Accountants allege ‘covert’ code changes

The accountants code of conduct has been subject to too many changes some of which have been covert, according to the Institute of Public Accountants (IPA).

The IPA has told the Accounting Professional and Ethical Standards Board (APESB) that the rate at which changes have been made to the code has seen it reach 253 pages and that it had reached the stage where it needs to be restored to its origin as a “short, principles-based document”.

The IPA said it held concerns about “the ongoing frequent and perpetual changes made to the code”.

“With each change, further rules-based requirements are added to the Code which adds unnecessary complexity and dilutes its original principles-based design,” it said.

“IPA encourages the APESB to work with IESBA with the view to redesigning the Code to restore it to a short principles-based document that is updated no more than once a year, and preferably less frequently than that,” the IPA said.

“To assist in applying the Code’s principles, the rules-based requirements reflecting modern accepted standards of practice should be relocated to separate standards to address themes or relevant areas of practice for accountants.

“Given the increased focus on the application of ethical standards by accountants globally, this is an opportune time for the APESB and IESBA to sharpen its focus and assist accounting bodies and the accounting profession to improve the clarity of the fundamental principles of the Code.”

On the question of “covert” changes to the code, the IPA claimed that the number of amendments proposed were not technology-related revisions to the Code – instead, the amendments represented further covert changes to the fundamental principles”.

“In recent times, the constant changes to the fundamental principles of the Code may have the unintended perception that the foundation of the Code of Ethics is deficient and not fit-for-purpose. This contrasts with other accounting frameworks that see much less frequent changes and are written based on considered and sound principles that are more enduring,” it said.

“The current IESBA-APESB approach of frequently changing the Code is costly for all stakeholders to allocate resources to monitor developments, adjust systems for changes in requirements with different application dates and simply to understand the myriad of complex requirements.”

“This is particularly problematic for SME practitioners, who often do not have the technical or financial resources to keep up with the changes. In recent times, IPA has had an increased focus on increasing awareness of the Code. Feedback from our Members indicates that they continue to be surprised with the perpetual changes made to the Code each year.”