts;
(b) Ethical issues involved;
(c) Fundamental principles related to the matter in question;
(d) Established internal procedures; and
(e) Alternative courses of action.
Having considered the relevant factors, a professional accountant shall determine
the appropriate course of action, weighing the consequences of each possible
course of action. If the matter remains unresolved, the professional accountant
may wish to consult with other appropriate persons within the firm or employing
organization for help in obtaining resolution.
100.19 Where a matter involves a conflict with, or within, an organization, a professional
accountant shall determine whether to consult with those charged with governance
of the organization, such as the board of directors or the audit committee.
100.20 It may be in the best interests of the professional accountant to document the
substance of the issue, the details of any discussions held, and the decisions made
concerning that issue.
100.21 If a significant conflict cannot be resolved, a professional accountant may consider
obtaining professional advice from ACCA or from legal advisors. The professional
accountant generally can obtain guidance on ethical issues without breaching the
fundamental principle of confidentiality if the matter is discussed with ACCA on
an anonymous basis or with a legal advisor under the protection of legal privilege.
Instances in which the professional accountant may consider obtaining legal advice
vary. For example, a professional accountant may have encountered a fraud, the
reporting of which could breach the professional accountant’s responsibility to
respect confidentiality. The professional accountant may consider obtaining legal
advice in that instance to determine whether there is a requirement to report.
100.22 If, after exhausting all relevant possibilities, the ethical conflict remains unresolved,
a professional accountant shall, where possible, refuse to remain associated with
the matter creating the conflict. The professional accountant shall determine
whether, in the circumstances, it is appropriate to withdraw from the engagement
team or specific assignment, or to resign altogether from the engagement, the firm
or the employing organization.
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110 Integrity
SECTION 110
Integrity
110.1
The principle of integrity imposes an obligation on all professional accountants to be
straightforward and honest in all professional and business relationships. Integrity
also implies fair dealing and truthfulness.
110.2
A professional accountant shall not knowingly be associated with reports, returns,
communications or other information where the professional accountant believes
that the information:
(a) Contains a materially false or misleading statement;
(b) Contains statements or information furnished recklessly; or
(c) Omits or obscures information required to be included where such omission or
obscurity would be misleading.
When a professional accountant becomes aware that the accountant has
been associated with such information, the accountant shall take steps to be
disassociated from that information.
110.3
A professional accountant will be deemed not to be in breach of paragraph 110.2
if the professional accountant provides a modified report in respect of a matter
contained in paragraph 110.2.
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Objectivity 120
SECTION 120
Objectivity
120.1
The principle of objectivity imposes an obligation on all professional accountants
not to compromise their professional or business judgment because of bias, conflict
of interest or the undue influence of others.
120.2
A professional accountant may be exposed to situations that may impair objectivity.
It is impracticable to define and prescribe all such situations. A professional
accountant shall not perform a professional service if a circumstance or relationship
biases or unduly influences the accountant’s professional judgment with respect to
that service.
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130 Professional competence and due care
SECTION 130
Professional competence and due care
130.1
The principle of professional competence and due care imposes the following
obligations on all professional accountants:
(a) To maintain professional knowledge and skill at the level required to ensure that
clients or employers receive competent professional service; and
(b) To act diligently in accordance with applicable technical and professional
standards when providing professional services.
130.2
Competent professional service requires the exercise of sound judgment in applying
professional knowledge and skill in the performance of such service. Professional
competence may be divided into two separate phases:
(a) Attainment of professional competence; and
(b) Maintenance of professional competence.
130.3
The maintenance of professional competence requires a continuing awareness and
an understanding of relevant technical, professional and business developments.
Continuing professional development enables a professional accountant to develop
and maintain the capabilities to perform competently within the professional
environment.
130.4
Diligence encompasses the responsibility to act in accordance with the
requirements of an assignment, carefully, thoroughly and on a timely basis.
130.5
A professional accountant shall take reasonable steps to ensure that those working
under the professional accountant’s authority in a professional capacity have
appropriate training and supervision.
130.6
Where appropriate, a professional accountant shall make clients, employers or other
users of the accountant’s professional services aware of the limitations inherent in
the services.
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Confidentiality 140
SECTION 140
Confidentiality
140.1
The principle of confidentiality imposes an obligation on all professional accountants
to refrain from:
(a) Disclosing outside the firm or employing organization confidential information
acquired as a result of professional and business relationships without proper
and specific authority or unless there is a legal or professional right or duty to
disclose; and
(b) Using confidential information acquired as a result of professional and business
relationships to their personal advantage or the advantage of third parties.
140.2
A professional accountant shall maintain confidentiality, including in a social
environment, being alert to the possibility of inadvertent disclosure, particularly to a
close business associate or a close or immediate family member.
140.3
A professional accountant shall maintain confidentiality of information disclosed by
a prospective client or employer.
140.4
A professional accountant shall maintain confidentiality of information within the
firm or employing organization.
140.5
A professional accountant shall take reasonable steps to ensure that staff under the
professional accountant’s control and persons from whom advice and assistance is
obtained respect the professional accountant’s duty of confidentiality.
140.6
The need to comply with the principle of confidentiality continues even after the
end of relationships between a professional accountant and a client or employer.
When a professional accountant changes employment or acquires a new client,
the professional accountant is entitled to use prior experience. The professional
accountant shall not, however, use or disclose any confidential information either
acquired or received as a result of a professional or business relationship.
140.7
The following are circumstances where professional accountants are or may be
required to disclose confidential information or when such disclosure may be
appropriate:
(a) Disclosure is permitted by law and is authorized by the client or the employer;
(b) Disclosure is required by law, for example:
(i) Production of documents or other provision of evidence in the course of
legal proceedings; or
(ii) Disclosure to the appropriate public authorities of infringements of the law
that come to light; and
(c) There is a professional duty or right to disclose, when not prohibited by law:
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140 Confidentiality
(i) To comply with the quality review of ACCA or another professional body;
(ii) To respond to an inquiry or investigation by ACCA or a regulatory body;
(iii)To protect the professional interests of a professional accountant in legal
proceedings; or
(iv)To comply with technical standards and ethics requirements.
140.8
In deciding whether to disclose confidential information, relevant factors to consider
include:
(a) Whether the interests of all parties, including third parties whose interests
may be affected, could be harmed if the client or employer consents to the
disclosure of information by the professional accountant;
(b) Whether all the relevant information is known and substantiated, to the extent
it is practicable; when the situation involves unsubstantiated facts, incomplete
information or unsubstantiated conclusions, professional judgment shall be used
in determining the type of disclosure to be made, if any;
(c) The type of communication that is expected and to whom it is addressed; and
(d) Whether the parties to whom the communication is addressed are appropriate
recipients.
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Professional behavior 150
SECTION 150
Professional behavior
150.1
The principle of professional behavior imposes an obligation on all professional
accountants to comply with relevant laws and regulations and avoid any action that
the professional accountant knows or should know may discredit the profession.
This includes actions that a reasonable and informed third party, weighing all the
specific facts and circumstances available to the professional accountant at that
time, would be likely to conclude adversely affects the good reputation of the
profession.
150.2
In marketing and promoting themselves and their work, professional accountants
shall not bring the profession into disrepute. Professional accountants shall be
honest and truthful and not:
(a) Make exaggerated claims for the services they are able to offer, the
qualifications they possess, or experience they have gained; or
(b) Make disparaging references or unsubstantiated comparisons to the work of
others.
150.3
A professional accountant shall behave with courtesy and consideration towards
all with whom the professional accountant comes into contact in a professional
capacity.
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Part B – Professional Accountants in
Public Practice
Section 200 Introduction
Section 210 Professional appointment
Section 220 Conflicts of interest
Section 230 Second opinions
Section 240 Fees and other types of remuneration
Section 250 Marketing professional services
Section 260 Gifts and hospitality
Section 270 Custody of client assets
Section 280 Objectivity – All services
Section 290 Independence – Audit and review engagements
Section 291 Independence – Other assurance engagements
Interpretation 2005-01
Supplementary requirements and guidance:
Section B1 Professional duty of confidence in relation to defaults and
unlawful acts of clients and others
Section B2 Money laundering
Section B3 Whistleblowing responsibilities placed on auditors
Section B4 Descriptions of professional accountants and firms and the
names of practising firms
Section B5 Legal ownership of, and rights of access to, books, files,
working papers and other documents
Section B6 Retention periods for books, files, working papers and
other documents
Section B7 Activities through corporate or non-corporate organisations
Section B8 The obligations of consultants
Section B9 Professional liability of accountants and auditors
Section B10 The incapacity or death of a practitioner
Section B11 Estates of deceased persons
Section B12 Corporate finance advice including take-overs
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Introduction 200
SECTION 200
Introduction
200.1
This Part of the Code describes how the conceptual framework contained in Part
A applies in certain situations to professional accountants in public practice.
This Part does not describe all of the circumstances and relationships that could
be encountered by a professional accountant in public practice that create or
may create threats to compliance with the fundamental principles. Therefore,
the professional accountant in public practice is encouraged to be alert for such
circumstances and relationships.
200.2 A professional accountant in public practice shall not knowingly engage in any
business, occupation, or activity that impairs or might impair integrity, objectivity
or the good reputation of the profession and as a result would be incompatible with
the fundamental principles.
Threats and safeguards
200.3 Compliance with the fundamental principles may potentially be threatened by a
broad range of circumstances and relationships. The nature and significance of the
threats may differ depending on whether they arise in relation to the provision of
services to an audit client and whether the audit client is a public interest entity, to
an assurance client that is not an audit client, or to a non-assurance client.
Threats fall into one or more of the following categories:
(a) Self-interest;
(b) Self-review;
(c) Advocacy;
(d) Familiarity; and
(e) Intimidation.
These threats are discussed further in Part A of this Code.
200.4
Examples of circumstances that create self-interest threats for a professional
accountant in public practice include:
• A member of the assurance team having a direct financial interest in the
assurance client.
• A firm having undue dependence on total fees from a client.
• A member of the assurance team having a significant close business
relationship with an assurance client.
• A firm being concerned about the possibility of losing a significant client.
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200 Introduction
• A member of the audit team entering into employment negotiations with the
audit client.
• A firm entering into a contingent fee arrangement relating to an assurance
engagement.
• A professional accountant discovering a significant error when evaluating
the results of a previous professional service performed by a member of the
professional accountant’s firm.
200.5
Examples of circumstances that create self-review threats for a professional
accountant in public practice include:
• A firm issuing an assurance report on the effectiveness of the operation of
financial systems after designing or implementing the systems.
• A firm having prepared the original data used to generate records that are the
subject matter of the assurance engagement.
• A member of the assurance team being, or having recently been, a director or
officer of the client.
• A member of the assurance team being, or having recently been, employed by
the client in a position to exert significant influence over the subject matter of
the engagement.
• The firm performing a service for an assurance client that directly affects the
subject matter information of the assurance engagement.
200.6
Examples of circumstances that create advocacy threats for a professional
accountant in public practice include:
• The firm promoting shares in an audit client.
• A professional accountant acting as an advocate on behalf of an audit client in
litigation or disputes with third parties.
200.7
Examples of circumstances that create familiarity threats for a professional
accountant in public practice include:
• A member of the engagement team having a close or immediate family member
who is a director or officer of the client.
• A member of the engagement team having a close or immediate family member
who is an employee of the client who is in a position to exert significant
influence over the subject matter of the engagement.
• A director or officer of the client or an employee in a position to exert significant
influence over the subject matter of the engagement having recently served as
the engagement partner.
• A professional accountant accepting gifts or preferential treatment from a client,
unless the value is trivial or inconsequential.
• Senior personnel having a long association with the assurance client.
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Introduction 200
200.8
Examples of circumstances that create intimidation threats for a professional
accountant in public practice include:
• A firm being threatened with dismissal from a client engagement.
• An audit client indicating that it will not award a planned non-assurance
contract to the firm if the firm continues to disagree with the client’s accounting
treatment for a particular transaction.
• A firm being threatened with litigation by the client.
• A firm being pressured to reduce inappropriately the extent of work performed
in order to reduce fees.
• A professional accountant feeling pressured to agree with the judgment of a
client employee because the employee has more expertise on the matter in
question.
• A professional accountant being informed by a partner of the firm that a
planned promotion will not occur unless the accountant agrees with an audit
client’s inappropriate accounting treatment.
200.9
Safeguards that may eliminate or reduce threats to an acceptable level fall into two
broad categories:
(a) Safeguards created by the profession, legislation or regulation; and
(b) Safeguards in the work environment.
Examples of safeguards created by the profession, legislation or regulation are
described in paragraph 100.14 of Part A of this Code.
200.10 A professional accountant in public practice shall exercise judgment to determine
how best to deal with threats that are not at an acceptable level, whether by
applying safeguards to eliminate the threat or reduce it to an acceptable level or
by terminating or declining the relevant engagement. In exercising this judgment,
a professional accountant in public practice shall consider whether a reasonable
and informed third party, weighing all the specific facts and circumstances
available to the professional accountant at that time, would be likely to conclude
that the threats would be eliminated or reduced to an acceptable level by the
application of safeguards, such that compliance with the fundamental principles
is not compromised. This consideration will be affected by matters such as the
significance of the threat, the nature of the engagement and the structure of the
firm.
200.11 In the work environment, the relevant safeguards will vary depending on the
circumstances. Work environment safeguards comprise firm-wide safeguards and
engagement-specific safeguards.
200.12 Examples of firm-wide safeguards in the work environment include:
• Leadership of the firm that stresses the importance of compliance with the
fundamental principles.
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200 Introduction
• Leadership of the firm that establishes the expectation that members of an
assurance team will act in the public interest.
• Policies and procedures to implement and monitor quality control of
engagements.
• Documented policies regarding the need to identify threats to compliance with
the fundamental principles, evaluate the significance of those threats, and apply
safeguards to eliminate or reduce the threats to an acceptable level or, when
appropriate safeguards are not available or cannot be applied, terminate or
decline the relevant engagement.
• Documented internal policies and procedures requiring compliance with the
fundamental principles.
• Policies and procedures that will enable the identification of interests or
relationships between the firm or members of engagement teams and
clients.
• Policies and procedures to monitor and, if necessary, manage the reliance on
revenue received from a single client.
• Using different partners and engagement teams with separate reporting lines for
the provision of non-assurance services to an assurance client.
• Policies and procedures to prohibit individuals who are not members of
an engagement team from inappropriately influencing the outcome of the
engagement.
• Timely communication of a firm’s policies and procedures, including any
changes to them, to all partners and professional staff, and appropriate training
and education on such policies and procedures.
• Designating a member of senior management to be responsible for overseeing
the adequate functioning of the firm’s quality control system.
• Advising partners and professional staff of assurance clients and related entities
from which independence is required.
• A disciplinary mechanism to promote compliance with policies and procedures.
• Published policies and procedures to encourage and empower staff to
communicate to senior levels within the firm any issue relating to compliance
with the fundamental principles that concerns them.
200.13 Examples of engagement-specific safeguards in the work environment include:
• Having a professional accountant who was not involved with the non-assurance
service review the non-assurance work performed or otherwise advise as
necessary.
• Having a professional accountant who was not a member of the assurance
team review the assurance work performed or otherwise advise as necessary.
• Consulting an independent third party, such as a committee of independent
directors, a professional regulatory body or another professional accountant.
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Introduction 200
• Discussing ethical issues with those charged with governance of the client.
• Disclosing to those charged with governance of the client the nature of services
provided and extent of fees charged.
• Involving another firm to perform or re-perform part of the engagement.
• Rotating senior assurance team personnel.
200.14 Depending on the nature of the engagement, a professional accountant in public
practice may also be able to rely on safeguards that the client has implemented.
However it is not possible to rely solely on such safeguards to reduce threats to an
acceptable level.
200.15 Examples of safeguards within the client’s systems and procedures include:
• The client requires persons other than management to ratify or approve the
appointment of a firm to perform an engagement.
• The client has competent employees with experience and seniority to make
managerial decisions.
• The client has implemented internal procedures that ensure objective choices in
commissioning non-assurance engagements.
• The client has a corporate governance structure that provides appropriate
oversight and communications regarding the firm’s services.
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210 Professional appointment
SECTION 210
Professional appointment
210A
Clients are free to choose their accountants/auditors, or other advisers, and to
change them as they wish.
210B
References in subsequent paragraphs to an “accountant” shall be taken to apply
equally when the appointment under consideration is that of an auditor, reporting
accountant or accountant.
Client acceptance
210.1
Before accepting a new client relationship, a professional accountant in public
practice shall determine whether acceptance would create any threats to
compliance with the fundamental principles. Potential threats to integrity or
professional behavior may be created from, for example, questionable issues
associated with the client (its owners, management or activities).
210.2
Client issues that, if known, could threaten compliance with the fundamental
principles include, for example, client involvement in illegal activities (such as
money laundering), dishonesty or questionable financial reporting practices.
210.3
A professional accountant in public practice shall evaluate the significance of any
threats and apply safeguards when necessary to eliminate them or reduce them to
an acceptable level.
Examples of such safeguards include:
• Obtaining knowledge and understanding of the client, its owners, managers and
those responsible for its governance and business activities; or
• Securing the client’s commitment to improve corporate governance practices or
internal controls.
210.4
Where it is not possible to reduce the threats to an acceptable level, the
professional accountant in public practice shall decline to enter into the client
relationship.
210.5
It is recommended that a professional accountant in public practice periodically
review acceptance decisions for recurring client engagements.
Engagement acceptance1
210.6
The fundamental principle of professional competence and due care imposes an
obligation on a professional accountant in public practice to provide only those
1 A professional accountant contemplating accepting a specific client engagement is also referred to the
paragraphs under the heading ‘Changes in a professional appointment’.
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Professional appointment 210
services that the professional accountant in public practice is competent to
perform. Before accepting a specific client engagement, a professional accountant
in public practice shall determine whether acceptance would create any threats to
compliance with the fundamental principles. For example, a self-interest threat to
professional competence and due care is created if the engagement team does not
possess, or cannot acquire, the competencies necessary to properly carry out the
engagement.
210.7
A professional accountant in public practice shall evaluate the significance of
threats and apply safeguards, when necessary, to eliminate them or reduce
them to an acceptable level. Examples of such safeguards include:
• Acquiring an appropriate understanding of the nature of the client’s business,
the complexity of its operations, the specific requirements of the engagement
and the purpose, nature and scope of the work to be performed.
• Acquiring knowledge of relevant industries or subject matters.
• Possessing or obtaining experience with relevant regulatory or reporting
requirements.
• Assigning sufficient staff with the necessary competencies.
• Using experts where necessary.
• Agreeing on a realistic time frame for the performance of the engagement.
• Complying with quality control policies and procedures designed to provide
reasonable assurance that specific engagements are accepted only when they
can be performed competently.
210.8
When a professional accountant in public practice intends to rely on the advice or
work of an expert, the professional accountant in public practice shall determine
whether such reliance is warranted. Factors to consider include: reputation,
expertise, resources available and applicable professional and ethical standards.
Such information may be gained from prior association with the expert or from
consulting others.
Changes in a professional appointment
210.9
A professional accountant in public practice who is asked to replace an existing
accountant, or who is considering tendering for an engagement currently held by
an existing accountant, shall determine whether there are any reasons, professional
or otherwise, for not accepting the engagement, such as circumstances that create
threats to compliance with the fundamental principles that cannot be eliminated
or reduced to an acceptable level by the application of safeguards. For example,
there may be a threat to professional competence and due care if a professional
accountant in public practice accepts the engagement before knowing all the
pertinent facts.
210.10 A professional accountant in public practice shall evaluate the significance
of any threats. Depending on the nature of the engagement, this may require
direct communication with the existing accountant to establish the facts and
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210 Professional appointment
circumstances regarding the proposed change so that the professional accountant
in public practice can decide whether it would be appropriate to accept the
engagement. For example, the apparent reasons for the change in appointment
may not fully reflect the facts and may indicate disagreements with the existing
accountant that may influence the decision to accept the appointment.
210.10ACommunication with the existing accountant is not just a matter of professional
courtesy. Its main purpose is to enable a professional accountant to ensure
that there has been no action by the client which would on ethical grounds
preclude the professional accountant from accepting the appointment and that,
after considering all the facts, the client is someone for whom the professional
accountant would wish to act. Thus, a professional accountant shall communicate
with the existing accountant on being asked to accept appointment for any
recurring work, except where the client has not previously had an accountant acting
for them.
210.11 Safeguards shall be applied when necessary to eliminate any threats or reduce
them to an acceptable level. Examples of such safeguards include:
• When replying to requests to submit tenders, stating in the tender that,
before accepting the engagement, contact with the existing accountant will
be requested so that inquiries may be made as to whether there are any
professional or other reasons why the appointment should not be accepted;
• Asking the existing accountant to provide known information on any facts
or circumstances that, in the existing accountant’s opinion, the proposed
accountant needs to be aware of before deciding whether to accept the
engagement; or
• Obtaining necessary information from other sources.
When the threats cannot be eliminated or reduced to an acceptable level through
the application of safeguards, a professional accountant in public practice shall,
unless there is satisfaction as to necessary facts by other means, decline the
engagement.
210.12 A professional accountant in public practice may be asked to undertake work
that is complementary or additional to the work of the existing accountant. Such
circumstances may create threats to professional competence and due care
resulting from, for example, a lack of or incomplete information. The significance of
any threats shall be evaluated and safeguards applied when necessary to eliminate
the threat or reduce it to an acceptable level. An example of such a safeguard
is notifying the existing accountant of the proposed work, which would give the
existing accountant the opportunity to provide any relevant information needed for
the proper conduct of the work.
210.12ABefore accepting such work, a professional accountant in public practice shall
determine whether to communicate with the existing accountant to inform them of
the general nature of the complementary or additional work.
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Professional appointment 210
210.12BIt is in the client’s interest that the existing accountant is aware of the additional
work being undertaken. This will facilitate the transfer of information between the
advisers and aid them in carrying out their respective appointments.
210.12CIn very exceptional circumstances a professional accountant may not be required
to communicate with the existing accountant. A professional accountant is
responsible for checking with the Advisory Services Section whether, in his/
her particular circumstances, he/she may dispense with the usual procedure of
communicating with the existing accountant.
210.13 A professional accountant in public practice may be an existing accountant in
receipt of a communication from a proposed accountant. An existing accountant
is bound by confidentiality. Whether that professional accountant is permitted or
required to discuss the affairs of a client with a proposed accountant will depend on
the nature of the engagement and on:
(a) Whether the client’s permission to do so has been obtained; or
(b) The legal or ethical requirements relating to such communications and
disclosure, which may vary by jurisdiction.
