Code of Professional Conduct

of the South African Institute

of Chartered Accountants
including Independence Standards
2024 Edition

This gratis electronic version is proudly prepared and supplied by LexisNexis.

The purpose of the gratis Code is to ensure SAICA members (CA(SA)s and
AGA(SA)s) have access to the Code because they are required to comply with
it in terms of SAICA’s by-laws.
Students should take note that this e-book contains only a portion (the Code
only) of Volume 2 of the SAICA Student Handbook and are required to ensure
that they have the hard copy of Volume 2, which contains other examinable
information.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 1

Code of Professional Conduct of the

South African Institute of Chartered Accountants
including Independence Standards
2024 Edition

STATUS OF THE CODE

This document contains the SAICA Code of Professional Conduct (“the Code”), 2024 Edition.
The Board of the South African Institute of Chartered Accountants (“SAICA”) has adopted the
International Code of Ethics for Professional accountants (including International Independence
Standards) as released by the International Ethics Standards Board for Accountants’ (IESBA) in
2018 in its entirety. SAICA is a member of the International Federation of Accountants (IFAC)
and has adopted the International Code of Ethics for Professional accountants with the per-
mission of IFAC but has however included additional guidance to assist in the local application
of certain requirements applicable to all SAICA members and associates.
The Code is applicable to all SAICA members and associates as defined in the SAICA Constitu-
tion. A contravention of, or failure to comply with any requirements of the Code, may be regarded
as a Punishable Conduct or misconduct in terms of sections 4.1.5, 4.1.7, 4.2.5, 5.1.5, 5.2.2, 6.1.5,
6.1.8 and 6.2.2 of Appendix 4 of the SAICA By-laws1 and as such may be investigated and if appro-
priate the member or associate may be found guilty and may be liable for penalties as described
in the By-laws.
Sections 4.3 and 5.1.12 of the By-laws state that Punishable Conduct on the part of a trainee
accountant shall include any conduct which would amount to Punishable Conduct had it been
perpetrated by a Member, Associate General Accountant or Accounting Technician. Annexure 3,
item 2.4 of the SAICA training regulations requires that trainee accountants should at all times
keep the affairs of the training office and its clients confidential and not breach any codes of
professional conduct, disciplinary rules or by-laws that apply to the profession of a CA(SA) or an
AGA(SA) and, if applicable, a Registered Auditor. The Code also conforms to the Independent
Regulatory Board for Auditors (IRBA) Code of Professional Conduct for Registered Auditors.
South African amendments to the IESBA Code of Ethics are underlined and in italics in the Code.

CHANGES OF SUBSTANCE FROM THE 2023 EDITION

The SAICA Code of Professional Conduct
This document replaces the 2023 edition of the Code of Professional Conduct of the South African
Institute of Chartered Accountants, and incorporates the following revisions:
• The revised definition of a public interest entity (PIE) which, among other matters, specifies a
broader list of mandatory PIE categories, including a new category “publicly traded entity” to
replace the category of “listed entity.”
• Changes to the definitions of “audit client” and “group audit client” in the Glossary arising from
the approved revisions to the definitions of listed entity and public interest entity.
• Technology-related provisions of the Code.

Approved Changes that Are Not Yet Effective

The 2024 edition of the handbook contains:
• Tax planning and related services provisions of the Code
Section 280 will be effective for tax planning activities beginning after June 30, 2025.
ET – 2 SAICA Student Handbook 2024/2025

Section 380 and the consequential amendments to Section 321 will be effective for tax planning
services beginning after June 30, 2025.
Transitional provision: For tax planning services or activities commenced before the above
effective date, such services or activities may be continued and be completed under the extant
provisions of the Code.
Early adoption is permitted.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 3

SAICA Code of Professional Conduct (2024 Edition)

CONTENTS
Page
Guide to the Code .................................................................................................................. 3
SAICA Code of Professional Conduct (2024 Edition) ..................................................... 9
Definitions, including Lists of Abbreviations and Standards ............................................... 12
Part 1 – Complying with the Code, Fundamental Principles and Conceptual
Framework......................................................................................................................... 26
Part 2 – Professional Accountants in Business ..................................................................... 43
Part 3 – Professional Accountants in Public Practice ........................................................... 70
Independence Standards (Parts 4A and 4B) ..................................................................... 108
Part 4A – Independence for Audit and Review Engagements .............................................. 108
Part 4B – Independence for Assurance Engagements other than Audit and Review
Engagements ..................................................................................................................... 192
Effective Date ........................................................................................................................ 221

GUIDE TO THE CODE

(This Guide is a non-authoritative aid to using the Code.)

Purpose of the Code

1. The SAICA Code of Professional Conduct (including Independence Standards) (“the
Code”) sets out fundamental principles of ethics for professional accountants, reflecting
the profession’s recognition of its public interest responsibility. These principles establish
the standard of behaviour expected of a professional accountant. The fundamental principles
are: integrity, objectivity, professional competence and due care, confidentiality, and pro-
fessional behaviour.
2. The Code provides a conceptual framework that professional accountants are to apply in
order to identify, evaluate and address threats to compliance with the fundamental prin-
ciples. The Code sets out requirements and application material on various topics to help
professional accountants apply the conceptual framework to those topics.
3. In the case of audits, reviews and other assurance engagements, the Code sets out Inde-
pendence Standards, established by the application of the conceptual framework to threats
to independence in relation to these engagements.

How the Code is Structured

4. The Code contains the following material:
• Definitions, which contain defined terms (together with additional explanations where
appropriate) and described terms which have a specific meaning in certain parts of the
Code. For example, as noted in the Definitions, in Part 4A, the term “audit engagement”
applies equally to both audit and review engagements. The Definitions also include lists
of abbreviations that are used in the Code and other standards to which the Code refers.
• Part 1 – Complying with the Code, Fundamental Principles and Conceptual Framework,
which includes the fundamental principles and the conceptual framework and is applic-
able to all professional accountants.
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• Part 2 – Professional Accountants in Business, which sets out additional material that
applies to professional accountants in business when performing professional activities.
Professional accountants in business include professional accountants employed,
engaged or contracted in an executive or non-executive capacity in, for example:
o Commerce, industry or service.
o The public sector.
o Education.
o The not-for-profit sector.
o Regulatory or professional bodies.
Part 2 is also applicable to individuals who are professional accountants in public prac-
tice when performing professional activities pursuant to their relationship with the firm,
whether as a contractor, employee or owner.
• Part 3 – Professional accountants in Public Practice, which sets out additional material
that applies to professional accountants in public practice when providing professional
services.
• Part 4 – Independence Standards, which sets out additional material that applies to pro-
fessional accountants in public practice when providing assurance services, as follows:
o Part 4A – Independence for Audit and Review Engagements, which applies when
performing audit or review engagements.
o Part 4B – Independence for Assurance Engagements Other than Audit and Review
Engagements, which applies when performing assurance engagements that are not
audit or review engagements.
5. The Code contains sections which address specific topics. Some sections contain sub-
sections dealing with specific aspects of those topics. Each section of the Code is struc-
tured, where appropriate, as follows:
• Introduction – sets out the subject matter addressed within the section, and introduces
the requirements and application material in the context of the conceptual framework.
Introductory material contains information, including an explanation of terms used,
which is important to the understanding and application of each Part and its sections.
• Requirements – establish general and specific obligations with respect to the subject
matter addressed.
• Application material – provides context, explanations, suggestions for actions or
matters to consider, illustrations and other guidance to assist in complying with the
requirements.

How to Use the Code

The Fundamental Principles, Independence and Conceptual Framework
6. The Code requires professional accountants to comply with the fundamental principles of
ethics. The Code also requires them to apply the conceptual framework to identify, evaluate
and address threats to compliance with the fundamental principles. Applying the con-
ceptual framework requires exercising professional judgement, remaining alert for new
information and to changes in facts and circumstances, and using the reasonable and
informed third party test.
7. The conceptual framework recognises that the existence of conditions, policies and pro-
cedures established by the profession, legislation, regulation, the firm, or the employing
organisation might impact the identification of threats. Those conditions, policies and
procedures might also be a relevant factor in the professional accountant’s evaluation of
whether a threat is at an acceptable level. When threats are not at an acceptable level, the
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 5

conceptual framework requires the professional accountant to address those threats. Apply-
ing safeguards is one way that threats might be addressed. Safeguards are actions individ-
ually or in combination that the professional accountant takes that effectively reduce threats
to an acceptable level.
8. In addition, the Code requires professional accountants to be independent when performing
audit, review and other assurance engagements. The conceptual framework applies in the
same way to identifying, evaluating and addressing threats to independence as to threats to
compliance with the fundamental principles.
9. Complying with the Code requires knowing, understanding and applying:
• All of the relevant provisions of a particular section in the context of Part 1, together
with the additional material set out in Sections 200, 300, 400, 500, 600, 800 and 900,
as applicable.
• All of the relevant provisions of a particular section, for example, applying the pro-
visions that are set out under the subheadings titled “General” and “All Audit Clients”
together with additional specific provisions, including those set out under the subhead-
ings titled “Audit Clients that are not Public Interest Entities” or “Audit Clients that are
Public Interest Entities.”
• All of the relevant provisions set out in a particular section together with any additional
provisions set out in any relevant subsection.

Requirements and Application Material

10. Requirements and application material are to be read and applied with the objective of
complying with the fundamental principles, applying the conceptual framework and, when
performing audit, review and other assurance engagements, being independent.
Requirements
11. Requirements are designated with the letter “R”, are numbered in bold and, in most cases,
include the word “shall.” The word “shall” in the Code imposes an obligation on a pro-
fessional accountant or firm to comply with the specific provision in which “shall” has
been used.
12. In some situations, the Code provides a specific exception to a requirement. In such a situ-
ation, the provision is designated with the letter “R” but uses “may” or conditional wording.
13. When the word “may” is used in the Code, it denotes permission to take a particular action
in certain circumstances, including as an exception to a requirement. It is not used to denote
possibility.
14. When the word “might” is used in the Code, it denotes the possibility of a matter arising, an
event occurring or a course of action being taken. The term does not ascribe any particular
level of possibility or likelihood when used in conjunction with a threat, as the evaluation
of the level of a threat depends on the facts and circumstances of any particular matter,
event or course of action.
Application Material
15. In addition to requirements, the Code contains application material that provides context
relevant to a proper understanding of the Code. In particular, the application material is
intended to help a professional accountant to understand how to apply the conceptual
framework to a particular set of circumstances and to understand and comply with a
specific requirement. While such application material does not of itself impose a require-
ment, consideration of the material is necessary to the proper application of the requirements
of the Code, including application of the conceptual framework. Application material is
designated with the letter “A”.
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16. Where application material includes lists of examples, these lists are not intended to be
exhaustive.

APPENDIX TO THE GUIDE TO THE CODE (INCLUDING

SOUTH AFRICAN ADAPTATIONS AND AMENDMENTS)
17. This Appendix to this Guide provides an overview of the Code.
South African Adaptations and Amendments
18. South African adaptations and amendments to the IESBA International Code of Ethics for
Professional Accountants are underlined and in italics.
19. South African adaptions include the following:
• A change to the name of the Code;
• A change in the definition of professional accountants to include SAICA members and
associates;
• Additional sub-headings for clarity;
• Additional words to certain paragraphs; and
• Strikethrough of IESBA Code paragraphs that have not been adopted in South Africa.
20. South African amendments, which are more substantive than adaptations, and require a
change to the numbering system, are represented as follows:
• South African requirements and application material will include a reference to “SA”,
e.g. R115.3 SA or 350.8 A1 SA;
• Paragraphs inserted between two consecutively numbered paragraphs will include an
“a” in the paragraph number, e.g. R400.8a SA; and
• Paragraphs that are not South African paragraphs but that have been amended to
reflect a change in status (e.g. from application material to a requirement) will also
include a reference to “SA”, e.g. application paragraph changed to a requirement,
120.9 A2 to R120.9a SA.
21. South African laws and regulations may impose requirements that regulate the conduct of
professional accountants and their clients. These requirements may be in addition to the
content of the Code, or are more restrictive than the Code. A list of such laws and regu-
lations is not provided in this Code, but a proper identification, understanding and appli-
cation of such matters, is necessary.
22. South African amendments (excluding definitions) are listed below:
Paragraph Number Detail
Subsection 113 – Professional Competence and Due Care
R113.4 SA South African requirement
Subsection 115 – Professional Behaviour
Multiple Firms and Assisted Holding Out
R115.3 SA South African requirement
R115.4 SA South African requirement
Signing Conventions for Reports
R115.5 SA South African requirement
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 7

Paragraph Number Detail

R115.6 SA South African requirement
Use of Electronic Signatures
115.7 A1 SA South African application material
115.7 A2 SA South African application material
115.7 A3 SA South African application material
115.7 A4 SA South African application material
115.7 A5 SA South African application material
R115.8 SA South African requirement
115.9 A1 SA South African application material
115.9 A2 SA South African application material
115.10 A1 SA South African application material
115.11 A1 SA South African application material
115.11 A2 SA South African application material
Section 120 – The Conceptual Framework
R120.9a SA 120.9 A2 (which is an application paragraph in the IESBA Code of Ethics)
has been elevated into a South African requirement R120.9a SA.
Section 320 – Professional Appointments
R320.6a SA South African requirement
R320.7a SA South African requirement
Section 321 – Second Opinions
321.3 A4 SA South African application material
R321.3a SA South African requirement
321.3a A1 SA South African application material
R321.3b SA South African requirement
R321.5 SA South African requirement
321.5 A1 SA South African application material
Section 330 – Fees and Other Types of Remuneration
R330.4 SA South African requirement
Section 350 – Custody of Client Assets
R350.4a SA 350.4 A1 (which is an application paragraph in the IESBA Code of Ethics)
has been elevated to a South African requirement R350.4a SA
R350.6 SA South African requirement
R350.7 SA South African requirement
R350.8 SA South African requirement
350.8 A1 SA South African application material
ET – 8 SAICA Student Handbook 2024/2025

Paragraph Number Detail

R350.9 SA South African requirement
Section 400 – Applying the Conceptual Framework to Independence for Audit and Review
Engagements
Public Interest Entities
400.22 SA South African application material
R400.23 SA South African requirement

DEFINITIONS, INCLUDING LIST OF ABBREVIATIONS AND STANDARDS

(ALL PROFESSIONAL ACCOUNTANTS)

PART 1
COMPLYING WITH THE CODE, FUNDAMENTAL PRINCIPLES
AND CONCEPTUAL FRAMEWORK
(ALL PROFESSIONAL ACCOUNTANTS – SECTIONS 100 TO 199)

PART 2 PART 3
PROFESSIONAL ACCOUNTANTS PROFESSIONAL ACCOUNTANTS
IN BUSINESS IN PUBLIC PRACTICE
(SECTIONS 200 TO 299) (SECTIONS 300 TO 399)
(PART 2 IS ALSO APPLICABLE TO INDIVIDUAL
PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE
WHEN PERFORMING PROFESSIONAL ACTIVITIES
PURSUANT TO THEIR RELATIONSHIP
WITH THE FIRM)
INDEPENDENCE STANDARDS
(PARTS 4A AND 4B)
PART 4A – INDEPENDENCE FOR AUDIT
AND REVIEW ENGAGEMENTS
(SECTIONS 400 TO 899)
PART 4B – INDEPENDENCE FOR ASSURANCE
ENGAGEMENTS OTHER THAN
AUDIT AND REVIEW ENGAGEMENTS
(SECTIONS 900 TO 999)
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 9

