International Ethics Standards Board for Accountants (IESBA) IESBA Recently, a draft for public comment was released, once again soliciting opinions from all parties on the provisions in the International Code of Ethics for Accountants that pertain to accountants’ responses to violations of laws and regulations. IESBA The draft introduces relevant background information as well as proposed revisions to the International Code of Ethics for Accountants.

I. Relevant Background Information

IESBA Yu 2010 We began working on revising the International Code of Ethics for Accountants, with the aim of assisting and guiding professional accountants in addressing violations of laws and regulations encountered in their practice, thereby maximizing the protection of the public interest.

2012 Year 8 Month, IESBA The first draft for public comment has been released. This draft has received support from most stakeholders, particularly regulatory authorities; however, some stakeholders still have concerns about the draft’s operability and the potential unintended consequences it might bring. In response to these concerns, IESBA After thorough research and discussion, it was concluded that... 2015 Year 5 The month released the second draft for public comment.

II. Proposed Amendments to the International Code of Ethics for Accountants

This draft for comments proposes a comprehensive and balanced framework that focuses on the standards professional accountants need to meet in order to safeguard the public interest. “ Effect ” It emphasizes the respective responsibilities of professional accountants, as well as those of management and governance bodies, thereby better balancing the need for professional accountants to safeguard the public interest with considerations regarding the global applicability of the code. Specifically, this draft for comments introduces the following key revisions to the International Code of Ethics for Professional Accountants:

1. Proposed to add Article [number] to the International Code of Ethics for Accountants. 225 Section and Paragraph 360 The section separately regulates practicing accountants ( Professional Accountants in Public Practice ) and professional accountants in the industrial and commercial sectors ( Professional Accountants in Business ) Addressing violations of laws and regulations, and making compliance amendments to other relevant provisions of the code.

2. It is proposed to limit the scope of the relevant laws and regulations. Specifically, the scope of these laws and regulations will be limited to those that are widely recognized as directly affecting the material amounts and disclosures in the client’s financial statements, as well as other laws and regulations that have a critical impact on the client’s business operations, its ability to continue operating, or its capacity to avoid significant penalties.

3. It is proposed to differentiate among entities that may be involved in violations of laws and regulations. It is also proposed to categorize professional accountants into four types: auditors, practicing accountants engaged in non-audit services, senior professional accountants working in the business and commercial sectors, and other professional accountants working in the business and commercial sectors, each of which would be subject to different regulatory provisions. Taking auditors as an example, when encountering a violation of laws and regulations or a suspected violation, auditors should follow the following approach:

( 1 The identified or suspected violations of laws and regulations shall be reported to management or the governance body, enabling management or the governance body to take corrective actions, mitigate adverse impacts on stakeholders, prevent behaviors that have not yet occurred, and, when necessary, prompt management or the governance body to report to the appropriate authorities.

( 2 ) Fulfilling the professional responsibilities of auditors, including the responsibility to comply with laws, regulations, and professional standards.

( 3 ) Determine whether further measures are required, such as reporting to the appropriate authorities, terminating the client relationship, or disengaging from the business engagement.

( 4 ) Keep written records regarding matters related to addressing violations of laws and regulations.

In the previous draft for public comments, if auditors detect conduct that violates laws and regulations or is suspected of violating laws and regulations, they should respond following the approach outlined below:

( 1 Confirm or rule out suspicions of alleged violations of laws and regulations, and communicate with management at the appropriate level;

( 2 ) If the management at this level fails to take appropriate measures within the prescribed timeframe, the issue should be escalated to higher-level management or the governance body.

( 3 If higher-level management or the governing body still fails to take appropriate measures, the professional accountant should consider whether to disclose the matter to the appropriate authorities.

( 4 When providing professional services to audit clients at their accounting firm or network firm, if an auditor believes that disclosing suspected violations of laws and regulations would serve the public interest and the audit client has failed to make such a disclosure, the auditor shall report the matter to the appropriate authorities. The scope of the disclosure shall be limited to suspected violations of laws and regulations that directly or indirectly affect the client’s financial reporting, as well as those suspected violations that are relevant to the auditor’s area of expertise.

4. Proposed additions to the provisions regarding communication between current and former auditors. Proposed amendments to International Code of Ethics for Accountants No. 210 The standard has been revised to explicitly require that, during an audit of financial statements, the successor auditor communicate with the predecessor auditor, and that the predecessor auditor provide information related to the client in a truthful and clear manner.

III. Duration of this consultation period

IESBA The deadline for this consultation is 2015 Year 9 Moon 4 Day. The link to the comment invitation text is:

http://www.ifac.org/publications-resources/responding-non-compliance-laws-regulations

IV. Overall Timeline

This project is expected to... 2016 Completed in the first half of the year, it will then be rewritten according to the new writing style outlined in the International Code of Ethics for Accountants.

To gain a deeper understanding of the views and suggestions from China’s certified public accountant profession regarding this proposal and to appropriately reflect relevant opinions and demands, the Chinese Institute of Certified Public Accountants is currently conducting a research study. We welcome input from all sectors on this proposal—submissions can be in either English or Chinese. If you have any comments, please submit them by [date]. 2015 Year 8 Moon 4 We will soon submit our written feedback to the Association of Certified Public Accountants.

Contact: Professional Standards Department, Chinese Institute of Certified Public Accountants   Zhao Jizhe

Phone: 010-88250207

Fax: 010-88250066

Email: zjz1106@cicpa.org.cn

Mailing address: Middle Section of West Fourth Ring Road, Haidian District, Beijing市 16 Courtyard No. 2 Building No., Postal Code 100039