Circumstances where the professional accountant is or may be required to disclose
confidential information or where such disclosure may otherwise be appropriate are
set out in Section 140 of Part A of this Code.
210.14 A professional accountant in public practice will generally need to obtain the client’s
permission, preferably in writing, to initiate discussion with an existing accountant.
Once that permission is obtained, the existing accountant shall comply with relevant
legal and other regulations governing such requests. The proposed accountant
shall write to the existing accountant requesting all the information which ought
to be made available to enable the proposed accountant to decide whether or not
to accept the appointment. Where the existing accountant provides information, it
shall be provided honestly and unambiguously. If the proposed accountant is unable
to communicate with the existing accountant, the proposed accountant shall take
reasonable steps to obtain information about any possible threats by other means,
such as through inquiries of third parties or background investigations of senior
management or those charged with governance of the client.
210.15 If the existing accountant continues to fail to reply, or fails to supply satisfactory
replies, the proposed accountant shall generally send a further letter by a recorded
delivery service. The letter shall state that unless a reply is received within a stated
period, say seven days, the proposed accountant will assume there are no matters
of which he/she should be aware and, at the end of the stated period, will proceed
to accept the appointment.
210.16 If a client refuses permission to the existing accountant to discuss their affairs,
the existing accountant shall inform the proposed accountant of this fact. The
proposed accountant shall inform the client that he/she is not prepared to accept
the appointment.
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210 Professional appointment
210.17 Where the existing accountant receives permission, as set out in paragraph
210.23(b) below, he/she shall provide all reasonable information (in addition to
transfer information) in response to a request from the proposed accountant. It is
for the existing accountant to decide what information is reasonable and what he/
she considers may be relevant to the proposed accountant’s decision on whether
or not to accept the appointment. (The issue of transfer information is considered
separately at paragraph 210.36.)
210.18 The existing accountant may not prevent the proposed accountant from acting on
behalf of the client.
210.19 Any information supplied by the existing accountant shall be considered carefully
by the proposed accountant before deciding to accept or reject the appointment.
210.20 The proposed accountant shall try to find out the reason for the change of
accountant. The proposed accountant shall be careful that, by accepting an
appointment, he/she is not assisting the client to act improperly or unlawfully.
210.21 For example, the proposed accountant may find that the existing accountant
has been conscientious in his/her duty as an independent professional, but has
encountered client opposition. The existing accountant may have declined to give
way on what he/she considers to be a matter of principle. In such circumstances
the proposed accountant shall generally decline the appointment.
210.22 The proposed accountant shall treat any information given by the existing
accountant in the strictest confidence.
Matters to be communicated to proposed clients
210.23 The proposed accountant shall ask the proposed client to write to their existing
accountant to:
(a) notify them of the proposed change, and
(b) give permission for the existing accountant to discuss the client’s affairs with
the proposed accountant.
210.24 If a professional accountant in public practice receives a communication from a
proposed accountant but has not received permission to discuss the client’s affairs
with the proposed accountant, the professional accountant shall notify the client of
the contact. Additionally, the professional accountant shall write to the proposed
accountant declining to give information and stating his/her reasons.
Matters to be communicated to proposed accountants
210.25 If the existing accountant considers there are matters to be brought to the
attention of the proposed accountant, the existing accountant shall be prepared to
specify the nature and details of such matters.
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Professional appointment 210
210.26 If the existing accountant considers there are no matters to be brought to the
attention of the proposed accountant, the existing accountant shall write to state
this fact.
210.27 It is recommended that the existing and proposed accountants communicate in
writing. If oral discussions take place, each party shall make and retain their own
contemporaneous record of matters discussed and decisions and agreements
made.
210.28 Where the existing accountant has suspicions of some guilty or unlawful act, e.g.
defrauding the tax authorities, but has no proof, it is for the existing accountant to
determine whether, and to what extent, his/her suspicions shall be conveyed to the
proposed accountant.
Unpaid fees of previous accountant
210.29 The proposed accountant is not expected to refuse to act where there are unpaid
fees owed to the existing accountant.
210.30 It is a matter for the proposed accountant’s own judgement to decide how far he/
she may properly go in assisting the existing accountant to recover fees.
210.31 The proposed accountant would generally be expected to draw the attention of the
client to the fact that fees are due and unpaid and to suggest that they be paid.
Transfer of books and papers
210.32 Once a new accountant has been appointed, or on otherwise ceasing to hold office,
the former accountant shall ensure that all books and papers belonging to his/
her former client which are in the former accountant’s possession are promptly
transferred, whether the new accountant or the client has requested them or not,
except where the former accountant claims to exercise a lien or other security over
them in respect of unpaid fees.
210.33 Professional accountants in public practice are advised to refer to Section B5,
Legal ownership of, and rights of access to, books, files, working papers and other
documents.
Transfer of information
210.34 In order to ensure continuity of treatment of a client’s affairs, the former
accountant shall promptly provide the new accountant with all reasonable transfer
information that the new accountant requests, free of charge.
210.35 All reasonable transfer information shall be provided even where there are unpaid
fees.
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210 Professional appointment
210.36 “Reasonable transfer information” is defined as:
(a) a copy of the last set of accounts formally approved by the client; and
(b) a detailed trial balance that is in agreement with the accounts referred to in (a)
above.
210.37 Any information in addition to the reasonable transfer information, as defined
in paragraph 210.36 above, is provided purely at the discretion of the former
accountant, who may render a charge to the person requesting the information.
Changes in audit appointment
210.38 A professional accountant in public practice shall comply with the local law with
regard to the change of auditor.
210.39 The proposed auditor shall ensure that he/she has been properly appointed and
that his/her predecessor has vacated office in a correct and valid manner.
Casual vacancy in auditorship
210.40 Where there is a casual vacancy in the auditorship of a company, that vacancy will
generally be filled by the directors appointing an auditor.
210.41 A professional accountant in public practice invited to fill a casual vacancy shall
follow a course of action similar to that outlined in this section.
210.42 If the casual vacancy has arisen through the death or incapacity of the previous
auditor, the necessary contacts will have to be made with the former auditor’s
partners, if any, or with the person who is temporarily responsible for maintaining
the practice.
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Conflicts of interest 220
SECTION 220
Conflicts of interest
220.1
A professional accountant in public practice shall take reasonable steps to identify
circumstances that could pose a conflict of interest. Such circumstances may
create threats to compliance with the fundamental principles. For example, a threat
to objectivity may be created when a professional accountant in public practice
competes directly with a client or has a joint venture or similar arrangement with
a major competitor of a client. A threat to objectivity or confidentiality may also be
created when a professional accountant in public practice performs services for
clients whose interests are in conflict or the clients are in dispute with each other in
relation to the matter or transaction in question.
220.2
A professional accountant in public practice shall evaluate the significance of any
threats and apply safeguards when necessary to eliminate the threats or reduce
them to an acceptable level. Before accepting or continuing a client relationship or
specific engagement, the professional accountant in public practice shall evaluate
the significance of any threats created by business interests or relationships with
the client or a third party.
220.3
Depending upon the circumstances giving rise to the conflict, application of one of
the following safeguards is generally necessary:
(a) Notifying the client of the firm’s business interest or activities that may
represent a conflict of interest and obtaining their consent to act in such
circumstances; or
(b) Notifying all known relevant parties that the professional accountant in public
practice is acting for two or more parties in respect of a matter where their
respective interests are in conflict and obtaining their consent to so act; or
(c) Notifying the client that the professional accountant in public practice does
not act exclusively for any one client in the provision of proposed services (for
example, in a particular market sector or with respect to a specific service) and
obtaining their consent to so act.
220.4
The professional accountant shall also determine whether to apply one or more of
the following additional safeguards:
(a) The use of separate engagement teams;
(b) Procedures to prevent access to information (e.g., strict physical separation of
such teams, confidential and secure data filing);
(c) Clear guidelines for members of the engagement team on issues of security and
confidentiality;
(d) The use of confidentiality agreements signed by employees and partners of the
firm; and
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220 Conflicts of interest
(e) Regular review of the application of safeguards by a senior individual not
involved with relevant client engagements.
(f) advising one or more clients to seek additional independent advice.
220.5
Where a conflict of interest creates a threat to one or more of the fundamental
principles, including objectivity, confidentiality, or professional behavior, that
cannot be eliminated or reduced to an acceptable level through the application of
safeguards, the professional accountant in public practice shall not accept a specific
engagement or shall resign from one or more conflicting engagements.
220.6
Where a professional accountant in public practice has requested consent from
a client to act for another party (which may or may not be an existing client) in
respect of a matter where the respective interests are in conflict and that consent
has been refused by the client, the professional accountant in public practice shall
not continue to act for one of the parties in the matter giving rise to the conflict of
interest.
220.7
Any decision on the part of a sole practitioner shall take account of the fact that
the safeguards at (a) to (e) of paragraph 220.4 above will not be available to him/
her. Similar considerations apply to small firms.
Conflicts between professional accountants’ and clients’ interests
220.8
A professional accountant in public practice shall not accept or continue an
engagement in which there is, or is likely to be, a significant conflict of interest
between the professional accountant and the client.
220.9
Any form of financial gain which accrues or is likely to accrue to a professional
accountant in public practice as a result of an engagement, or as a result of using
information known to him/her about a client, will always amount to a significant
conflict of interest between the professional accountant and the client unless the
financial gain is declared under the provisions of paragraph 220.11 below.
220.10 Whether any other form of interest is such as to amount to significant conflict will
depend on all the circumstances of the case.
Commission and other financial gains
220.11 Where any commission, fee, reward or other financial gain is received by a firm or
anyone in the firm, in return for the introduction of clients, as a result of advice
or other services given to clients, or as a result of using information known about
clients, the professional accountant in public practice shall, when necessary,
establish safeguards to eliminate the threats or reduce them to an acceptable level.
Such safeguards shall generally include:
(a) disclosing to the client in writing any arrangement to receive a referral fee,
both of the fact that such commission, fee, reward or other financial gain will
be or has been received and, as soon as practicable, of its amount and terms;
and
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Conflicts of interest 220
(b) obtaining advance agreement from the client for any referral arrangement in
connection with the sale by a third party of goods or services to the client.
220.12 The provisions in paragraph 220.11 apply to any commission, fee, reward or other
financial gain received, whether it relates to a single transaction concerning a
client or more than one client, or a series or group of transactions concerning a
client or more than one client. For the avoidance of doubt, this includes “override”
commission, whereby in some jurisdictions commission may be earned if the
number of financial products of a particular type sold by a professional accountant
in public practice reaches a certain level.
220.13 Where the commission, fee, reward or other financial gain results from advice
given to a client, special care shall be taken that the advice is in fact in the best
interests of the client.
Agency work
220.14 The acceptance by a professional accountant in public practice of an agency
for the supply of services or products may present a conflict of interest which
threatens compliance with the fundamental principles.
220.15 Before accepting or continuing an agency, a professional accountant shall satisfy
himself/herself that:
(a) his/her compliance with the fundamental principles would not be compromised;
and
(b) such acceptance or continuance would not be rendered inappropriate by the
nature of the services he/she is to provide under the agency, or the manner in
which those services may be brought to the attention of the public.
220.16 In this section, references to “clients” are references to clients of the firm. A
person does not become a client of the firm merely by virtue of being a customer
or member of the organisation for which the firm is an agent. However, where the
firm provides advice to such a person (whether gratuitously or for a fee) that person
may become a client of the firm.
Conflicts between the interests of different clients
220.17 There is, on the face of it, nothing improper in a firm having two or more clients
whose interests may be in conflict, provided the work that the firm undertakes is
not, itself, likely to be the subject of dispute between those clients.
220.18 In such cases, however, the firm’s work shall be so managed as to avoid the
interests of one client adversely affecting those of another.
220.19 Where the acceptance or continuance of an engagement would, even with
safeguards, materially prejudice the interests of any client, the appointment shall
not be accepted or continued.
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220 Conflicts of interest
220.20 Such prejudice might arise in a variety of ways, including the leakage of
information from one client to another and the firm being forced into a position
where it has to choose between the interests of different clients.
Managing conflicts between clients’ interests
220.21 All reasonable steps shall be taken to ascertain whether any conflict of interest
exists, or is likely to arise in the future, both in regard to new engagements and
to the changing circumstances of existing clients, and including any implications
arising from the possession of confidential information.
220.22 Relationships with clients and former clients need to be reviewed before accepting
a new appointment and regularly thereafter.
220.23 Where a professional accountant in public practice becomes aware of possible
conflict between the interests of two or more clients, all reasonable steps shall be
taken to manage the conflict and thereby avoid any adverse consequences.
220.24 Relationships which ended over two years before are unlikely to constitute conflict.
The nature of the engagement is relevant in this connection. (Professional
accountants in public practice are referred to Section B12, Corporate finance
advice including take-overs.)
Conflicts between the interests of professional accountants and
firms
220.25 A professional accountant in public practice obtaining confidential information as
a result of his/her role as principal or employee of a firm shall not use, or appear
to use, that information for his/her personal advantage or the advantage of a third
party.
220.26 Such a requirement shall generally be incorporated in the partnership agreement
or contract of employment. However, before incorporating such a requirement into
the partnership agreement or contract of employment, professional accountants
are strongly recommended to seek legal advice.
Disengagement
220.27 Wherever a professional accountant in public practice is required to disengage
from an existing engagement, he/she shall do so as speedily as is compatible with
the interests of the clients concerned.
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Second opinions 230
SECTION 230
Second opinions
230.1
Situations where a professional accountant in public practice is asked to provide
a second opinion on the application of accounting, auditing, reporting or other
standards or principles to specific circumstances or transactions by or on behalf of a
company or an entity that is not an existing client may create threats to compliance
with the fundamental principles. For example, there may be a threat to professional
competence and due care in circumstances where the second opinion is not based
on the same set of facts that were made available to the existing accountant or is
based on inadequate evidence. The existence and significance of any threat will
depend on the circumstances of the request and all the other available facts and
assumptions relevant to the expression of a professional judgment.
230.2
When asked to provide such an opinion, a professional accountant in public
practice shall evaluate the significance of any threats and apply safeguards when
necessary to eliminate them or reduce them to an acceptable level. Examples
of such safeguards include seeking client permission to contact the existing
accountant, describing the limitations surrounding any opinion in communications
with the client and providing the existing accountant with a copy of the opinion.
230.3
If the company or entity seeking the opinion will not permit communication with
the existing accountant, a professional accountant in public practice shall determine
whether, taking all the circumstances into account, it is appropriate to provide the
opinion sought.
230.4
Not at issue are opinions provided pursuant to litigation, expert testimony and
assistance provided to other firms and their clients jointly.
230.5
A professional accountant in public practice giving an opinion on the application
of accounting standards or other standards or principles, relating to a hypothetical
situation and not based on the specific facts or circumstances of a particular
organisation, shall ensure that the nature of the opinion is made clear.
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240 Fees and other types of remuneration
SECTION 240
Fees and other types of remuneration
240.1
When entering into negotiations regarding professional services, a professional
accountant in public practice may quote whatever fee is deemed appropriate. The
fact that one professional accountant in public practice may quote a fee lower than
another is not in itself unethical. Nevertheless, there may be threats to compliance
with the fundamental principles arising from the level of fees quoted. For example,
a self-interest threat to professional competence and due care is created if the fee
quoted is so low that it may be difficult to perform the engagement in accordance
with applicable technical and professional standards for that price.
240.2
The existence and significance of any threats created will depend on factors such as
the level of fee quoted and the services to which it applies. The significance of any
threat shall be evaluated and safeguards applied when necessary to eliminate the
threat or reduce it to an acceptable level. Examples of such safeguards include:
• Making the client aware of the terms of the engagement and, in particular, the
basis on which fees are charged and which services are covered by the quoted
fee.
• Assigning appropriate time and qualified staff to the task.
240.2A If, in the course of an investigation into allegations of unsatisfactory work, there
is evidence of the work having been obtained or retained through quoting a fee
that is not economic in terms of the factors mentioned in paragraph 240.2 above,
that fact may be taken into account in considering the conduct of a professional
accountant in public practice having regard to the fundamental principles.
Basis of fees
240.2B Letters of engagement shall state the fees to be charged or the basis upon which
the fees are calculated.
240.2C Where the letter of engagement is not explicit with regard to the basis on which
fees are calculated, the professional accountant in public practice shall charge a
fee which is fair and reasonable. This may have regard to any or all of the following
to the extent that they are not referred to in the letter of engagement:
(a) the seniority and professional expertise of the persons necessarily engaged on
the work;
(b) the time expended by each;
(c) the degree of risk and responsibility which the work entails;
(d) the urgency of the work to the client; and
(e) the importance of the work to the client.
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Fees and other types of remuneration 240
240.2D ACCA does not prescribe the basis for calculating fees nor does it set charge-out
rates.
240.2E Professional accountants are, however, reminded that they have certain
professional responsibilities in relation to fees, and these aspects are discussed
further in the following paragraphs.
240.3
Contingent fees are widely used for certain types of non-assurance assignments.2
They may, however, create threats to compliance with the fundamental principles
in certain circumstances. They may create a self-interest threat to objectivity. The
existence and significance of such threats will depend on factors including:
• The nature of the engagement.
• The range of possible fee amounts.
• The basis for determining the fee.
• Whether the outcome or result of the transaction is to be reviewed by an
independent third party.
240.4
The significance of any such threats shall be evaluated and safeguards applied
when necessary to eliminate or reduce them to an acceptable level. Examples of
such safeguards include:
• An advance written agreement with the client as to the basis of remuneration.
• Disclosure to intended users of the work performed by the professional
accountant in public practice and the basis of remuneration.
• Quality control policies and procedures.
• Review by an independent third party of the work performed by the professional
accountant in public practice.
240.4A In order to preserve professional accountants’ objectivity, fees shall not be charged
on a percentage, contingency or similar basis, save where that course of action is
generally accepted practice for certain specialised work or as provided for in the
succeeding paragraphs. Particularly, professional accountants in public practice
are reminded that fees charged in respect of expert or insolvency work may be
subject to the requirements of local law.
Referral fees and commission
240.5
In certain circumstances, a professional accountant in public practice may receive a
referral fee or commission relating to a client. For example, where the professional
accountant in public practice does not provide the specific service required, a fee
may be received for referring a continuing client to another professional accountant
in public practice or other expert. A professional accountant in public practice may
receive a commission from a third party (e.g., a software vendor) in connection with
2 Contingent fees for non-assurance services provided to audit clients and other assurance clients are
discussed in sections 290 and 291 of this Part of the Code.
345
240 Fees and other types of remuneration
the sale of goods or services to a client. Accepting such a referral fee or commission
creates a self-interest threat to objectivity and professional competence and due
care.
240.6
A professional accountant in public practice may also pay a referral fee to obtain a
client, for example, where the client continues as a client of an existing accountant
but requires specialist services not offered by the existing accountant. The
payment of such a referral fee also creates a self-interest threat to objectivity and
professional competence and due care.
240.7
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Disclosing to the client any arrangements to pay a referral fee to another
professional accountant3 for the work referred.
• Disclosing to the client any arrangements to receive a referral fee for referring
the client to another professional accountant in public practice.
• Obtaining advance agreement from the client for commission arrangements in
connection with the sale by a third party of goods or services to the client.
240.8
A professional accountant in public practice may purchase all or part of another
firm on the basis that payments will be made to individuals formerly owning the
firm or to their heirs or estates. Such payments are not regarded as commissions or
referral fees for the purpose of paragraphs 240.5–240.7 above.
Commission on indemnity terms
240.9
A professional accountant in public practice may receive commission in respect
of transactions effected for clients on the basis that this must be repaid in certain
circumstances. In these circumstances, the professional accountant in public
practice may agree with clients any one of the following options:
(a) to delay refunding the clients’ commission until the expiry of the term; or
(b) to place the commission into a designated deposit account until the expiry of
the term and then to refund the commission to clients with interest; or
(c) to rebate the clients’ commission annually over the term; or
(d) to request persons paying commission to pay only the commission due each
year, retaining the balance; or
(e) to forgo all commission; or
(f) to instruct the persons offering commission to retain the commission for the
benefit of clients’ pension or other policies.
3 Examples here relating to “another professional accountant” would also apply to accountants who are
members of other IFAC member bodies and other accountants, including unqualified accountants.
346
Fees and other types of remuneration 240
240.10 Nothing in this Code prohibits a professional accountant in public practice from
refunding the commission to clients either with or without clients’ confirmation that
they would reimburse the professional accountant in the event that the commission
became repayable.
Insolvency work in the UK
240.11 In appointments under the Insolvency Act of the United Kingdom, receiverships,
and similar work, the remuneration is dependent upon the manner of appointment
and the relevant statutes.
240.12 Professional accountants are referred to Statement of Insolvency Practice 9 for
guidance in respect of remuneration of insolvency office holders contained in the
separate ACCA publication setting out the Statements of Insolvency Practice.
240.13 A professional accountant in public practice concerned with the special situation of
introducing insolvency business in the United Kingdom are advised to refer to Part
D, Insolvency Code of Ethics.
Management buy-out and raising venture capital
240.14 There are circumstances, such as advising on a management buy-out or the raising
of venture capital, where in some instances fees cannot realistically be charged
save on a contingency basis, for example, where the ability of clients to pay is
dependent upon the success or failure of the venture.
240.15 Where work is subject to a contingency or percentage fee, the capacity in which
the professional accountant has worked and the basis of his/her remuneration shall
be made clear in any document upon which a third party may rely.
Fee disputes
240.16 When a professional accountant in public practice is about to render a fee note
which is substantially different from fees rendered to the same client on earlier
occasions for which the work would appear to be comparable, it is good practice to
explain to the client the reason for the variation.
240.17 To the extent that the increased fee reflects a charge for extra work, the reason
for the extra work shall be explained in writing to the client. To the extent that the
increased fee reflects an increase in disbursements or costs, this shall also be
explained in writing to the client.
240.18 In cases where the fee note rendered is in excess of a quotation or estimate or
indication of fees, the client may consider it to be excessive. The client may be
prepared to pay a smaller amount and may tender such a sum. If the professional
accountant in public practice does not wish to waive the balance of his/her fees, it
is recommended that the professional accountant accept the sum but, at the same
time, notify the client in writing that the sum is accepted in part payment of the
fees.