SAICA CODE OF PROFESSIONAL CONDUCT (2024 EDITION)

CONTENTS

Page
Definitions, including Lists of Abbreviations and Standards ............................................... 12
Lists of Abbreviations and Standards referred to in the Code .............................................. 25
Part 1 – Complying with the Code, Fundamental Principles and
Conceptual Framework .................................................................................................. 26
Section 100 ............................................................................................................................ 26
Complying with the Code ................................................................................................ 26
Section 110 ............................................................................................................................ 28
The Fundamental Principles ............................................................................................ 28
Subsection 111 – Integrity ............................................................................................... 29
Subsection 112 – Objectivity ........................................................................................... 29
Subsection 113 – Professional Competence and Due Care ............................................. 29
Subsection 114 – Confidentiality .................................................................................... 30
Subsection 115 – Professional Behaviour ....................................................................... 32
Section 120 ............................................................................................................................ 35
The Conceptual Framework ............................................................................................ 35
Part 2 – Professional Accountants in Business ................................................................. 43
Section 200 ............................................................................................................................ 44
Applying the Conceptual Framework – Professional Accountants in Business ............. 44
Section 210 ............................................................................................................................ 48
Conflicts of Interest ......................................................................................................... 48
Section 220 ............................................................................................................................ 50
Preparation and Presentation of Information ................................................................... 50
Section 230 ............................................................................................................................ 54
Acting with Sufficient Expertise ..................................................................................... 54
Section 240 ............................................................................................................................ 55
Financial Interests, Compensation and Incentives linked to Financial Reporting
and Decision Making ................................................................................................... 55
Section 250 ............................................................................................................................ 56
Inducements, Including Gifts and Hospitality ................................................................. 56
Section 260 ............................................................................................................................ 60
Responding to Non-Compliance with Laws and Regulations ......................................... 60
Section 270 ............................................................................................................................ 68
Pressure to Breach the Fundamental Principles .............................................................. 68
Part 3 – Professional Accountants in Public Practice ...................................................... 70
Section 300 ............................................................................................................................ 71
Applying the Conceptual Framework – Professional Accountants in Public Practice ..... 71
Section 310 ............................................................................................................................ 77
Conflicts of Interest ......................................................................................................... 77
Section 320 ............................................................................................................................ 81
Professional Appointments .............................................................................................. 81
Section 321 ............................................................................................................................ 85
Second Opinions .............................................................................................................. 85
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Page
Section 325 ............................................................................................................................ 86
Objectivity of an Engagement Quality Reviewer and other Appropriate Reviewers ..... 86
Section 330 ............................................................................................................................ 88
Fees and Other Types of Remuneration .......................................................................... 88
Section 340 ............................................................................................................................ 90
Inducements, including Gifts and Hospitality ................................................................. 90
Section 350 ............................................................................................................................ 94
Custody of Client Assets ................................................................................................. 94
Section 360 ............................................................................................................................ 96
Responding to Non-Compliance with Laws and Regulations ......................................... 96
International Independence Standards (Parts 4A and 4B) ............................................. 108
Part 4A – Independence for Audit and Review Engagements ........................................ 108
Section 400 ............................................................................................................................ 108
Applying the Conceptual Framework to Independence for Audit
and Review Engagements............................................................................................ 108
Section 410 ............................................................................................................................ 130
Fees .................................................................................................................................. 130
Section 411 ............................................................................................................................ 140
Compensation and Evaluation Policies ........................................................................... 140
Section 420 ............................................................................................................................ 141
Gifts and Hospitality ........................................................................................................ 141
Section 430 ............................................................................................................................ 141
Actual or Threatened Litigation ...................................................................................... 141
Section 510 ............................................................................................................................ 142
Financial Interests ............................................................................................................ 142
Section 511 ............................................................................................................................ 145
Loans and Guarantees ...................................................................................................... 145
Section 520 ............................................................................................................................ 146
Business Relationships .................................................................................................... 146
Section 521 ............................................................................................................................ 148
Family and Personal Relationships.................................................................................. 148
Section 522 ............................................................................................................................ 150
Recent service with an Audit Client ................................................................................ 150
Section 523 ............................................................................................................................ 151
Serving as a Director or Officer of an Audit Client ........................................................ 151
Section 524 ............................................................................................................................ 152
Employment with an Audit Client ................................................................................... 152
Section 525 ............................................................................................................................ 154
Temporary Personnel Assignments ................................................................................. 154
Section 540 ............................................................................................................................ 155
Long Association of Personnel (including Partner Rotation) with an Audit Client ........ 155
Section 600 ............................................................................................................................ 159
Provision of Non-Assurance Services to an Audit Client ............................................... 159
Subsection 601 – Accounting and Bookkeeping Services .............................................. 167
Subsection 602 – Administrative Services ...................................................................... 169
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 11

Page
Subsection 603 – Valuation Services .............................................................................. 170
Subsection 604 – Tax Services ........................................................................................ 171
Subsection 605 – Internal Audit Services........................................................................ 178
Subsection 606 – Information Technology Systems Services ........................................ 180
Subsection 607 – Litigation Support Services ................................................................. 182
Subsection 608 – Legal Services ..................................................................................... 184
Subsection 609 – Recruiting Services ............................................................................. 187
Subsection 610 – Corporate Finance Services ................................................................ 188
Section 800 ............................................................................................................................ 190
Reports on Special Purpose Financial Statements that include a Restriction on Use
and Distribution (Audit and Review Engagements).................................................... 190
Part 4B – Independence for Assurance Engagements other than Audit
and Review Engagements ............................................................................................... 192
Section 900 ............................................................................................................................ 193
Applying the Conceptual Framework to Independence for Assurance Engagements
other than Audit and Review Engagements ................................................................ 193
Section 905 ............................................................................................................................ 200
Fees .................................................................................................................................. 200
Section 906 ............................................................................................................................ 203
Gifts and Hospitality ........................................................................................................ 203
Section 907 ............................................................................................................................ 204
Actual or Threatened Litigation ...................................................................................... 204
Section 910 ............................................................................................................................ 204
Financial Interests ............................................................................................................ 204
Section 911 ............................................................................................................................ 206
Loans and Guarantees ...................................................................................................... 206
Section 920 ............................................................................................................................ 208
Business Relationships .................................................................................................... 208
Section 921 ............................................................................................................................ 209
Family and Personal Relationships.................................................................................. 209
Section 922 ............................................................................................................................ 211
Recent Service with an Assurance Client ........................................................................ 211
Section 923 ............................................................................................................................ 212
Serving as a Director or Officer of an Assurance Client ................................................. 212
Section 924 ............................................................................................................................ 213
Employment with an Assurance Client ........................................................................... 213
Section 940 ............................................................................................................................ 214
Long Association of Personnel with an Assurance Client .............................................. 214
Section 950 ............................................................................................................................ 216
Provision of Non-Assurance Services to Assurance Clients ........................................... 216
Section 990 ............................................................................................................................ 219
Reports that include a Restriction on Use and Distribution
(Assurance Engagements other than Audit and Review Engagements) ..................... 219
Effective Date ........................................................................................................................ 221
Changes to the Code .............................................................................................................. 221
ET – 12 SAICA Student Handbook 2024/2025

DEFINITIONS, INCLUDING LISTS OF ABBREVIATIONS AND

STANDARDS
In the SAICA Code of Professional Conduct, the singular shall be construed as including the plural
as well as the reverse, and the terms below have the following meanings assigned to them.
In this Definitions section, explanations of defined terms are shown in regular font; italics are used
for explanations of described terms which have a specific meaning in certain parts of the Code or
for additional explanations of defined terms. References are also provided to terms described in
the Code.
Acceptable level A level at which a professional accountant using the reasonable and
informed third party test would likely conclude that the professional
accountant complies with the fundamental principles.
Accredited A status granted by the IRBA to a professional body that meets and con-
Professional Body tinues to meet the prescribed accreditation standards.
“Accreditation” means the status afforded to a professional body in
accordance with Part 1 of Chapter III [of the Act], which status may be
granted in full or in part”1.
“Professional body” means a body of, or representing:
(a) registered auditors and registered candidate auditors; or
(b) accountants, registered auditors and registered candidate auditors”.2
Act The Auditing Profession Act, No. 26 of 2005, as amended.
Advanced electronic An advanced electronic signature, as defined in the Electronic Commu-
signatures nications and Transactions Act, 2002 (No. 25 of 2002), is “an electronic
signature which results from a process which has been accredited by the
Authority as provided for in section 37”.
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.
Appropriate reviewer An appropriate reviewer is a professional with the necessary knowledge,
skills, experience and authority to review, in an objective manner, the
relevant work performed or service provided. Such an individual might
be a professional accountant.
This term is described in paragraph 300.8 A4.
Assisted holding out Assisting an individual to contravene Sections 41(1) and/or 41(2) of the
Act
Associate A person who has been admitted and registered as an associate general
accountant (AGA) with the Institute and therefore entitled to use the
designation “Associate General Accountant” or “Associate General
Accountant (South Africa)” or the initials “AGA(SA)” or a person who
has been admitted and registered as an associate (AT) with the Institute
and therefore entitled to use the designation of Fellow Member of Asso-
ciation of Accounting Technician or the initials “FMAAT(SA)” or
Member of Association of Accounting Technicians or the initials
“MAAT(SA)” or Public Sector Member of Association of Accounting
Technician or the initials “PSMAAT(SA)”.

________________________

1 Section 1 v “accreditation”.
2 Section 1 v “professional body”.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 13

Assurance client The responsible party and also, in an attestation engagement, the party
taking responsibility for the subject matter information (who might be
the same as the responsible party).
Assurance An engagement in which a professional accountant in public practice aims
engagement to obtain sufficient appropriate evidence in order to express a conclusion
designed to enhance the degree of confidence of the intended users other
than the responsible party about the subject matter information.
(ISAE 3000 (Revised) describes the elements and objectives of an assur-
ance engagement conducted under that Standard, and the Assurance
Framework provides a general description of assurance engagements to
which International Standards on Auditing (ISAs), International Stand-
ards on Review Engagements (ISREs) and International Standards on
Assurance Engagements (ISAEs) apply.)
In Part 4B, the term ‘assurance engagement’ addresses assurance
engagements other than audit engagements or review engagements.
Assurance team (a) All members of the engagement team for the assurance engagement;
(b) All others within, or engaged by, the firm who can directly influence
the outcome of the assurance engagement, including:
(i) Those who recommend the compensation of, or who provide
direct supervisory, management or other oversight of the assur-
ance engagement partner in connection with the performance
of the assurance engagement;
(ii) Those who provide consultation regarding technical or industry
specific issues, transactions or events for the assurance engage-
ment; and
(iii) Those who perform an engagement quality review, or a review
consistent with the objective of an engagement quality review,
for the engagement.
Attestation An assurance engagement in which a party other than the registered
engagement auditor in public practice measures or evaluates the underlying subject
matter against the criteria.
A party other than the registered auditor also often presents the resulting
subject matter information in a report or statement. In some cases, how-
ever, the subject matter information may be presented by the registered
auditor in the assurance report. In an attestation engagement, the regis-
tered auditor’s conclusion addresses whether the subject matter infor-
mation is free from material misstatement.
The registered auditor’s conclusion may be phrased in terms of:
(i) The underlying subject matter and the applicable criteria;
(ii) The subject matter information and the applicable criteria; or
(iii) A statement made by the appropriate party.
Audit In Part 4A, the term “audit” applies equally to “review”.
Audit client An entity in respect of which a firm conducts an audit engagement. When
the client is a publicly traded entity in accordance with paragraphs
R400.22 and R400.23, audit client will always include its related entities.
When the audit client is not a publicly traded entity, audit client includes
those related entities over which the client has direct or indirect control.
(See also paragraph R400.27.)
ET – 14 SAICA Student Handbook 2024/2025

In Part 4A, the term “audit client” applies equally to “review client.”
In the case of a group audit, see the definition of group audit client.
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 applic-
able 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.
In Part 4A, the term “audit engagement” applies equally to “review
engagement.”
Audit report In Part 4A, the term “audit report” applies equally to “review report”.
Audit team (a) All members of the engagement team for the audit engagement;
(b) All others within, or engaged by, the firm who can directly influence
the outcome of the audit engagement, including:
(i) Those who recommend the compensation of, or who provide
direct supervisory, management or other oversight of the
engagement partner in connection with the performance of the
audit engagement, including those at all successively senior
levels above the engagement partner through to the individual
who is the firm’s Senior or Managing Partner (Chief Executive
or equivalent);
(ii) Those who provide consultation regarding technical or industry-
specific issues, transactions or events for the engagement; and
(iii) Those who perform an engagement quality review, or a review
consistent with the objective of an engagement quality review,
for the engagement; and
(c) Any other individuals within a network firm who can directly influ-
ence the outcome of the audit engagement.
In Part 4A, the term “audit team” applies equally to “review team”. In
the case of a group audit, see the definition of group audit team.
Chartered Accountant Means a chartered accountant registered as such with the Institute and
therefore entitled to use the designation “Chartered Accountant”,
“Geoktrooieerde Rekenmeester”, Chartered Accountant (South Africa)”,
“Geoktrooieerde Rekenmeester (Suid-Afrika)”, “Chartered Accountant
(SA)” OR “Geoktrooieerde Rekenmeester (SA)”, or the initials “CA”,
“GR”, “CA(SA)” or “GR(SA)”.
Client account A bank account which is used solely for the banking of clients’ monies.
Client monies Any monies, including documents of title to money such as bills of
exchange and promissory notes, as well as documents of title that can be
converted into money such as bearer bonds, received by a registered
auditor to be held or paid out on the instruction of the person from whom
or on whose behalf they are received.
Close family A parent, child or sibling who is not an immediate family member.
Component An entity, business unit, function or business activity, or some combin-
ation thereof, determined by the group auditor for purposes of planning
and performing audit procedures in a group audit.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 15

Component audit A component in respect of which a group auditor firm or component

client auditor firm performs audit work for purposes of a group audit. When a
component is:
(a) A legal entity, the component audit client is the entity and any
related entities over which the entity has direct or indirect control;
or
(b) A business unit, function or business activity (or some combination
thereof), the component audit client is the legal entity or entities to
which the business unit belongs or in which the function or business
activity is being performed.
Component auditor A firm performing audit work related to a component for purposes of a
firm group audit
Conceptual framework This term is described in Section 120.
Confidential Any information, data or other material in whatever form or medium
information (including written, electronic, visual or oral) that is not publicly available.
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.
Cooling-off period This term is described in paragraph R540.5 for the purposes of para-
graphs R540.11 to R540.19.
Criteria In an assurance engagement, the benchmarks used to measure or
evaluate the underlying subject matter. The “applicable criteria” are the
criteria used for the particular engagement.
Direct engagement An assurance engagement in which the registered auditor in public prac-
tice measures or evaluates the underlying subject matter against the
applicable criteria and the registered auditor presents the resulting sub-
ject matter information as part of, or accompanying, the assurance report.
In a direct engagement, the registered auditor’s conclusion addresses the
reported outcome of the measurement or evaluation of the underlying
subject matter against the criteria.
Direct financial A financial interest:
interest (a) Owned directly by and under the control of an individual or entity
(including those managed on a discretionary basis by others); or
(b) Beneficially owned through a collective investment vehicle, estate,
trust or other intermediary over which the individual or entity has
control, or the ability to influence investment decisions.
Director or officer Those charged with the governance of an entity, or acting in an equiva-
lent capacity, regardless of their title, which might vary from jurisdiction
to jurisdiction.
Eligible audit This term is described in paragraph 800.2 for the purposes of Section
engagement 800.
Eligible assurance This term is described in paragraph 990.2 for the purposes of Section
engagement 990.
Engagement partner The partner or other person in the firm who is responsible for the engage-
ment 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.
ET – 16 SAICA Student Handbook 2024/2025

