HANDBOOK OF THE CODE OF ETHICS FOR PROFESSIONAL ...

1 HANDBOOK OF THE CODE OF ETHICS FOR. PROFESSIONAL accountants . 2018. THE INSTITUTE OF CHARTERED accountants OF NEPAL. CHANGES OF SUBSTANCE FROM 2016 EDITION. This HANDBOOK replaces the 2016 edition of the HANDBOOK of the Code of ETHICS for PROFESSIONAL accountants , as revised by the: NOCLAR Pronouncement Responding to Non-Compliance with Laws and Regulations;. Close-Off Document Changes to the Code Addressing the Long Association of Personnel with an Audit or Assurance Client; and Close-Off Document Changes to Part C of the Code Addressing Preparation and Presentation of Information and Pressure to Breach the Fundamental Principles. Changes The 2018 edition of the HANDBOOK is completely rewritten under a new structure and drafting convention that makes the Code easier to navigate, use and enforce.

2 Renamed the International Code of ETHICS for PROFESSIONAL accountants (including International Independence Standards), the Code incorporates several substantive additions and revisions, including: An enhanced and more prominently featured conceptual framework . Clearer and more robust provisions pertaining to safeguards that are better aligned with threats to compliance with the fundamental principles and to independence. Strengthened independence provisions addressing the long association of personnel with an audit or assurance client. New and revised sections dedicated to PROFESSIONAL accountants in business (PAIBs) relating to: Preparing and presenting information; and Pressure to breach the fundamental principles. Clear guidance for PROFESSIONAL accountants in public practice (PAPPs) that relevant PAIB provisions set out in Part 2 of the Code are applicable to them.

3 Strengthened provisions for PAIBs and PAPPs pertaining to the offering or accepting of inducements, including gifts and hospitality. New application material to emphasize the importance of understanding facts and circumstances when exercising PROFESSIONAL judgment. New application material to explain how compliance with the fundamental principles supports the exercise of PROFESSIONAL skepticism in an audit or other assurance engagement. Effective Date Parts 1-3. Parts 1, 2 and 3 will be effective as of June 15, 2019. International Independence Standards (Parts 4A and 4B). Part 4A relating to independence for audit and review engagements will be effective for audits and reviews of financial statements for periods beginning on or after June 15, 2019.

4 Part 4B relating to independence for assurance engagements with respect to subject matter covering periods will be effective for periods beginning on or after June 15, 2019; otherwise, it will be effective as of June 15, 2019. Early adoption is permitted. GUIDE TO THE CODE. (This Guide is a non-authoritative aid to using the Code.). Purpose of the Code 1. The International Code of ETHICS for PROFESSIONAL accountants (including International Independence Standards) ( the Code ) sets out fundamental principles of ETHICS for PROFESSIONAL accountants , reflecting the profession's recognition of its public interest responsibility. These principles establish the standard of behavior expected of a PROFESSIONAL accountant. The fundamental principles are: integrity, objectivity, PROFESSIONAL competence and due care, confidentiality, and PROFESSIONAL behavior.

5 2. The Code provides a conceptual framework that PROFESSIONAL accountants are to apply in order to identify, evaluate and address threats to compliance with the fundamental principles. The Code sets out requirements and application material on various topics to help accountants apply the conceptual framework to those topics. 3. In the case of audits, reviews and other assurance engagements, the Code sets out International Independence Standards, established by the application of the conceptual framework to threats to independence in relation to these engagements. HANDBOOK OF THE CODE OF ETHICS FOR PROFESSIONAL accountants (Including INTERNATIONAL INDEPENDENCE STANDARDS). TABLE OF CONTENTS. Page PREFACE .. 1. PART 1 COMPLYING WITH THE CODE, FUNDAMENTAL.