347
240 Fees and other types of remuneration
240.19 When a client behaves in such a manner, it is possible that the client has genuine
doubts as to the propriety of the fee, and is not actuated by malice or lack of
means. In such circumstances, the professional accountant in public practice is
reminded that, on written application by both the parties to the dispute, ACCA
can arrange for an arbitrator to be appointed to determine any dispute over fees
charged.
240.20 A professional accountant in public practice whose fees have not been paid may
in certain circumstances exercise a lien over certain books and papers of the
client upon which the professional accountant has been working. Professional
accountants in public practice are referred to Section B5, Legal ownership of, and
rights of access to, books, files, working papers and other documents.
240.21 A professional accountant in public practice shall be prepared to provide the client
with reasonable explanation of the fees charged. The explanation shall be provided
without charge and shall be sufficient to enable the client to understand the nature
of the work carried out. A professional accountant in public practice shall also take
all reasonable steps to resolve speedily any dispute which arises.
Investment business in the UK and Ireland
240.22 Firms that carry on exempt regulated activities in the United Kingdom and
firms that carry on investment business in the Republic of Ireland are referred
to regulation 6(3) of the Designated Professional Body Regulations 2001 and
regulation 7(5) of the Irish Investment Business Regulations 1999 respectively.
240.23 Professional accountants in public practice carrying on exempt regulated activities
in the United Kingdom or carrying on investment business in the Republic of
Ireland are advised to refer to regulation 5 of the Designated Professional Body
Regulations 2001 or regulation 5 of the Irish Investment Business Regulations
1999 respectively.
Advertisements
240.24 The attention of professional accountants in public practice is drawn to the
guidance contained in Section 250, Marketing professional services, relative to the
mention of fees in advertisements.
348
Marketing professional services 250
SECTION 250
Marketing professional services
250A
A professional accountant in public practice may inform the public of the services
he/she is capable of providing by means of advertising or other forms of promotion
subject to the general requirement that the medium shall not reflect adversely on
the professional accountant, ACCA or the accountancy profession.
250.1
When a professional accountant in public practice solicits new work through
advertising or other forms of marketing, there may be a threat to compliance with
the fundamental principles. For example, a self-interest threat to compliance with
the principle of professional behavior is created if services, achievements, or
products are marketed in a way that is inconsistent with that principle.
250.2
A professional accountant in public practice shall not bring the profession into
disrepute when marketing professional services. The professional accountant in
public practice shall be honest and truthful and not:
(a) Make exaggerated claims for services offered, qualifications possessed, or
experience gained; or
(b) Make disparaging references or unsubstantiated comparisons to the work of
another.
If the professional accountant in public practice is in doubt about whether
a proposed form of advertising or marketing is appropriate, the professional
accountant in public practice shall consider consulting with ACCA.
250.2A Advertisements and promotional material prepared or produced by a professional
accountant shall not (either in content or presentation):
(a) bring ACCA into disrepute or bring discredit to the professional accountant,
firm or the accountancy profession;
(b) discredit the services offered by others whether by claiming superiority for the
professional accountant’s own services or otherwise;
(c) be misleading, either directly or by implication;
(d) fall short of any local regulatory or legislative requirements, such as the
requirements of the United Kingdom Advertising Standards Authority’s Code
of Advertising and Sales Promotion, notably as to legality, decency, clarity,
honesty, and truthfulness.
250.3
An advertisement shall be clearly distinguishable as such.
349
250 Marketing professional services
Reference to fees in promotional material
250.4
Where reference is made in promotional material to fees, the basis on which those
fees are calculated, hourly or other charging rates, etc. shall be clearly stated.
250.5
The greatest care shall be taken to ensure that any reference to fees does not
mislead the reader as to the precise range of services and time commitment that
the reference is intended to cover.
250.6
A professional accountant in public practice may make comparisons in promotional
material between the professional accountant’s fees and the fees of other
accounting practices, whether professional accountants or not, providing that any
such comparison shall not give a misleading impression.
250.7
When making comparisons, a professional accountant shall ensure that he/
she pays appropriate attention to relevant local codes or legislation, such as the
United Kingdom Advertising Standards Authority’s Code of Advertising and Sales
Promotion and the EC Directive on Comparative Advertising (97/55/EC). The
following conditions, which are extracted from the aforementioned sources but
should be followed by all professional accountants as best practice, shall generally
be met:
(a) it compares the services meeting the same needs or intended for the same
purpose;
(b) it objectively compares one or more material, relevant, verifiable and
representative features of those services, which may include fees;
(c) it does not create confusion in the market place between the advertiser and
a competitor or between the advertiser’s trade marks, trade names, other
distinguishing marks, goods or services and those of a competitor;
(d) it does not discredit or denigrate the trade marks, trade names, other
distinguishing marks, goods, services, activities or circumstances of a
competitor;
(e) for products with designation of origin, it relates in each case to products with
the same designation;
(f) it does not take unfair advantage of the reputation of a trade mark, trade name
or other distinguishing marks of a competitor or of the designation of origin of
competing products; and
(g) it does not present goods or services as imitations or replicas of goods or
services bearing a protected trade mark or trade name.
250.8
The danger of giving a misleading impression is particularly pronounced when
constraints of space limit the amount of information which can be given.
250.9
Promotional material which is based on the offer of percentage discounts on
existing fees is permitted.
250.10 A professional accountant may offer a free consultation at which levels of fees will
be discussed.
350
Marketing professional services 250
Promotional material and promotional activities
250.11 Promotional material may contain any factual statement, the truth of which the
professional accountant in public practice is able to justify, but it shall not make
unflattering references to, or unflattering comparisons with, the services of others.
250.12 Professional accountants in public practice are reminded that any promotional
activity shall be carried out in accordance with any relevant legislation. For
example, a professional accountant in public practice shall comply with legislation
relating to the making of unsolicited telephone calls, facsimile transmissions
or other electronic communication to a non-client with a view to obtaining
professional work.
250.13 Any promotional activity undertaken by a professional accountant in public
practice, or his/her agent, shall not amount to harassment of the non-client.
Investment business
250.14 Rules for professional accountants in public practice in the United Kingdom
on advertising of exempt regulated activities are set out in regulation 4(2)(r) of
the Designated Professional Body Regulations 2001 and those for professional
accountants in public practice carrying on investment business in the Republic
of Ireland in regulation 6 of the Irish Investment Business Regulations 1999
respectively.
351
260 Gifts and hospitality
SECTION 260
Gifts and hospitality
260.1
A professional accountant in public practice, or an immediate or close family
member, may be offered gifts and hospitality from a client. Such an offer may
create threats to compliance with the fundamental principles. For example, a selfinterest or familiarity threat to objectivity may be created if a gift from a client is
accepted; an intimidation threat to objectivity may result from the possibility of such
offers being made public.
260.2
The existence and significance of any threat will depend on the nature, value, and
intent of the offer. Where gifts or hospitality are offered that a reasonable and
informed third party, weighing all the specific facts and circumstances, would
consider trivial and inconsequential, a professional accountant in public practice
may conclude that the offer is made in the normal course of business without the
specific intent to influence decision-making or to obtain information. In such cases,
the professional accountant in public practice may generally conclude that any
threat to compliance with the fundamental principles is at an acceptable level.
260.3
A professional accountant in public practice shall evaluate the significance of any
threats and apply safeguards when necessary to eliminate the threats or reduce
them to an acceptable level. When the threats cannot be eliminated or reduced to
an acceptable level through the application of safeguards, a professional accountant
in public practice shall not accept such an offer.
352
Custody of client assets 270
SECTION 270
Custody of client assets
270.1
A professional accountant in public practice shall not assume custody of client
monies or other assets unless permitted to do so by law and, if so, in compliance
with any additional legal duties imposed on a professional accountant in public
practice holding such assets.
270.2
The holding of client assets creates threats to compliance with the fundamental
principles; for example, there is a self-interest threat to professional behavior and
may be a self-interest threat to objectivity arising from holding client assets. A
professional accountant in public practice entrusted with money (or other assets)
belonging to others shall therefore:
(a) Keep such assets separately from personal or firm assets;
(b) Use such assets only for the purpose for which they are intended;
(c) At all times be ready to account for those assets and any income, dividends, or
gains generated, to any persons entitled to such accounting; and
(d) Comply with all relevant laws and regulations relevant to the holding of and
accounting for such assets.
270.3
As part of client and engagement acceptance procedures for services that may
involve the holding of client assets, a professional accountant in public practice
shall make appropriate inquiries about the source of such assets and consider legal
and regulatory obligations. For example, if the assets were derived from illegal
activities, such as money laundering, a threat to compliance with the fundamental
principles would be created. In such situations, the professional accountant may
consider seeking legal advice.
Clients’ monies
270.4
A professional accountant in public practice is strictly accountable for all clients’
monies that the professional accountant receives.
270.5
In this section, the term “clients’ monies” includes all monies received by
a professional accountant in public practice to be held or disbursed by the
professional accountant on the instructions of the persons from whom or on whose
behalf they are received and includes insolvency monies.
270.6
Firms in the UK which carry on exempt regulated activities and are not authorised
by the FSA to carry on regulated activities, and firms which carry on investment
business in the Republic of Ireland and are not authorised by the Financial
Regulator to carry on such business, are referred to regulation 4(2) of the
Designated Professional Body Regulations 2001 and regulation 4(4)(a)(x) of the
Irish Investment Business Regulations 1999 respectively, which prohibit the
holding of investment business client money.
353
270 Custody of client assets
270.7
The remaining paragraphs of this section are concerned only with clients’ monies
that are not governed by regulation 4(2) of the Designated Professional Body
Regulations 2001 or regulation 4(4)(a)(x) of the Irish Investment Business
Regulations 1999.
Clients’ accounts
270.8
Clients’ monies shall be paid without delay into a bank account, separate from
other accounts of the firm.
270.9
Such accounts may be either general accounts or accounts in the name of the
specific client. All such accounts shall in all cases include in their title the word
“client”. Any such bank accounts are referred to herein as “a client account”.
270.10 Where it is anticipated that the monies of individual clients in excess of £10,000
or its equivalent will be held by the firm for more than 30 days, the money shall be
paid into a separate bank account designated by the name of the client or number
allocated to the client account.
270.11 The term “bank” is defined in paragraph 270.31 below.
Opening a client bank account
270.12 Whenever a firm opens a client account, it shall give written notice in clear terms
to the bank concerned as to the nature of the account.
270.13 The notice shall require the bank to acknowledge in writing that it accepts the
terms of the notice.
Payments into a client bank account
270.14 Where a firm receives cheques or drafts that include both clients’ monies and
other monies, it shall pay them into a client account.
270.15 Once the monies have been received into such a client account, the firm shall
withdraw from that account such part of the sum received as can properly be
transferred to an office account in accordance with the guidance set out in
paragraphs 270.17 to 270.18 below.
270.16 Save as referred to in paragraph 270.15 above, no monies other than clients’
monies shall be paid into a client account.
Withdrawals from a client bank account
270.17 The following may be withdrawn from a client bank account, provided that the
sums withdrawn shall not exceed the total of the monies held for the time being in
the account of the client concerned:
(a) monies properly required for a payment to or on behalf of a client;
354
Custody of client assets 270
(b) monies properly required for or towards payment of debts due to the firm from
a client, otherwise than in respect of fees or commissions earned by the firm;
(c) monies properly required for or towards payment of fees or commissions
payable to the firm by a client for work properly carried out by the firm;
(d) monies drawn on a client’s authority or in conformity with any contract between
the firm and a client.
270.18 Monies shall not be withdrawn from a client bank account for or towards payment
of fees or commissions payable under paragraph 270.17 above unless:
(a) the client has been notified in writing that monies held or received on the
client’s behalf will be applied against those fees or commissions, and the client
has not disagreed; and
(b) a principal of the firm has expressly authorised the withdrawal; and
(c) either:
(i) 30 days have elapsed since the date of delivery to the client of the
notification; or
(ii) the precise amount to be withdrawn has been agreed with the client in
writing or has been finally determined by a court or arbitrator.
270.19 A firm shall be careful to differentiate, both in its records and, where appropriate,
in its use of client accounts, between monies held on behalf of clients in their
personal capacity and those, with the knowledge of the firm, held on behalf of
those same clients as trustees for others. A separate client account shall be
opened to receive the trust monies of each separate trust.
270.20 Bank charges for maintaining client accounts shall be paid out of the firm’s own
account and not from any client account.
Fees paid in advance
270.21 Fees paid by clients in advance for professional work agreed to be performed
and clearly identifiable as such shall not be regarded as clients’ monies for the
purposes of this Code.
270.22 Professional accountants in public practice are reminded that, where professional
work paid for in advance is not carried out, fees advanced by the client shall be
returned to him/her. A professional accountant in public practice shall ensure that
sufficient financial resources to meet any such repayment are available.
Interest payable on client account monies
270.23 Subject to paragraph 270.24 below, in respect of all monies held by a firm on
behalf of clients, the firm shall pay clients interest of not less than the amount that
would have been earned by way of gross interest if all clients’ monies held by the
firm for clients had been kept in separate interest-bearing accounts at the small
deposit rate with the bank concerned.
355
270 Custody of client assets
270.24 The obligation in paragraph 270.23 above may be over-ridden by express written
agreement between the firm and a client. For instance, clients could agree to forgo
sums of interest of less than, say, UK £10, or in respect of bank credits until they
have been cleared.
270.25 Interest on trust accounts shall be paid and the requirements of paragraphs
270.23 and 270.24 above are not applicable to trust monies.
Monies held by the firm as stakeholder
270.26 Monies held by a professional accountant as stakeholder shall be regarded as
clients’ monies and shall be paid into a separate bank account maintained for the
purpose or into a client bank account.
Maintaining records
270.27 A firm shall at all times maintain accurate records and controls (e.g. by way of
reconciliations) so as to show clearly the monies it has received, held, and paid
on account of their clients, and the details of any other monies dealt with by them
through a client account, clearly distinguishing the monies of each client from the
monies of other clients and from the firm’s monies.
270.28 A professional accountant shall maintain such records for a period of not less than
six years from the date of the last transaction recorded.
Fees and fee disputes
270.29 The attention of professional accountants is drawn to the guidance on fees
contained in Section 240, Fees and other types of remuneration.
270.30 A professional accountant shall not withhold due payment out of monies to clients
for the sole reason that a dispute exists in relation to fees.
Bank
270.31 The term “bank” comprises an institution authorised within the meaning of the
Banking Act 1987 of the United Kingdom, the Bank of England, the central bank
of another member state of the European Community, a building society within
the meaning of the Building Societies Act 1986 of the United Kingdom (which
has adopted the power to provide unrestricted money transaction services) and
equivalent institutions around the world.
Insolvency work: UK
270.32 Professional accountants are referred to Statement of Insolvency Practice 11,
Handling of funds in formal insolvency appointments, for guidance in respect of
clients’ monies. The Statement is contained in the separate ACCA publication
setting out the Statements of Insolvency Practice.
356
Custody of client assets 270
270.33 A professional accountant shall not retain insolvency monies in a general client
account; such funds shall be retained in a designated client account and any
interest earned accounted to the insolvent estate. It is nevertheless acceptable for
a professional accountant to use a general client account to clear funds received
by cheque which cannot be endorsed to the insolvent estate. Such funds paid into
a general client account shall be transferred to the insolvent estate to which they
relate as soon as possible.
Untraceable funds
270.34 In exceptional circumstances client money may be withdrawn from a client
account on the written authorisation of ACCA, which may impose the condition
that the money be paid by the professional accountant to a charity which gives
an indemnity against any legitimate claim subsequently made for the money in
question.
357
280 Objectivity – All services
SECTION 280
Objectivity – All services
280.1
A professional accountant in public practice shall determine when providing any
professional service whether there are threats to compliance with the fundamental
principle of objectivity resulting from having interests in, or relationships with, a
client or its directors, officers or employees. For example, a familiarity threat to
objectivity may be created from a family or close personal or business relationship.
280.2
A professional accountant in public practice who provides an assurance service
shall be independent of the assurance client. Independence of mind and in
appearance is necessary to enable the professional accountant in public practice
to express a conclusion, and be seen to express a conclusion, without bias, conflict
of interest, or undue influence of others. Sections 290 and 291 provide specific
guidance on independence requirements for professional accountants in public
practice when performing assurance engagements.
280.3
The existence of threats to objectivity when providing any professional service will
depend upon the particular circumstances of the engagement and the nature of the
work that the professional accountant in public practice is performing.
280.4
A professional accountant in public practice shall evaluate the significance of any
threats and apply safeguards when necessary to eliminate them or reduce them to
an acceptable level. Examples of such safeguards include:
• Withdrawing from the engagement team.
• Supervisory procedures.
• Terminating the financial or business relationship giving rise to the threat.
• Discussing the issue with higher levels of management within the firm.
• Discussing the issue with those charged with governance of the client.
If safeguards cannot eliminate or reduce the threat to an acceptable level, the
professional accountant shall decline or terminate the relevant engagement.
Note: The Auditing Practices Board (APB) has issued Ethical Standards to be applied in
the audit of historical financial information in the United Kingdom and the Republic of
Ireland. Any audit firm, any person in an audit firm who is directly involved in an audit and
any person in an audit firm who is part of the chain of command for an audit to which APB
Ethical Standards apply shall comply with their requirements. Where relevant, a professional
accountant in public practice shall therefore comply with both APB’s Ethical Standards and
Section 290. Where there is any apparent conflict between requirements, the professional
accountant shall comply with the requirement that is more stringent.
358
Independence – Audit and review engagements 290
SECTION 290
Independence – Audit and review
engagements
Structure of section
A conceptual framework approach to independence
Networks and network firms
Public interest entities
Related entities
Those charged with governance
Documentation
Engagement period
Mergers and acquisitions
Other considerations
Application of the conceptual framework approach to independence
Financial interests
Loans and guarantees
Business relationships
Family and personal relationships
Employment with an audit client
Temporary staff assignments
Recent service with an audit client
Serving as a director or officer of an audit client
Long association of senior personnel (including partner rotation) with an
audit client
Provision of non-assurance services to audit clients
Management responsibilities
Preparing accounting records and financial statements
Valuation services
Taxation services
Internal audit services
IT systems services
Litigation support services
Legal services
Recruiting services
Corporate finance services
Fees
Fees – Relative size
Fees – Overdue
Contingent fees
Compensation and evaluation policies
Gifts and hospitality
Actual or threatened litigation
Reports that include a restriction on use and distribution
Paragraph
290.1
290.4
290.13
290.25
290.27
290.28
290.29
290.30
290.33
290.39
290.100
290.102
290.118
290.124
290.127
290.134
290.142
290.143
290.146
290.150
290.156
290.162
290.167
290.175
290.181
290.195
290.201
290.207
290.209
290.214
290.216
290.220
290.220
290.223
290.224
290.228
290.230
290.231
290.500
359
290 Independence – Audit and review engagements
Structure of section
290.1
This section addresses the independence requirements for audit engagements and
review engagements, which are assurance engagements in which a professional
accountant in public practice expresses a conclusion on financial statements. Such
engagements comprise audit and review engagements to report on a complete
set of financial statements and a single financial statement. Independence
requirements for assurance engagements that are not audit or review engagements
are addressed in Section 291.
290.2
In certain circumstances involving audit engagements where the audit report
includes a restriction on use and distribution and provided certain conditions are
met, the independence requirements in this section may be modified as provided
in paragraphs 290.500 to 290.514. The modifications are not permitted in the
case of an audit of financial statements required by law or regulation.
290.3
In this section, the term(s):
(a) “Audit,” “audit team,” “audit engagement,” “audit client” and “audit report”
includes review, review team, review engagement, review client and review
report; and
(b) “Firm” includes network firm, except where otherwise stated.
A conceptual framework approach to independence
290.4
In the case of audit engagements, it is in the public interest and, therefore,
required by this Code of Ethics, that members of audit teams, firms and network
firms shall be independent of audit clients.
290.5
The objective of this section is to assist firms and members of audit teams in
applying the conceptual framework approach described below to achieving and
maintaining independence.
290.6
Independence comprises:
(a) Independence of mind
The state of mind that permits the expression of a conclusion without being
affected by influences that compromise professional judgment, thereby
allowing an individual to act with integrity and exercise objectivity and
professional skepticism.
(b) Independence in appearance
290.7
360
The avoidance of facts and circumstances that are so significant that a
reasonable and informed third party would be likely to conclude, weighing all
the specific facts and circumstances, that a firm’s, or a member of the audit
team’s, integrity, objectivity or professional skepticism has been compromised.
The conceptual framework approach shall be applied by professional accountants
to:
Independence – Audit and review engagements 290
(a) Identify threats to independence;
(b) Evaluate the significance of the threats identified; and
(c) Apply safeguards, when necessary, to eliminate the threats or reduce them to
an acceptable level.
When the professional accountant determines that appropriate safeguards are
not available or cannot be applied to eliminate the threats or reduce them to an
acceptable level, the professional accountant shall eliminate the circumstance or
relationship creating the threats or decline or terminate the audit engagement.
A professional accountant shall use professional judgment in applying this
conceptual framework.
290.8
Many different circumstances, or combinations of circumstances, may be relevant
in assessing threats to independence. It is impossible to define every situation that
creates threats to independence and to specify the appropriate action. Therefore,
this Code establishes a conceptual framework that requires firms and members
of audit teams to identify, evaluate, and address threats to independence. The
conceptual framework approach assists professional accountants in practice in
complying with the ethical requirements in this Code. It accommodates many
variations in circumstances that create threats to independence and can deter a
professional accountant from concluding that a situation is permitted if it is not
specifically prohibited.
290.9
Paragraphs 290.100 and onwards describe how the conceptual framework
approach to independence is to be applied. These paragraphs do not address
all the circumstances and relationships that create or may create threats to
independence.
290.10 In deciding whether to accept or continue an engagement, or whether a particular
individual may be a member of the audit team, a firm shall identify and evaluate
threats to independence. If the threats are not at an acceptable level, and the
decision is whether to accept an engagement or include a particular individual
on the audit team, the firm shall determine whether safeguards are available to
eliminate the threats or reduce them to an acceptable level. If the decision is
whether to continue an engagement, the firm shall determine whether any existing
safeguards will continue to be effective to eliminate the threats or reduce them to
an acceptable level or whether other safeguards will need to be applied or whether
the engagement needs to be terminated. Whenever new information about a threat
to independence comes to the attention of the firm during the engagement, the
firm shall evaluate the significance of the threat in accordance with the conceptual
framework approach.
290.11 Throughout this section, reference is made to the significance of threats to
independence. In evaluating the significance of a threat, qualitative as well as
quantitative factors shall be taken into account.
290.12 This section does not, in most cases, prescribe the specific responsibility
of individuals within the firm for actions related to independence because
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responsibility may differ depending on the size, structure and organization of a
firm. The firm is required by International Standards on Quality Control (ISQCs) to
establish policies and procedures designed to provide it with reasonable assurance
that independence is maintained when required by relevant ethical requirements.
In addition, International Standards on Auditing (ISAs) require the engagement
partner to form a conclusion on compliance with the independence requirements
that apply to the engagement.
Networks and network firms
290.13 If a firm is deemed to be a network firm, the firm shall be independent of the audit
clients of the other firms within the network (unless otherwise stated in this Code).
The independence requirements in this section that apply to a network firm apply
to any entity, such as a consulting practice or professional law practice, that meets
the definition of a network firm irrespective of whether the entity itself meets the
definition of a firm.
290.14 To enhance their ability to provide professional services, firms frequently form
larger structures with other firms and entities. Whether these larger structures
create a network depends on the particular facts and circumstances and does
not depend on whether the firms and entities are legally separate and distinct.
For example, a larger structure may be aimed only at facilitating the referral of
work, which in itself does not meet the criteria necessary to constitute a network.
Alternatively, a larger structure might be such that it is aimed at co-operation and
the firms share a common brand name, a common system of quality control, or
significant professional resources and consequently is deemed to be a network.
290.15 The judgment as to whether the larger structure is a network shall be made in
light of whether a reasonable and informed third party would be likely to conclude,
weighing all the specific facts and circumstances, that the entities are associated
in such a way that a network exists. This judgment shall be applied consistently
throughout the network.
290.16 Where the larger structure is aimed at co-operation and it is clearly aimed at
profit or cost sharing among the entities within the structure, it is deemed to be
a network. However, the sharing of immaterial costs does not in itself create a
network. In addition, if the sharing of costs is limited only to those costs related
to the development of audit methodologies, manuals, or training courses, this
would not in itself create a network. Further, an association between a firm and an
otherwise unrelated entity to jointly provide a service or develop a product does not
in itself create a network.
290.17 Where the larger structure is aimed at co-operation and the entities within the
structure share common ownership, control or management, it is deemed to be a
network. This could be achieved by contract or other means.
290.18 Where the larger structure is aimed at co-operation and the entities within the
structure share common quality control policies and procedures, it is deemed to be
a network. For this purpose, common quality control policies and procedures are
those designed, implemented and monitored across the larger structure.
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290.19 Where the larger structure is aimed at co-operation and the entities within the
structure share a common business strategy, it is deemed to be a network. Sharing
a common business strategy involves an agreement by the entities to achieve
common strategic objectives. An entity is not deemed to be a network firm merely
because it co-operates with another entity solely to respond jointly to a request for
a proposal for the provision of a professional service.
290.20 Where the larger structure is aimed at co-operation and the entities within the
structure share the use of a common brand name, it is deemed to be a network.
A common brand name includes common initials or a common name. A firm is
deemed to be using a common brand name if it includes, for example, the common
brand name as part of, or along with, its firm name, when a partner of the firm
signs an audit report.
290.21 Even though a firm does not belong to a network and does not use a common
brand name as part of its firm name, it may give the appearance that it belongs to
a network if it makes reference in its stationery or promotional materials to being
a member of an association of firms. Accordingly, if care is not taken in how a firm
describes such memberships, a perception may be created that the firm belongs to
a network.
290.22 If a firm sells a component of its practice, the sales agreement sometimes provides
that, for a limited period of time, the component may continue to use the name
of the firm, or an element of the name, even though it is no longer connected to
the firm. In such circumstances, while the two entities may be practicing under
a common name, the facts are such that they do not belong to a larger structure
aimed at co-operation and are, therefore, not network firms. Those entities shall
determine how to disclose that they are not network firms when presenting
themselves to outside parties.
290.23 Where the larger structure is aimed at co-operation and the entities within the
structure share a significant part of professional resources, it is deemed to be a
network. Professional resources include:
• Common systems that enable firms to exchange information such as client
data, billing and time records;
• Partners and staff;
• Technical departments that consult on technical or industry specific issues,
transactions or events for assurance engagements;
• Audit methodology or audit manuals; and
• Training courses and facilities.
290.24 The determination of whether the professional resources shared are significant,
and therefore the firms are network firms, shall be made based on the relevant
facts and circumstances. Where the shared resources are limited to common audit
methodology or audit manuals, with no exchange of personnel or client or market
information, it is unlikely that the shared resources would be significant. The same
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applies to a common training endeavor. Where, however, the shared resources
involve the exchange of people or information, such as where staff are drawn from
a shared pool, or a common technical department is created within the larger
structure to provide participating firms with technical advice that the firms are
required to follow, a reasonable and informed third party is more likely to conclude
that the shared resources are significant.
Public interest entities
290.25 Section 290 contains additional provisions that reflect the extent of public interest
in certain entities. For the purpose of this section, public interest entities are:
(a) All listed entities; and
(b) Any entity:
(i) Defined by regulation or legislation as a public interest entity; or
(ii) For which the audit is required by regulation or legislation to be conducted
in compliance with the same independence requirements that apply to the
audit of listed entities. Such regulation may be promulgated by any relevant
regulator, including an audit regulator; and
(c) Entities that 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 may include
credit institutions (for example, banks), insurance companies, investment
firms and pension firms.
290.26 Firms and member bodies are encouraged to determine whether to treat additional
entities, or certain categories of entities, as public interest entities because they
have a large number and wide range of stakeholders. Factors to be considered
include:
• The nature of the business, such as the holding of assets in a fiduciary
capacity for a large number of stakeholders. Examples may include financial
institutions, such as banks and insurance companies, and pension funds;
• Size; and
• Number of employees.
In considering the above, ACCA has included category (c) within the definition
in paragraph 290.25, and augmented the definition of “public interest entity”
accordingly.
Related entities
290.27 In the case of an audit client that is a listed entity, references to an audit client
in this section include related entities of the client (unless otherwise stated). For
all other audit clients, references to an audit client in this section include related
entities over which the client has direct or indirect control. When the audit team
knows or has reason to believe that a relationship or circumstance involving
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another related entity of the client is relevant to the evaluation of the firm’s
independence from the client, the audit team shall include that related entity
when identifying and evaluating threats to independence and applying appropriate
safeguards.
Those charged with governance
290.28 Even when not required by the Code, applicable auditing standards, law or
regulation, regular communication is encouraged between the firm and those
charged with governance of the audit client regarding relationships and other
matters that might, in the firm’s opinion, reasonably bear on independence. Such
communication enables those charged with governance to:
(a) Consider the firm’s judgments in identifying and evaluating threats to
independence;
(b) Consider the appropriateness of safeguards applied to eliminate them or reduce
them to an acceptable level; and
(c) Take appropriate action. Such an approach can be particularly helpful with
respect to intimidation and familiarity threats.
Documentation
290.29 Documentation provides evidence of the professional accountant’s judgments in
forming conclusions regarding compliance with independence requirements. The
absence of documentation is not a determinant of whether a firm considered a
particular matter nor whether it is independent.
The professional accountant shall document conclusions regarding compliance with
independence requirements, and the substance of any relevant discussions that
support those conclusions. Accordingly:
(a) When safeguards are required to reduce a threat to an acceptable level, the
professional accountant shall document the nature of the threat and the
safeguards in place or applied that reduce the threat to an acceptable level; and
(b) When a threat required significant analysis to determine whether safeguards
were necessary and the professional accountant concluded that they were
not because the threat was already at an acceptable level, the professional
accountant shall document the nature of the threat and the rationale for the
conclusion.
Engagement period
290.30 Independence from the audit client is required both during the engagement period
and the period covered by the financial statements. The engagement period starts
when the audit team begins to perform audit services. The engagement period
ends when the audit report is issued. When the engagement is of a recurring
nature, it ends at the later of the notification by either party that the professional
relationship has terminated or the issuance of the final audit report.
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290.31 When an entity becomes an audit client during or after the period covered by
the financial statements on which the firm will express an opinion, the firm shall
determine whether any threats to independence are created by:
• Financial or business relationships with the audit client during or after the
period covered by the financial statements but before accepting the audit
engagement; or
• Previous services provided to the audit client.
290.32 If a non-assurance service was provided to the audit client during or after the
period covered by the financial statements but before the audit team begins to
perform audit services and the service would not be permitted during the period of
the audit engagement, the firm shall evaluate any threat to independence created
by the service. If a threat is not at an acceptable level, the audit engagement shall
only be accepted if safeguards are applied to eliminate any threats or reduce them
to an acceptable level. Examples of such safeguards include:
• Not including personnel who provided the non-assurance service as members
of the audit team;
• Having a professional accountant review the audit and non-assurance work as
appropriate; or
• Engaging another firm to evaluate the results of the non-assurance service
or having another firm re-perform the non-assurance service to the extent
necessary to enable it to take responsibility for the service.
Mergers and acquisitions
290.33 When, as a result of a merger or acquisition, an entity becomes a related entity of
an audit client, the firm shall identify and evaluate previous and current interests
and relationships with the related entity that, taking into account available
safeguards, could affect its independence and therefore its ability to continue the
audit engagement after the effective date of the merger or acquisition.
290.34 The firm shall take steps necessary to terminate, by the effective date of the
merger or acquisition, any current interests or relationships that are not permitted
under this Code. However, if such a current interest or relationship cannot
reasonably be terminated by the effective date of the merger or acquisition, for
example, because the related entity is unable by the effective date to effect an
orderly transition to another service provider of a non-assurance service provided
by the firm, the firm shall evaluate the threat that is created by such interest or
relationship. The more significant the threat, the more likely the firm’s objectivity
will be compromised and it will be unable to continue as auditor. The significance
of the threat will depend upon factors such as:
• The nature and significance of the interest or relationship;
• The nature and significance of the related entity relationship (for example,
whether the related entity is a subsidiary or parent); and
• The length of time until the interest or relationship can reasonably be
terminated.
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The firm shall discuss with those charged with governance the reasons why the
interest or relationship cannot reasonably be terminated by the effective date of the
merger or acquisition and the evaluation of the significance of the threat.
290.35 If those charged with governance request the firm to continue as auditor, the firm
shall do so only if:
(a) The interest or relationship will be terminated as soon as reasonably possible
and in all cases within six months of the effective date of the merger or
acquisition;
(b) Any individual who has such an interest or relationship, including one that has
arisen through performing a non-assurance service that would not be permitted
under this section, will not be a member of the engagement team for the audit
or the individual responsible for the engagement quality control review; and
(c) Appropriate transitional measures will be applied, as necessary, and discussed
with those charged with governance. Examples of transitional measures
include:
• Having a professional accountant review the audit or non-assurance work
as appropriate;
• Having a professional accountant, who is not a member of the firm
expressing the opinion on the financial statements, perform a review that is
equivalent to an engagement quality control review; or
• Engaging another firm to evaluate the results of the non-assurance service
or having another firm re-perform the non-assurance service to the extent
necessary to enable it to take responsibility for the service.
290.36 The firm may have completed a significant amount of work on the audit prior to
the effective date of the merger or acquisition and may be able to complete the
remaining audit procedures within a short period of time. In such circumstances,
if those charged with governance request the firm to complete the audit while
continuing with an interest or relationship identified in 290.33, the firm shall do so
only if it:
(a) Has evaluated the significance of the threat created by such interest or
relationship and discussed the evaluation with those charged with governance;
(b) Complies with the requirements of paragraph 290.35(b)–(c); and
(c) Ceases to be the auditor no later than the issuance of the audit report.
290.37 When addressing previous and current interests and relationships covered by
paragraphs 290.33 to 290.36, the firm shall determine whether, even if all the
requirements could be met, the interests and relationships create threats that
would remain so significant that objectivity would be compromised and, if so, the
firm shall cease to be the auditor.
290.38 The professional accountant shall document any interests or relationships covered
by paragraphs 290.34 and 36 that will not be terminated by the effective date
of the merger or acquisition and the reasons why they will not be terminated, the
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transitional measures applied, the results of the discussion with those charged with
governance, and the rationale as to why the previous and current interests and
relationships do not create threats that would remain so significant that objectivity
would be compromised.
Other considerations
290.39 There may be occasions when there is an inadvertent violation of this section.
If such an inadvertent violation occurs, it generally will be deemed not to
compromise independence provided the firm has appropriate quality control
policies and procedures in place, equivalent to those required by ISQCs, to
maintain independence and, once discovered, the violation is corrected promptly
and any necessary safeguards are applied to eliminate any threat or reduce it to an
acceptable level. The firm shall determine whether to discuss the matter with those
charged with governance.
Paragraphs 290.40 to 290.99 are intentionally left blank.
Application of the conceptual framework approach to
independence
290.100 Paragraphs 290.102 to 290.231 describe specific circumstances and relationships
that create or may create threats to independence. The paragraphs describe
the potential threats and the types of safeguards that may be appropriate to
eliminate the threats or reduce them to an acceptable level and identify certain
situations where no safeguards could reduce the threats to an acceptable level.
The paragraphs do not describe all of the circumstances and relationships that
create or may create a threat to independence. The firm and the members of the
audit team shall evaluate the implications of similar, but different, circumstances
and relationships and determine whether safeguards, including the safeguards in
paragraphs 200.12 to 200.15, can be applied when necessary to eliminate the
threats to independence or reduce them to an acceptable level.
290.101 Paragraphs 290.102 to 290.126 contain references to the materiality of a financial
interest, loan, or guarantee, or the significance of a business relationship. For
the purpose of determining whether such an interest is material to an individual,
the combined net worth of the individual and the individual’s immediate family
members may be taken into account.
Financial interests
290.102 Holding a financial interest in an audit client may create a self-interest threat. The
existence and significance of any threat created depends on:
(a) The role of the person holding the financial interest,
(b) Whether the financial interest is direct or indirect, and
(c) The materiality of the financial interest.
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290.103 Financial interests may be held through an intermediary (e.g. a collective
investment vehicle, estate or trust). The determination of whether such financial
interests are direct or indirect will depend upon whether the beneficial owner
has control over the investment vehicle or the ability to influence its investment
decisions. When control over the investment vehicle or the ability to influence
investment decisions exists, this Code defines that financial interest to be a direct
financial interest. Conversely, when the beneficial owner of the financial interest
has no control over the investment vehicle or ability to influence its investment
decisions, this Code defines that financial interest to be an indirect financial
interest.
290.104 If a member of the audit team, a member of that individual’s immediate family,
or a firm has a direct financial interest or a material indirect financial interest in
the audit client, the self-interest threat created would be so significant that no
safeguards could reduce the threat to an acceptable level. Therefore, none of the
following shall have a direct financial interest or a material indirect financial interest
in the client: a member of the audit team; a member of that individual’s immediate
family; or the firm.
290.105 When a member of the audit team has a close family member who the audit team
member knows has a direct financial interest or a material indirect financial interest
in the audit client, a self-interest threat is created. The significance of the threat
will depend on factors such as:
• The nature of the relationship between the member of the audit team and the
close family member; and
• The materiality of the financial interest to the close family member.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• The close family member disposing, as soon as practicable, of all of the
financial interest or disposing of a sufficient portion of an indirect financial
interest so that the remaining interest is no longer material;
• Having a professional accountant review the work of the member of the audit
team; or
• Removing the individual from the audit team.
290.106 If a member of the audit team, a member of that individual’s immediate family,
or a firm has a direct or material indirect financial interest in an entity that has a
controlling interest in the audit client, and the client is material to the entity, the
self-interest threat created would be so significant that no safeguards could reduce
the threat to an acceptable level. Therefore, none of the following shall have such
a financial interest: a member of the audit team; a member of that individual’s
immediate family; and the firm.
290.107 The holding by a firm’s retirement benefit plan of a direct or material indirect
financial interest in an audit client creates a self-interest threat. The significance of
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the threat shall be evaluated and safeguards applied when necessary to eliminate
the threat or reduce it to an acceptable level.
290.108 If other partners in the office in which the engagement partner practices in
connection with the audit engagement, or their immediate family members, hold a
direct financial interest or a material indirect financial interest in that audit client,
the self-interest threat created would be so significant that no safeguards could
reduce the threat to an acceptable level. Therefore, neither such partners nor their
immediate family members shall hold any such financial interests in such an audit
client.
290.109 The office in which the engagement partner practices in connection with the
audit engagement is not necessarily the office to which that partner is assigned.
Accordingly, when the engagement partner is located in a different office from
that of the other members of the audit team, professional judgment shall be
used to determine in which office the partner practices in connection with that
engagement.
290.110 If other partners and managerial employees who provide non-audit services to the
audit client, except those whose involvement is minimal, or their immediate family
members, hold a direct financial interest or a material indirect financial interest
in the audit client, the self-interest threat created would be so significant that no
safeguards could reduce the threat to an acceptable level. Accordingly, neither
such personnel nor their immediate family members shall hold any such financial
interests in such an audit client.
290.111 Despite paragraphs 290.108 and 290.110, the holding of a financial interest in an
audit client by an immediate family member of:
(a) A partner located in the office in which the engagement partner practices in
connection with the audit engagement, or
(b) A partner or managerial employee who provides non-audit services to the audit
client, is deemed not to compromise independence if the financial interest is
received as a result of the immediate family member’s employment rights (e.g.,
through pension or share option plans) and, when necessary, safeguards are
applied to eliminate any threat to independence or reduce it to an acceptable
level.
However, when the immediate family member has or obtains the right to dispose
of the financial interest or, in the case of a stock option, the right to exercise
the option, the financial interest shall be disposed of or forfeited as soon as
practicable.
290.112 A self-interest threat may be created if the firm or a member of the audit team,
or a member of that individual’s immediate family, has a financial interest in an
entity and an audit client also has a financial interest in that entity. However,
independence is deemed not to be compromised if these interests are immaterial
and the audit client cannot exercise significant influence over the entity. If such
interest is material to any party, and the audit client can exercise significant
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influence over the other entity, no safeguards could reduce the threat to an
acceptable level. Accordingly, the firm shall not have such an interest and any
individual with such an interest shall, before becoming a member of the audit
team, either:
(a) Dispose of the interest; or
(b) Dispose of a sufficient amount of the interest so that the remaining interest is
no longer material.
290.113 A self-interest, familiarity or intimidation threat may be created if a member of the
audit team, or a member of that individual’s immediate family, or the firm, has a
financial interest in an entity when a director, officer or controlling owner of the
audit client is also known to have a financial interest in that entity. The existence
and significance of any threat will depend upon factors such as:
• The role of the professional on the audit team;
• Whether ownership of the entity is closely or widely held;
• Whether the interest gives the investor the ability to control or significantly
influence the entity; and
• The materiality of the financial interest.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Removing the member of the audit team with the financial interest from the
audit team; or
• Having a professional accountant review the work of the member of the audit
team.
290.114 The holding by a firm, or a member of the audit team, or a member of that
individual’s immediate family, of a direct financial interest or a material indirect
financial interest in the audit client as a trustee creates a self-interest threat.
Similarly, a self-interest threat is created when:
(a) A partner in the office in which the engagement partner practices in connection
with the audit;
(b) Other partners and managerial employees who provide non-assurance services
to the audit client, except those whose involvement is minimal; or
(c) Their immediate family members, hold a direct financial interest or a material
indirect financial interest in the audit client as trustee.
Such an interest shall not be held unless:
(a) Neither the trustee, nor an immediate family member of the trustee, nor the
firm are beneficiaries of the trust;
(b) The interest in the audit client held by the trust is not material to the trust;
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(c) The trust is not able to exercise significant influence over the audit client; and
(d) The trustee, an immediate family member of the trustee, or the firm cannot
significantly influence any investment decision involving a financial interest in
the audit client.
290.115 Members of the audit team shall determine whether a self-interest threat is created
by any known financial interests in the audit client held by other individuals
including:
(a) Partners and professional employees of the firm, other than those referred to
above, or their immediate family members; and
(b) Individuals with a close personal relationship with a member of the audit team.
Whether these interests create a self-interest threat will depend on factors such as:
• The firm’s organizational, operating and reporting structure; and
• The nature of the relationship between the individual and the member of the
audit team.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Removing the member of the audit team with the personal relationship from
the audit team;
• Excluding the member of the audit team from any significant decision-making
concerning the audit engagement; or
• Having a professional accountant review the work of the member of the audit
team.
290.116 If a firm or a partner or employee of the firm, or a member of that individual’s
immediate family, receives a direct financial interest or a material indirect financial
interest in an audit client, for example, by way of an inheritance, gift or as a result
of a merger and such interest would not be permitted to be held under this section,
then:
(a) If the interest is received by the firm, the financial interest shall be disposed
of immediately, or a sufficient amount of an indirect financial interest shall be
disposed of so that the remaining interest is no longer material;
(b) If the interest is received by a member of the audit team, or a member of that
individual’s immediate family, the individual who received the financial interest
shall immediately dispose of the financial interest, or dispose of a sufficient
amount of an indirect financial interest so that the remaining interest is no
longer material; or
(c) If the interest is received by an individual who is not a member of the audit
team, or by an immediate family member of the individual, the financial interest
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Independence – Audit and review engagements 290
shall be disposed of as soon as possible, or a sufficient amount of an indirect
financial interest shall be disposed of so that the remaining interest is no longer
material. Pending the disposal of the financial interest, a determination shall be
made as to whether any safeguards are necessary.
290.117 When an inadvertent violation of this section as it relates to a financial interest in
an audit client occurs, it is deemed not to compromise independence if:
(a) The firm has established policies and procedures that require prompt
notification to the firm of any breaches resulting from the purchase, inheritance
or other acquisition of a financial interest in the audit client;
(b) The actions in paragraph 290.116 (a)–(c) are taken as applicable; and
(c) The firm applies other safeguards when necessary to reduce any remaining
threat to an acceptable level. Examples of such safeguards include:
• Having a professional accountant review the work of the member of the
audit team; or
• Excluding the individual from any significant decision-making concerning
the audit engagement.
The firm shall determine whether to discuss the matter with those charged with
governance.