Engagement period The engagement period starts when the audit team begins to perform the
(Audit and Review audit. The engagement period ends when the audit report is issued. When
Engagements) the engagement is of a recurring nature, it ends at the later of the notifi-
cation by either party that the professional relationship has ended or the
issuance of the final audit report.
Engagement period The engagement period starts when the assurance team begins to perform
(Assurance assurance services with respect to the particular engagement. The engage-
Engagements Other ment period ends when the assurance report is issued. When the engage-
than Audit and Review ment is of a recurring nature, it ends at the later of the notification by
Engagements) either party that the professional relationship has ended or the issuance
of the final assurance report.
Engagement quality An objective evaluation of the significant judgements made by the
review engagement team and the conclusions reached thereon, performed by the
engagement quality reviewer and completed on or before the date of the
engagement report.
Engagement quality A partner, other individual in the firm, or an external individual,
reviewer appointed by the firm to perform the engagement quality review.
Engagement team All partners and staff performing the engagement, and any other individ-
uals who perform procedures on the engagement, excluding external
experts and internal auditors who provide direct assistance on the
engagement.
In Part 4A, the term “engagement team” refers to individuals perform-
ing audit or review procedures on the audit or review engagement,
respectively. This term is further described in paragraph 400.9.
ISA 220 (Revised) provides further guidance on the definition of engage-
ment team in the context of an audit of financial statements.
ISA 620 defines an auditor’s expert as an individual or organisation
possessing expertise in a field other than accounting or auditing, whose
work in that field is used by the auditor to assist the auditor in obtaining
sufficient appropriate audit evidence. ISA 620 deals with the auditor’s
responsibilities relating to the work of such experts.
ISA 610 (Revised 2013) deals with the auditor’s responsibilities if using
the work of internal auditors, including using internal auditors to
provide direct assistance on the audit engagement.
In Part 4B, the term “engagement team” refers to individuals perform-
ing assurance procedures on the assurance engagement.
Existing accountant A professional accountant in public practice currently holding an audit
appointment or carrying out accounting, tax, consulting or similar pro-
fessional 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 account-
ing or auditing, whose work in that field is used to assist the professional
accountant in obtaining sufficient appropriate evidence.
Financial interest An interest in an 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.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 17

Financial statements 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 state-
ment, for example, a balance sheet, or a statement of revenues and
expenses, and related explanatory notes.
The term does not refer to specific elements, accounts or items of a finan-
cial statement.
Financial statements In the case of a single entity, the financial statements of that entity. In
on which the firm will the case of consolidated financial statements, also referred to as group
express an opinion financial statements, the consolidated financial statements.
Firm (a) A partnership, company or sole proprietor referred to in section 383
of the Act;
(b) An entity that controls such parties in (a), through ownership,
management or other means; and
(c) An entity controlled by such parties in (a), through ownership,
management or other means.
Paragraphs 400.4 and 900.3 explain how the word “firm” is used to
address the responsibility of professional accountants and firms for com-
pliance with Parts 4A and 4B, respectively.
Fundamental principles This term is described in paragraph 110.1 A1. Each of the fundamental
principles is, in turn, described in the following paragraphs:
Integrity R111.1
Objectivity R112.1
Professional competence and due care R113.1
Confidentiality 114.1 to R114.3
Professional behaviour R115.1
Group A reporting entity for which group financial statements are prepared.
Group audit The audit of group financial statements.
Group audit client The entity on whose group financial statements the group auditor firm
conducts an audit engagement. When the entity is a listed entity, group
audit client will always include its related entities and any other com-
ponents at which audit work is performed. When the entity is not a listed
entity, group audit client includes related entities over which such entity
has direct or indirect control and any other components at which audit
work is performed.
See also paragraph R400.22.
Group auditor firm The firm that expresses the opinion on the group financial statements.
Group audit team (a) All members of the engagement team for the group audit, including
individuals within, or engaged by, component auditor firms who
perform audit procedures related to components for purposes of the
group audit;

________________________

3 Section 1 v “firm”.
ET – 18 SAICA Student Handbook 2024/2025

(b) All others within, or engaged by, the group auditor firm who can
directly influence the outcome of the group audit, including:
(i) Those who recommend the compensation of, or who provide
direct supervisory, management or other oversight of the group
engagement partner in connection with the performance of the
group audit, including those at all successively senior levels
above the group engagement partner through to the individual
who is the firm’s Senior or Managing Partner (Chief Executive
or equivalent);
(ii) Those who provide consultation regarding technical or industry-
specific issues, transactions or events for the group audit; and
(iii) Those who perform an engagement quality review, or a review
consistent with the objective of an engagement quality review,
for the group audit;
(c) Any other individuals within a network firm of the group auditor
firm’s network who can directly influence the outcome of the group
audit; and
(d) Any other individuals within a component auditor firm outside the
group auditor firm’s network who can directly influence the out-
come of the group audit.
Group engagement The engagement partner who is responsible for the group audit.
partner
Group financial Financial statements that include the financial information of more than
statements one entity or business unit through a consolidation process.
Historical financial Information expressed in financial terms in relation to a particular entity,
information 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.
IESBA Code IESBA International Code of Ethics for Professional Accountants
(including International Independence Standards).
Immediate family A spouse (or equivalent) or dependent.
Independence Independence comprises:
(a) Independence of mind – the state of mind that permits the expression
of a conclusion without being affected by influences that comprom-
ise professional judgement, thereby allowing an individual to act
with integrity, and exercise objectivity and professional scepticism.
(b) Independence in appearance – the avoidance of facts and circum-
stances that are so significant that a reasonable and informed third
party would be likely to conclude that a firm’s, or an audit or assur-
ance team member’s, integrity, objectivity or professional scepti-
cism has been compromised.
As set out in paragraphs 400.5 and 900.4, references to an individual or
firm being “independent” mean that the individual or firm has complied
with Parts 4A and 4B, as applicable
Indirect financial A financial interest beneficially owned through a collective investment
interest vehicle, estate, trust or other intermediary over which the individual or
entity has no control or ability to influence investment decisions.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 19

Inducement An object, situation, or action that is used as a means to influence another

individual’s behaviour, but not necessarily with the intent to improperly
influence that individual’s behaviour.
Inducements can range from minor acts of hospitality between business
colleagues (for professional accountants in business), or between pro-
fessional accountants and existing or prospective clients, to acts that
result in non-compliance with laws and regulations. An inducement can
take many different forms, for example:
• Gifts.
• Hospitality.
• Entertainment.
• Political or charitable donations.
• Appeals to friendship and loyalty.
• Employment or other commercial opportunities.
• Preferential treatment, rights or privileges.
Institute The South African Institute of Chartered Accountants (SAICA)
Key audit partner The engagement partner, the individual responsible for the engagement
quality review, and other audit partners, if any, on the engagement team
who make key decisions or judgements 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” might include, for
example, engagement partners for certain components in a group audit
such as significant subsidiaries or divisions.
May This term is used in the Code to denote permission to take a particular
action in certain circumstances, including as an exception to a require-
ment. It is not used to denote possibility.
Might This term is used in the Code to denote the possibility of a matter arising,
an event occurring or a course of action being taken. The term does not
ascribe any particular level of possibility or likelihood when used in
conjunction with a threat, as the evaluation of the level of a threat
depends on the facts and circumstances of any particular matter, event
or course of action.
Network A larger structure:
(a) That is aimed at co-operation; and
(b) That is clearly aimed at profit or cost sharing or shares common
ownership, control or management, common quality management
policies and procedures, common business strategy, the use of a
common brand-name, or a significant part of professional resources.
Network firm A firm or entity that belongs to a network.
For further information, see paragraphs 400.50 A1 to 400.54 A1.
Non-compliance with Non-compliance with laws and regulations (“non-compliance”) com-
laws and regulations prises acts of omission or commission, intentional or unintentional,
(Professional which are contrary to the prevailing laws or regulations committed by
accountants in the following parties:
Business) (a) The professional accountant’s employing organisation;
(b) Those charged with governance of the employing organisation;
ET – 20 SAICA Student Handbook 2024/2025

(c) Management of the employing organisation; or

(d) Other individuals working for or under the direction of the employing
organisation.
This term is described in paragraph 260.5 A1.
Non-compliance with Non-compliance with laws and regulations (“non-compliance”) com-
laws and regulations prises acts of omission or commission, intentional or unintentional,
(Professional which are contrary to the prevailing laws or regulations committed by
accountants in Public the following parties:
Practice) (a) A client;
(b) Those charged with governance of a client;
(c) Management of a client; or
(d) Other individuals working for or under the direction of a client.
This term is described in paragraph 360.5 A1.
Office A distinct sub-group, whether organised on geographical or practice
lines.
Ordinary electronic An electronic signature, as defined in the Electronic Communications
signatures and Transactions Act, 2002 (No. 25 of 2002), is “data attached to,
incorporated in, or logically associated with other data and which is
intended by the user to serve as a signature”.
Predecessor accountant A professional accountant in public practice who most recently held an
audit appointment or carried out accounting, tax, consulting or similar
professional services for a client, where there is no existing accountant.
Professional accountant A generic term in this Code to refer to a chartered accountant [see
Chartered Accountant] or an associate [see Associate] as required by
the context of its use in a requirement or application material of this
Code, and taking into account that this Code is applicable to all
chartered accountants and associates in terms of the SAICA By-laws.
In Part 1, the term “professional accountant” refers to individual pro-
fessional accountants in business and to professional accountants in
public practice and their firms.
In Part 2, the term “professional accountant” refers to professional
accountants in business.
In Parts 3, 4A and 4B, the term “professional accountant” refers to
professional accountants in public practice and their firms.
Professional accountant A professional accountant working in areas such as commerce, industry,
in business service, the public sector, education, the not-for-profit sector, or in
regulatory or professional bodies, who might be an employee, contractor,
partner, director (executive or non-executive), owner-manager or
volunteer.
Professional accountant A professional accountant, irrespective of functional classification (for
in public practice example, audit, tax or consulting) in a firm that provides professional
services.
The term “professional accountant in public practice” is also used to
refer to a firm of professional accountants in public practice.
Professional activity An activity requiring accountancy or related skills undertaken by a
professional accountant, including:
• auditing, review, other assurance and related services;
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 21

• accounting;
• tax;
• management consulting; and
• financial management.
Professional judgement Professional judgement involves the application of relevant training,
professional knowledge, skill and experience commensurate with the
facts and circumstances, taking into account the nature and scope of the
particular professional activities, and the interests and relationships
involved.
This term is described in paragraph 120.5 A4.
Professional services Professional activities performed for clients. These include but are not
limited to the following:
(a) Audit, review, other assurance and related services:
(i) Financial statement audits and reviews, other assurance and
related services such as regulatory reporting, sustainability,
compliance and performance reporting; and
(ii) Preparation of financial statements in accordance with recog-
nised financial reporting standards and applicable statutes;
(b) Accounting services:
(i) Preparation of accounting records;
(c) Company statutory services;
(d) Taxation services:
(i) Tax return preparation and submission;
(ii) Tax calculations for the purpose of preparing accounting
entries;
(iii) Tax planning and other tax advisory services; and
(iv) Assistance in the resolution of tax disputes;
(e) Management consulting and advisory services:
(i) Accounting advisory and financial management advisory ser-
vices; accounting support, conversion services for new and
revised accounting standards, financial modelling and project
management;
(ii) Business performance services; business effectiveness, people
and change management, operational and business finance;
(iii) Internal audit; risk and compliance services, review and moni-
toring of internal controls, risk management, compliance
services, corporate governance and audit committee advisory
services;
(iv) Corporate finance service; mergers and acquisitions, valu-
ations, infrastructure financing, debt and capital markets, due
diligence reviews, transaction services and designated advisor
services;
(v) Corporate recovery services; liquidation and insolvency
administration, curator bonis, administration of deceased
estates, judicial management and trusteeships;
ET – 22 SAICA Student Handbook 2024/2025

(vi) Financial risk management services; actuarial services, bank-

ing and risk advisory, regulatory and compliance services, and
technical accounting;
(vii) Information technology (IT) advisory; security, privacy and
continuity, enterprise resource planning; information system
audit services, IT project advisory, governance and perform-
ance; and
(viii) Forensic services; dispute advisory and resolution, ethics and
integrity monitoring, fraud risk management, intellectual prop-
erty and other investigations and regulatory compliance.
Proposed accountant A professional accountant in public practice who is considering accept-
ing an audit appointment or an engagement to perform accounting, tax,
consulting or similar professional services for a prospective client (or in
some cases, an existing client).
Public interest entity For the purposes of Part 4A, an entity is a public interest entity when it
falls within any of the following categories:
(a) A publicly traded entity;
(b) An entity one of whose main functions is to take deposits from the
public;
(c) An entity one of whose main functions is to provide insurance to the
public; or
(d) An entity specified as such by law, regulation or professional stand-
ards to meet the purpose described in paragraph 400.15.
Paragraph R400.23 SA more explicitly defines the categories of public
interest entities in (b) and (c) above, and specifies those additional
entities that are deemed to be public entities to meet the interest purpose
described in paragraph 400.15, as contemplated in paragraph (d) above.
Publicly traded entity An entity that issues financial instruments that are transferrable and
traded through a publicly accessible market mechanism, including
through listing on a stock exchange.
A listed entity as defined by relevant securities law or regulation is an
example of a publicly traded entity.
Reasonable and The reasonable and informed third party test is a consideration by the
informed third party professional accountant about whether the same conclusions would
Reasonable and likely be reached by another party. Such consideration is made from the
informed third party test perspective of a reasonable and informed third party, who weighs all the
relevant facts and circumstances that the accountant knows, or could
reasonably be expected to know, at the time that the conclusions are
made. The reasonable and informed third party does not need to be a
professional accountant, but would possess the relevant knowledge and
experience to understand and evaluate the appropriateness of the
accountant’s conclusions in an impartial manner.
These terms are described in paragraph R120.5 A9.
Registered auditor An individual or firm registered as an auditor with the Regulatory
Board4.

