C-26, r. 28 - Code of ethics of certified management accountants

Section 34.7 Disposition versions

2012-09-01

34.7. A member commits a breach of the independence rule contemplated in section 34.2 if, in the context of an audit of a listed enterprise:

(1)  the member participates on the engagement team, or a team within a network partnership or joint-stock company that is in a position to influence the engagement when a parent, non-dependent child or sibling is in an accounting role or a financial reporting oversight role at the client that puts the parent, non-dependent child or sibling in a position to exercise influence over either the contents of the financial statements or anyone who prepares them, or was in such a position during any period covered by the engagement;

(2)  the member or partnership within which he practises his profession performs such an engagement when a person who participated in an audit of the financial statements of the listed enterprise has accepted employment in a financial reporting oversight role with respect to the enterprise before a period of one year has elapsed from the date on which the financial statements were filed with a stock exchange recognized by a Canadian or foreign securities regulator;

(3)  the member performs such an engagement for a listed enterprise, or a related entity, when a person practising professional activities within the partnership within which the member practises his profession, or within a network partnership or joint-stock company, serves as an officer or a director of the related entity or as secretary for the related entity;

(4)  the member continues as the person with primary responsibility for the engagement or as the engagement quality control reviewer on such an engagement for a listed enterprise for more than 5 years, and there after resumes or assumes such functions before a further 5 years have elapsed from the date on which he ceased to perform these functions;

(5)  the member, who has responsibility for decision making on auditing, accounting and reporting matters that affect the performance of the engagement, or who maintains regular contact with the audit committee or management of the listed enterprise and provides more than 10 hours of assurance services during the engagement period in connection with the annual financial statements or the interim financial information of the listed enterprise, or who has primary responsibility for an audit engagement for a subsidiary of the listed enterprise, continues in such role or roles for more than 7 years and thereafter resumes or assumes such functions before a further 2 years have elapsed from the date on which he ceased to perform these functions. However, this provision does not extend to members who consult with the engagement team regarding technical or industry specific issues, transactions or events;

(6)  the member or partnership within which he practises his profession performs such an engagement when, during either the period covered by the financial statements subject to audit or the engagement period, another person within the partnership or a network partnership or joint-stock company makes a management decision or performs management functions for the listed enterprise or a related entity;

(7)  the member or partnership within which he practises his profession performs such an engagement when, during either the period covered by the financial statements subject to audit or the engagement period, the member, the partnership, a network partnership or joint-stock company or another person within the partnership or a network partnership or joint-stock company, provides professional services to the listed enterprise or a related entity, the results of which are likely to be subject to audit procedures during the financial statement audit, including one of the following services, unless the member determines that the results of these services will not be subject to such procedures:

(a)  accounting or bookkeeping services related to the accounting records or financial statements to be audited;

(b)  valuation services;

(c)  actuarial services;

(d)  internal audit services that relate to the enterprise’s internal accounting controls, financial systems or financial statements;

(e)  financial information systems design, implementation, operation or management services;

(8)  the member or partnership within which he practises his profession performs such an engagement when, during either the period covered by the financial statements subject to audit or the engagement period, the member, the partnership, a network partnership or joint-stock company or another person within the partnership or a network partnership or joint-stock company, provides one of the following professional services to a listed enterprise or a related entity:

(a)  services that consist in providing an expert opinion or other expert service for the listed enterprise or a legal representative thereof, for the purpose of advocating the enterprise’s interest in a civil, criminal, regulatory, administrative or legislative proceeding or investigation;

(b)  legal services other than those referred to in section 141 of the Act respecting the Barreau du Québec (chapter B-1);

(c)  human resource management services that involve:

i.  searching for or seeking out prospective candidates for management, executive or director positions;

ii.  engaging in psychological testing, or other formal testing or evaluation programs;

iii.  undertaking reference checks of prospective candidates for an executive or director position;

iv.  acting as a negotiator or mediator on the listed enterprise’s behalf with respect to employees or future employees concerning any condition of employment, including position, status or title, compensation or fringe benefits; or

v.  recommending that the enterprise hire a specific candidate for a specific job or advising it to do so;

(9)  the member or partnership within which he practises his profession performs such an engagement when, during either the period covered by the financial statements subject to audit or the engagement period, an audit partner or a shareholder with voting rights who is on the engagement team earns or receives compensation for procuring any engagement that is not an assurance engagement from the listed enterprise, unless the partnership within which the member practises his profession has fewer than 5 audit clients that are listed enterprises and fewer than 10 partners or shareholders with voting rights;

(10)  the member or partnership or joint-stock company within which he practises his profession provides services to a listed enterprise or a related entity without the prior approval of the audit committee, unless the following conditions exist:

(a)  the services do not represent more than 5% of total audit fees paid by the listed enterprise and a related entity to the member, the partnership and network partnerships or joint-stock companies in the fiscal year in which the services are provided;

(b)  the services were recognized as assurance services at the time of the engagement;

(c)  the provision of these services is promptly brought to the attention of the audit committee; and

(d)  the audit committee or one or more designated representatives approves the services prior to the completion of the audit for the listed enterprise or the related entity;

(11)  the member or the partnership or joint-stock company within which he practises his profession performs such an engagement when, during either the period covered by the financial statements subject to audit or the engagement period, a person within the partnership or a network partnership or joint-stock company provides services referred to in paragraph 12 of section 34.5 to a related entity.

O.C. 406-2010, s. 3; O.C. 904-2011, s. 17.