Loans and guarantees
290.118 A loan, or a guarantee of a loan, to a member of the audit team, or a member of
that individual’s immediate family, or the firm from an audit client that is a bank or
a similar institution may create a threat to independence. If the loan or guarantee
is not made under normal lending procedures, terms and conditions, a self-interest
threat would be created that would be so significant that no safeguards could
reduce the threat to an acceptable level. Accordingly, neither a member of the
audit team, a member of that individual’s immediate family, nor a firm shall accept
such a loan or guarantee.
290.119 If a loan to a firm from an audit client that is a bank or similar institution is made
under normal lending procedures, terms and conditions and it is material to the
audit client or firm receiving the loan, it may be possible to apply safeguards
to reduce the self-interest threat to an acceptable level. An example of such a
safeguard is having the work reviewed by a professional accountant from a network
firm that is neither involved with the audit nor received the loan.
290.120 A loan, or a guarantee of a loan, from an audit client that is a bank or a similar
institution to a member of the audit team, or a member of that individual’s
immediate family, does not create a threat to independence if the loan or guarantee
is made under normal lending procedures, terms and conditions. Examples of
such loans include home mortgages, bank overdrafts, car loans and credit card
balances.
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290.121 If the firm or a member of the audit team, or a member of that individual’s
immediate family, accepts a loan from, or has a borrowing guaranteed by, an audit
client that is not a bank or similar institution, the self-interest threat created would
be so significant that no safeguards could reduce the threat to an acceptable level,
unless the loan or guarantee is immaterial to both (a) the firm or the member of the
audit team and the immediate family member, and (b) the client.
290.122 Similarly, if the firm or a member of the audit team, or a member of that
individual’s immediate family, makes or guarantees a loan to an audit client, the
self-interest threat created would be so significant that no safeguards could reduce
the threat to an acceptable level, unless the loan or guarantee is immaterial to both
(a) the firm or the member of the audit team and the immediate family member,
and (b) the client.
290.123 If a firm or a member of the audit team, or a member of that individual’s immediate
family, has deposits or a brokerage account with an audit client that is a bank,
broker or similar institution, a threat to independence is not created if the deposit
or account is held under normal commercial terms.
Business relationships
290.124 A close business relationship between a firm, or a member of the audit team,
or a member of that individual’s immediate family, and the audit client or its
management, arises from a commercial relationship or common financial interest
and may create self-interest or intimidation threats. Examples of such relationships
include:
• Having a financial interest in a joint venture with either the client or a
controlling owner, director, officer or other individual who performs senior
managerial activities for that client.
• Arrangements to combine one or more services or products of the firm with
one or more services or products of the client and to market the package with
reference to both parties.
• Distribution or marketing arrangements under which the firm distributes or
markets the client’s products or services, or the client distributes or markets
the firm’s products or services.
Unless any financial interest is immaterial and the business relationship is
insignificant to the firm and the client or its management, the threat created would
be so significant that no safeguards could reduce the threat to an acceptable level.
Therefore, unless the financial interest is immaterial and the business relationship
is insignificant, the business relationship shall not be entered into, or it shall be
reduced to an insignificant level or terminated.
In the case of a member of the audit team, unless any such financial interest is
immaterial and the relationship is insignificant to that member, the individual shall
be removed from the audit team.
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Independence – Audit and review engagements 290
If the business relationship is between an immediate family member of a member
of the audit team and the audit client or its management, the significance of any
threat shall be evaluated and safeguards applied when necessary to eliminate the
threat or reduce it to an acceptable level.
290.125 A business relationship involving the holding of an interest by the firm, or a
member of the audit team, or a member of that individual’s immediate family, in
a closely-held entity when the audit client or a director or officer of the client, or
any group thereof, also holds an interest in that entity does not create threats to
independence if:
(a) The business relationship is insignificant to the firm, the member of the audit
team and the immediate family member, and the client;
(b) The financial interest is immaterial to the investor or group of investors; and
(c) The financial interest does not give the investor, or group of investors, the
ability to control the closely-held entity.
290.126 The purchase of goods and services from an audit client by the firm, or a member
of the audit team, or a member of that individual’s immediate family, does not
generally create a threat to independence if the transaction is in the normal course
of business and at arm’s length. However, such transactions may be of such a
nature or magnitude that they create a self-interest threat. The significance of any
threat shall be evaluated and safeguards applied when necessary to eliminate the
threat or reduce it to an acceptable level. Examples of such safeguards include:
• Eliminating or reducing the magnitude of the transaction; or
• Removing the individual from the audit team.
Family and personal relationships
290.127 Family and personal relationships between a member of the audit team and a
director or officer or certain employees (depending on their role) of the audit
client may create self-interest, familiarity or intimidation threats. The existence
and significance of any threats will depend on a number of factors, including the
individual’s responsibilities on the audit team, the role of the family member or
other individual within the client and the closeness of the relationship.
290.128 When an immediate family member of a member of the audit team is:
(a) a director or officer of the audit client; or
(b) an employee in a position to exert significant influence over the preparation of
the client’s accounting records or the financial statements on which the firm
will express an opinion,
or was in such a position during any period covered by the engagement or the
financial statements, the threats to independence can only be reduced to an
acceptable level by removing the individual from the audit team. The closeness
of the relationship is such that no other safeguards could reduce the threat to an
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acceptable level. Accordingly, no individual who has such a relationship shall be a
member of the audit team.
290.129 Threats to independence are created when an immediate family member of a
member of the audit team is an employee in a position to exert significant influence
over the client’s financial position, financial performance or cash flows. The
significance of the threats will depend on factors such as:
• The position held by the immediate family member; and
• The role of the professional on the audit team.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Removing the individual from the audit team; or
• Structuring the responsibilities of the audit team so that the professional does
not deal with matters that are within the responsibility of the immediate family
member.
290.130 Threats to independence are created when a close family member of a member of
the audit team is:
(a) A director or officer of the audit client; or
(b) An employee in a position to exert significant influence over the preparation of
the client’s accounting records or the financial statements on which the firm
will express an opinion.
The significance of the threats will depend on factors such as:
• The nature of the relationship between the member of the audit team and the
close family member;
• The position held by the close family member; and
• The role of the professional on the audit team.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Removing the individual from the audit team; or
• Structuring the responsibilities of the audit team so that the professional does
not deal with matters that are within the responsibility of the close family
member.
290.131 Threats to independence are created when a member of the audit team has a
close relationship with a person who is not an immediate or close family member,
but who is a director or officer or an employee in a position to exert significant
influence over the preparation of the client’s accounting records or the financial
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statements on which the firm will express an opinion. A member of the audit team
who has such a relationship shall consult in accordance with firm policies and
procedures. The significance of the threats will depend on factors such as:
• The nature of the relationship between the individual and the member of the
audit team;
• The position the individual holds with the client; and
• The role of the professional on the audit team.
The significance of the threats shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples
of such safeguards include:
• Removing the professional from the audit team; or
• Structuring the responsibilities of the audit team so that the professional does
not deal with matters that are within the responsibility of the individual with
whom the professional has a close relationship.
290.132 Self-interest, familiarity or intimidation threats may be created by a personal or
family relationship between (a) a partner or employee of the firm who is not a
member of the audit team and (b) a director or officer of the audit client or an
employee in a position to exert significant influence over the preparation of the
client’s accounting records or the financial statements on which the firm will
express an opinion. Partners and employees of the firm who are aware of such
relationships shall consult in accordance with firm policies and procedures. The
existence and significance of any threat will depend on factors such as:
• The nature of the relationship between the partner or employee of the firm and
the director or officer or employee of the client;
• The interaction of the partner or employee of the firm with the audit team;
• The position of the partner or employee within the firm; and
• The position the individual holds with the client.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Structuring the partner’s or employee’s responsibilities to reduce any potential
influence over the audit engagement; or
• Having a professional accountant review the relevant audit work performed.
290.133 When an inadvertent violation of this section as it relates to family and personal
relationships occurs, it is deemed not to compromise independence if:
(a) The firm has established policies and procedures that require prompt
notification to the firm of any breaches resulting from changes in the
employment status of their immediate or close family members or other
personal relationships that create threats to independence;
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(b) The inadvertent violation relates to an immediate family member of a member
of the audit team becoming a director or officer of the audit client or being
in a position to exert significant influence over the preparation of the client’s
accounting records or the financial statements on which the firm will express
an opinion, and the relevant professional is removed from the audit team; and
(c) The firm applies other safeguards when necessary to reduce any remaining
threat to an acceptable level. Examples of such safeguards include:
(i) Having a professional accountant review the work of the member of the
audit team; or
(ii) Excluding the relevant professional from any significant decision-making
concerning the engagement.
The firm shall determine whether to discuss the matter with those charged with
governance.
Employment with an audit client
290.134 Familiarity or intimidation threats may be created if a director or officer of the
audit client, or an employee in a position to exert significant influence over the
preparation of the client’s accounting records or the financial statements on which
the firm will express an opinion, has been a member of the audit team or partner
of the firm.
290.135 If a former member of the audit team or partner of the firm has joined the audit
client in such a position and a significant connection remains between the firm and
the individual, the threat would be so significant that no safeguards could reduce
the threat to an acceptable level. Therefore, independence would be deemed to be
compromised if a former member of the audit team or partner joins the audit client
as a director or officer, or as an employee in a position to exert significant influence
over the preparation of the client’s accounting records or the financial statements
on which the firm will express an opinion, unless:
(a) The individual is not entitled to any benefits or payments from the firm, unless
made in accordance with fixed predetermined arrangements, and any amount
owed to the individual is not material to the firm; and
(b) The individual does not continue to participate or appear to participate in the
firm’s business or professional activities.
290.136 If a former member of the audit team or partner of the firm has joined the audit
client in such a position, and no significant connection remains between the firm
and the individual, the existence and significance of any familiarity or intimidation
threats will depend on factors such as:
• The position the individual has taken at the client;
• Any involvement the individual will have with the audit team;
• The length of time since the individual was a member of the audit team or
partner of the firm; and
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Independence – Audit and review engagements 290
• The former position of the individual within the audit team or firm, for example,
whether the individual was responsible for maintaining regular contact with the
client’s management or those charged with governance.
The significance of any threats created shall be evaluated and safeguards applied
when necessary to eliminate the threats or reduce them to an acceptable level.
Examples of such safeguards include:
• Modifying the audit plan;
• Assigning individuals to the audit team who have sufficient experience in
relation to the individual who has joined the client; or
• Having a professional accountant review the work of the former member of the
audit team.
290.137 If a former partner of the firm has previously joined an entity in such a position and
the entity subsequently becomes an audit client of the firm, the significance of any
threat to independence shall be evaluated and safeguards applied when necessary
to eliminate the threat or reduce it to an acceptable level.
290.138 A self-interest threat is created when a member of the audit team participates in
the audit engagement while knowing that the member of the audit team will, or
may, join the client some time in the future. Firm policies and procedures shall
require members of an audit team to notify the firm when entering employment
negotiations with the client. On receiving such notification, the significance of the
threat shall be evaluated and safeguards applied when necessary to eliminate the
threat or reduce it to an acceptable level. Examples of such safeguards include:
• Removing the individual from the audit team; or
• A review of any significant judgments made by that individual while on the
team.
Audit clients that are public interest entities
290.139 Familiarity or intimidation threats are created when a key audit partner joins the
audit client that is a public interest entity as:
(a) A director or officer of the entity; or
(b) An employee in a position to exert significant influence over the preparation of
the client’s accounting records or the financial statements on which the firm
will express an opinion.
Independence would be deemed to be compromised unless, subsequent to the
partner ceasing to be a key audit partner, the public interest entity had issued
audited financial statements covering a period of not less than twelve months and
the partner was not a member of the audit team with respect to the audit of those
financial statements.
290.140 An intimidation threat is created when the individual who was the firm’s Senior
or Managing Partner (Chief Executive or equivalent) joins an audit client that is a
public interest entity as:
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(a) An employee in a position to exert significant influence over the preparation of
the entity’s accounting records or its financial statements; or
(b) A director or officer of the entity. Independence would be deemed to be
compromised unless twelve months have passed since the individual was the
Senior or Managing Partner (Chief Executive or equivalent) of the firm.
290.141 Independence is deemed not to be compromised if, as a result of a business
combination, a former key audit partner or the individual who was the firm’s former
Senior or Managing Partner is in a position as described in paragraphs 290.139
and 290.140, and:
(a) The position was not taken in contemplation of the business combination;
(b) Any benefits or payments due to the former partner from the firm have
been settled in full, unless made in accordance with fixed predetermined
arrangements and any amount owed to the partner is not material to the firm;
(c) The former partner does not continue to participate or appear to participate in
the firm’s business or professional activities; and
(d) The position held by the former partner with the audit client is discussed with
those charged with governance.
Temporary staff assignments
290.142 The lending of staff by a firm to an audit client may create a self-review threat.
Such assistance may be given, but only for a short period of time and the firm’s
personnel shall not be involved in:
(a) Providing non-assurance services that would not be permitted under this
section; or
(b) Assuming management responsibilities.
In all circumstances, the audit client shall be responsible for directing and
supervising the activities of the loaned staff.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Conducting an additional review of the work performed by the loaned staff;
• Not giving the loaned staff audit responsibility for any function or activity that
the staff performed during the temporary staff assignment; or
• Not including the loaned staff as a member of the audit team.
Recent service with an audit client
290.143 Self-interest, self-review or familiarity threats may be created if a member of the
audit team has recently served as a director, officer, or employee of the audit
client. This would be the case when, for example, a member of the audit team has
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Independence – Audit and review engagements 290
to evaluate elements of the financial statements for which the member of the audit
team had prepared the accounting records while with the client.
290.144 If, during the period covered by the audit report, a member of the audit team had
served as a director or officer of the audit client, or was an employee in a position
to exert significant influence over the preparation of the client’s accounting records
or the financial statements on which the firm will express an opinion, the threat
created would be so significant that no safeguards could reduce the threat to an
acceptable level. Consequently, such individuals shall not be assigned to the audit
team.
290.145 Self-interest, self-review or familiarity threats may be created if, before the period
covered by the audit report, a member of the audit team had served as a director
or officer of the audit client, or was an employee in a position to exert significant
influence over the preparation of the client’s accounting records or financial
statements on which the firm will express an opinion. For example, such threats
would be created if a decision made or work performed by the individual in the
prior period, while employed by the client, is to be evaluated in the current period
as part of the current audit engagement. The existence and significance of any
threats will depend on factors such as:
• The position the individual held with the client;
• The length of time since the individual left the client; and
• The role of the professional on the audit team.
The significance of any threat shall be evaluated and safeguards applied when
necessary to reduce the threat to an acceptable level. An example of such a
safeguard is conducting a review of the work performed by the individual as a
member of the audit team.
Serving as a director or officer of an audit client
290.146 If a partner or employee of the firm serves as a director or officer of an audit client,
the self-review and self-interest threats created would be so significant that no
safeguards could reduce the threats to an acceptable level. Accordingly, no partner
or employee shall serve as a director or officer of an audit client.
290.147 The position of Company Secretary has different implications in different
jurisdictions. Duties may range from administrative duties, such as personnel
management and the maintenance of company records and registers, to duties as
diverse as ensuring that the company complies with regulations or providing advice
on corporate governance matters. Generally, this position is seen to imply a close
association with the entity.
290.148 If a partner or employee of the firm serves as Company Secretary for an audit
client, self-review and advocacy threats are created that would generally be so
significant that no safeguards could reduce the threats to an acceptable level.
Despite paragraph 290.146, when this practice is specifically permitted under
local law, professional rules or practice, and provided management makes all
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relevant decisions, the duties and activities shall be limited to those of a routine
and administrative nature, such as preparing minutes and maintaining statutory
returns. In those circumstances, the significance of any threats shall be evaluated
and safeguards applied when necessary to eliminate the threats or reduce them to
an acceptable level.
290.149 Performing routine administrative services to support a company secretarial
function or providing advice in relation to company secretarial administration
matters does not generally create threats to independence, as long as client
management makes all relevant decisions.
Long association of senior personnel (including partner rotation)
with an audit client
General provisions
290.150 Familiarity and self-interest threats are created by using the same senior personnel
on an audit engagement over a long period of time. The significance of the threats
will depend on factors such as:
• How long the individual has been a member of the audit team;
• The role of the individual on the audit team;
• The structure of the firm;
• The nature of the audit engagement;
• Whether the client’s management team has changed; and
• Whether the nature or complexity of the client’s accounting and reporting
issues has changed.
The significance of the threats shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples
of such safeguards include:
• Rotating the senior personnel off the audit team;
• Having a professional accountant who was not a member of the audit team
review the work of the senior personnel; or
• Regular independent internal or external quality reviews of the engagement.
Audit clients that are public interest entities
290.151 In respect of an audit of a public interest entity, an individual shall not be a key
audit partner for more than seven years. After such time, the individual shall not
be a member of the engagement team or be a key audit partner for the client for
two years. During that period, the individual shall not participate in the audit of the
entity, provide quality control for the engagement, consult with the engagement
team or the client regarding technical or industry specific issues, transactions or
events or otherwise directly influence the outcome of the engagement.
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Independence – Audit and review engagements 290
290.152 Despite paragraph 290.151, key audit partners whose continuity is especially
important to audit quality may, in rare cases due to unforeseen circumstances
outside the firm’s control, be permitted an additional year on the audit team as
long as the threat to independence can be eliminated or reduced to an acceptable
level by applying safeguards. For example, a key audit partner may remain on the
audit team for up to one additional year in circumstances where, due to unforeseen
events, a required rotation was not possible, as might be the case due to serious
illness of the intended engagement partner.
290.153 The long association of other partners with an audit client that is a public interest
entity creates familiarity and self-interest threats. The significance of the threats
will depend on factors such as:
• How long any such partner has been associated with the audit client;
• The role, if any, of the individual on the audit team; and
• The nature, frequency and extent of the individual’s interactions with the
client’s management or those charged with governance.
The significance of the threats shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples
of such safeguards include:
• Rotating the partner off the audit team or otherwise ending the partner’s
association with the audit client; or
• Regular independent internal or external quality reviews of the engagement.
290.154 When an audit client becomes a public interest entity, the length of time the
individual has served the audit client as a key audit partner before the client
becomes a public interest entity shall be taken into account in determining the
timing of the rotation. If the individual has served the audit client as a key audit
partner for five years or less when the client becomes a public interest entity, the
number of years the individual may continue to serve the client in that capacity
before rotating off the engagement is seven years less the number of years already
served. If the individual has served the audit client as a key audit partner for six
or more years when the client becomes a public interest entity, the partner may
continue to serve in that capacity for a maximum of two additional years before
rotating off the engagement.
290.155 When a firm has only a few people with the necessary knowledge and experience
to serve as a key audit partner on the audit of a public interest entity, rotation of
key audit partners may not be an available safeguard. If an independent regulator
in the relevant jurisdiction has provided an exemption from partner rotation in
such circumstances, an individual may remain a key audit partner for more than
seven years, in accordance with such regulation, provided that the independent
regulator has specified alternative safeguards which are applied, such as a regular
independent external review.
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Provision of non-assurance services to audit clients
290.156 Firms have traditionally provided to their audit clients a range of non-assurance
services that are consistent with their skills and expertise. Providing non-assurance
services may, however, create threats to the independence of the firm or members
of the audit team. The threats created are most often self-review, self-interest and
advocacy threats.
290.157 New developments in business, the evolution of financial markets and changes
in information technology make it impossible to draw up an all-inclusive list of
non-assurance services that might be provided to an audit client. When specific
guidance on a particular non-assurance service is not included in this section,
the conceptual framework shall be applied when evaluating the particular
circumstances.
290.158 Before the firm accepts an engagement to provide a non-assurance service to an
audit client, a determination shall be made as to whether providing such a service
would create a threat to independence. In evaluating the significance of any threat
created by a particular non-assurance service, consideration shall be given to
any threat that the audit team has reason to believe is created by providing other
related non-assurance services. If a threat is created that cannot be reduced to an
acceptable level by the application of safeguards, the non-assurance service shall
not be provided.
290.159 Providing certain non-assurance services to an audit client may create a threat
to independence so significant that no safeguards could reduce the threat to an
acceptable level. However, the inadvertent provision of such a service to a related
entity, division or in respect of a discrete financial statement item of such a client
will be deemed not to compromise independence if any threats have been reduced
to an acceptable level by arrangements for that related entity, division or discrete
financial statement item to be audited by another firm or when another firm reperforms the non-assurance service to the extent necessary to enable it to take
responsibility for that service.
290.160 A firm may provide non-assurance services that would otherwise be restricted
under this section to the following related entities of the audit client:
(a) An entity, which is not an audit client, that has direct or indirect control over
the audit client;
(b) An entity, which is not an audit client, with a direct financial interest in the
client if that entity has significant influence over the client and the interest in
the client is material to such entity; or
(c) An entity, which is not an audit client, that is under common control with the
audit client,
384
if it is reasonable to conclude that (a) the services do not create a self-review threat
because the results of the services will not be subject to audit procedures and (b)
any threats that are created by the provision of such services are eliminated or
reduced to an acceptable level by the application of safeguards.
Independence – Audit and review engagements 290
290.161 A non-assurance service provided to an audit client does not compromise the firm’s
independence when the client becomes a public interest entity if:
(a) The previous non-assurance service complies with the provisions of this section
that relate to audit clients that are not public interest entities;
(b) Services that are not permitted under this section for audit clients that are
public interest entities are terminated before or as soon as practicable after the
client becomes a public interest entity; and
(c) The firm applies safeguards when necessary to eliminate or reduce to an
acceptable level any threats to independence arising from the service.
Management responsibilities
290.162 Management of an entity performs many activities in managing the entity in the
best interests of stakeholders of the entity. It is not possible to specify every
activity that is a management responsibility. However, management responsibilities
involve leading and directing an entity, including making significant decisions
regarding the acquisition, deployment and control of human, financial, physical and
intangible resources.
290.163 Whether an activity is a management responsibility depends on the circumstances
and requires the exercise of judgment. Examples of activities that would generally
be considered a management responsibility include:
• Setting policies and strategic direction;
• Directing and taking responsibility for the actions of the entity’s employees;
• Authorizing transactions;
• Deciding which recommendations of the firm or other third parties to
implement;
• Taking responsibility for the preparation and fair presentation of the financial
statements in accordance with the applicable financial reporting framework;
and
• Taking responsibility for designing, implementing and maintaining internal
control.
290.164 Activities that are routine and administrative, or involve matters that are
insignificant, generally are deemed not to be a management responsibility. For
example, executing an insignificant transaction that has been authorized by
management or monitoring the dates for filing statutory returns and advising an
audit client of those dates is deemed not to be a management responsibility.