________________________

4 Section 1 v. “registered auditor”.

Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 23

This term, when used in the Code, includes a registered candidate

auditor in so far as it is applicable, as required by the context of its use
in a requirement or application material of this Code, and considering
this Code, as applicable.
Registered Candidate Means an individual who has obtained a registered auditor designation
Auditor from an accredited professional body, who is registered as a candidate
auditor with the Regulatory Board and who is serving under the super-
vision of a registered auditor5.
Regulatory Board The Independent Regulatory Board for Auditors established by Section
3 of the Act6.
Related entity An entity that has any of the following relationships with the client:
(a) An entity that has direct or indirect control over the client if the client
is material to such entity;
(b) An entity with a direct financial interest in the client if that entity has
significant influence over the client and the interest in the client is
material to such entity;
(c) An entity over which the client has direct or indirect control;
(d) An entity in which the client, or an entity related to the client under
(c) above, has a direct financial interest that gives it significant
influence over such entity and the interest is material to the client
and its related entity in (c); and
(e) An entity which is under common control with the client (a “sister
entity”) if the sister entity and the client are both material to the
entity that controls both the client and sister entity.
Responsible party In an assurance engagement, the party responsible for the underlying
subject matter.
Review client An entity in respect of which a firm conducts a review engagement.
Review engagement 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 professional account-
ant’s attention that causes the professional accountant to believe that the
financial statements are not prepared, in all material respects, in accord-
ance with an applicable financial reporting framework.
Review team (a) All members of the engagement team for the review engagement;
and
(b) All others within, or engaged by the firm who can directly influence
the outcome of the review engagement, including:
(i) Those who recommend the compensation of, or who provide
direct supervisory, management or other oversight of the
engagement partner in connection with the performance of the
review engagement, including those at all successively senior
levels above the engagement partner through to the individual
who is the firm’s Senior or Managing Partner (Chief Executive
or equivalent);
________________________

5 Section 1 v “registered candidate auditor”.

6 Section 1 v “Regulatory Board”.
ET – 24 SAICA Student Handbook 2024/2025

(ii) Those who provide consultation regarding technical or in-

dustry specific issues, transactions or events for the engage-
ment; and
(iii) Those who perform an engagement quality review, or a
review consistent with the objective of an engagement quality
review for the engagement; and
(c) Any other individuals within a network firm who can directly
influence the outcome of the review engagement.
Safeguards Safeguards are actions, individually or in combination, that the profes-
sional accountant takes that effectively reduce threats to compliance
with the fundamental principles to an acceptable level.
This term is described in paragraph 120.10 A2.
Senior professional Senior professional accountants in business are directors, officers or
accountant in business senior employees able to exert significant influence over, and make
decisions regarding, the acquisition, deployment and control of the
employing organisation’s human, financial, technological, physical and
intangible resources.
This term is described in paragraph 260.11 A1.
Special purpose Financial statements prepared in accordance with a financial reporting
financial statements framework designed to meet the financial information needs of
specified users.
Subject matter The outcome of the measurement or evaluation of the underlying
information subject matter against the criteria, i.e., the information that results from
applying the criteria to the underlying subject matter.
Substantial harm This term is described in paragraphs 260.5 A3 and 360.5 A3.
Those charged with The person(s) or organisation(s) (for example, a corporate trustee) with
governance responsibility for overseeing the strategic direction of the entity and obli-
gations related to the accountability of the entity. This includes oversee-
ing the financial reporting process. For some entities in some juris-
dictions, those charged with governance might include management
personnel, for example, executive members of a governance board of a
private or public sector entity, or an owner-manager.
Threats This term is described in paragraph 120.6 A3 and includes the following
categories:
Self interest 120.6 A3(a)
Self-review 120.6 A3(b)
Advocacy 120.6 A3(c)
Familiarity 120.6 A3(d)
Intimidation 120.6 A3(e)
Time-on period This term is described in paragraph R540.5.
Underlying subject The phenomenon that is measured or evaluated by applying criteria.
matter
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 25

LISTS OF ABBREVIATIONS AND STANDARDS

REFERRED TO IN THE CODE
LIST OF ABBREVIATIONS
Abbreviation Explanation
Assurance Framework International Framework for Assurance Engagements
CoCo Chartered Professional Accountants of Canada Criteria of Control
COSO Committee of Sponsoring Organisations of the Treadway Commission
IAASB International Auditing and Assurance Standards Board
IESBA International Ethics Standards Board for Accountants
IFAC International Federation of Accountants
ISAs International Standards on Auditing
ISAEs International Standards on Assurance Engagements
ISQMs International Standards on Quality Management
ISREs International Standards on Review Engagements

LIST OF STANDARDS REFERRED TO IN THE CODE

Standard Full Title
IESBA Code IESBA International Code of Ethics for Professional accountants (including Inter-
national Independence Standards)
ISA 220 (Revised) Quality Management for an Audit of Financial Statements
ISA 320 Materiality in Planning and Performing an Audit
ISA 600 (Revised) Special Considerations – Audits of Group Financial Statements (Including the
Work of Component Auditors)
ISA 610 (Revised 2013) Using the Work of Internal Auditors
ISA 620 Using the Work of an Auditor’s Expert
ISAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial
Information
ISQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial State-
ments, or Other Assurance or Related Services Engagements
ISQM 2 Engagement Quality Reviews
ISRE 2400 (Revised) Engagements to Review Historical Financial Statements
ET – 26 SAICA Student Handbook 2024/2025

Page
PART 1 – COMPLYING WITH THE CODE, FUNDAMENTAL PRINCIPLES AND
CONCEPTUAL FRAMEWORK
Section 100 Complying with the Code ............................................................................... 26
Section 110 The Fundamental Principles ........................................................................... 28
Subsection 111 – Integrity ............................................................................................... 29
Subsection 112 – Objectivity ........................................................................................... 29
Subsection 113 – Professional Competence and Due Care ............................................. 29
Subsection 114 – Confidentiality .................................................................................... 30
Subsection 115 – Professional Behaviour ....................................................................... 32
Section 120 The Conceptual Framework ........................................................................... 35

PART 1 – COMPLYING WITH THE CODE, FUNDAMENTAL

PRINCIPLES AND CONCEPTUAL FRAMEWORK
SECTION 100
COMPLYING WITH THE CODE
General
100.1 A distinguishing mark of the accountancy profession is its acceptance of the respon-
sibility to act in the public interest.
100.2 Confidence in the profession is a reason why businesses, governments and other
organisations involve professional accountants in a broad range of areas, including
assurance and other professional activities. Professional accountants understand and
acknowledge that such confidence is based on the skills and values that professional
accountants bring to the professional activities they undertake, including:
(a) Adherence to ethical principles and professional standards;
(b) Use of business acumen;
(c) Application of expertise on technical and other matters; and
(d) Exercise of professional judgement.
The application of these skills and values enables professional accountants to pro-
vide advice or other output that meets the purpose for which it was provided, and
which can be relied upon by the intended users of such output.
100.3 The Code sets out high-quality standards of ethical behaviour expected of pro-
fessional accountants.
100.4 The Code establishes five fundamental principles to be complied with by all pro-
fessional accountants. It also includes a conceptual framework that sets out the
approach to be taken to identify, evaluate and address threats to compliance with
those fundamental principles and, for audits and other assurance engagements,
threats to independence. The Code also applies the fundamental principles and the
conceptual framework to a range of facts and circumstances that professional
accountants might encounter, whether in business or in public practice.

Requirements and Application Material

100.5 A1 The requirements in the Code, designated with the letter “R,” impose obligations.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 27

100.5 A2 Application material, designated with the letter “A,” provides context, explanations,
suggestions for actions or matters to consider, illustrations and other guidance rele-
vant to a proper understanding of the Code. In particular, the application material is
intended to help a professional accountant to understand how to apply the concep-
tual framework to a particular set of circumstances and to understand and comply
with a specific requirement. While such application material does not of itself
impose a requirement, consideration of the material is necessary to the proper appli-
cation of the requirements of the Code, including application of the conceptual
framework.
R100.6 A professional accountant shall comply with the Code.
100.6 A1 Upholding the fundamental principles and compliance with the specific require-
ments of the Code enable professional accountants to meet their responsibility to
act in the public interest.
100.6 A2 Complying with the Code includes giving appropriate regard to the aim and intent
of the specific requirements.
100.6 A3 Compliance with the requirements of the Code does not mean that professional
accountants will have always met their responsibility to act in the public interest.
There might be unusual or exceptional circumstances in which a professional
accountant believes that complying with a requirement or requirements of the Code
might not be in the public interest or would lead to a disproportionate outcome. In
those circumstances, the professional accountant is encouraged to consult with an
appropriate body such as a professional or regulatory body.
100.6 A4 In acting in the public interest, a professional accountant considers not only the
preferences or requirements of an individual client or employing organisation, but
also the interests of other stakeholders when performing professional activities.
R100.7 If there are circumstances where laws or regulations preclude a professional
accountant from complying with certain parts of the Code, those laws and regu-
lations prevail, and the professional accountant shall comply with all other parts of
the Code.
100.7 A1 The principle of professional behaviour requires a professional accountant to com-
ply with relevant laws and regulations. Some jurisdictions might have provisions
that differ from or go beyond those set out in the Code. Professional accountants in
those jurisdictions need to be aware of those differences and comply with the more
stringent provisions unless prohibited by law or regulation.

Breaches of the Code

R100.8 Paragraphs R400.80 to R400.89 and R900.50 to R900.55 address a breach of
Independence Standards. A professional accountant who identifies a breach of any
other provision of the Code shall evaluate the significance of the breach and its
impact on the professional accountant’s ability to comply with the fundamental
principles. The professional accountant shall also:
(a) Take whatever actions might be available, as soon as possible, to address the
consequences of the breach satisfactorily; and
(b) Determine whether to report the breach to the relevant parties.
100.8 A1 Relevant parties to whom such a breach might be reported include those who might
have been affected by it, a professional or regulatory body or an oversight authority.
ET – 28 SAICA Student Handbook 2024/2025

SECTION 110
THE FUNDAMENTAL PRINCIPLES
General
110.1 A1 There are five fundamental principles of ethics for professional accountants:
(a) Integrity – to be straightforward and honest in all professional and business
relationships.
(b) Objectivity – to exercise professional or business judgement without being
compromised by:
(i) Bias;
(ii) Conflict of interest; or
(iii) Undue influence of, or undue reliance on, individuals, organisations,
technology or other factors.
(c) Professional Competence and Due Care – to:
(i) Attain and maintain professional knowledge and skill at the level
required to ensure that a client or employing organisation receives com-
petent professional service, based on current technical and professional
standards and relevant legislation; and
(ii) Act diligently and in accordance with applicable technical and pro-
fessional standards.
(d) Confidentiality – to respect the confidentiality of information acquired as a
result of professional and business relationships.
(e) Professional Behaviour – to:
(i) Comply with relevant laws and regulations;
(ii) Behave in a manner consistent with the profession’s responsibility to
act in the public interest in all professional activities and business
relationships; and
(iii) Avoid any conduct that the professional accountant knows or should
know might discredit the profession.
R110.2 A professional accountant shall comply with each of the fundamental principles.
110.2 A1 The fundamental principles of ethics establish the standard of behaviour expected
of a professional accountant. The conceptual framework establishes the approach
which a professional accountant is required to apply to assist in complying with
those fundamental principles. Subsections 111 to 115 set out requirements and
application material related to each of the fundamental principles.
110.2 A2 A professional accountant might face a situation in which complying with one fun-
damental principle conflicts with complying with one or more other fundamental
principles. In such a situation, the professional accountant might consider consult-
ing, on an anonymous basis if necessary, with:
• Others within the firm or employing organisation.
• Those charged with governance.
• A professional body.
• A regulatory body.
• Legal counsel.
However, such consultation does not relieve the professional accountant from the
responsibility to exercise professional judgement to resolve the conflict or, if
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 29

necessary, and unless prohibited by law or regulation, disassociate from the matter
creating the conflict.
110.2 A3 The professional accountant is encouraged to document the substance of the issue,
the details of any discussions, the decisions made and the rationale for those decisions.

SUBSECTION 111 – INTEGRITY

R111.1 A professional accountant shall comply with the principle of integrity, which requires
an accountant to be straightforward and honest in all professional and business
relationships.
111.1 A1 Integrity involves fair dealing, truthfulness and having the strength of character to
act appropriately, even when facing pressure to do otherwise or when doing so
might create potential adverse personal or organisational consequences.
111.1 A2 Acting appropriately involves:
(a) Standing one’s ground when confronted by dilemmas and difficult situations;
or
(b) Challenging others as and when circumstances warrant, in a manner appropri-
ate to the circumstances.
R111.2 A professional accountant shall not knowingly be associated with reports, returns,
communications or other information where the professional accountant believes
that the information:
(a) Contains a materially false or misleading statement;
(b) Contains statements or information provided recklessly; or
(c) Omits or obscures required information where such omission or obscurity
would be misleading.
111.2 A1 If a professional accountant provides a modified report in respect of such a report,
return, communication or other information, the professional accountant is not in
breach of paragraph R111.2.
R111.3 When a professional accountant becomes aware of having been associated with
information described in paragraph R111.2, the professional accountant shall take
steps to be disassociated from that information.

SUBSECTION 112 – OBJECTIVITY

R112.1 A professional accountant shall comply with the principle of objectivity, which
requires a professional accountant to exercise professional or business judgement
without being compromised by:
(a) Bias;
(b) Conflict of interest; or
(c) Undue influence of, or undue reliance on, individuals, organisations, technol-
ogy or other factors.
R112.2 A professional accountant shall not undertake a professional activity if a circum-
stance or relationship unduly influences the professional accountant’s professional
judgement regarding that activity.

SUBSECTION 113 – PROFESSIONAL COMPETENCE AND DUE CARE

R113.1 A professional accountant shall comply with the principle of professional com-
petence and due care, which requires a professional accountant to:
ET – 30 SAICA Student Handbook 2024/2025

(a) Attain and maintain professional knowledge and skill at the level required to
ensure that a client or employing organisation receives competent professional
service, based on current technical and professional standards and relevant
legislation; and
(b) Act diligently and in accordance with applicable technical and professional
standards.
113.1 A1 Serving clients and employing organisations with professional competence involves
the exercise of sound judgement in applying professional knowledge and skills.
113.1 A2 The knowledge and skills necessary for a professional activity vary depending on the
nature of the activity being undertaken. For example, in addition to the application
of any technical knowledge relevant to the professional activity, interpersonal,
communication and organisational skills facilitate the professional accountant’s
interaction with entities and individuals with whom the accountant interacts.
113.1 A3 Maintaining professional competence requires a professional accountant to have a
continuing awareness and understanding of technical, professional, business and
technology-related developments relevant to the professional activities undertaken
by the professional accountant. Continuing professional development enables an
accountant to develop and maintain the capabilities to perform competently within
the professional environment.
113.1 A4 Diligence encompasses the responsibility to act in accordance with the requirements
of an assignment, carefully, thoroughly and on a timely basis.
R113.2 In complying with the principle of professional competence and due care, a pro-
fessional accountant shall take reasonable steps to ensure that those working in a
professional capacity under the professional accountant’s authority have appropri-
ate training and supervision.
R113.3 Where appropriate, a professional accountant shall make clients, the employing
organisation, or other users of the professional accountant’s professional activities,
aware of the limitations inherent in the activities and explain the implications of
those limitations.
R113.4 SA A professional accountant shall not undertake or continue with any engagement
that the professional accountant is not competent to perform, unless the pro-
fessional accountant obtains advice and assistance which enables the professional
accountant to carry out the engagement satisfactorily.

