June 2023
Applicability of Deferred Provisions in The Icai Code of Ethics- Fees, Tax Services, and Non-Compliance of Laws and Regulations
INTRODUCTION
The 12th edition of the ICAI Code of Ethics, effective from July 1, 2020, is divided into three volumes. However, certain provisions in Volume-I were deferred due to the prevailing situation caused by Covid-19. The Institute of Chartered Accountants of India (ICAI) decided to make these deferred provisions applicable from October 1, 2022, with certain amendments. This article discusses provisions of Fees-relative size, Tax Services to Audit Clients, and Responding to Non-Compliance of Laws and Regulations (NOCLAR) applicable to members in practice and service.
1. Fees - Relative Size-
The provisions regarding fees and relative size in the Code of Ethics aim to address threats to independence that may arise when the total fees received by a firm from an audit client represent a significant proportion of the firm’s total fees. This situation can create self-interest or intimidation threats, which may compromise the professional accountant’s judgment and behaviour.
Self-interest threat refers to the risk that external factors, such as financial interests or incentives, could unduly influence the professional accountant’s objectivity and judgment. Intimidation threat, on the other hand, arises when there are perceived pressures or attempts to exert undue influence, leading the accountant to act in a bias
