Beyond Numbers · November 2003
By John Cowperthwaite, FCA
A simple message
Usually I cover several topics in my monthly column, but this time my message is singular and straightforward: I urge you to vote on the proposed rule changes before the November 25 Special General Meeting (SGM). Whether you vote electronically or in person, please take this opportunity to make your voice heard.
In October's mailing you received information about the updated independence rule (Rule 204) and the amendments to the compliance to professional standards (Rule 206). Both items are being brought forward to the SGM, and are part of the profession's ongoing efforts to demonstrate CAs' commitment to integrity and professionalism. By saying "yes" to these proposals, we will be showing regulators, investors, and clients that CAs abide by the highest of standards.
For many CAs, these changes will have no greater impact than to clarify existing practices. For others, these changes will mean an increase in documentation. Finally, for some members, these changes will require changing the way they do business. In the latter two instances, the Institute's primary objective on the passing of these rules will be to help those CAs manage the transition.
We've created a website to allow you to vote electronically and to provide you with more information on the proposed changes. Go to the Institute's website at www.ica.bc.ca, and you'll see a blue dot with "SGM" written on it, which you can click to access information. Or access the information through the Members Only section of the site. (The SGM button requires a username and password, both of which were sent to you last month and repeated in our email notifications. If you don't have yours, please call us at 1-800-663-2677.)
Resolution 1: Updated Independence Standard (Rule 204)
The updated independence standard is a key part of the Canadian CA profession's broader strategy to enhance public confidence and trust in the profession. It's based on the International Federation of Accountants (IFAC) standard and the updated American SEC requirements, which are among the toughest in the world.
As explained in last month's cover story, the updated Canadian independence standard more clearly articulates the rules CAs already follow to ensure independence between themselves and the clients they serve, and provides members with enhanced guidance on how to apply those rules in their practices. The updated standard reflects the values of integrity and sound judgement that are the very foundation of our profession.
The updated standard explicitly states the requirements for auditor objectivity and independence CAs are already expected to adhere to in principle and in practice. It lays out the potential "threats" to independence (e.g. financial interests) and appropriate "safeguards" CAs should use to ensure their independence is not at risk. A number of prohibitions are also set out with respect to insurmountable threats that would clearly compromise a CA's independence.
A key feature of the new standard is the straightforward requirement that CAs document the nature of their engagements with their clients, along with any threats to independence they identify, and the safeguards they use to either eliminate these threats or reduce them to an acceptable level.
Resolution 2: Amendment to Compliance with Professional Standards (Rule 206)
Amendments to Rule 206 (Compliance with Professional Standards) expand the scope of this rule to include members who are senior financial officers, directors, or members of audit committees. The rule codifies the general principle already followed by CA members who serve on audit committees or boards of directors, where they exercise the care and diligence of a competent CA-enhanced by their own career experience-in carrying out their responsibilities. These proposed amendments reflect an ongoing global trend for greater openness and transparency in financial reporting. See this month's For the Profession for more information.
I believe these rule changes send an important message about the profession's commitment to integrity. To learn more, refer to the ICABC website, which not only offers a wealth of information about the rule changes-including how they could affect you and practice guides to managing these changes-but also provides resources to answer any of your questions, including a discussion forum, a direct link to Professional Advisory Services, and a schedule of face-to-face meetings across the province.
By the time you read this article, CEO Richard Rees, FCA, and I will have travelled across BC to meet with members and discuss these issues. I look forward to sharing the upshot of these meetings in future columns.
Remember: You have a voice in this profession-please make sure it's heard by voting before or on November 25th.
As always, to contact me, please email me at email@example.com.