SUBSECTION 114 – CONFIDENTIALITY

R114.1 A professional accountant shall comply with the principle of confidentiality, which
requires a professional accountant to respect the confidentiality of information
acquired as in the course of professional and business relationships. A professional
accountant shall:
(a) Be alert to the possibility of inadvertent disclosure, including in a social
environment, and particularly to a close business associate or an immediate or
a close family member;
(b) Maintain confidentiality of information within the firm or employing organ-
isation;
(c) Maintain confidentiality of information disclosed by a prospective client or
employing organisation; and
(d) Take reasonable steps to ensure that personnel under the professional account-
ant’s control, and individuals from whom advice and assistance are obtained,
comply with the professional accountant’s duty of confidentiality.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 31

114.1 A1 Maintaining the confidentiality of information acquired in the course of professional

and business relationships involves the professional accountant taking appropriate
action to protect the confidentiality of such information in the course of its col-
lection, use, transfer, storage or retention, dissemination and lawful destruction.
R114.2 Subject to paragraph R114.3, a professional accountant shall not:
(a) Disclose confidential information acquired in the course of professional and
business relationships;
(b) Use confidential information acquired in the course of professional and busi-
ness relationships for the personal advantage of the professional accountant or
for the advantage of a third party;
(c) Use or disclose any confidential information, either acquired or received in
the course of a professional or business relationship, after that relationship has
ended; and
(d) Use or disclose information in respect of which the duty of confidentiality
applies notwithstanding that that information has become publicly available,
whether properly or improperly.
R114.3 As an exception to paragraph R114.2, a professional accountant may disclose or use
confidential information where:
(a) There is a legal or professional duty or right to do so; or
(b) This is authorised by the client or any person with the authority to permit dis-
closure or use of the confidential information and this is not prohibited by law
or regulation.
114.3 A1 Confidentiality serves the public interest because it facilitates the free flow of infor-
mation from the professional accountant’s client or employing organisation to the
professional accountant in the knowledge that the information will not be disclosed
to a third party. Nevertheless, the following are circumstances where professional
accountants might be required or have the duty or right to disclose confidential
information:
(a) Disclosure is required by law or regulation, for example:
(i) Production of documents or other provision of evidence in the course
of legal proceedings; or
(ii) Disclosure to the appropriate public authorities of infringements of the
law that come to light; including disclosures of reportable irregularities
reported to the Regulatory Board as required by section 45 of the Act;
and
(b) There is a professional duty or right to disclose or use, when not prohibited by
law or regulation:
(i) To comply with the quality review of the Regulatory Board or the
Institute;
(ii) To respond to an inquiry or investigation by the Institute, the Regu-
latory Board and any other regulatory body;
(iii) To protect the professional interests of a professional accountant in
legal proceedings; or
(iv) To comply with technical and professional standards, including ethics
requirements.
114.3 A2 In deciding whether to disclose or use confidential information, factors to consider,
depending on the circumstances, include:
ET – 32 SAICA Student Handbook 2024/2025

• Whether the interests of any parties, including third parties whose interests might
be affected, could be harmed if the client or employing organisation authorises
the disclosure or use of information by the professional accountant.
• Whether all the relevant information is known and substantiated, to the extent
practicable. Factors affecting the decision to disclose or use, the information
include:
o Unsubstantiated facts.
o Incomplete information.
o Unsubstantiated conclusions.
• The proposed means of communicating, the information.
• Whether the parties to whom the information is to be provided or access is to be
granted are appropriate recipients.
• Any applicable law or regulation (including those governing privacy) in a juris-
diction where disclosure might take place and, if different, the jurisdiction where
the confidential information originates.
114.3 A3 The circumstances in which a firm or employing organisation seeks authorisation
to use or disclose confidential information, include where the information is to be
used for training purposes, in the development of products or technology, in research
or as source material for industry or other benchmarking data or studies. Such
authorisation might be general in its application (for example, in relation to use of
the information for internal training purposes or quality enhancement initiatives).
When obtaining the authorisation of the individual or entity that provided such
information for use in specific circumstances, relevant considerations to be commu-
nicated (preferably in writing) might include:
• The nature of the information to be used or disclosed.
• The purpose for which the information is to be used or disclosed (for example,
technology development, research or benchmarking data or studies).
• The individual or entity who will undertake the activity for which the infor-
mation is to be used or disclosed.
• Whether the identity of the individual or entity that provided such information
or any individuals or entities to which such information relates will be identifi-
able from the output of the activity for which the information is to be used or
disclosed.
R114.4 A professional accountant shall continue to comply with the principle of confiden-
tiality even after the end of the relationship between the professional accountant and
a client or employing organisation. When changing employment or acquiring a new
client, the professional accountant is entitled to use prior experience but shall not
use or disclose any confidential information acquired or received as in the course of
a professional or business relationship.

SUBSECTION 115 – PROFESSIONAL BEHAVIOUR

R115.1 A professional accountant shall comply with the principle of professional behav-
iour, which requires a professional accountant to:
(a) Comply with relevant laws and regulations;
(b) Behave in a manner consistent with the profession’s responsibility to act in
the public interest in all professional activities and business relationships; and
(c) Avoid any conduct that the professional accountant knows or should know
might discredit the profession.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 33

A professional accountant shall not knowingly engage in any business, occupation

or activity that impairs or might impair the integrity, objectivity or good reputation
of the profession, and as a result would be incompatible with the fundamental
principles.
115.1 A1 Conduct that might discredit the profession includes conduct that a reasonable and
informed third party would be likely to conclude adversely affects the good repu-
tation of the profession.
R115.2 When undertaking marketing or promotional activities, a professional accountant
shall not bring the profession into disrepute. A professional accountant shall be
honest and truthful and shall not make:
(a) Exaggerated claims for the services offered by, or the qualifications or experi-
ence of, the professional accountant; or
(b) Disparaging references or unsubstantiated comparisons to the work of others.
115.2 A1 If a professional accountant is in doubt about whether a form of advertising or
marketing is appropriate, the professional accountant is encouraged to consult with
the Institute.

Multiple Firms and Assisted Holding Out

R115.3 SA A professional accountant may be associated with more than one audit firm or a
professional services firm. Such association shall not be misleading or cause con-
fusion, and the professional accountant shall ensure that there is a clear distinction
between the different firms.
R115.4 SA A professional accountant who is associated with an audit firm, or professional
services firm and has professional accountants who are not registered auditors,
shall ensure:
• that those professional accountants do not intentionally or unintentionally con-
travene Section 41(1) and /or 41(2) of the Act, or
• that any action of the professional accountant or the firm do not intentionally or
unintentionally assist Section 41(1) and / or 41(2) of the Act to be contravened
by those professional accountants who are not registered auditors

Signing Convention for Reports

R115.5 SA A professional accountant shall not delegate to any other registered auditor who is
not a partner or fellow director, the power to sign audit, review or other assurance
reports, to be signed by the professional accountant responsible for the engage-
ment. However, in specific cases where emergencies of sufficient gravity arise, this
prohibition may be relaxed, provided the full circumstances giving rise to the need
for delegation are reported both to the relevant client and to the Regulatory Board
or the Institute, and written consent for such delegation is obtained from the Regu-
latory Board or the Institute.
R115.6 SA The individual professional accountant responsible for the audit, review or other
assurance engagement shall, when signing any audit, review or other assurance
report or certificate, reflect the following:
(a) the individual professional accountant’s full name;
(b) if not a sole proprietor, the capacity in which they are signing;
(c) their designation underneath their name; and
(d) if not set out on the firm’s letterhead, the name of the professional account-
ant’s firm.
ET – 34 SAICA Student Handbook 2024/2025

Use of Electronic Signatures

Introduction
115.7 A1 SA A professional accountant might, when signing any audit, review, or other assur-
ance report, make use of an ordinary or advanced electronic signature as an alter-
native to a traditional wet-ink signature.
115.7 A2 SA The Electronic Communications and Transactions Act, 2002 (No. 25 of 2002) (ECT
Act), allows for the use of an electronic signature. The main object of the ECT Act
is to enable and facilitate electronic communications and transactions in the public
interest.
115.7 A3 SA The ECT Act allows for the use of ordinary and advanced electronic signatures.
115.7.A4 SA An advanced electronic signature is the more secure form of electronic signatures.
An ordinary electronic signature can take many forms and security features in these
signatures range from no security to security provided by software or other prod-
ucts that are close to or similar to those of an advanced electronic signature.
115.7.A5 SA Advanced electronic signatures are a specialised type of electronic signature that
result from a process that has been accredited by the South African Accreditation
Authority (SAAA). The SAAA is responsible for the accreditation of authentication
and certification of products and services used in support of advanced electronic
signatures and monitoring of the activities of authentication and certification
service providers whose products or services have been accredited by the SAAA
within the Republic of South Africa.
Requirements and Application Material
R115.8 SA The individual professional accountant responsible for the audit, review or other
assurance engagement shall, when signing any audit, review, or other assurance
report, make use of either:
(a) A wet-ink signature;
(b) A secure ordinary electronic signature; or
(c) An advanced electronic signature
that is/are the firm’s authorised means of signing any audit, review, or other assur-
ance report.
115.9 A1 SA The inappropriate use of a signature might create threats to compliance with the
fundamental principles of professional competence and due care and professional
behaviour.
115.9 A2 SA A secure ordinary electronic signature means an electronic signature generated by
a technology system or application that contains data security features which pro-
tect the ordinary electronic signature from unauthorised use and access.
Examples of ordinary electronic signatures that are not secure include, but are not
limited to:
• A typed name or initials in electronic format marked as “signed electronically”
• A wet-ink signature that is photographed or scanned and thus transformed into
an electronic format
• The use of a stylus without data security features
Considerations When Choosing an Electronic Signature
115.10 A1 SA Factors that are relevant when the firm decides whether an ordinary or advanced
electronic signature is appropriately secure in the circumstances, include:
• The nature and extent of security provided, for example:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 35

o Whether it meets recognised security standards, such as the information

security management system standard (ISO 27001); and/or
o The type and number of data security features that it incorporates; and/or
o The strength of applicable access controls
• Whether the service provider is reputable
Considerations When Using an Ordinary Electronic Signature
115.11 A1 SA The inappropriate use of a secure ordinary electronic signature might create
threats to compliance with the fundamental principles of professional competence
and due care and professional behaviour when unauthorised access to the secure
ordinary electronic signature is obtained and it is used to sign an audit, review or
other assurance report without the knowledge of the individual professional account-
ant to whom the secure ordinary electronic signature belongs. The level of threats
will be affected by how the firm responds to the factors in 115.10 A1 SA.
115.11 A2 SA Examples of actions that might be safeguards to address such threats include:
• The professional accountant taking precautions to prevent unauthorised use of
the secure ordinary electronic signature;
• Obtaining assistance or training from someone with the necessary expertise on
the use of a secure ordinary electronic signature; and
• Should the unauthorised user of the secure ordinary electronic signature be
holding out to be a professional accountant, reporting the unauthorised use of
the secure ordinary electronic signature to the Regulatory Board or the Institute
and taking the necessary corrective action.

SECTION 120
THE CONCEPTUAL FRAMEWORK
Introduction
120.1 The circumstances in which professional accountants operate might create threats
to compliance with the fundamental principles. Section 120 sets out requirements
and application material, including a conceptual framework, to assist professional
accountants in complying with the fundamental principles and meeting their respon-
sibility to act in the public interest. Such requirements and application material
accommodate the wide range of facts and circumstances, including the various pro-
fessional activities, interests and relationships, that create threats to compliance with
the fundamental principles. In addition, they deter professional accountants from
concluding that a situation is permitted solely because that situation is not specific-
ally prohibited by the Code.
120.2 The conceptual framework specifies an approach for a professional accountant to:
(a) Identify threats to compliance with the fundamental principles;
(b) Evaluate the threats identified; and
(c) Address the threats by eliminating or reducing them to an acceptable level.

Requirements and Application Material

General
R120.3 The professional accountant shall apply the conceptual framework to identify, evalu-
ate and address threats to compliance with the fundamental principles set out in
Section 110.
ET – 36 SAICA Student Handbook 2024/2025

120.3 A1 Additional requirements and application material that are relevant to the application
of the conceptual framework are set out in:
(a) Part 2 – Professional accountants in Business;
(b) Part 3 – Professional accountants in Public Practice; and
(c) Part 4 – Independence Standards, as follows:
(i) Part 4A – Independence for Audit and Review Engagements; and
(ii) Part 4B – Independence for Assurance Engagements Other than Audit
and Review Engagements.
R120.4 When dealing with an ethics issue, the professional accountant shall consider the
context in which the issue has arisen or might arise. Where an individual who is a
professional accountant in public practice is performing professional activities
pursuant to the professional accountant’s relationship with the firm, whether as a
contractor, employee or owner, the individual shall comply with the provisions in
Part 2 that apply to these circumstances.
R120.5 When applying the conceptual framework, the professional accountant shall:
(a) Have an inquiring mind
(b) Exercise professional judgement; and
(c) Use the reasonable and informed third party test described in paragraph 120.5
A9.
Having an inquiring mind
120.5 A1 An inquiring mind is a prerequisite to obtaining an understanding of known facts
and circumstances necessary for the proper application of the conceptual frame-
work. Having an inquiring mind involves:
(a) Considering the source, relevance and sufficiency of information obtained,
taking into account the nature, scope and outputs of the professional activity
being undertaken; and
(b) Being open and alert to a need for further investigation or other action.
120.5 A2 When considering the source, relevance and sufficiency of information obtained,
the professional accountant might consider, among other matters, whether:
• New information has emerged or there have been changes in facts and circum-
stances.
• The information or its source might be influenced by bias or self-interest.
• There is reason to be concerned that potentially relevant information might be
missing from the facts and circumstances known to the professional accountant.
• There is an inconsistency between the known facts and circumstances and the
professional accountant’s expectations.
• The information provides a reasonable basis on which to reach a conclusion.
• There might be other reasonable conclusions that could be reached from the
information obtained.
120.5 A3 Paragraph R120.5 requires all professional accountants to have an inquiring mind
when identifying, evaluating and addressing threats to the fundamental principles.
This prerequisite for applying the conceptual framework applies to all professional
accountants regardless of the professional activity undertaken. Under auditing,
review and other assurance standards, including those issued by the IAASB, pro-
fessional accountants are also required to exercise professional scepticism, which
includes a critical assessment of evidence.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 37

Exercising Professional Judgement

120.5 A4 Professional judgement involves the application of relevant training, professional
knowledge, skill and experience commensurate with the facts and circumstances,
taking into account the nature and scope of the particular professional activities, and
the interests and relationships involved.
120.5 A5 Professional judgement is required when the professional accountant applies the
conceptual framework in order to make informed decisions about the courses of
actions available, and to determine whether such decisions are appropriate in the
circumstances. In making this determination, the professional accountant might
consider matters such as whether:
• The professional accountant’s expertise and experience are sufficient to reach a
conclusion.
• There is a need to consult with others with relevant expertise or experience.
• The professional accountant’s own preconception or bias might be affecting the
professional accountant’s exercise of professional judgement.
120.5 A6 The circumstances in which professional accountants carry out professional activi-
ties and the factors involved vary considerably in their range and complexity. The
professional judgment exercised by accountants might need to take into account the
complexity arising from the compounding effect of the interaction between, and
changes in, elements of the facts and circumstances that are uncertain and variables
and assumptions that are interconnected or interdependent.
120.5 A7 Managing complexity involves:
• Making the firm or employing organisation and, if appropriate, relevant stake-
holders aware of the inherent uncertainties or difficulties arising from the facts
and circumstances. (Ref: Para. R113.3)
• Being alert to any developments or changes in the facts and circumstances and
assessing whether they might impact any judgments the accountant has made.
(Ref: Para. R120.5 to 120.5 A3, and R120.9 to 120.9 A2)
120.5 A8 Managing complexity might also involve:
• Analysing and investigating as relevant, any uncertain elements, the variables
and assumptions and how they are connected or interdependent.
• Using technology to analyse relevant data to inform the professional account-
ant’s judgment.
• Consulting with others, including experts, to ensure appropriate challenge and
additional input as part of the evaluation process.

Reasonable and Informed Third Party

120.5 A9 The reasonable and informed third party test is a consideration by the professional
accountant about whether the same conclusions would likely be reached by another
party. Such consideration is made from the perspective of a reasonable and informed
third party, who weighs all the relevant facts and circumstances that the professional
accountant knows, or could reasonably be expected to know, at the time the con-
clusions are made. The reasonable and informed third party does not need to be a
professional accountant, but would possess the relevant knowledge and experience
to understand and evaluate the appropriateness of the professional accountant’s con-
clusions in an impartial manner.
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Identifying Threats
R120.6 The professional accountant shall identify threats to compliance with the fundamen-
tal principles.
120.6 A1 An understanding of the facts and circumstances, including any professional activ-
ities, interests and relationships that might compromise compliance with the funda-
mental principles, is a prerequisite to the professional accountant’s identification of
threats to such compliance. The existence of certain conditions, policies and pro-
cedures established by the profession, legislation, regulation, the firm, or the employ-
ing organisation that can enhance the professional accountant acting ethically might
also help identify threats to compliance with the fundamental principles. Paragraph
120.8 A2 includes general examples of such conditions, policies and procedures
which are also factors that are relevant in evaluating the level of threats.
120.6 A2 Threats to compliance with the fundamental principles might be created by a broad
range of facts and circumstances. It is not possible to define every situation that
creates threats. In addition, the nature of engagements and work assignments might
differ and, consequently, different types of threats might be created.
120.6 A3 Threats to compliance with the fundamental principles fall into one or more of the
following categories:
(a) Self-interest threat – the threat that a financial or other interest will inappro-
priately influence a professional accountant’s judgement or behaviour;
(b) Self-review threat – the threat that a professional accountant will not appro-
priately evaluate the results of a previous judgement made; or an activity
performed by the professional accountant, or by another individual within the
professional accountant’s firm or employing organisation, on which the pro-
fessional accountant will rely when forming a judgement as part of performing
a current activity;
(c) Advocacy threat – the threat that a professional accountant will promote a
client’s or employing organisation’s position to the point that the professional
accountant’s objectivity is compromised;
(d) Familiarity threat – the threat that due to a long or close relationship with a
client, or employing organisation, a professional accountant will be too sym-
pathetic to their interests or too accepting of their work; and
(e) Intimidation threat – the threat that a professional accountant will be deterred
from acting objectively because of actual or perceived pressures, including
attempts to exercise undue influence over the professional accountant.
120.6 A4 A circumstance might create more than one threat, and a threat might affect com-
pliance with more than one fundamental principle.

Evaluating Threats
R120.7 When the professional accountant identifies a threat to compliance with the funda-
mental principles, the professional accountant shall evaluate whether such a threat
is at an acceptable level.
Acceptable Level
120.7 A1 An acceptable level is a level at which a professional accountant using the reason-
able and informed third party test would likely conclude that the professional
accountant complies with the fundamental principles.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 39

Factors Relevant in Evaluating the Level of Threats

120.8 A1 The consideration of qualitative as well as quantitative factors is relevant in the
professional accountant’s evaluation of threats, as is the combined effect of multiple
threats, if applicable.
120.8 A2 The existence of conditions, policies and procedures described in paragraph 120.6
A1 might also be factors that are relevant in evaluating the level of threats to
compliance with fundamental principles. Examples of such conditions, policies and
procedures include:
• Corporate governance requirements.
• Educational, training and experience requirements for the profession.
• Effective complaint systems which enable the professional accountant and the
general public to draw attention to unethical behaviour.
• An explicitly stated duty to report breaches of ethics requirements.
• Professional or regulatory monitoring and disciplinary procedures.
Consideration of New Information or Changes in Facts and Circumstances
R120.9 If the professional accountant becomes aware of new information or changes in
facts and circumstances that might impact whether a threat has been eliminated or
reduced to an acceptable level, the professional accountant shall re-evaluate and
address that threat accordingly.
120.9 A1 Remaining alert throughout the professional activity assists the professional account-
ant in determining whether new information has emerged or changes in facts and
circumstances have occurred that:
(a) Impact the level of a threat; or
(b) Affect the professional accountant’s conclusions about whether safeguards
applied continue to be appropriate to address identified threats.
(120.9 A2 has been elevated into a South African requirement R120.9a SA)
R120.9a SA If new information results in the identification of a new threat, the professional
accountant shall evaluate and, as appropriate, address this threat. (Ref: Paras. R120.7
and R120.10).

Addressing Threats
R120.10 If the professional accountant determines that the identified threats to compliance
with the fundamental principles are not at an acceptable level, the professional
accountant shall address the threats by eliminating them or reducing them to an
acceptable level. The professional accountant shall do so by:
(a) Eliminating the circumstances, including interests or relationships, that are
creating the threats;
(b) Applying safeguards, where available and capable of being applied, to reduce
the threats to an acceptable level; or
(c) Declining or ending the specific professional activity.

Actions to Eliminate Threats

120.10 A1 Depending on the facts and circumstances, a threat might be addressed by elimin-
ating the circumstance creating the threat. However, there are some situations in
which threats can only be addressed by declining or ending the specific professional
ET – 40 SAICA Student Handbook 2024/2025

activity. This is because the circumstances that created the threats cannot be elimin-
ated and safeguards are not capable of being applied to reduce the threat to an
acceptable level.

Safeguards
120.10 A2 Safeguards are actions, individually or in combination, that the professional
accountant takes that effectively reduce threats to compliance with the fundamental
principles to an acceptable level.
Consideration of Significant Judgements Made and Overall Conclusions Reached
R120.11 The professional accountant shall form an overall conclusion about whether the
actions that the professional accountant takes, or intends to take, to address the
threats created will eliminate those threats or reduce them to an acceptable level. In
forming the overall conclusion, the professional accountant shall:
(a) Review any significant judgements made or conclusions reached; and
(b) Use the reasonable and informed third party test.

Other Considerations when Applying the Conceptual Framework

Bias
120.12 A1 Conscious or unconscious bias affects the exercise of professional judgement when
identifying, evaluating and addressing threats to compliance with the fundamental
principles.
120.12 A2 Examples of potential bias to be aware of when exercising professional judgment
include:
• Anchoring bias, which is a tendency to use an initial piece of information as an
anchor against which subsequent information is inadequately assessed.
• Automation bias, which is a tendency to favour output generated from auto-
mated systems, even when human reasoning or contradictory information raises
questions as to whether such output is reliable or fit for purpose.
• Availability bias, which is a tendency to place more weight on events or experi-
ences that immediately come to mind or are readily available than on those that
are not.
• Confirmation bias, which is a tendency to place more weight on information that
corroborates an existing belief than information that contradicts or casts doubt
on that belief.
• Groupthink, which is a tendency for a group of individuals to discourage in-
dividual creativity and responsibility and as a result reach a decision without
critical reasoning or consideration of alternatives.
• Overconfidence bias, which is a tendency to overestimate one’s own ability to
make accurate assessments of risk or other judgements or decisions.
• Representation bias, which is a tendency to base an understanding on a pattern
of experiences, events or beliefs that is assumed to be representative.
• Selective perception, which is a tendency for a person’s expectations to influ-
ence how the person views a particular matter or person.
120.12 A3 Actions that might mitigate the effect of bias include:
• Seeking advice from experts to obtain additional input.
• Consulting with others to ensure appropriate challenge as part of the evaluation
process.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 41

• Receiving training related to the identification of bias as part of professional

development.

Organisational Culture
120.13 A1 The effective application of the conceptual framework by a professional accountant
is enhanced when the importance of ethical values that align with the fundamental
principles and other provisions set out in the Code is promoted through the internal
culture of the professional accountant’s firm.
120.13 A2 The promotion of an ethical culture within an organisation is most effective when:
(a) Leaders and those in managerial roles promote the importance of, and hold
themselves and others accountable for demonstrating, the ethical values of the
organisation;
(b) Appropriate education and training programs, management processes, and
performance evaluation and reward criteria that promote an ethical culture are
in place;
(c) Effective policies and procedures are in place to encourage and protect those
who report actual or suspected illegal or unethical behaviour, including
whistle-blowers; and
(d) The organisation adheres to ethical values in its dealings with third parties.
120.13 A3 Professional accountants are expected to:
(a) Encourage and promote an ethics-based culture in their organisation, taking
into account their position and seniority; and
(b) Exhibit ethical behaviour in dealings with individuals with whom, and entities
with which, the accountants, the firm or the employing organisation has a
professional or business relationship.

Considerations for Audits, Reviews, Other Assurance and Related Services Engagements
Firm Culture
120.14 A1 ISQM 1 sets out requirements and application material relating to firm culture in
the context of a firm’s responsibilities to design, implement and operate a system
of quality management for audits or reviews of financial statements, or other assur-
ance or related services engagements.
Independence
120.15 A1 Professional accountants in public practice are required by Independence Standards
to be independent when performing audits, reviews, or other assurance engage-
ments. Independence is linked to the fundamental principles of objectivity and
integrity. It comprises:
(a) Independence of mind – the state of mind that permits the expression of a con-
clusion without being affected by influences that compromise professional
judgement, thereby allowing an individual to act with integrity, and exercise
objectivity and professional scepticism.
(b) Independence in appearance – the avoidance of facts and circumstances that
are so significant that a reasonable and informed third party would be likely
to conclude that a firm’s or an audit or assurance team member’s integrity,
objectivity or professional scepticism has been compromised.
120.15 A2 Independence Standards set out requirements and application material on how to
apply the conceptual framework to maintain independence when performing audits,
reviews or other assurance engagements. Professional accountants and firms are
ET – 42 SAICA Student Handbook 2024/2025

required to comply with these standards in order to be independent when conducting

such engagements. The conceptual framework to identify, evaluate and address
threats to compliance with the fundamental principles applies in the same way to
compliance with independence requirements. The categories of threats to com-
pliance with the fundamental principles described in paragraph 120.6 A3 are also
the categories of threats to compliance with independence requirements.
120.15 A3 Conditions, policies and procedures described in paragraphs 120.6 A1 and 120.8 A2
that might assist in identifying and evaluating threats to compliance with the fun-
damental principles might also be factors relevant to identifying and evaluating
threats to independence. In the context of audits, reviews and other assurance
engagements, a system of quality management designed, implemented and operated
by a firm in accordance with the quality management standards issued by the
IAASB is an example of such conditions, policies and procedures.
Professional Scepticism
120.16 A1 Under auditing, review and other assurance standards, including those issued by the
IAASB, professional accountants in public practice are required to exercise pro-
fessional scepticism when planning and performing audits, reviews and other assur-
ance engagements. Professional scepticism and the fundamental principles that are
described in Section 110 are inter-related concepts.
120.16 A2 In an audit of financial statements, compliance with the fundamental principles,
individually and collectively, supports the exercise of professional scepticism, as
shown in the following examples:
• Integrity requires the professional accountant to be straightforward and honest.
For example, the professional accountant complies with the principle of integrity
by:
(a) Being straightforward and honest when raising concerns about a position
taken by a client; and
(b) Pursuing inquiries about inconsistent information and seeking further audit
evidence to address concerns about statements that might be materially
false or misleading in order to make informed decisions about the appro-
priate course of action in the circumstances.
(c) Having the strength of character to act appropriately, even when facing
pressure to do otherwise or when doing so might create potential adverse
personal or organisational consequences. Acting appropriately involves:
(a) Standing one’s ground when confronted by dilemmas and difficult
situations; or
(b) Challenging others as and when circumstances warrant, in a manner
appropriate to the circumstances.
In doing so, the professional accountant demonstrates the critical assessment of
audit evidence that contributes to the exercise of professional scepticism.
• Objectivity requires the professional accountant to exercise professional or busi-
ness judgement without being compromised by:
(a) Bias;
(b) Conflict of interest; or
(c) Undue influence of, or undue reliance on, individuals, organisations, tech-
nology or other factors.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 43

For example, the professional accountant complies with the principle of object-
ivity by:
(a) Recognising circumstances or relationships such as familiarity with the
client, that might compromise the professional accountant’s professional
or business judgement; and
(b) Considering the impact of such circumstances and relationships on the pro-
fessional accountant’s judgement when evaluating the sufficiency and
appropriateness of audit evidence related to a matter material to the client’s
financial statements.
In doing so, the professional accountant behaves in a manner that contributes to
the exercise of professional scepticism.
• Professional competence and due care requires the professional accountant to
have professional knowledge and skill at the level required to ensure the pro-
vision of competent professional service, and to act diligently in accordance
with applicable standards, laws and regulations. For example, the professional
accountant complies with the principle of professional competence and due care
by:
(a) Applying knowledge that is relevant to a particular client’s industry and
business activities in order to properly identify risks of material misstate-
ment;
(b) Designing and performing appropriate audit procedures; and
(c) Applying relevant knowledge when critically assessing whether audit
evidence is sufficient and appropriate in the circumstances.
In doing so, the professional accountant behaves in a manner that contributes to
the exercise of professional scepticism.