Further, providing advice and recommendations to assist management in
discharging its responsibilities is not assuming a management responsibility.
290.165 If a firm were to assume a management responsibility for an audit client, the
threats created would be so significant that no safeguards could reduce the threats
to an acceptable level. For example, deciding which recommendations of the firm
to implement will create self-review and self-interest threats. Further, assuming a
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management responsibility creates a familiarity threat because the firm becomes
too closely aligned with the views and interests of management. Therefore, the firm
shall not assume a management responsibility for an audit client.
290.166 To avoid the risk of assuming a management responsibility when providing nonassurance services to an audit client, the firm shall be satisfied that a member of
management is responsible for making the significant judgments and decisions that
are the proper responsibility of management, evaluating the results of the service
and accepting responsibility for the actions to be taken arising from the results of
the service. This reduces the risk of the firm inadvertently making any significant
judgments or decisions on behalf of management. The risk is further reduced when
the firm gives the client the opportunity to make judgments and decisions based on
an objective and transparent analysis and presentation of the issues.
Preparing accounting records and financial statements
General provisions
290.167 Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the applicable financial reporting framework. These
responsibilities include:
• Originating or changing journal entries, or determining the account
classifications of transactions; and
• Preparing or changing source documents or originating data, in electronic or
other form, evidencing the occurrence of a transaction (for example, purchase
orders, payroll time records, and customer orders).
290.168 Providing an audit client with accounting and bookkeeping services, such as
preparing accounting records or financial statements, creates a self-review threat
when the firm subsequently audits the financial statements.
290.169 The audit process, however, necessitates dialogue between the firm and
management of the audit client, which may involve:
• The application of accounting standards or policies and financial statement
disclosure requirements;
• The appropriateness of financial and accounting control and the methods used
in determining the stated amounts of assets and liabilities; or
• Proposing adjusting journal entries.
These activities are considered to be a normal part of the audit process and do
not, generally, create threats to independence.
290.170 Similarly, the client may request technical assistance from the firm on matters
such as resolving account reconciliation problems or analyzing and accumulating
information for regulatory reporting. In addition, the client may request technical
advice on accounting issues such as the conversion of existing financial statements
from one financial reporting framework to another (for example, to comply
with group accounting policies or to transition to a different financial reporting
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Independence – Audit and review engagements 290
framework such as International Financial Reporting Standards). Such services do
not, generally, create threats to independence provided the firm does not assume a
management responsibility for the client.
Audit clients that are not public interest entities
290.171 The firm may provide services related to the preparation of accounting records and
financial statements to an audit client that is not a public interest entity where the
services are of a routine or mechanical nature, so long as any self-review threat
created is reduced to an acceptable level. Examples of such services include:
• Providing payroll services based on client-originated data;
• Recording transactions for which the client has determined or approved the
appropriate account classification;
• Posting transactions coded by the client to the general ledger;
• Posting client-approved entries to the trial balance; and
• Preparing financial statements based on information in the trial balance.
In all cases, the significance of any threat created shall be evaluated and
safeguards applied when necessary to eliminate the threat or reduce it to an
acceptable level. Examples of such safeguards include:
• Arranging for such services to be performed by an individual who is not a
member of the audit team; or
• If such services are performed by a member of the audit team, using a partner
or senior staff member with appropriate expertise who is not a member of the
audit team to review the work performed.
Audit clients that are public interest entities
290.172 Except in emergency situations, a firm shall not provide to an audit client that is
a public interest entity accounting and bookkeeping services, including payroll
services, or prepare financial statements on which the firm will express an opinion
or financial information which forms the basis of the financial statements.
290.173 Despite paragraph 290.172, a firm may provide accounting and bookkeeping
services, including payroll services and the preparation of financial statements or
other financial information, of a routine or mechanical nature for divisions or related
entities of an audit client that is a public interest entity if the personnel providing
the services are not members of the audit team and:
(a) The divisions or related entities for which the service is provided are
collectively immaterial to the financial statements on which the firm will
express an opinion; or
(b) The services relate to matters that are collectively immaterial to the financial
statements of the division or related entity.
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290 Independence – Audit and review engagements
Emergency situations
290.174 Accounting and bookkeeping services, which would otherwise not be permitted
under this section, may be provided to audit clients in emergency or other unusual
situations when it is impractical for the audit client to make other arrangements.
This may be the case when (a) only the firm has the resources and necessary
knowledge of the client’s systems and procedures to assist the client in the timely
preparation of its accounting records and financial statements, and (b) a restriction
on the firm’s ability to provide the services would result in significant difficulties for
the client (for example, as might result from a failure to meet regulatory reporting
requirements). In such situations, the following conditions shall be met:
(a) Those who provide the services are not members of the audit team;
(b) The services are provided for only a short period of time and are not expected
to recur; and
(c) The situation is discussed with those charged with governance.
Valuation services
General provisions
290.175 A valuation comprises the making of assumptions with regard to future
developments, the application of appropriate methodologies and techniques, and
the combination of both to compute a certain value, or range of values, for an
asset, a liability or for a business as a whole.
290.176 Performing valuation services for an audit client may create a self-review threat.
The existence and significance of any threat will depend on factors such as:
• Whether the valuation will have a material effect on the financial statements.
• The extent of the client’s involvement in determining and approving the
valuation methodology and other significant matters of judgment.
• The availability of established methodologies and professional guidelines.
• For valuations involving standard or established methodologies, the degree of
subjectivity inherent in the item.
• The reliability and extent of the underlying data.
• The degree of dependence on future events of a nature that could create
significant volatility inherent in the amounts involved.
• The extent and clarity of the disclosures in the financial statements.
The significance of any threat created shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level.
Examples of such safeguards include:
• Having a professional who was not involved in providing the valuation service
review the audit or valuation work performed; or
• Making arrangements so that personnel providing such services do not
participate in the audit engagement.
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290.177 Certain valuations do not involve a significant degree of subjectivity. This is likely
the case where the underlying assumptions are either established by law or
regulation, or are widely accepted and when the techniques and methodologies
to be used are based on generally accepted standards or prescribed by law or
regulation. In such circumstances, the results of a valuation performed by two or
more parties are not likely to be materially different.
290.178 If a firm is requested to perform a valuation to assist an audit client with its tax
reporting obligations or for tax planning purposes and the results of the valuation
will not have a direct effect on the financial statements, the provisions included in
paragraph 290.191 apply.
Audit clients that are not public interest entities
290.179 In the case of an audit client that is not a public interest entity, if the valuation
service has a material effect on the financial statements on which the firm will
express an opinion and the valuation involves a significant degree of subjectivity,
no safeguards could reduce the self-review threat to an acceptable level.
Accordingly a firm shall not provide such a valuation service to an audit client.
Audit clients that are public interest entities
290.180 A firm shall not provide valuation services to an audit client that is a public interest
entity if the valuations would have a material effect, separately or in the aggregate,
on the financial statements on which the firm will express an opinion.
Taxation services
290.181 Taxation services comprise a broad range of services, including:
• Tax return preparation;
• Tax calculations for the purpose of preparing the accounting entries;
• Tax planning and other tax advisory services; and
• Assistance in the resolution of tax disputes.
While taxation services provided by a firm to an audit client are addressed
separately under each of these broad headings; in practice, these activities are
often interrelated.
290.182 Performing certain tax services creates self-review and advocacy threats. The
existence and significance of any threats will depend on factors such as:
• The system by which the tax authorities assess and administer the tax in
question and the role of the firm in that process;
• The complexity of the relevant tax regime and the degree of judgment
necessary in applying it;
• The particular characteristics of the engagement; and
• The level of tax expertise of the client’s employees.
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Tax return preparation
290.183 Tax return preparation services involve assisting clients with their tax reporting
obligations by drafting and completing information, including the amount of tax
due (usually on standardized forms) required to be submitted to the applicable
tax authorities. Such services also include advising on the tax return treatment
of past transactions and responding on behalf of the audit client to the tax
authorities’ requests for additional information and analysis (including providing
explanations of and technical support for the approach being taken). Tax return
preparation services are generally based on historical information and principally
involve analysis and presentation of such historical information under existing
tax law, including precedents and established practice. Further, the tax returns
are subject to whatever review or approval process the tax authority deems
appropriate. Accordingly, providing such services does not generally create a threat
to independence if management takes responsibility for the returns including any
significant judgments made.
Tax calculations for the purpose of preparing accounting entries
Audit clients that are not public interest entities
290.184 Preparing calculations of current and deferred tax liabilities (or assets) for an audit
client for the purpose of preparing accounting entries that will be subsequently
audited by the firm creates a self-review threat. The significance of the threat will
depend on:
(a) The complexity of the relevant tax law and regulation and the degree of
judgment necessary in applying them;
(b) The level of tax expertise of the client’s personnel; and
(c) The materiality of the amounts to the financial statements.
Safeguards shall be applied when necessary to eliminate the threat or reduce it to
an acceptable level. Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the
service;
• If the service is performed by a member of the audit team, using a partner or
senior staff member with appropriate expertise who is not a member of the
audit team to review the tax calculations; or
• Obtaining advice on the service from an external tax professional.
Audit clients that are public interest entities
290.185 Except in emergency situations, in the case of an audit client that is a public
interest entity, a firm shall not prepare tax calculations of current and deferred
tax liabilities (or assets) for the purpose of preparing accounting entries that are
material to the financial statements on which the firm will express an opinion.
290.186 The preparation of calculations of current and deferred tax liabilities (or assets)
for an audit client for the purpose of the preparation of accounting entries, which
would otherwise not be permitted under this section, may be provided to audit
clients in emergency or other unusual situations when it is impractical for the
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audit client to make other arrangements. This may be the case when (a) only the
firm has the resources and necessary knowledge of the client’s business to assist
the client in the timely preparation of its calculations of current and deferred
tax liabilities (or assets), and (b) a restriction on the firm’s ability to provide the
services would result in significant difficulties for the client (for example, as might
result from a failure to meet regulatory reporting requirements). In such situations,
the following conditions shall be met:
(a) Those who provide the services are not members of the audit team;
(b) The services are provided for only a short period of time and are not expected
to recur; and
(c) The situation is discussed with those charged with governance.
Tax planning and other tax advisory services
290.187 Tax planning or other tax advisory services comprise a broad range of services,
such as advising the client how to structure its affairs in a tax efficient manner or
advising on the application of a new tax law or regulation.
290.188 A self-review threat may be created where the advice will affect matters to be
reflected in the financial statements. The existence and significance of any threat
will depend on factors such as:
• The degree of subjectivity involved in determining the appropriate treatment for
the tax advice in the financial statements;
• The extent to which the outcome of the tax advice will have a material effect
on the financial statements;
• Whether the effectiveness of the tax advice depends on the accounting
treatment or presentation in the financial statements and there is doubt as
to the appropriateness of the accounting treatment or presentation under the
relevant financial reporting framework;
• The level of tax expertise of the client’s employees;
• The extent to which the advice is supported by tax law or regulation, other
precedent or established practice; and
• Whether the tax treatment is supported by a private ruling or has otherwise
been cleared by the tax authority before the preparation of the financial
statements.
For example, providing tax planning and other tax advisory services where the
advice is clearly supported by tax authority or other precedent, by established
practice or has a basis in tax law that is likely to prevail does not generally create a
threat to independence.
290.189 The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Using professionals who are not members of the audit team to perform the
service;
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• Having a tax professional, who was not involved in providing the tax service,
advise the audit team on the service and review the financial statement
treatment;
• Obtaining advice on the service from an external tax professional; or
• Obtaining pre-clearance or advice from the tax authorities.
290.190 Where the effectiveness of the tax advice depends on a particular accounting
treatment or presentation in the financial statements and:
(a) The audit team has reasonable doubt as to the appropriateness of the related
accounting treatment or presentation under the relevant financial reporting
framework; and
(b) The outcome or consequences of the tax advice will have a material effect on
the financial statements on which the firm will express an opinion;
The self-review threat would be so significant that no safeguards could reduce the
threat to an acceptable level. Accordingly, a firm shall not provide such tax advice
to an audit client.
290.191 In providing tax services to an audit client, a firm may be requested to perform a
valuation to assist the client with its tax reporting obligations or for tax planning
purposes. Where the result of the valuation will have a direct effect on the
financial statements, the provisions included in paragraphs 290.175 to 290.180
relating to valuation services are applicable. Where the valuation is performed for
tax purposes only and the result of the valuation will not have a direct effect on
the financial statements (i.e. the financial statements are only affected through
accounting entries related to tax), this would not generally create threats to
independence if such effect on the financial statements is immaterial or if the
valuation is subject to external review by a tax authority or similar regulatory
authority. If the valuation is not subject to such an external review and the effect
is material to the financial statements, the existence and significance of any threat
created will depend upon factors such as:
• The extent to which the valuation methodology is supported by tax law
or regulation, other precedent or established practice and the degree of
subjectivity inherent in the valuation.
• The reliability and extent of the underlying data.
The significance of any threat created shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level.
Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the
service;
• Having a professional review the audit work or the result of the tax service; or
• Obtaining pre-clearance or advice from the tax authorities.
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Independence – Audit and review engagements 290
Assistance in the resolution of tax disputes
290.192 An advocacy or self-review threat may be created when the firm represents an
audit client in the resolution of a tax dispute once the tax authorities have notified
the client that they have rejected the client’s arguments on a particular issue and
either the tax authority or the client is referring the matter for determination in
a formal proceeding, for example before a tribunal or court. The existence and
significance of any threat will depend on factors such as:
• Whether the firm has provided the advice which is the subject of the tax
dispute;
• The extent to which the outcome of the dispute will have a material effect on
the financial statements on which the firm will express an opinion;
• The extent to which the matter is supported by tax law or regulation, other
precedent, or established practice;
• Whether the proceedings are conducted in public; and
• The role management plays in the resolution of the dispute.
The significance of any threat created shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level.
Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the
service;
• Having a tax professional, who was not involved in providing the tax service,
advise the audit team on the services and review the financial statement
treatment; or
• Obtaining advice on the service from an external tax professional.
290.193 Where the taxation services involve acting as an advocate for an audit client before
a public tribunal or court in the resolution of a tax matter and the amounts involved
are material to the financial statements on which the firm will express an opinion,
the advocacy threat created would be so significant that no safeguards could
eliminate or reduce the threat to an acceptable level. Therefore, the firm shall not
perform this type of service for an audit client. What constitutes a “public tribunal
or court” shall be determined according to how tax proceedings are heard in the
particular jurisdiction.
290.194 The firm is not, however, precluded from having a continuing advisory role
(for example, responding to specific requests for information, providing factual
accounts or testimony about the work performed or assisting the client in analyzing
the tax issues) for the audit client in relation to the matter that is being heard
before a public tribunal or court.
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Internal audit services
General provisions
290.195 The scope and objectives of internal audit activities vary widely and depend on the
size and structure of the entity and the requirements of management and those
charged with governance. Internal audit activities may include:
• Monitoring of internal control – reviewing controls, monitoring their operation
and recommending improvements thereto;
• Examination of financial and operating information – reviewing the means used
to identify, measure, classify and report financial and operating information,
and specific inquiry into individual items including detailed testing of
transactions, balances and procedures;
• Review of the economy, efficiency and effectiveness of operating activities
including non-financial activities of an entity; and
• Review of compliance with laws, regulations and other external requirements,
and with management policies and directives and other internal requirements.
290.196 Internal audit services involve assisting the audit client in the performance of its
internal audit activities. The provision of internal audit services to an audit client
creates a self-review threat to independence if the firm uses the internal audit
work in the course of a subsequent external audit. Performing a significant part
of the client’s internal audit activities increases the possibility that firm personnel
providing internal audit services will assume a management responsibility. If the
firm’s personnel assume a management responsibility when providing internal
audit services to an audit client, the threat created would be so significant that no
safeguards could reduce the threat to an acceptable level. Accordingly, a firm’s
personnel shall not assume a management responsibility when providing internal
audit services to an audit client.
290.197 Examples of internal audit services that involve assuming management
responsibilities include:
(a) Setting internal audit policies or the strategic direction of internal audit
activities;
(b) Directing and taking responsibility for the actions of the entity’s internal audit
employees;
(c) Deciding which recommendations resulting from internal audit activities shall
be implemented;
(d) Reporting the results of the internal audit activities to those charged with
governance on behalf of management;
(e) Performing procedures that form part of the internal control, such as reviewing
and approving changes to employee data access privileges;
(f) Taking responsibility for designing, implementing and maintaining internal
control; and
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Independence – Audit and review engagements 290
(g) Performing outsourced internal audit services, comprising all or a substantial
portion of the internal audit function, where the firm is responsible for
determining the scope of the internal audit work and may have responsibility
for one or more of the matters noted in (a)–(f).
290.198 To avoid assuming a management responsibility, the firm shall only provide internal
audit services to an audit client if it is satisfied that:
(a) The client designates an appropriate and competent resource, preferably within
senior management, to be responsible at all times for internal audit activities
and to acknowledge responsibility for designing, implementing, and maintaining
internal control;
(b) The client’s management or those charged with governance reviews, assesses
and approves the scope, risk and frequency of the internal audit services;
(c) The client’s management evaluates the adequacy of the internal audit services
and the findings resulting from their performance;
(d) The client’s management evaluates and determines which recommendations
resulting from internal audit services to implement and manages the
implementation process; and
(e) The client’s management reports to those charged with governance the
significant findings and recommendations resulting from the internal audit
services.
290.199 When a firm uses the work of an internal audit function, International Standards
on Auditing require the performance of procedures to evaluate the adequacy of
that work. When a firm accepts an engagement to provide internal audit services
to an audit client, and the results of those services will be used in conducting the
external audit, a self-review threat is created because of the possibility that the
audit team will use the results of the internal audit service without appropriately
evaluating those results or exercising the same level of professional skepticism as
would be exercised when the internal audit work is performed by individuals who
are not members of the firm. The significance of the threat will depend on factors
such as:
• The materiality of the related financial statement amounts;
• The risk of misstatement of the assertions related to those financial statement
amounts; and
• The degree of reliance that will be placed on the internal audit service.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. An example of
such a safeguard is using professionals who are not members of the audit team to
perform the internal audit service.
Audit clients that are public interest entities
290.200 In the case of an audit client that is a public interest entity, a firm shall not provide
internal audit services that relate to:
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(a) A significant part of the internal controls over financial reporting;
(b) Financial accounting systems that generate information that is, separately
or in the aggregate, significant to the client’s accounting records or financial
statements on which the firm will express an opinion; or
(c) Amounts or disclosures that are, separately or in the aggregate, material to the
financial statements on which the firm will express an opinion.
IT systems services
General provisions
290.201 Services related to information technology (“IT”) systems include the design or
implementation of hardware or software systems. The systems may aggregate
source data, form part of the internal control over financial reporting or generate
information that affects the accounting records or financial statements, or the
systems may be unrelated to the audit client’s accounting records, the internal
control over financial reporting or financial statements. Providing systems services
may create a self-review threat depending on the nature of the services and the IT
systems.
290.202 The following IT systems services are deemed not to create a threat to
independence as long as the firm’s personnel do not assume a management
responsibility:
(a) Design or implementation of IT systems that are unrelated to internal control
over financial reporting;
(b) Design or implementation of IT systems that do not generate information
forming a significant part of the accounting records or financial statements;
(c) Implementation of “off-the-shelf” accounting or financial information reporting
software that was not developed by the firm if the customization required to
meet the client’s needs is not significant; and
(d) Evaluating and making recommendations with respect to a system designed,
implemented or operated by another service provider or the client.
Audit clients that are not public interest entities
290.203 Providing services to an audit client that is not a public interest entity involving
the design or implementation of IT systems that (a) form a significant part of
the internal control over financial reporting or (b) generate information that is
significant to the client’s accounting records or financial statements on which the
firm will express an opinion creates a self-review threat.
290.204 The self-review threat is too significant to permit such services unless appropriate
safeguards are put in place ensuring that:
(a) The client acknowledges its responsibility for establishing and monitoring a
system of internal controls;
(b) The client assigns the responsibility to make all management decisions with
respect to the design and implementation of the hardware or software system
to a competent employee, preferably within senior management;
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Independence – Audit and review engagements 290
(c) The client makes all management decisions with respect to the design and
implementation process;
(d) The client evaluates the adequacy and results of the design and
implementation of the system; and
(e) The client is responsible for operating the system (hardware or software) and
for the data it uses or generates.
290.205 Depending on the degree of reliance that will be placed on the particular IT
systems as part of the audit, a determination shall be made as to whether to
provide such non-assurance services only with personnel who are not members
of the audit team and who have different reporting lines within the firm. The
significance of any remaining threat shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level. An
example of such a safeguard is having a professional accountant review the audit
or non-assurance work.
Audit clients that are public interest entities
290.206 In the case of an audit client that is a public interest entity, a firm shall not provide
services involving the design or implementation of IT systems that (a) form a
significant part of the internal control over financial reporting or (b) generate
information that is significant to the client’s accounting records or financial
statements on which the firm will express an opinion.
Litigation support services
290.207 Litigation support services may include activities such as acting as an expert
witness, calculating estimated damages or other amounts that might become
receivable or payable as the result of litigation or other legal dispute, and
assistance with document management and retrieval. These services may create a
self-review or advocacy threat.
290.208 If the firm provides a litigation support service to an audit client and the service
involves estimating damages or other amounts that affect the financial statements
on which the firm will express an opinion, the valuation service provisions included
in paragraphs 290.175 to 290.180 shall be followed. In the case of other litigation
support services, the significance of any threat created shall be evaluated and
safeguards applied when necessary to eliminate the threat or reduce it to an
acceptable level.
Legal services
290.209 For the purpose of this section, legal services are defined as any services for which
the person providing the services must either be admitted to practice law before
the courts of the jurisdiction in which such services are to be provided or have the
required legal training to practice law. Such legal services may include, depending
on the jurisdiction, a wide and diversified range of areas including both corporate
and commercial services to clients, such as contract support, litigation, mergers
and acquisition legal advice and support and assistance to clients’ internal legal
departments. Providing legal services to an entity that is an audit client may create
both self-review and advocacy threats.
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290.210 Legal services that support an audit client in executing a transaction (e.g., contract
support, legal advice, legal due diligence and restructuring) may create self-review
threats. The existence and significance of any threat will depend on factors such
as:
• The nature of the service;
• Whether the service is provided by a member of the audit team; and
• The materiality of any matter in relation to the client’s financial statements.
