The ED is a significant improvement from the former ED on Responding to a Suspected Illegal Act. It has gone some way to finding a good balance between responding to stakeholders’ expectations and complying with the applicable legal framework.
FEE agrees with IESBA that the Code is not meant to override national law, and should be applied without prejudice to any applicable legal provisions. In FEE’s view, this is an essential clarification that ought to be more prominent in the finalised Code.
FEE has consistently supported the concept of transparency in its public policy work while recognising limits and practical difficulties that could arise when applying this concept. FEE had previously expressed the opinion that IESBA should not seek to require disclosure in the absence of an appropriate legal framework and retains this stance. FEE is therefore pleased that mandatory reporting is no longer being considered, as this would have resulted in unintended and adverse consequences, potentially reducing the ability of PAs to influence potential non-compliance. FEE would also welcome that the Code clarify that disclosure is precluded where there is a conflict with local laws and regulations, an example being tipping-off concerns under anti-money laundering legislation where a discussion with management may not always be lawfully allowed.
FEE comment letter to IESBA on the Exposure Draft: “Responding to Non-Compliance with Laws and Regulations”
IESBA Exposure Draft “Responding to Non-Compliance with Laws and Regulations”