Page
PART 2 – PROFESSIONAL ACCOUNTANTS IN BUSINESS
Section 200 Applying the Conceptual Framework – Professional accountants
in Business ...................................................................................................... 44
Section 210 Conflicts of Interest ........................................................................................ 48
Section 220 Preparation and Presentation of Information .................................................. 50
Section 230 Acting with Sufficient Expertise .................................................................... 54
Section 240 Financial Interests, Compensation and Incentives Linked to
Financial Reporting and Decision Making ..................................................... 55
Section 250 Inducements, Including Gifts And Hospitality ............................................... 56
Section 260 Responding to Non-Compliance with Laws and Regulations ........................ 60
Section 270 Pressure to Breach the Fundamental Principles ............................................. 68
ET – 44 SAICA Student Handbook 2024/2025

PART 2 – PROFESSIONAL ACCOUNTANTS IN BUSINESS

SECTION 200
APPLYING THE CONCEPTUAL FRAMEWORK –
PROFESSIONAL ACCOUNTANTS IN BUSINESS
Introduction
200.1 This Part of the Code sets out requirements and application material for professional
accountants in business when applying the conceptual framework set out in Section
120. It does not describe all of the facts and circumstances, including professional
activities, interests and relationships, that could be encountered by professional
accountants in business, which create or might create threats to compliance with the
fundamental principles. Therefore, the conceptual framework requires professional
accountants in business to be alert for such facts and circumstances.
200.2 Investors, creditors, employing organisations and other sectors of the business com-
munity, as well as governments and the general public, might rely on the work of
professional accountants in business. Professional accountants in business might be
solely or jointly responsible for the preparation and reporting of financial and other
information, on which both their employing organisations and third parties might
rely. They might also be responsible for providing effective financial management
and competent advice on a variety of business-related matters.
200.3 A professional accountant in business might be an employee, contractor, partner,
director (executive or non-executive), owner-manager, or volunteer of an employ-
ing organisation. The legal form of the relationship of the professional accountant
with the employing organisation has no bearing on the ethical responsibilities
placed on the professional accountant.
200.4 In this Part, the term “professional accountant” refers to:
(a) A professional accountant in business; and
(b) An individual who is a professional accountant in public practice when
performing professional activities pursuant to the professional accountant’s
relationship with the professional accountant’s firm, whether as a contractor,
employee or owner. More information on when Part 2 is applicable to pro-
fessional accountants in public practice is set out in paragraphs R120.4,
R300.5 and 300.5 A1.

Requirements and Application Material

General
R200.5 A professional accountant shall comply with the fundamental principles set out in
Section 110 and apply the conceptual framework set out in Section 120 to identify,
evaluate and address threats to compliance with the fundamental principles.
200.5 A1 A professional accountant has a responsibility to further the legitimate objectives of
the professional accountant’s employing organisation. The Code does not seek to
hinder accountants from fulfilling that responsibility, but addresses circumstances
in which compliance with the fundamental principles might be compromised.
200.5 A2 Professional accountants may promote the position of the employing organisation
when furthering the legitimate goals and objectives of their employing organisation,
provided that any statements made are neither false nor misleading. Such actions
usually would not create an advocacy threat.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 45

200.5 A3 The more senior the position of a professional accountant, the greater will be the
ability and opportunity to access information, and to influence policies, decisions
made and actions taken by others involved with the employing organisation. To the
extent that they are able to do so, taking into account their position and seniority in
the organisation, professional accountants are expected to encourage and promote
an ethics-based culture in the organisation and exhibit ethical behaviour in dealings
with individuals with whom, and entities with which, the accountant or the employ-
ing organisation has a professional or business relationship in accordance with para-
graph 120.13 A3. Examples of actions that might be taken include the introduction,
implementation and oversight of:
• Ethics education and training programmes.
• Management processes and performance evaluation and reward criteria that
promote an ethical culture
• Ethics and whistle-blowing policies.
• Policies and procedures designed to prevent non-compliance with laws and
regulations.

Identifying Threats
200.6 A1 Threats to compliance with the fundamental principles might be created by a broad
range of facts and circumstances. The categories of threats are described in para-
graph 120.6 A3. The following are examples of facts and circumstances within each
of those categories that might create threats for a professional accountant when
undertaking a professional activity:
(a) Self-interest Threats
• A professional accountant holding a financial interest in, or receiving a
loan or guarantee from, the employing organisation.
• A professional accountant participating in incentive compensation arrange-
ments offered by the employing organisation.
• A professional accountant having access to corporate assets for personal
use.
• A professional accountant being offered a gift or special treatment from a
supplier of the employing organisation.
(b) Self-review Threats
• A professional accountant determining the appropriate accounting treat-
ment for a business combination after performing the feasibility study
supporting the purchase decision.
(c) Advocacy Threats
• A professional accountant having the opportunity to manipulate infor-
mation in a prospectus in order to obtain favourable financing.
(d) Familiarity Threats
• A professional accountant being responsible for the financial reporting of
the employing organisation when an immediate or close family member
employed by the organisation makes decisions that affect the financial
reporting of the organisation.
• A professional accountant having a long association with individuals influ-
encing business decisions.
ET – 46 SAICA Student Handbook 2024/2025

(e) Intimidation Threats

• A professional accountant or immediate or close family member facing the
threat of dismissal or replacement over a disagreement about:
o The application of an accounting principle.
o The way in which financial information is to be reported.
• An individual attempting to influence the decision-making process of the
professional accountant, for example with regard to the awarding of con-
tracts or the application of an accounting principle.
Identifying Threats Associated with the Use of Technology
200.6 A2 The following are examples of facts and circumstances relating to the use of tech-
nology that might create threats for a professional accountant when undertaking a
professional activity:
• Self-interest Threats
o The data available might not be sufficient for the effective use of the tech-
nology.
o The technology might not be appropriate for the purpose for which it is to be
used.
o The accountant might not have sufficient information and expertise, or access
to an expert with sufficient understanding, to use and explain the technology
and its appropriateness for the purpose intended.
(Ref: Para. 230.2).
• Self-review Threats
o The technology was designed or developed using the knowledge, expertise
or judgment of the accountant or employing organisation.

Evaluating Threats
200.7 A1 The conditions, policies and procedures described in paragraphs 120.6 A1 and
120.8 A2 might impact the evaluation of whether a threat to compliance with the
fundamental principles is at an acceptable level.
200.7 A2 The professional accountant’s evaluation of the level of a threat is also impacted by
the nature and scope of the professional activity.
200.7 A3 The professional accountant’s evaluation of the level of a threat might be impacted
by the work environment within the employing organisation and its operating
environment. For example:
• Leadership that stresses the importance of ethical behaviour and the expectation
that employees will act in an ethical manner.
• Policies and procedures to empower and encourage employees to communicate
ethics issues that concern them to senior levels of management without fear of
retribution.
• Policies and procedures to implement and monitor the quality of employee
performance.
• Systems of corporate oversight or other oversight structures and strong internal
controls.
• Recruitment procedures emphasising the importance of employing high calibre
competent personnel.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 47

• Timely communication of policies and procedures, including any changes to

them, to all employees, and appropriate training and education on such policies
and procedures.
• Ethics and code of conduct policies.
200.7 A4 The professional accountant’s evaluation of the level of a threat associated with the
use of technology might also be impacted by the work environment within the
employing organisation and its operating environment. For example:
• Level of corporate oversight and internal controls over the technology.
• Assessments of the quality and functionality of technology that are undertaken
by a third-party.
• Training that is provided regularly to all relevant employees so they obtain and
maintain the professional competence to sufficiently understand, use and explain
the technology and its appropriateness for the purpose intended.
200.7 A5 Professional accountants might consider obtaining legal advice where they believe
that unethical behaviour or actions by others have occurred, or will continue to occur,
within the employing organisation.

Addressing Threats
200.8 A1 Sections 210 to 270 describe certain threats that might arise during the course of
performing professional activities and include examples of actions that might
address such threats.
200.8 A2 In extreme situations, if the circumstances that created the threats cannot be elimin-
ated and safeguards are not available or capable of being applied to reduce the threat
to an acceptable level, it might be appropriate for a professional accountant to resign
from the employing organisation.

Communicating with Those Charged with Governance

R200.9 When communicating with those charged with governance in accordance with the
Code, a professional accountant shall determine the appropriate individual(s) within
the employing organisation’s governance structure with whom to communicate. If
the professional accountant communicates with a subgroup of those charged with
governance, the professional accountant shall determine whether communication
with all of those charged with governance is also necessary so that they are adequately
informed.
200.9 A1 In determining with whom to communicate, a professional accountant might con-
sider:
(a) The nature and importance of the circumstances; and
(b) The matter to be communicated.
200.9 A2 Examples of a subgroup of those charged with governance include an audit com-
mittee or an individual member of those charged with governance.
R200.10 If a professional accountant communicates with individuals who have management
responsibilities as well as governance responsibilities, the professional accountant
shall be satisfied that communication with those individuals adequately informs all
of those in a governance role with whom the professional accountant would other-
wise communicate.
200.10 A1 In some circumstances, all of those charged with governance are involved in
managing the employing organisation, for example, a small business where a single
owner manages the organisation and no one else has a governance role. In these
ET – 48 SAICA Student Handbook 2024/2025

cases, if matters are communicated with individual(s) with management respon-

sibilities, and those individual(s) also have governance responsibilities, the profes-
sional accountant has satisfied the requirement to communicate with those charged
with governance.

SECTION 210
CONFLICTS OF INTEREST
Introduction
210.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
210.2 A conflict of interest creates threats to compliance with the principle of objectivity
and might create threats to compliance with the other fundamental principles. Such
threats might be created when:
(a) A professional accountant undertakes a professional activity related to a
particular matter for two or more parties whose interests with respect to that
matter are in conflict; or
(b) The interest of a professional accountant with respect to a particular matter
and the interests of a party for whom the professional accountant undertakes
a professional activity related to that matter are in conflict.
A party might include an employing organisation, a vendor, a customer, a lender, a
shareholder, or another party.
210.3 This section sets out specific requirements and application material relevant to
applying the conceptual framework to conflicts of interest.

Requirements and Application Material

General
R210.4 A professional accountant shall not allow a conflict of interest to compromise pro-
fessional or business judgement.
210.4 A1 Examples of circumstances that might create a conflict of interest include:
• Serving in a management or governance position for two employing organ-
isations and acquiring confidential information from one organisation that might
be used by the professional accountant to the advantage or disadvantage of the
other organisation.
• Undertaking a professional activity for each of two parties in a partnership,
where both parties are employing the professional accountant to assist them to
dissolve their partnership.
• Preparing financial information for certain members of management of the pro-
fessional accountant’s employing organisation who are seeking to undertake a
management buy-out.
• Being responsible for selecting a vendor for the employing organisation when
an immediate family member of the professional accountant might benefit finan-
cially from the transaction.
• Serving in a governance capacity in an employing organisation that is approving
certain investments for the company where one of those investments will increase
the value of the investment portfolio of the professional accountant or an imme-
diate family member.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 49

Conflict Identification
R210.5 A professional accountant shall take reasonable steps to identify circumstances that
might create a conflict of interest, and therefore a threat to compliance with one or
more of the fundamental principles. Such steps shall include identifying:
(a) The nature of the relevant interests and relationships between the parties
involved; and
(b) The activity and its implication for relevant parties.
R210.6 A professional accountant shall remain alert to changes over time in the nature of
the activities, interests and relationships that might create a conflict of interest while
performing a professional activity.

Threats Created by Conflicts of Interest

210.7 A1 In general, the more direct the connection between the professional activity and the
matter on which the parties’ interests conflict, the more likely the level of the threat
is not at an acceptable level.
210.7 A2 An example of an action that might eliminate threats created by conflicts of interest
is withdrawing from the decision-making process related to the matter giving rise
to the conflict of interest.
210.7 A3 Examples of actions that might be safeguards to address threats created by conflicts
of interest include:
• Restructuring or segregating certain responsibilities and duties.
• Obtaining appropriate oversight, for example, acting under the supervision of an
executive or non-executive director.

Disclosure and Consent

General
210.8 A1 It is generally necessary to:
(a) Disclose the nature of the conflict of interest and how any threats created were
addressed to the relevant parties, including to the appropriate levels within the
employing organisation affected by a conflict; and
(b) Obtain consent from the relevant parties for the professional accountant to
undertake the professional activity when safeguards are applied to address the
threat.
210.8 A2 Consent might be implied by a party’s conduct in circumstances where the pro-
fessional accountant has sufficient evidence to conclude that the parties know the
circumstances at the outset and have accepted the conflict of interest if they do not
raise an objection to the existence of the conflict.
210.8 A3 If such disclosure or consent is not in writing, the professional accountant is encour-
aged to document:
(a) The nature of the circumstances giving rise to the conflict of interest;
(b) The safeguards applied to address the threats when applicable; and
(c) The consent obtained.

Other Considerations
210.9 A1 When addressing a conflict of interest, the professional accountant is encouraged to
seek guidance from within the employing organisation or from others, such as a pro-
fessional body, legal counsel or another professional accountant. When making such
ET – 50 SAICA Student Handbook 2024/2025

disclosures or sharing information within the employing organisation and seeking

guidance of third parties, the principle of confidentiality applies.

SECTION 220
PREPARATION AND PRESENTATION OF INFORMATION
Introduction
220.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
220.2 Preparing or presenting information might create a self-interest, intimidation or other
threats to compliance with one or more of the fundamental principles. This section
sets out specific requirements and application material relevant to applying the con-
ceptual framework in such circumstances.

Requirements and Application Material

General
220.3 A1 Professional accountants at all levels in an employing organisation are involved in the
preparation or presentation of information both within and outside the organisation.
220.3 A2 Stakeholders to whom, or for whom, such information is prepared or presented,
include:
• Management and those charged with governance.
• Investors and lenders or other creditors.
• Regulatory bodies.
This information might assist stakeholders in understanding and evaluating aspects
of the employing organisation’s state of affairs and in making decisions concerning
the organisation. Information can include financial and non-financial information
that might be made public or used for internal purposes.
Examples include:
• Operating and performance reports.
• Decision support analyses.
• Budgets and forecasts.
• Information provided to the internal and external auditors.
• Risk analyses.
• General and special purpose financial statements.
• Tax returns.
• Reports filed with regulatory bodies for legal and compliance purposes.
220.3 A3 For the purposes of this section, preparing or presenting information includes
recording, maintaining and approving information.
R220.4 When preparing or presenting information, a professional accountant shall:
(a) Prepare or present the information in accordance with a relevant reporting
framework, where applicable;
(b) Prepare or present the information in a manner that is intended neither to mis-
lead nor to influence contractual or regulatory outcomes inappropriately;
(c) Exercise professional judgement to:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 51

(i) Represent the facts accurately and completely in all material respects;
(ii) Describe clearly the true nature of business transactions or activities;
and
(iii) Classify and record information in a timely and proper manner; and
(d) Not omit anything with the intention of rendering the information misleading
or of influencing contractual or regulatory outcomes inappropriately.
(e) Avoid undue influence of, or undue reliance on, individuals, organisations or
technology; and
(f) Be aware of the risk of bias.
220.4 A1 An example of influencing a contractual or regulatory outcome inappropriately is
using an unrealistic estimate with the intention of avoiding violation of a contractual
requirement such as a debt covenant or of a regulatory requirement such as a capital
requirement for a financial institution.

