Code of Ethics ABC definitions
Definitions relating to sections A, B and C of the Code of Ethics.
Effective from 1st January 2011. Text framed in grey is where ICAEW's Council considers additional discussion and/or requirements to be useful or necessary.
|Acceptable level||A level at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances available to the professional accountant at that time, that compliance with the fundamental principles is not compromised.|
|Advertising||The communication to the public of information as to the services or skills provided by professional accountants in public practice with a view to procuring professional business.|
|Affiliates||A person granted affiliate status by ICAEW under its regulations.|
|Assurance client||The responsible party that is the person (or persons) who: |
An engagement in which a professional accountant in public practice expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.
(For guidance on assurance engagements see the International Framework for Assurance engagements issued by the International Auditing and Assurance Standards Board which describes the elements and objectives of an assurance engagement and identifies engagements to which International Standards on Auditing (ISAs), International Standards on Review engagements (ISREs) and International Standards on Assurance engagements (ISAEs) apply.) www.ifac.org/IAASB/Pronouncements.php.
|Audit client||An entity in respect of which a firm conducts an audit engagement. When the client is a listed entity, audit client will always include its related entities. When the audit client is not a listed entity, audit client includes those related entities over which the client has direct or indirect control.|
|Audit committee||Those charged with governance. This may be a separate committee or the full Board.|
|Audit engagement||A reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects), in accordance with an applicable financial reporting framework, such as an engagement conducted in accordance with International Standards on Auditing. This includes a Statutory Audit, which is an audit required by legislation or other regulation.|
|Close family||A parent, child or sibling who is not an immediate family member.|
|Contingent fee||A fee calculated on a predetermined basis relating to the outcome of a transaction or the result of the services performed by the firm. A fee that is established by a court or other public authority is not a contingent fee.|
|Direct financial interest||A financial interest: |
|Director or officer||Those charged with the governance of an entity, or acting in an equivalent capacity, regardless of their title, which may vary from jurisdiction to jurisdiction.|
|Engagement partner||The partner or other person in the firm who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.|
|Engagement quality control review||A process designed to provide an objective evaluation, on or before the report is issued, of the significant judgments the engagement team made and the conclusions it reached in formulating the report.|
|Engagement team||All partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform assurance procedures on the engagement. This excludes external experts engaged by the firm or a network firm.|
|Existing accountant||A professional accountant in public practice currently holding an audit appointment or carrying out accounting, taxation, consulting or similar professional services for a client.|
|External expert||An individual (who is not a partner or a member of the professional staff, including temporary staff, of the firm or a network firm) or organisation possessing skills, knowledge and experience in a field other than accounting or auditing, whose work in that field is used to assist the professional accountant in obtaining sufficient appropriate evidence.|
|Financial interest||An interest in equity or other security, debenture, loan or other debt instrument of an entity, including rights and obligations to acquire such an interest and derivatives directly related to such interest.|
A structured representation of historical financial information, including related notes, intended to communicate an entity's economic resources or obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework. The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information. The term can relate to a complete set of financial statements, but it can also refer to a single financial statement, for example, a balance sheet, or a statement of revenues and expenses, and related explanatory notes.
Financial statements on which the firm will express an opinion
|Historical financial information||Information expressed in financial terms in relation to a particular entity, derived primarily from that entity’s accounting system, about economic events occurring in past time periods or about economic conditions or circumstances at points in time in the past.|
|Immediate family||A spouse (or equivalent) or dependent.|
|Indirect financial interest||A financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control or ability to influence investment decisions.|
|Key audit partner|
The engagement partner, the individual responsible for the engagement quality control review, and other audit partners, if any, on the engagement team who make key decisions or judgments on significant matters with respect to the audit of the financial statements on which the firm will express an opinion. Depending upon the circumstances and the role of the individuals on the audit, "other audit partners" may include, for example, audit partners responsible for significant subsidiaries or divisions.
|Listed entity||An entity whose shares, stock or debt are quoted or listed on a recognised stock exchange, or are marketed under the regulations of a recognised stock exchange or other equivalent body.|
|Loan||A sum of money lent, whether direct or through a third party, with the intention that it will be repaid with or without interest.|
|Member||A member of ICAEW, an affiliate, an employee of a member firm or affiliate, or a provisional member.|
|Member firm||This means, for the purposes of this Code: |
|Network||A larger structure: |
|Office||A distinct sub-group, whether organised on geographical or practice lines.|
|Officer||Those charged with the governance of an entity, or acting in an equivalent capacity, regardless of their title, which may vary from jurisdiction to jurisdiction.|
|Partner or principal||References to a partner or principal of a firm include the following: |
|Professional accountant||An individual who is a member of an IFAC member body.|
|Professional accountant in business|
A professional accountant employed or engaged in an executive or non-executive capacity in such areas as commerce, industry, service, the public sector, education, the not for profit sector, regulatory bodies or professional bodies, or a professional accountant contracted by such entities.
A professional accountant in business may be a salaried employee, a partner, director (whether executive or non-executive), an owner manager, a volunteer, or another working for one or more employing organisations. The legal form of the relationship with the employing organisation, if any, has no bearing on the ethical responsibilities incumbent on the professional accountant in business.
|Professional accountant in public practice|
A professional accountant, irrespective of functional classification (e.g., audit, tax or consulting) in a firm that provides professional services. This term is also used to refer to a firm of professional accountants in public practice.
|Professional service||Services requiring accountancy or related skills performed by a professional accountant including accounting, auditing, taxation, management consulting and financial management services.|
|Provisional member||A person: |
|Public interest entity|
|Related entity||An entity that has any of the following relationships with the client: |
An assurance engagement, conducted in accordance with International Standards on Review engagements or equivalent, in which a professional accountant in public practice expresses a conclusion on whether, on the basis of the procedures which do not provide all the evidence that would be required in an audit, anything has come to the accountant's attention that causes the accountant to believe that the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework.