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

Section 34.5 Disposition versions

2012-09-01

34.5. A member commits a breach of the independence rule contemplated in section 34.2 if, in the context of an assurance engagement or a specified auditing procedures engagement:

(1)  the member participates on an engagement team when he, or a dependent or spouse, holds and controls a financial interest in the client or holds a financial interest in the client that allows him to exercise significant influence over the client’s directors or officers within the meaning of Sections 3050 and 3840 of the Canadian Institute of Chartered Accountants Handbook;

(2)  the member or partnership within which he practises his profession performs such an engagement when the member or partnership holds and controls a financial interest in the client or holds a financial interest in the client that allows him to exercise significant influence over the client’s directors or officers within the meaning of Sections 3050 and 3840 of the Canadian Institute of Chartered Accountants Handbook;

(3)  the member or partnership within which he practises his profession performs such an engagement for a client:

(a)  when the partnership has a loan from or has a loan guaranteed by the client, except when the client is a bank or other financial institution and the loan or guarantee is immaterial to the partnership and the client, the loan or guarantee is made under terms and conditions that would have been imposed on any other person in similar circumstances, and the partnership is complying with the terms of the loan;

(b)  that is not a bank or other financial institution when the partnership has a loan to the client;

(c)  when the partnership guarantees a loan of the client;

(4)  the member or partnership within which he practises his profession performs such an engagement for a client:

(a)  when the partnership has a loan from or has a loan guaranteed by an officer or director of the client or a shareholder of the client who owns more than 10% of the equity securities of the client;

(b)  when the partnership has a loan to or guarantees a loan of an officer or director of the client or a shareholder of the client who owns more than 10% of the equity securities of the client;

(5)  the member participates on the engagement team when:

(a)  he has a loan from or has a loan guaranteed by:

i.  the client, unless the client is a bank or other financial institution, the loan or guarantee is made under terms and conditions that would have been imposed on any other person in similar circumstances and the member is complying with the terms of the loan;

ii.  an officer or director of the client; or

iii.  a shareholder of the client who owns more than 10% of the equity securities of the client;

(b)  he has a loan to or guarantees a loan of the client, other than a bank or other financial institution, of an officer or director of the client, or of a shareholder of the client who owns more than 10% of the equity securities of the client;

(6)  the member or partnership within which he practises his profession performs an engagement when the partnership has a business relationship with the client or its directors or officers unless the business relationship is clearly insignificant to the partnership, the client, or its directors and officers, as the case may be;

(7)  the member participates on the engagement team when he has a business relationship with the client or its directors or officers, unless the business relationship is clearly insignificant to the member, the client or its directors and officers, as the case may be;

(8)  the member participates on the engagement team when a dependent or spouse of the member is a director or officer of the client or an employee of the client in a position to exercise direct and significant influence, within the meaning of Sections 3050 and 3840 of the Canadian Institute of Chartered Accountants Handbook, over the subject matter of the engagement, or was in such a position during the period covered by the financial statements subject to the engagement or the engagement period;

(9)  the member participates on the engagement team when he served as an officer or director for the client or performed functions for the client that put him in a position to exercise direct and significant influence, within the meaning of Sections 3050 and 3840 of the Canadian Institute of Chartered Accountants Handbook, over the subject matter of the engagement during the engagement period;

(10)  the member or partnership within which he practises his profession performs such an engagement when the member or any other person practising professional activities therein serves as an officer or director for the client;

(11)  the member or partnership within which he practises his profession performs such an engagement when, during the engagement period, the member, the partnership or any other person practising professional activities therein makes a management decision or performs management functions for the client;

(12)  the member or partnership within which he practises his profession performs such an engagement when, during the engagement period, the member, the partnership or any other person practising professional activities therein provides any of the following services to the client:

(a)  promoting, dealing in or underwriting the client’s securities;

(b)  making investment decisions on behalf of the client or otherwise having discretionary authority over the client’s investments;

(c)  executing a transaction to buy or sell the client’s investments; or

(d)  safeguarding assets of the client;

(13)  the member participates on an engagement team and he or the partnership within which he practises his profession accepts a gift or hospitality, including a product or service discount, from the client, unless the gift or hospitality is clearly insignificant to the member or partnership.

O.C. 406-2010, s. 3.