The significance of any threat created shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level.
Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the
service; or
• Having a professional who was not involved in providing the legal services
provide advice to the audit team on the service and review any financial
statement treatment.
290.211 Acting in an advocacy role for an audit client in resolving a dispute or litigation
when the amounts involved are material to the financial statements on which
the firm will express an opinion would create advocacy and self-review threats
so significant that no safeguards could reduce the threat to an acceptable level.
Therefore, the firm shall not perform this type of service for an audit client.
290.212 When a firm is asked to act in an advocacy role for an audit client in resolving a
dispute or litigation when the amounts involved are not material to the financial
statements on which the firm will express an opinion, the firm shall evaluate the
significance of any advocacy and self-review threats created and apply safeguards
when necessary to eliminate the threat or reduce it to an acceptable level.
Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the
service; or
• Having a professional who was not involved in providing the legal services
advise the audit team on the service and review any financial statement
treatment.
290.213 The appointment of a partner or an employee of the firm as General Counsel for
legal affairs of an audit client would create self-review and advocacy threats that
are so significant that no safeguards could reduce the threats to an acceptable
level. The position of General Counsel is generally a senior management position
with broad responsibility for the legal affairs of a company, and consequently, no
member of the firm shall accept such an appointment for an audit client.
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Independence – Audit and review engagements 290
Recruiting services
General provisions
290.214 Providing recruiting services to an audit client may create self-interest, familiarity
or intimidation threats. The existence and significance of any threat will depend on
factors such as:
• The nature of the requested assistance; and
• The role of the person to be recruited.
The significance of any threat created shall be evaluated and safeguards applied
when necessary to eliminate the threat or reduce it to an acceptable level. In all
cases, the firm shall not assume management responsibilities, including acting as a
negotiator on the client’s behalf, and the hiring decision shall be left to the client.
The firm may generally provide such services as reviewing the professional
qualifications of a number of applicants and providing advice on their suitability
for the post. In addition, the firm may interview candidates and advise on a
candidate’s competence for financial accounting, administrative or control
positions.
Audit clients that are public interest entities
290.215 A firm shall not provide the following recruiting services to an audit client that is
a public interest entity with respect to a director or officer of the entity or senior
management in a position to exert significant influence over the preparation of
the client’s accounting records or the financial statements on which the firm will
express an opinion:
• Searching for or seeking out candidates for such positions; and
• Undertaking reference checks of prospective candidates for such positions.
Corporate finance services
290.216 Providing corporate finance services such as:
• assisting an audit client in developing corporate strategies;
• identifying possible targets for the audit client to acquire;
• advising on disposal transactions;
• assisting finance raising transactions; and
• providing structuring advice,
may create advocacy and self-review threats. The significance of any threat shall
be evaluated and safeguards applied when necessary to eliminate the threat or
reduce it to an acceptable level. Examples of such safeguards include:
• Using professionals who are not members of the audit team to provide the
services; or
• Having a professional who was not involved in providing the corporate finance
service advise the audit team on the service and review the accounting
treatment and any financial statement treatment.
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290.217 Providing a corporate finance service, for example advice on the structuring of a
corporate finance transaction or on financing arrangements that will directly affect
amounts that will be reported in the financial statements on which the firm will
provide an opinion may create a self-review threat. The existence and significance
of any threat will depend on factors such as:
• The degree of subjectivity involved in determining the appropriate treatment for
the outcome or consequences of the corporate finance advice in the financial
statements;
• The extent to which the outcome of the corporate finance advice will directly
affect amounts recorded in the financial statements and the extent to which
the amounts are material to the financial statements; and
• Whether the effectiveness of the corporate finance advice depends on a
particular accounting treatment or presentation in the financial statements and
there is doubt as to the appropriateness of the related accounting treatment or
presentation under the relevant financial reporting framework.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Using professionals who are not members of the audit team to perform the
service; or
• Having a professional who was not involved in providing the corporate finance
service to the client advise the audit team on the service and review the
accounting treatment and any financial statement treatment.
290.218 Where the effectiveness of corporate finance advice depends on a particular
accounting treatment or presentation in the financial statements and:
(a) The audit team has reasonable doubt as to the appropriateness of the related
accounting treatment or presentation under the relevant financial reporting
framework; and
(b) The outcome or consequences of the corporate finance advice will have a
material effect on the financial statements on which the firm will express an
opinion;
the self-review threat would be so significant that no safeguards could reduce the
threat to an acceptable level, in which case the corporate finance advice shall not
be provided.
290.219 Providing corporate finance services involving promoting, dealing in, or
underwriting an audit client’s shares would create an advocacy or self-review threat
that is so significant that no safeguards could reduce the threat to an acceptable
level. Accordingly, a firm shall not provide such services to an audit client.
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Independence – Audit and review engagements 290
Fees
Fees – Relative size
290.220 When the total fees from an audit client represent a large proportion of the total
fees of the firm expressing the audit opinion, the dependence on that client and
concern about losing the client creates a self-interest or intimidation threat. The
significance of the threat will depend on factors such as:
• The operating structure of the firm;
• Whether the firm is well established or new; and
• The significance of the client qualitatively and/or quantitatively to the firm.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Reducing the dependency on the client;
• External quality control reviews; or
• Consulting a third party, such as a professional regulatory body or a
professional accountant, on key audit judgments.
290.221 A self-interest or intimidation threat is also created when the fees generated from
an audit client represent a large proportion of the revenue from an individual
partner’s clients or a large proportion of the revenue of an individual office of the
firm. The significance of the threat will depend upon factors such as:
• The significance of the client qualitatively and/or quantitatively to the partner or
office; and
• The extent to which the remuneration of the partner, or the partners in the
office, is dependent upon the fees generated from the client.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Reducing the dependency on the audit client;
• Having a professional accountant review the work or otherwise advise as
necessary; or
• Regular independent internal or external quality reviews of the engagement.
Audit clients that are public interest entities
290.222 Where an audit client is a public interest entity and, for two consecutive years,
the total fees from the client and its related entities (subject to the considerations
in paragraph 290.27) represent more than 15% of the total fees received by the
firm expressing the opinion on the financial statements of the client, the firm shall
disclose to those charged with governance of the audit client the fact that the
total of such fees represents more than 15% of the total fees received by the firm,
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290 Independence – Audit and review engagements
and discuss which of the safeguards below it will apply to reduce the threat to an
acceptable level, and apply the selected safeguard:
• Prior to the issuance of the audit opinion on the second year’s financial
statements, a professional accountant, who is not a member of the firm
expressing the opinion on the financial statements, performs an engagement
quality control review of that engagement or a professional regulatory body
performs a review of that engagement that is equivalent to an engagement
quality control review (“a pre-issuance review”); or
• After the audit opinion on the second year’s financial statements has been
issued, and before the issuance of the audit opinion on the third year’s financial
statements, a professional accountant, who is not a member of the firm
expressing the opinion on the financial statements, or a professional regulatory
body performs a review of the second year’s audit that is equivalent to an
engagement quality control review (“a post-issuance review”).
When the total fees significantly exceed 15%, the firm shall determine whether the
significance of the threat is such that a post-issuance review would not reduce the
threat to an acceptable level and, therefore, a pre-issuance review is required. In
such circumstances a pre-issuance review shall be performed.
Thereafter, when the fees continue to exceed 15% each year, the disclosure to
and discussion with those charged with governance shall occur and one of the
above safeguards shall be applied. If the fees significantly exceed 15%, the firm
shall determine whether the significance of the threat is such that a post-issuance
review would not reduce the threat to an acceptable level and, therefore, a preissuance review is required. In such circumstances a pre-issuance review shall be
performed.
Fees – Overdue
290.223 A self-interest threat may be created if fees due from an audit client remain
unpaid for a long time, especially if a significant part is not paid before the issue
of the audit report for the following year. Generally the firm is expected to require
payment of such fees before such audit report is issued. If fees remain unpaid
after the report has been issued, the existence and significance of any threat shall
be evaluated and safeguards applied when necessary to eliminate the threat or
reduce it to an acceptable level. An example of such a safeguard is having an
additional professional accountant who did not take part in the audit engagement
provide advice or review the work performed. The firm shall determine whether
the overdue fees might be regarded as being equivalent to a loan to the client and
whether, because of the significance of the overdue fees, it is appropriate for the
firm to be re-appointed or continue the audit engagement.
Contingent fees
290.224 Contingent fees are fees calculated on a predetermined basis relating to the
outcome of a transaction or the result of the services performed by the firm.
For the purposes of this section, a fee is not regarded as being contingent if
established by a court or other public authority.
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Independence – Audit and review engagements 290
290.225 A contingent fee charged directly or indirectly, for example through an intermediary,
by a firm in respect of an audit engagement creates a self-interest threat that is
so significant that no safeguards could reduce the threat to an acceptable level.
Accordingly, a firm shall not enter into any such fee arrangement.
290.226 A contingent fee charged directly or indirectly, for example through an intermediary,
by a firm in respect of a non-assurance service provided to an audit client may
also create a self-interest threat. The threat created would be so significant that no
safeguards could reduce the threat to an acceptable level if:
(a) The fee is charged by the firm expressing the opinion on the financial
statements and the fee is material or expected to be material to that firm;
(b) The fee is charged by a network firm that participates in a significant part of
the audit and the fee is material or expected to be material to that firm; or
(c) The outcome of the non-assurance service, and therefore the amount of the
fee, is dependent on a future or contemporary judgment related to the audit of
a material amount in the financial statements.
Accordingly, such arrangements shall not be accepted.
290.227 For other contingent fee arrangements charged by a firm for a non-assurance
service to an audit client, the existence and significance of any threats will depend
on factors such as:
• The range of possible fee amounts;
• Whether an appropriate authority determines the outcome of the matter upon
which the contingent fee will be determined;
• The nature of the service; and
• The effect of the event or transaction on the financial statements.
The significance of any threats shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples
of such safeguards include:
• Having a professional accountant review the relevant audit work or otherwise
advise as necessary; or
• Using professionals who are not members of the audit team to perform the
non-assurance service.
Compensation and evaluation policies
290.228 A self-interest threat is created when a member of the audit team is evaluated
on or compensated for selling non-assurance services to that audit client. The
significance of the threat will depend on:
• The proportion of the individual’s compensation or performance evaluation that
is based on the sale of such services;
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290 Independence – Audit and review engagements
• The role of the individual on the audit team; and
• Whether promotion decisions are influenced by the sale of such services.
The significance of the threat shall be evaluated and, if the threat is not at an
acceptable level, the firm shall either revise the compensation plan or evaluation
process for that individual or apply safeguards to eliminate the threat or reduce it
to an acceptable level. Examples of such safeguards include:
• Removing such members from the audit team; or
• Having a professional accountant review the work of the member of the audit
team.
290.229 A key audit partner shall not be evaluated on or compensated based on that
partner’s success in selling non-assurance services to the partner’s audit client.
This is not intended to prohibit normal profit-sharing arrangements between
partners of a firm.
Gifts and hospitality
290.230 Accepting gifts or hospitality from an audit client may create self-interest and
familiarity threats. If a firm or a member of the audit team accepts gifts or
hospitality, unless the value is trivial and inconsequential, the threats created
would be so significant that no safeguards could reduce the threats to an
acceptable level. Consequently, a firm or a member of the audit team shall not
accept such gifts or hospitality.
Actual or threatened litigation
290.231 When litigation takes place, or appears likely, between the firm or a member
of the audit team and the audit client, self-interest and intimidation threats are
created. The relationship between client management and the members of the
audit team must be characterized by complete candor and full disclosure regarding
all aspects of a client’s business operations. When the firm and the client’s
management are placed in adversarial positions by actual or threatened litigation,
affecting management’s willingness to make complete disclosures, self-interest and
intimidation threats are created. The significance of the threats created will depend
on such factors as:
• The materiality of the litigation; and
• Whether the litigation relates to a prior audit engagement.
The significance of the threats shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples
of such safeguards include:
• If the litigation involves a member of the audit team, removing that individual
from the audit team; or
• Having a professional review the work performed.
404
Independence – Audit and review engagements 290
If such safeguards do not reduce the threats to an acceptable level, the only
appropriate action is to withdraw from, or decline, the audit engagement.
Paragraphs 290.232 to 290.499 are intentionally left blank.
Reports that include a restriction on use and distribution
Introduction
290.500 The independence requirements in Section 290 apply to all audit engagements.
However, in certain circumstances involving audit engagements where the
report includes a restriction on use and distribution, and provided the conditions
described in 290.501 to 290.502 are met, the independence requirements in this
section may be modified as provided in paragraphs 290.505 to 290.514. These
paragraphs are only applicable to an audit engagement on special purpose financial
statements (a) that is intended to provide a conclusion in positive or negative form
that the financial statements are prepared in all material respects, in accordance
with the applicable financial reporting framework, including, in the case of a fair
presentation framework, that the financial statements give a true and fair view
or are presented fairly, in all material respects, in accordance with the applicable
financial reporting framework, and (b) where the audit report includes a restriction
on use and distribution. The modifications are not permitted in the case of an audit
of financial statements required by law or regulation.
290.501 The modifications to the requirements of Section 290 are permitted if the intended
users of the report (a) are knowledgeable as to the purpose and limitations of the
report, and (b) explicitly agree to the application of the modified independence
requirements. Knowledge as to the purpose and limitations of the report may
be obtained by the intended users through their participation, either directly
or indirectly through their representative who has the authority to act for the
intended users, in establishing the nature and scope of the engagement. Such
participation enhances the ability of the firm to communicate with intended users
about independence matters, including the circumstances that are relevant to the
evaluation of the threats to independence and the applicable safeguards necessary
to eliminate the threats or reduce them to an acceptable level, and to obtain their
agreement to the modified independence requirements that are to be applied.
290.502 The firm shall communicate (for example, in an engagement letter) with the
intended users regarding the independence requirements that are to be applied
with respect to the provision of the audit engagement. Where the intended users
are a class of users (for example, lenders in a syndicated loan arrangement) who
are not specifically identifiable by name at the time the engagement terms are
established, such users shall subsequently be made aware of the independence
requirements agreed to by the representative (for example, by the representative
making the firm’s engagement letter available to all users).
290.503 If the firm also issues an audit report that does not include a restriction on use and
distribution for the same client, the provisions of paragraphs 290.500 to 290.514
do not change the requirement to apply the provisions of paragraphs 290.1 to
290.231 to that audit engagement.
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290 Independence – Audit and review engagements
290.504 The modifications to the requirements of Section 290 that are permitted in the
circumstances set out above are described in paragraphs 290.505 to 290.514.
Compliance in all other respects with the provisions of Section 290 is required.
Public interest entities
290.505 When the conditions set out in paragraphs 290.500 to 290.502 are met, it is not
necessary to apply the additional requirements in paragraphs 290.100 to 290.231
that apply to audit engagements for public interest entities.
Related entities
290.506 When the conditions set out in paragraphs 290.500 to 290.502 are met,
references to audit client do not include its related entities. However, when the
audit team knows or has reason to believe that a relationship or circumstance
involving a related entity of the client is relevant to the evaluation of the firm’s
independence of the client, the audit team shall include that related entity when
identifying and evaluating threats to independence and applying appropriate
safeguards.
Networks and network firms
290.507 When the conditions set out in paragraphs 290.500 to 290.502 are met,
reference to the firm does not include network firms. However, when the firm
knows or has reason to believe that threats are created by any interests and
relationships of a network firm, they shall be included in the evaluation of threats
to independence.
Financial interests, loans and guarantees, close business relationships and family and
personal relationships
290.508 When the conditions set out in paragraphs 290.500 to 290.502 are met, the
relevant provisions set out in paragraphs 290.102 to 290.145 apply only to the
members of the engagement team, their immediate family members and close
family members.
290.509 In addition, a determination shall be made as to whether threats to independence
are created by interests and relationships, as described in paragraphs 290.102 to
290.145, between the audit client and the following members of the audit team:
(a) Those who provide consultation regarding technical or industry specific issues,
transactions or events; and
(b) Those who provide quality control for the engagement, including those who
perform the engagement quality control review.
406
An evaluation shall be made of the significance of any threats that the engagement
team has reason to believe are created by interests and relationships between
the audit client and others within the firm who can directly influence the outcome
of the audit engagement, including those who recommend the compensation of,
or who provide direct supervisory, management or other oversight of the audit
engagement partner in connection with the performance of the audit engagement
(including those at all successively senior levels above the engagement partner
through to the individual who is the firm’s Senior or Managing Partner (Chief
Executive or equivalent)).
Independence – Audit and review engagements 290
290.510 An evaluation shall also be made of the significance of any threats that the
engagement team has reason to believe are created by financial interests in the
audit client held by individuals, as described in paragraphs 290.108 to 290.111
and paragraphs 290.113 to 290.115.
290.511 Where a threat to independence is not at an acceptable level, safeguards shall be
applied to eliminate the threat or reduce it to an acceptable level.
290.512 In applying the provisions set out in paragraphs 290.106 and 290.115 to interests
of the firm, if the firm has a material financial interest, whether direct or indirect,
in the audit client, the self-interest threat created would be so significant that no
safeguards could reduce the threat to an acceptable level. Accordingly, the firm
shall not have such a financial interest.
Employment with an audit client
290.513 An evaluation shall be made of the significance of any threats from any
employment relationships as described in paragraphs 290.134 to 290.138. Where
a threat exists that is not at an acceptable level, safeguards shall be applied to
eliminate the threat or reduce it to an acceptable level. Examples of safeguards
that might be appropriate include those set out in paragraph 290.136.
Provision of non-assurance services
290.514 If the firm conducts an engagement to issue a restricted use and distribution report
for an audit client and provides a non-assurance service to the audit client, the
provisions of paragraphs 290.156 to 290.231 shall be complied with, subject to
paragraphs 290.504 to 290.507.
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291 Independence – Other assurance engagements
SECTION 291
Independence – Other assurance
engagements
Structure of section
A conceptual framework approach to independence
Assurance engagements
Assertion-based assurance engagements
Direct reporting assurance engagements
Reports that include a restriction on use and distribution
Multiple responsible parties
Documentation
Engagement period
Other considerations
Application of the conceptual framework approach to independence
Financial interests
Loans and guarantees
Business relationships
Family and personal relationships
Employment with assurance clients
Recent service with an assurance client
Serving as a director or officer of an assurance client
Long association of senior personnel with assurance clients
Provision of non-assurance services to assurance clients
Management responsibilities
Other considerations
Fees
Fees – Relative size
Fees – Overdue
Contingent fees
Gifts and hospitality
Actual or threatened litigation
408
Paragraph
291.1
291.4
291.12
291.17
291.20
291.21
291.28
291.29
291.30
291.33
291.100
291.104
291.113
291.119
291.121
291.128
291.132
291.135
291.139
291.140
291.143
291.148
291.151
291.151
291.153
291.154
291.158
291.159
Independence – Other assurance engagements 291
Structure of section
291.1
This section addresses independence requirements for assurance engagements
that are not audit or review engagements. Independence requirements for audit and
review engagements are addressed in Section 290. If the assurance client is also
an audit or review client, the requirements in Section 290 also apply to the firm,
network firms and members of the audit or review team. In certain circumstances
involving assurance engagements where the assurance report includes a restriction
on use and distribution and provided certain conditions are met, the independence
requirements in this section may be modified as provided in 291.21 to 291.27.
291.2
Assurance engagements are designed to enhance intended users’ degree of
confidence about the outcome of the evaluation or measurement of a subject
matter against criteria. The International Framework for Assurance Engagements
(the Assurance Framework) issued by the International Auditing and Assurance
Standards Board describes the elements and objectives of an assurance
engagement and identifies engagements to which International Standards on
Assurance Engagements (ISAEs) apply. For a description of the elements and
objectives of an assurance engagement, refer to the Assurance Framework.
291.3
Compliance with the fundamental principle of objectivity requires being independent
of assurance clients. In the case of assurance engagements, it is in the public
interest and, therefore, required by this Code of Ethics, that members of assurance
teams and firms be independent of assurance clients and that any threats that
the firm has reason to believe are created by a network firm’s interests and
relationships be evaluated. In addition, when the assurance team knows or has
reason to believe that a relationship or circumstance involving a related entity of
the assurance client is relevant to the evaluation of the firm’s independence from
the client, the assurance team shall include that related entity when identifying and
evaluating threats to independence and applying appropriate safeguards.
A conceptual framework approach to independence
291.4
The objective of this section is to assist firms and members of assurance teams
in applying the conceptual framework approach described below to achieving and
maintaining independence.
291.5
Independence comprises:
(a) Independence of mind
The state of mind that permits the expression of a conclusion without being
affected by influences that compromise professional judgment, thereby allowing
an individual to act with integrity and exercise objectivity and professional
skepticism.
(b) Independence in appearance
The avoidance of facts and circumstances that are so significant that a
reasonable and informed third party would be likely to conclude, weighing
all the specific facts and circumstances, that a firm’s, or a member of the
assurance team’s, integrity, objectivity or professional skepticism has been
compromised.
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291 Independence – Other assurance engagements
291.6
The conceptual framework approach shall be applied by professional accountants
to:
(a) Identify threats to independence;
(b) Evaluate the significance of the threats identified; and
(c) Apply safeguards when necessary to eliminate the threats or reduce them to an
acceptable level.
When the professional accountant determines that appropriate safeguards are
not available or cannot be applied to eliminate the threats or reduce them to an
acceptable level, the professional accountant shall eliminate the circumstance or
relationship creating the threats or decline or terminate the assurance engagement.
A professional accountant shall use professional judgment in applying this
conceptual framework.
291.7
Many different circumstances, or combinations of circumstances, may be relevant
in assessing threats to independence. It is impossible to define every situation that
creates threats to independence and to specify the appropriate action. Therefore,
this Code establishes a conceptual framework that requires firms and members of
assurance teams to identify, evaluate, and address threats to independence. The
conceptual framework approach assists professional accountants in public practice
in complying with the ethical requirements in this Code. It accommodates many
variations in circumstances that create threats to independence and can deter a
professional accountant from concluding that a situation is permitted if it is not
specifically prohibited.
291.8
Paragraphs 291.100 and onwards describe how the conceptual framework
approach to independence is to be applied. These paragraphs do not address all the
circumstances and relationships that create or may create threats to independence.