6 PRINCIPLES AND CONCEPTUAL 2. 100 Complying with the Code .. 2. 110 The Fundamental Principles .. 3. 111 Integrity .. 3. 112 Objectivity .. 4. 113 PROFESSIONAL Competence and Due 4. 114 4-5. 115 PROFESSIONAL Behavior .. 6. 120 The Conceptual Framework .. 7-11. PART 2 PROFESSIONAL accountants IN 12. 200 Applying the Conceptual Framework PROFESSIONAL accountants in 13-15. 210 Conflicts of 16-17. 220 Preparation and Presentation of Information .. 18-20. 230 Acting with Sufficient Expertise .. 20-21. 240 Financial Interests, Compensation and Incentives Linked to Financial Reporting and Decision 22. 250 Inducements, Including Gifts and 23-25. 260 Responding to Non-compliance with Laws and Regulations .. 26-31. 270 Pressure to Breach the Fundamental Principles.

7 31-33. PART 3 PROFESSIONAL accountants IN PUBLIC 34. 300 Applying the Conceptual Framework PROFESSIONAL accountants in Public Practice .. 35-38. 310 Conflicts of 39-42. 320 PROFESSIONAL 42-44. 321 Second Opinions .. 45. 330 Fees and Other Types of Remuneration .. 45-47. 340 Inducements, Including Gifts and 47-50. 350 Custody of Client 50. 360 Responding to Non-compliance with Laws and Regulations .. 50-61. INTERNATIONAL INDEPENDENCE STANDARDS. (PARTS 4A AND 4B).. 62. PART 4A INDEPENDENCE FOR AUDIT AND REVIEW. 63-70. 400 Applying the Conceptual Framework to Independence for Audit And Review Engagements .. 63-70. 410 71-73. 411 Compensation and Evaluation Policies .. 74. 420 Gifts and Hospitality .. 75. 430 Actual or Threatened Litigation.

8 76. 510 Financial Interests .. 77-79. 511 Loans and Guarantees .. 80. 520 Business Relationships .. 81. 521 Family and Personal Relationships .. 82-84. 522 Recent Service with an Audit Client .. 85. 523 Serving as a Director or Officer of an Audit 86. 524 Employment with an Audit 87-88. 525 Temporary Personnel Assignments .. 89. 540 Long Association of Personnel (Including Partner Rotation) with an Audit 90-93. 600 Provision of Non-Assurance Services to an Audit 94-96. 601 Accounting and Bookkeeping 97-98. 602 Administrative Services .. 99. 603 Valuation Services .. 99-100. 604- Tax Services .. 100-103. 605 Internal Audit Services .. 104-105. 606 Information Technology Systems Services .. 105-106. 607 Litigation Support Services.

9 106. 608 Legal Services .. 107-108. 609 Recruiting Services .. 108-109. 610 Corporate Finance Services .. 109-110. 800 Reports on Special Purpose Financial Statements that Include a Restriction on Use and Distribution (Audit and Review Engagements) . 110-112. PART 4B INDEPENDENCE FOR ASSURANCE ENGAGEMENTS OTHER THAN AUDIT AND. REVIEW ENGAGEMENTS 113. 900 Applying the Conceptual Framework to Independence for Assurance Engagements Other than Audit and Review Engagements .. 114-117. 905 118-119. 906 Gifts and Hospitality .. 120. 907 Actual or Threatened Litigation .. 120. 910 Financial Interests .. 120-121. 911 Loans and Guarantees .. 122. 920 Business Relationships .. 123. 921 Family and Personal Relationships .. 124-125. 922 Recent Service with an Assurance 126.

10 923 Serving as a Director or Officer of an Assurance Client .. 127. 924 Employment With an Assurance Client .. 128-129. 940 Long Association of Personnel with an Assurance 129-130. 950 Provision of Non-assurance Services to Assurance Clients Other than Audit and Review Engagement 131-133. 990 Reports that Include a Restriction on Use and Distribution (Assurance Engagements Other than Audit and Review Engagements) .. 134-135. PREFACE. The IESBA develops and issues, under its own standard setting authority, the International Code of ETHICS for PROFESSIONAL accountants (including International Independence Standards) ( the Code ). The Code is for use by PROFESSIONAL accountants around the world. In conformity with the above aim of the IESBA, the Institute of Chartered accountants of Nepal has initiated this step of reproducing the Code in the form of Hand book the Code of ETHICS for PROFESSIONAL accountants - 2018.