Earlier this month the International Ethics Standards Board for Accountants (IESBA) released for public comment the Exposure Draft, Proposed Revisions to the Code Pertaining to the Offering and Accepting of Inducements.
In a memorandum, IESBA provides background to, and an explanation of, the proposed revisions to the extant Code regarding:
• The offering and accepting of inducements by professional accountants in business1 (PAIBs)
and professional accountants in public practice2 (PAPPs); and
• Related conforming amendments to the independence provisions relating to gifts and hospitality.
The IESBA determined that the term “inducement” in the context of the Code should be broad and neutral and should not necessarily refer to situations when there is an intent to improperly influence the behavior of another person. Whilst acknowledging that the term is often used in contexts that have negative connotations, the IESBA is of the view that an inducement can also be used to influence another person to act in a manner that is not unethical.
In discussion with stakeholders, including the IESBA Consultative Advisory Group (CAG), during the development of the proposals, the IESBA noted a concern among some about using the word “inducements”. There was a view that the term is understood by some as having a negative connotation.
The IESBA believes that this concern could be addressed by providing a description of “inducements.” Accordingly, the proposed application material clarifies that an inducement:
• Is an object, situation or action that is used as a means to influence another individual’s behavior.
• Is not necessarily used with the intent to improperly influence an individual’s behavior.
• Can range from minor acts of hospitality between business colleagues to acts that result in non-compliance with laws and regulations.
Comments are requested by December 8, 2017. Respondents are asked to submit their comments electronically in both PDF and Word files through the IESBA website, using the “Submit a Comment” link. First time users must register to use this feature.
The full memorandum is available here.