291.9
In deciding whether to accept or continue an engagement, or whether a particular
individual may be a member of the assurance team, a firm shall identify and
evaluate any threats to independence. If the threats are not at an acceptable
level, and the decision is whether to accept an engagement or include a particular
individual on the assurance team, the firm shall determine whether safeguards
are available to eliminate the threats or reduce them to an acceptable level. If
the decision is whether to continue an engagement, the firm shall determine
whether any existing safeguards will continue to be effective to eliminate the
threats or reduce them to an acceptable level or whether other safeguards will
need to be applied or whether the engagement needs to be terminated. Whenever
new information about a threat comes to the attention of the firm during the
engagement, the firm shall evaluate the significance of the threat in accordance
with the conceptual framework approach.
291.10 Throughout this section, reference is made to the significance of threats to
independence. In evaluating the significance of a threat, qualitative as well as
quantitative factors shall be taken into account.
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Independence – Other assurance engagements 291
291.11 This section does not, in most cases, prescribe the specific responsibility
of individuals within the firm for actions related to independence because
responsibility may differ depending on the size, structure and organization of a
firm. The firm is required by ISQCs to establish policies and procedures designed
to provide it with reasonable assurance that independence is maintained when
required by relevant ethical standards.
Assurance engagements
291.12 As further explained in the Assurance Framework, in an assurance engagement
the professional accountant in public practice expresses a conclusion designed to
enhance the degree of confidence of the intended users (other than the responsible
party) about the outcome of the evaluation or measurement of a subject matter
against criteria.
291.13 The outcome of the evaluation or measurement of a subject matter is the
information that results from applying the criteria to the subject matter. The term
“subject matter information” is used to mean the outcome of the evaluation or
measurement of a subject matter. For example, the Framework states that an
assertion about the effectiveness of internal control (subject matter information)
results from applying a framework for evaluating the effectiveness of internal
control, such as COSO4 or CoCo5 (criteria), to internal control, a process (subject
matter).
291.14 Assurance engagements may be assertion-based or direct reporting. In either case,
they involve three separate parties: a professional accountant in public practice, a
responsible party and intended users.
291.15 In an assertion-based assurance engagement, the evaluation or measurement of
the subject matter is performed by the responsible party, and the subject matter
information is in the form of an assertion by the responsible party that is made
available to the intended users.
291.16 In a direct reporting assurance engagement, the professional accountant in public
practice either directly performs the evaluation or measurement of the subject
matter, or obtains a representation from the responsible party that has performed
the evaluation or measurement that is not available to the intended users. The
subject matter information is provided to the intended users in the assurance
report.
Assertion-based assurance engagements
291.17 In an assertion-based assurance engagement, the members of the assurance team
and the firm shall be independent of the assurance client (the party responsible
for the subject matter information, and which may be responsible for the
4 “Internal Control – Integrated Framework” The Committee of Sponsoring Organizations of the Treadway
Commission.
5 “Guidance on Assessing Control – The CoCo Principles” Criteria of Control Board, The Canadian Institute
of Chartered Accountants.
411
291 Independence – Other assurance engagements
subject matter). Such independence requirements prohibit certain relationships
between members of the assurance team and (a) directors or officers, and (b)
individuals at the client in a position to exert significant influence over the subject
matter information. Also, a determination shall be made as to whether threats
to independence are created by relationships with individuals at the client in a
position to exert significant influence over the subject matter of the engagement. An
evaluation shall be made of the significance of any threats that the firm has reason
to believe are created by network firm6 interests and relationships.
291.18 In the majority of assertion-based assurance engagements, the responsible party
is responsible for both the subject matter information and the subject matter.
However, in some engagements, the responsible party may not be responsible
for the subject matter. For example, when a professional accountant in public
practice is engaged to perform an assurance engagement regarding a report that an
environmental consultant has prepared about a company’s sustainability practices
for distribution to intended users, the environmental consultant is the responsible
party for the subject matter information but the company is responsible for the
subject matter (the sustainability practices).
291.19 In assertion-based assurance engagements where the responsible party is
responsible for the subject matter information but not the subject matter, the
members of the assurance team and the firm shall be independent of the party
responsible for the subject matter information (the assurance client). In addition, an
evaluation shall be made of any threats the firm has reason to believe are created
by interests and relationships between a member of the assurance team, the firm, a
network firm and the party responsible for the subject matter.
Direct reporting assurance engagements
291.20 In a direct reporting assurance engagement, the members of the assurance team
and the firm shall be independent of the assurance client (the party responsible for
the subject matter). An evaluation shall also be made of any threats the firm has
reason to believe are created by network firm interests and relationships.
Reports that include a restriction on use and distribution
291.21 In certain circumstances where the assurance report includes a restriction on use
and distribution, and provided the conditions in this paragraph and in 291.22
are met, the independence requirements in this section may be modified. The
modifications to the requirements of Section 291 are permitted if the intended
users of the report (a) are knowledgeable as to the purpose, subject matter
information and limitations of the report and (b) explicitly agree to the application
of the modified independence requirements. Knowledge as to the purpose,
subject matter information, and limitations of the report may be obtained by the
intended users through their participation, either directly or indirectly through their
representative who has the authority to act for the intended users, in establishing
the nature and scope of the engagement. Such participation enhances the ability
6 See paragraphs 290.13 to 290.24 for guidance on what constitutes a network firm.
412
Independence – Other assurance engagements 291
of the firm to communicate with intended users about independence matters,
including the circumstances that are relevant to the evaluation of the threats to
independence and the applicable safeguards necessary to eliminate the threats or
reduce them to an acceptable level, and to obtain their agreement to the modified
independence requirements that are to be applied.
291.22 The firm shall communicate (for example, in an engagement letter) with the
intended users regarding the independence requirements that are to be applied
with respect to the provision of the assurance engagement. Where the intended
users are a class of users (for example, lenders in a syndicated loan arrangement)
who are not specifically identifiable by name at the time the engagement terms are
established, such users shall subsequently be made aware of the independence
requirements agreed to by the representative (for example, by the representative
making the firm’s engagement letter available to all users).
291.23 If the firm also issues an assurance report that does not include a restriction on
use and distribution for the same client, the provisions of paragraphs 291.25 to
291.27 do not change the requirement to apply the provisions of paragraphs 291.1
to 291.159 to that assurance engagement. If the firm also issues an audit report,
whether or not it includes a restriction on use and distribution, for the same client,
the provisions of Section 290 shall apply to that audit engagement.
291.24 The modifications to the requirements of Section 291 that are permitted in the
circumstances set out above are described in paragraphs 291.25 to 291.27.
Compliance in all other respects with the provisions of Section 291 is required.
291.25 When the conditions set out in paragraphs 291.21 and 291.22 are met, the
relevant provisions set out in paragraphs 291.104 to 291.134 apply to all members
of the engagement team, and their immediate and close family members. In
addition, a determination shall be made as to whether threats to independence
are created by interests and relationships between the assurance client and the
following other members of the assurance team:
(a) Those who provide consultation regarding technical or industry specific issues,
transactions or events; and
(b) Those who provide quality control for the engagement, including those who
perform the engagement quality control review.
An evaluation shall also be made, by reference to the provisions set out in
paragraphs 291.104 to 291.134, of any threats that the engagement team has
reason to believe are created by interests and relationships between the assurance
client and others within the firm who can directly influence the outcome of the
assurance engagement, including those who recommend the compensation, or
who provide direct supervisory, management or other oversight, of the assurance
engagement partner in connection with the performance of the assurance
engagement.
291.26 Even though the conditions set out in paragraphs 291.21 to 291.22 are met, if the
firm had a material financial interest, whether direct or indirect, in the assurance
client, the self-interest threat created would be so significant that no safeguards
413
291 Independence – Other assurance engagements
could reduce the threat to an acceptable level. Accordingly, the firm shall not have
such a financial interest. In addition, the firm shall comply with the other applicable
provisions of this section described in paragraphs 291.113 to 291.159.
291.27 An evaluation shall also be made of any threats that the firm has reason to believe
are created by network firm interests and relationships.
Multiple responsible parties
291.28 In some assurance engagements, whether assertion-based or direct reporting, there
might be several responsible parties. In determining whether it is necessary to apply
the provisions in this section to each responsible party in such engagements, the
firm may take into account whether an interest or relationship between the firm, or
a member of the assurance team, and a particular responsible party would create
a threat to independence that is not trivial and inconsequential in the context of the
subject matter information. This will take into account factors such as:
• The materiality of the subject matter information (or of the subject matter) for
which the particular responsible party is responsible; and
• The degree of public interest associated with the engagement.
If the firm determines that the threat to independence created by any such
interest or relationship with a particular responsible party would be trivial and
inconsequential, it may not be necessary to apply all of the provisions of this
section to that responsible party.
Documentation
291.29 Documentation provides evidence of the professional accountant’s judgments in
forming conclusions regarding compliance with independence requirements. The
absence of documentation is not a determinant of whether a firm considered a
particular matter nor whether it is independent.
The professional accountant shall document conclusions regarding compliance with
independence requirements, and the substance of any relevant discussions that
support those conclusions. Accordingly:
(a) When safeguards are required to reduce a threat to an acceptable level, the
professional accountant shall document the nature of the threat and the
safeguards in place or applied that reduce the threat to an acceptable level; and
(b) When a threat required significant analysis to determine whether safeguards
were necessary and the professional accountant concluded that they were
not because the threat was already at an acceptable level, the professional
accountant shall document the nature of the threat and the rationale for the
conclusion.
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Independence – Other assurance engagements 291
Engagement period
291.30 Independence from the assurance client is required both during the engagement
period and the period covered by the subject matter information. The engagement
period starts when the assurance team begins to perform assurance services with
respect to the particular engagement. The engagement period ends when the
assurance report is issued. When the engagement is of a recurring nature, it ends
at the later of the notification by either party that the professional relationship has
terminated or the issuance of the final assurance report.
291.31 When an entity becomes an assurance client during or after the period covered by
the subject matter information on which the firm will express a conclusion, the firm
shall determine whether any threats to independence are created by:
(a) Financial or business relationships with the assurance client during or after
the period covered by the subject matter information but before accepting the
assurance engagement; or
(b) Previous services provided to the assurance client.
291.32 If a non-assurance service was provided to the assurance client during or after the
period covered by the subject matter information but before the assurance team
begins to perform assurance services and the service would not be permitted
during the period of the assurance engagement, the firm shall evaluate any threat to
independence created by the service. If any threat is not at an acceptable level, the
assurance engagement shall only be accepted if safeguards are applied to eliminate
any threats or reduce them to an acceptable level. Examples of such safeguards
include:
• Not including personnel who provided the non-assurance service as members of
the assurance team;
• Having a professional accountant review the assurance and non-assurance work
as appropriate; or
• Engaging another firm to evaluate the results of the non-assurance service
or having another firm re-perform the non-assurance service to the extent
necessary to enable it to take responsibility for the service.
However, if the non-assurance service has not been completed and it is not
practical to complete or terminate the service before the commencement of
professional services in connection with the assurance engagement, the firm shall
only accept the assurance engagement if it is satisfied:
(a) The non-assurance service will be completed within a short period of time; or
(b) The client has arrangements in place to transition the service to another
provider within a short period of time.
During the service period, safeguards shall be applied when necessary. In addition,
the matter shall be discussed with those charged with governance.
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291 Independence – Other assurance engagements
Other considerations
291.33 There may be occasions when there is an inadvertent violation of this section.
If such an inadvertent violation occurs, it generally will be deemed not to
compromise independence provided the firm has appropriate quality control
policies and procedures in place equivalent to those required by ISQCs to maintain
independence and, once discovered, the violation is corrected promptly and
any necessary safeguards are applied to eliminate any threat or reduce it to an
acceptable level. The firm shall determine whether to discuss the matter with those
charged with governance.
Paragraphs 291.34 to 291.99 are intentionally left blank.
Application of the conceptual framework approach to
independence
291.100Paragraphs 291.104 to 291.159 describe specific circumstances and relationships
that create or may create threats to independence. The paragraphs describe
the potential threats and the types of safeguards that may be appropriate to
eliminate the threats or reduce them to an acceptable level and identify certain
situations where no safeguards could reduce the threats to an acceptable level. The
paragraphs do not describe all of the circumstances and relationships that create or
may create a threat to independence. The firm and the members of the assurance
team shall evaluate the implications of similar, but different, circumstances and
relationships and determine whether safeguards, including the safeguards in
paragraphs 200.12 to 200.15, can be applied when necessary to eliminate the
threats to independence or reduce them to an acceptable level.
291.101The paragraphs demonstrate how the conceptual framework approach applies to
assurance engagements and are to be read in conjunction with paragraph 291.28
which explains that, in the majority of assurance engagements, there is one
responsible party and that responsible party is the assurance client. However, in
some assurance engagements there are two or more responsible parties. In such
circumstances, an evaluation shall be made of any threats the firm has reason
to believe are created by interests and relationships between a member of the
assurance team, the firm, a network firm and the party responsible for the subject
matter. For assurance reports that include a restriction on use and distribution, the
paragraphs are to be read in the context of paragraphs 291.21 to 291.27.
291.102Interpretation 2005-01 provides further guidance on applying the independence
requirements contained in this section to assurance engagements.
291.103Paragraphs 291.104 to 291.120 contain references to the materiality of a financial
interest, loan, or guarantee, or the significance of a business relationship. For
the purpose of determining whether such an interest is material to an individual,
the combined net worth of the individual and the individual’s immediate family
members may be taken into account.
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Independence – Other assurance engagements 291
Financial interests
291.104Holding a financial interest in an assurance client may create a self-interest threat.
The existence and significance of any threat created depends on:
(a) The role of the person holding the financial interest,
(b) Whether the financial interest is direct or indirect, and
(c) The materiality of the financial interest.
291.105Financial interests may be held through an intermediary (e.g. a collective investment
vehicle, estate or trust). The determination of whether such financial interests are
direct or indirect will depend upon whether the beneficial owner has control over
the investment vehicle or the ability to influence its investment decisions. When
control over the investment vehicle or the ability to influence investment decisions
exists, this Code defines that financial interest to be a direct financial interest.
Conversely, when the beneficial owner of the financial interest has no control over
the investment vehicle or ability to influence its investment decisions, this Code
defines that financial interest to be an indirect financial interest.
291.106If a member of the assurance team, a member of that individual’s immediate family,
or a firm has a direct financial interest or a material indirect financial interest in
the assurance client, the self-interest threat created would be so significant that no
safeguards could reduce the threat to an acceptable level. Therefore, none of the
following shall have a direct financial interest or a material indirect financial interest
in the client: a member of the assurance team; a member of that individual’s
immediate family member; or the firm.
291.107When a member of the assurance team has a close family member who the
assurance team member knows has a direct financial interest or a material indirect
financial interest in the assurance client, a self-interest threat is created. The
significance of the threat will depend on factors such as
• The nature of the relationship between the member of the assurance team and
the close family member; and
• The materiality of the financial interest to the close family member.
The significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• The close family member disposing, as soon as practicable, of all of the
financial interest or disposing of a sufficient portion of an indirect financial
interest so that the remaining interest is no longer material;
• Having a professional accountant review the work of the member of the
assurance team; or
• Removing the individual from the assurance team.
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291 Independence – Other assurance engagements
291.108If a member of the assurance team, a member of that individual’s immediate family,
or a firm has a direct or material indirect financial interest in an entity that has a
controlling interest in the assurance client, and the client is material to the entity,
the self-interest threat created would be so significant that no safeguards could
reduce the threat to an acceptable level. Therefore, none of the following shall
have such a financial interest: a member of the assurance team; a member of that
individual’s immediate family; and the firm.
291.109The holding by a firm or a member of the assurance team, or a member of that
individual’s immediate family, of a direct financial interest or a material indirect
financial interest in the assurance client as a trustee creates a self-interest threat.
Such an interest shall not be held unless:
(a) Neither the trustee, nor an immediate family member of the trustee, nor the
firm are beneficiaries of the trust;
(b) The interest in the assurance client held by the trust is not material to the trust;
(c) The trust is not able to exercise significant influence over the assurance client;
and
(d) The trustee, an immediate family member of the trustee, or the firm cannot
significantly influence any investment decision involving a financial interest in
the assurance client.
291.110Members of the assurance team shall determine whether a self-interest threat
is created by any known financial interests in the assurance client held by other
individuals including:
• Partners and professional employees of the firm, other than those referred to
above, or their immediate family members; and
• Individuals with a close personal relationship with a member of the assurance
team.
Whether these interests create a self-interest threat will depend on factors such as:
• The firm’s organizational, operating and reporting structure; and
• The nature of the relationship between the individual and the member of the
assurance team.
The significance of any threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of
such safeguards include:
• Removing the member of the assurance team with the personal relationship
from the assurance team;
• Excluding the member of the assurance team from any significant decisionmaking concerning the assurance engagement; or
• Having a professional accountant review the work of the member of the
assurance team.
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Independence – Other assurance engagements 291
291.111 If a firm, a member of the assurance team, or an immediate family member of the
individual, receives a direct financial interest or a material indirect financial interest
in an assurance client, for example, by way of an inheritance, gift or as a result of
a merger, and such interest would not be permitted to be held under this section,
then:
(a) If the interest is received by the firm, the financial interest shall be disposed
of immediately, or a sufficient amount of an indirect financial interest shall be
disposed of so that the remaining interest is no longer material, or
(b) If the interest is received by a member of the assurance team, or a member
of that individual’s immediate family, the individual who received the financial
interest shall immediately dispose of the financial interest, or dispose of a
sufficient amount of an indirect financial interest so that the remaining interest
is no longer material.
291.112When an inadvertent violation of this section as it relates to a financial interest in an
assurance client occurs, it is deemed not to compromise independence if:
(a) The firm has established policies and procedures that require prompt
notification to the firm of any breaches resulting from the purchase, inheritance
or other acquisition of a financial interest in the assurance client;
(b) The actions taken in paragraph 291.111(a) – (b) are taken as applicable; and
(c) The firm applies other safeguards when necessary to reduce any remaining
threat to an acceptable level. Examples of such safeguards include:
• Having a professional accountant review the work of the member of the
assurance team; or
• Excluding the individual from any significant decision-making concerning the
assurance engagement.
The firm shall determine whether to discuss the matter with those charged with
governance.
Loans and guarantees
291.113A loan, or a guarantee of a loan, to a member of the assurance team, or a member
of that individual’s immediate family, or the firm from an assurance client that is
a bank or a similar institution, may create a threat to independence. If the loan or
guarantee is not made under normal lending procedures, terms and conditions, a
self-interest threat would be created that would be so significant that no safeguards
could reduce the threat to an acceptable level. Accordingly, neither a member of the
assurance team, a member of that individual’s immediate family, nor a firm shall
accept such a loan or guarantee.
291.114 If a loan to a firm from an assurance client that is a bank or similar institution is
made under normal lending procedures, terms and conditions and it is material
to the assurance client or firm receiving the loan, it may be possible to apply
safeguards to reduce the self-interest threat to an acceptable level. An example of
such a safeguard is having the work reviewed by a professional accountant from a
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291 Independence – Other assurance engagements
network firm that is neither involved with the assurance engagement nor received
the loan.
291.115A loan, or a guarantee of a loan, from an assurance client that is a bank or a similar
institution to a member of the assurance team, or a member of that individual’s
immediate family, does not create a threat to independence if the loan or guarantee
is made under normal lending procedures, terms and conditions. Examples of such
loans include home mortgages, bank overdrafts, car loans and credit card balances.
291.116If the firm or a member of the assurance team, or a member of that individual’s
immediate family, accepts a loan from, or has a borrowing guaranteed by, an
assurance client that is not a bank or similar institution, the self-interest threat
created would be so significant that no safeguards could reduce the threat to an
acceptable level, unless the loan or guarantee is immaterial to both the firm, or the
member of the assurance team and the immediate family member, and the client.
291.117 Similarly, if the firm, or a member of the assurance team, or a member of that
individual’s immediate family, makes or guarantees a loan to an assurance client,
the self-interest threat created would be so significant that no safeguards could
reduce the threat to an acceptable level, unless the loan or guarantee is immaterial
to both the firm, or the member of the assurance team and the immediate family
member, and the client.
291.118If a firm or a member of the assurance team, or a member of that individual’s
immediate family, has deposits or a brokerage account with an assurance client that
is a bank, broker, or similar institution, a threat to independence is not created if
the deposit or account is held under normal commercial terms.
Business relationships
291.119A close business relationship between a firm, or a member of the assurance team,
or a member of that individual’s immediate family, and the assurance client or its
management arises from a commercial relationship or common financial interest
and may create self-interest or intimidation threats. Examples of such relationships
include:
• Having a financial interest in a joint venture with either the client or a controlling
owner, director or officer or other individual who performs senior managerial
activities for that client.
• Arrangements to combine one or more services or products of the firm with
one or more services or products of the client and to market the package with
reference to both parties.
• Distribution or marketing arrangements under which the firm distributes or
markets the client’s products or services, or the client distributes or markets the
firm’s products or services.
420
Unless any financial interest is immaterial and the business relationship is
insignificant to the firm and the client or its management, the threat created would
be so significant that no safeguards could reduce the threat to an acceptable level.
Independence – Other assurance engagements 291
Therefore, unless the financial interest is immaterial and the business relationship is
insignificant, the business relationship shall not be entered into, or shall be reduced
to an insignificant level or terminated.
In the case of a member of the assurance team, unless any such financial interest is
immaterial and the relationship is insignificant to that member, the individual shall
be removed from the assurance team.
If the business relationship is between an immediate family member of a member of
the assurance team and the assurance client or its management, the significance of
any threat shall be evaluated and safeguards applied when necessary to eliminate
the threat or reduce it to an acceptable level.
291.120The purchase of goods and services from an assurance client by the firm, or
a member of the assurance team, or a member of that individual’s immediate
family, does not generally create a threat to independence if the transaction is in
the normal course of business and at arm’s length. However, such transactions
may be of such a nature or magnitude that they create a self-interest threat. The
significance of any threat shall be evaluated and safeguards applied when necessary
to eliminate the threat or reduce it to an acceptable level. Examples of such
safeguards include:
• Eliminating or reducing the magnitude of the transaction; or
• Removing the individual from the assurance team.
Family and personal relationships
291.121Family and personal relationships between a member of the assurance team and a
director or officer or certain employees (depending on their role) of the assurance
client, may create self-interest, familiarity or intimidation threats. The existence
and significance of any threats will depend on a number of factors, including the
individual’s responsibilities on the assurance team, the role of the family member or
other individual within the client, and the closeness of the relationship.
291.122When an immediate family member of a member of the a