Circular No.15/2001 November 29, 2001
ALL MEMBERS OF THE INSTITUTE
CODE OF ETHICS FOR CHARTERED ACCOUNTANTS - RELATIONS WITH OTHER CHARTERED ACCOUNTANTS IN PRACTICE
Dear Member,
The Council of the Institute in its 147th meeting held on October 27, 2001 has decided to replace paragraphs 13.29 and 13.31 of the Code of Ethics for Chartered Accountants.
New pages 47 and 48 are enclosed to replace existing pages in the Members’ Handbook, Volume-I, Part IV, Section 6.04 relating to Code of Ethics for Chartered Accountants.
Thanking you.
Yours truly,
Syed
Sajid Ali
Director
Technical Services
Encl. As above.
Note: For latest version of code of ethics see Circular No. 07/2000 dated April 20, 2000
has a legal
right to withhold them.
13.26 Certain organizations, either because of legislative
requirements or otherwise, call for submissions or tenders, e.g., competitive
bids, in relation to professional, services offered by accountants in
practice. In reply to a public advertisement or an unsolicited request
to make a submission or submit a tender a chartered accountant in practice
should, if the appointment may result in the replacement of another
chartered accountant in practice, state in the submission or tender
that before acceptance the opportunity to contact the other chartered
accountant in practice is required so that inquiries may be made as
to whether there are any professional reasons why the appointment should
not be accepted. If the submission or tender is successful, the existing
accountant should then be contacted.
13.27*
Where an existing chartered accountant is removed by the proprietors
of the business before he has completed the audit and submitted his
report, the existing chartered accountant must immediately inform the
Institute with relevant facts about his removal.
13.28 The proposed chartered accountant in practice
should not only follow the procedure detailed in the preceding paragraphs
of this Section, he should also inform the Institute about the offer
of appointment.
13.29**
The proposed chartered accountant in practice should not accept the
offer without prior clearance from the Institute, which clearance shall
not be unreasonably withheld. Provided however, in case the Institute
refuses to give its clearance, it shall communicate its decision within
15 (fifteen) days with reasons therefor.
13.30 Where an auditor, though willing for re-appointment
has not been re-appointed, he shall file with the Institute a copy of
the statement which he may have sent to the proprietors/Board of Directors
of the Company for circulation among the shareholders under section
253 of the Companies Ordinance, 1984. It shall be obligatory on the
proposed chartered accountant before accepting the appointment, to obtain
a copy of such a communication and follow the procedure detailed in
preceding paragraphs of this Section.
13.31**
In case the proprietors of the business decide to remove the auditors
before the completion of their term for whatever reasons, they may,
if they consider necessary, refer the matter to the Institute for appropriate
action in accordance with the Chartered Accountants Ordinance, 1961
and its rules, regulations and bye-laws for the time being in force.
________________________________________________________________
* Addition of paragraphs 13.27 to 13.31 was
approved by the Council of the Institute in its 139th meeting
held on October 28, 2000.
Contd….page
48
47
PART C - APPLICABLE TO EMPLOYED CHARTERED ACCOUNTANTS
The following sections contain guidance
which is particularly relevant to employed chartered accountants. Chartered
Accountants employed in public practice should be aware they may find
that the principles set out below are also of application to their particular
circumstances If chartered accountants employed in practice are in doubt
as to the applicability of any particular guidance, they should seek
assistance from the Institute.
SECTION 14
Conflicts of Loyalties
14.1 Employed
chartered accountants owe a duty of loyalty to their employer as well
as to their profession and there may be times when the two are in conflict.
An employee's normal priority should be to support his or her organization's
legitimate and ethical objectives and the rules and procedures drawn
up in support of them. However, an employee cannot legitimately be required
to:
(a)
break the law;
(b)
breach the rules and standards of their profession;
(c)
lie to or mislead (including misleading by keeping silent) those
acting as auditors to the employer; or
(d)
put their name to or otherwise be associated with a statement
which materially misrepresents the facts.
14.2 Differences
in view about the correct judgment on accounting. or ethical matters
should normally be raised and resolved within the employee's organization,
initially with the employee's immediate superior and possibly thereafter,
where disagreement about a significant ethical issue remains, with higher
levels of management or non-executive directors.
14.3 If employed
accountants cannot resolve any material issue involving a conflict between
their employers and their professional requirements they may, after
exhausting all other relevant possibilities, have no other recourse
but to consider resignation. Employees should state their reasons for
doing so to the employer but their duty of confidentiality normally
precludes them from communicating the issue to others (unless legally
or professionally required to do so).
14.4 For further
guidance as to the considerations involved see Section 2 - Resolution
of Ethical Conflicts.
________________________________________________________________
** Replacement of paragraphs 13.29 and 13.31
was approved by the Council of the Institute in its 147th
meeting held on October 27, 2001.
13.29 The proposed
chartered accountant in practice should not accept the offer without
clearance from the Institute.
13.31 In case the proprietors of the business decide
to remove the auditors before the completion of their term for whatever
reason, they may refer the matter to the Institute for appropriate action
in this respect.
48