By C.N. VAZE
Chartered Accountant
Arjun: Hey Bhagwan, you have a habit of staying too close to your Bhaktas
(devotees). But I request you to please keep yourself a little away from me.
Shrikrishna (smiling): Why? Anything wrong with me? Or with you?
Arjun: No. But better to maintain social distancing in this corona pandemic.
Shrikrishna: Arrey Arjun, this pandemic has occurred only because you people
have kept ME at a distance. Come close to ME and you will be free from all
worries.
Arjun: Really? But you keep on causing headaches to us by talking about this Code
of Ethics. You were telling me about the New Code of Ethics. Good that the New
Code has come now.
Shrikrishna: Oh, surprising! You were always cursing the Code of Ethics and how is it
that even without knowing about the New Code, you say it is good?
Arjun: Yes. As it is we never studied the old code seriously. Whatever we learnt
at the time of the exam, we have forgotten. Now we can directly go for the New
Code.
Shrikrishna (smiling): No, Arjun. The New Code is not replacing the old code. It is in
addition to the existing code, with some changes.
Arjun: Oh my God! Actually, I am fed up with these virtual meetings of study
circles. Every alternate day they are boring us with this New Code.
Shrikrishna: Last time I had started telling you about the New Code, and you wanted to
know more.
Arjun: Yes. Instead of listening to those lectures, it is better that you tell me
about it. I register there just to
get CPE.
Shrikrishna: That is unethical, Paarth. You are not truthful to yourself!
Arjun: Anyway, tell me, the New Code has become effective from 1st of
July, right?
Shrikrishna: Yes. But the good news for you is that some of the aspects have been
deferred.
Arjun: Arrey
waah! Very good. So no need to know about them!
What are those topics?
Shrikrishna:
Last time I told you about NOCLAR.
Arjun: Yes, non-compliance of Laws and Regulations.
Shrikrishna: Yes. Basically it was applicable only to the listed companies. But it has
been deferred.
Arjun: What next?
Shrikrishna: The one of your interest is about the taxation services to audit clients.
Arjun: Good. And what was that 15% fees point?
Shrikrishna: If out of your total
fees, more than 15% is received from one single audit client for two
successive years, then you need to communicate it to that client.
Arjun: And what will the client do? Will he remove us? What is the logic?
Shrikrishna: See, you should not be independent but appear to be
independent. If you are heavily depending on one single client, you are likely
to compromise on the quality of audit. It is a self-interest threat.
Arjun: True. You need to broad-base your practice.
Shrikrishna: So, for example, your major fee, say 60 to 70%, is from one audit client,
you are supposed to tell this to that client and demonstrate that you are truly
independent.
Arjun: What else is postponed?
Shrikrishna: The non-audit services like management consultancy services to the audit
client. Similarly, under Indian circumstances, auditors are commonly rendering
taxation services. So that is also deferred.
Arjun: Any more postponement so that we don’t need to bother about it?
Shrikrishna: The independence standards which were adapted from the International
Ethical Standards have also been deferred.
Arjun: Good. Now next time please tell me what is immediately implemented. We
will keep that in mind while doing this year’s audit.
Shrikrishna: Yes, dear. Surely, I will.
Om Shanti!
Note: This
dialogue is based on implementation of the New Code of Ethics w.e.f. 1st
July, 2020.
One who is bent on courting his death will not take kindly to
sage counsel given by his well-wishers
— (Valmiki Raamaayan 3.53.17)