Use of Discretion in Preparing or Presenting Information

R220.5 Preparing or presenting information might require the exercise of discretion in
making professional judgements. The professional accountant shall not exercise
such discretion with the intention of misleading others or influencing contractual or
regulatory outcomes inappropriately.
220.5 A1 Examples of ways in which discretion might be misused to achieve inappropriate
outcomes include:
• Determining estimates, for example, determining fair value estimates in order to
misrepresent profit or loss.
• Selecting or changing an accounting policy or method among two or more
alternatives permitted under the applicable financial reporting framework, for
example, selecting a policy for accounting for long-term contracts in order to
misrepresent profit or loss.
• Determining the timing of transactions, for example, timing the sale of an asset
near the end of the fiscal year in order to mislead.
• Determining the structuring of transactions, for example, structuring financing
transactions in order to misrepresent assets and liabilities or classification of
cash flows.
• Selecting disclosures, for example, omitting or obscuring information relating
to financial or operating risk in order to mislead.
R220.6 When performing professional activities, especially those that do not require com-
pliance with a relevant reporting framework, the professional accountant shall exer-
cise professional judgement to identify and consider:
(a) The purpose for which the information is to be used;
(b) The context within which it is given; and
(c) The audience to whom it is addressed.
220.6 A1 For example, when preparing or presenting pro forma reports, budgets or forecasts,
the inclusion of relevant estimates, approximations and assumptions, where appro-
priate, would enable those who might rely on such information to form their own
judgements.
220.6 A2 The professional accountant might also consider clarifying the intended audience,
context and purpose of the information to be presented.
ET – 52 SAICA Student Handbook 2024/2025

Using the Work of Others

R220.7 A professional accountant who intends to use the work of others, whether internal
or external to the employing organisation, or other organisations shall exercise pro-
fessional judgement to determine the appropriate steps to take, if any, in order to
fulfil the responsibilities set out in paragraph R220.4.
220.7 A1 Factors to consider when a professional accountant intends to use the work of others
include:
• The reputation and expertise of, and resources available to, the other individual
or organisation.
• Whether the other individual is subject to applicable professional and ethics
standards.
Such information might be gained from prior association with, or from consulting
others about, the other individual or organisation.

Using the Output of Technology

R220.8 A professional accountant who intends to use the output of technology, whether that
technology was developed internally or provided by third parties, shall exercise
professional judgment to determine the appropriate steps to take, if any, in order to
fulfil the responsibilities set out in paragraph R220.4.
220.8 A1 Factors to consider when a professional accountant intends to use the output of tech-
nology include:
• The nature of the activity to be performed by the technology.
• The expected use of, or extent of reliance on, the output of the technology.
• Whether the accountant has the ability, or has access to an expert with the abil-
ity, to understand, use and explain the technology and its appropriateness for the
purpose intended.
• Whether the technology used has been appropriately tested and evaluated for the
purpose intended.
• Prior experience with the technology and whether its use for specific purposes
is generally accepted.
• The employing organisation’s oversight of the design, development, implemen-
tation, operation, maintenance, monitoring, updating or upgrading of the tech-
nology.
• The controls relating to the use of the technology, including procedures for
authorising user access to the technology and overseeing such use.
• The appropriateness of the inputs to the technology, including data and any
related decisions, and decisions made by individuals in the course of using the
technology.

Addressing Information that Is or Might be Misleading

R220.9 When the professional accountant knows or has reason to believe that the information
with which the accountant is associated is misleading, the professional accountant
shall take appropriate actions to seek to resolve the matter.
220.9 A1 Actions that might be appropriate include:
• Discussing concerns that the information is misleading with the professional
accountant’s superior and/or the appropriate level(s) of management within the
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 53

professional accountant’s employing organisation or those charged with govern-

ance, and requesting such individuals to take appropriate action to resolve the
matter. Such action might include:
o Having the information corrected.
o If the information has already been disclosed to the intended users, informing
them of the correct information.
• Consulting the policies and procedures of the employing organisation (for
example, an ethics or whistle-blowing policy) regarding how to address such
matters internally.
220.9 A2 The professional accountant might determine that the employing organisation has
not taken appropriate action. If the professional accountant continues to have reason
to believe that the information is misleading, the following further actions might be
appropriate provided that the professional accountant remains alert to the principle
of confidentiality:
• Consulting with:
o A relevant professional body.
o The internal or external auditor of the employing organisation.
o Legal counsel.
• Determining whether any requirements exist to communicate to:
o Third parties, including users of the information.
o Regulatory and oversight authorities.
R220.10 If after exhausting all feasible options, the professional accountant determines that
appropriate action has not been taken and there is reason to believe that the infor-
mation is still misleading, the professional accountant shall refuse to be or to remain
associated with the information.
220.10 A1 In such circumstances, it might be appropriate for a professional accountant to
resign from the employing organisation.

Documentation
220.11 A1 The professional accountant is encouraged to document:
• The facts.
• The accounting principles or other relevant professional standards involved.
• The communications and parties with whom matters were discussed.
• The courses of action considered.
• How the professional accountant attempted to address the matter(s).

Other Considerations
220.12 A1 Where threats to compliance with the fundamental principles relating to the prep-
aration or presentation of information arise from a financial interest, including com-
pensation and incentives linked to financial reporting and decision making, the
requirements and application material set out in Section 240 apply.
220.12 A2 Where the misleading information might involve non-compliance with laws and
regulations, the requirements and application material set out in Section 260 apply.
220.12 A3 Where threats to compliance with the fundamental principles relating to the prep-
aration or presentation of information arise from pressure, the requirements and
application material set out in Section 270 apply.
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220.12 A4 When a professional accountant is considering using the work of others or the out-
put of technology, a consideration is whether the accountant is in a position within
the employing organisation to obtain information in relation to the factors necessary
to determine whether such use is appropriate.

SECTION 230
ACTING WITH SUFFICIENT EXPERTISE
Introduction
230.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
230.2 Acting without sufficient expertise creates a self-interest threat to compliance with
the principle of professional competence and due care. This section sets out specific
requirements and application material relevant to applying the conceptual frame-
work in such circumstances.

Requirements and Application Material

General
R230.3 A professional accountant shall not intentionally mislead an employing organisation
as to the level of expertise or experience possessed.
230.3 A1 The principle of professional competence and due care requires that a professional
accountant only undertake significant tasks for which the professional accountant
has, or can obtain, sufficient training or experience.
230.3 A2 A self-interest threat to compliance with the principle of professional competence
and due care might be created if a professional accountant has:
• Insufficient time for performing or completing the relevant duties.
• Incomplete, restricted or otherwise inadequate information for performing the
duties.
• Insufficient experience, training and/or education.
• Inadequate resources for the performance of the duties.
230.3 A3 Factors that are relevant in evaluating the level of such a threat include:
• The extent to which the professional accountant is working with others.
• The relative seniority of the professional accountant in the business.
• The level of supervision and review applied to the work.
230.3 A4 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Obtaining assistance or training from someone with the necessary expertise.
• Ensuring that there is adequate time available for performing the relevant duties.
R230.4 If a threat to compliance with the principle of professional competence and due care
cannot be addressed, a professional accountant shall determine whether to decline
to perform the duties in question. If the professional accountant determines that
declining is appropriate, the professional accountant shall communicate the reasons.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 55

Other Considerations
230.5 A1 The requirements and application material in Section 270 apply when a professional
accountant is pressured to act in a manner that might lead to a breach of the principle
of professional competence and due care.

SECTION 240
FINANCIAL INTERESTS, COMPENSATION AND INCENTIVES
LINKED TO FINANCIAL REPORTING AND DECISION MAKING
Introduction
240.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
240.2 Having a financial interest, or knowing of a financial interest held by an immediate
or close family member might create a self-interest threat to compliance with the
principles of objectivity or confidentiality. This section sets out specific requirements
and application material relevant to applying the conceptual framework in such
circumstances.

Requirements and Application Material

General
R240.3 A professional accountant shall not manipulate information or use confidential
information for personal gain or for the financial gain of others.
240.3 A1 Professional accountants might have financial interests or might know of financial
interests of immediate or close family members that, in certain circumstances, might
create threats to compliance with the fundamental principles. Financial interests
include those arising from compensation or incentive arrangements linked to finan-
cial reporting and decision making.
240.3 A2 Examples of circumstances that might create a self-interest threat include situations
in which the professional accountant or an immediate or close family member:
• Has a motive and opportunity to manipulate price-sensitive information in order
to gain financially.
• Holds a direct or indirect financial interest in the employing organisation and
the value of that financial interest might be directly affected by decisions made
by the professional accountant.
• Is eligible for a profit-related bonus and the value of that bonus might be directly
affected by decisions made by the professional accountant.
• Holds, directly or indirectly, deferred bonus share rights or share options in the
employing organisation, the value of which might be affected by decisions made
by the professional accountant.
• Participates in compensation arrangements which provide incentives to achieve
targets or to support efforts to maximise the value of the employing organisa-
tion’s shares. An example of such an arrangement might be through participation
in incentive plans which are linked to certain performance conditions being met.
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240.3 A3 Factors that are relevant in evaluating the level of such a threat include:
• The significance of the financial interest. What constitutes a significant financial
interest will depend on personal circumstances and the materiality of the finan-
cial interest to the individual.
• Policies and procedures for a committee independent of management to deter-
mine the level or form of senior management remuneration.
• In accordance with any internal policies, disclosure to those charged with gov-
ernance of:
o All relevant interests.
o Any plans to exercise entitlements or trade in relevant shares.
• Internal and external audit procedures that are specific to address issues that give
rise to the financial interest.
240.3 A4 Threats created by compensation or incentive arrangements might be compounded
by explicit or implicit pressure from superiors or colleagues. See Section 270, Pres-
sure to Breach the Fundamental Principles.

SECTION 250
INDUCEMENTS, INCLUDING GIFTS AND HOSPITALITY
Introduction
250.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
250.2 Offering or accepting inducements might create a self-interest, familiarity or intimi-
dation threat to compliance with the fundamental principles, particularly the prin-
ciples of integrity, objectivity and professional behaviour.
250.3 This section sets out requirements and application material relevant to applying the
conceptual framework in relation to the offering and accepting of inducements when
performing professional services that does not constitute non-compliance with laws
and regulations. This section also requires a professional accountant to comply with
relevant laws and regulations when offering or accepting inducements.

Requirements and Application Material

General
250.4 A1 An inducement is an object, situation, or action that is used as a means to influence
another individual’s behaviour, but not necessarily with the intent to improperly
influence that individual’s behaviour. Inducements can range from minor acts of
hospitality between business colleagues to acts that result in non-compliance with
laws and regulations. An inducement can take many different forms, for example:
• Gifts.
• Hospitality.
• Entertainment.
• Political or charitable donations.
• Appeals to friendship and loyalty.
• Employment or other commercial opportunities.
• Preferential treatment, rights or privileges.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 57

Inducements Prohibited by Laws and Regulations

R250.5 In many jurisdictions, there are laws and regulations, such as those related to bribery
and corruption, that prohibit the offering or accepting of inducements in certain
circumstances. The professional accountant shall obtain an understanding of rele-
vant laws and regulations and comply with them when the professional accountant
encounters such circumstances.

Inducements Not Prohibited by Laws and Regulations

250.6 A1 The offering or accepting of inducements that is not prohibited by laws and regu-
lations might still create threats to compliance with the fundamental principles.
Inducements with Intent to Improperly Influence Behaviour
R250.7 A professional accountant shall not offer, or encourage others to offer, any induce-
ment that is made, or which the professional accountant considers a reasonable and
informed third party would be likely to conclude is made, with the intent to improp-
erly influence the behaviour of the recipient or of another individual.
R250.8 A professional accountant shall not accept, or encourage others to accept, any induce-
ment that the professional accountant concludes is made, or considers a reasonable
and informed third party would be likely to conclude is made, with the intent to
improperly influence the behaviour of the recipient or of another individual.
250.9 A1 An inducement is considered as improperly influencing an individual’s behaviour
if it causes the individual to act in an unethical manner. Such improper influence
can be directed either towards the recipient or towards another individual who has
some relationship with the recipient. The fundamental principles are an appropriate
frame of reference for a professional accountant in considering what constitutes
unethical behaviour on the part of the professional accountant and, if necessary by
analogy, other individuals.
250.9 A2 A breach of the fundamental principle of integrity arises when a professional
accountant offers or accepts, or encourages others to offer or accept, an inducement
where the intent is to improperly influence the behaviour of the recipient or of
another individual.
250.9 A3 The determination of whether there is actual or perceived intent to improperly influ-
ence behaviour requires the exercise of professional judgement. Relevant factors to
consider might include:
• The nature, frequency, value and cumulative effect of the inducement.
• Timing of when the inducement is offered relative to any action or decision that
it might influence.
• Whether the inducement is a customary or cultural practice in the circumstances,
for example, offering a gift on the occasion of a religious holiday or wedding.
• Whether the inducement is an ancillary part of a professional service, for example,
offering or accepting lunch in connection with a business meeting.
• Whether the offer of the inducement is limited to an individual recipient or avail-
able to a broader group. The broader group might be internal or external to the
employing organisation, such as other customers or vendors.
• The roles and positions of the individuals offering or being offered the induce-
ment.
• Whether the professional accountant knows, or has reason to believe, that accept-
ing the inducement would breach the policies and procedures of the counter-
party’s employing organisation.
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• The degree of transparency with which the inducement is offered.

• Whether the inducement was required or requested by the recipient.
• The known previous behaviour or reputation of the offeror.
Consideration of Further Actions
250.10 A1 If the professional accountant becomes aware of an inducement offered with actual
or perceived intent to improperly influence behaviour, threats to compliance with
the fundamental principles might still be created even if the requirements in para-
graphs R250.7 and R250.8 are met.
250.10 A2 Examples of actions that might be safeguards to address such threats include:
• Informing senior management or those charged with governance of the employ-
ing organisation of the professional accountant or the offeror regarding the offer.
• Amending or terminating the business relationship with the offeror.
Inducements with No Intent to Improperly Influence Behaviour
250.11 A1 The requirements and application material set out in the conceptual framework
apply when a professional accountant has concluded there is no actual or perceived
intent to improperly influence the behaviour of the recipient or of another individual.
250.11 A2 If such an inducement is trivial and inconsequential, any threats created will be at
an acceptable level.
250.11 A3 Examples of circumstances where offering or accepting such an inducement might
create threats even if the professional accountant has concluded there is no actual
or perceived intent to improperly influence behaviour include:
• Self-interest threats
o A professional accountant is offered part-time employment by a vendor.
• Familiarity threats
o A professional accountant regularly takes a customer or supplier to sporting
events.
• Intimidation threats
o A professional accountant accepts hospitality, the nature of which could be
perceived to be inappropriate were it to be publicly disclosed.
250.11 A4 Relevant factors in evaluating the level of such threats created by offering or accept-
ing such an inducement include the same factors set out in paragraph 250.9 A3 for
determining intent.
250.11 A5 Examples of actions that might eliminate threats created by offering or accepting
such an inducement include:
• Declining or not offering the inducement.
• Transferring responsibility for any business-related decision involving the
counterparty to another individual who the professional accountant has no
reason to believe would be, or would be perceived to be, improperly influenced
in making the decision.
250.11 A6 Examples of actions that might be safeguards to address such threats created by
offering or accepting such an inducement include:
• Being transparent with senior management or those charged with governance of
the employing organisation of the professional accountant or of the counterparty
about offering or accepting an inducement.
• Registering the inducement in a log maintained by the employing organisation
of the professional accountant or the counterparty.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 59

• Having an appropriate reviewer, who is not otherwise involved in undertaking

the professional activity, review any work performed or decisions made by the
professional accountant with respect to the individual or organisation from
which the professional accountant accepted the inducement.
• Donating the inducement to charity after receipt and appropriately disclosing the
donation, for example, to those charged with governance or the individual who
offered the inducement.
• Reimbursing the cost of the inducement, such as hospitality, received.
• As soon as possible, returning the inducement, such as a gift, after it was initially
accepted.

Immediate or Close Family Members

R250.12 A professional accountant shall remain alert to potential threats to the professional
accountant’s compliance with the fundamental principles created by the offering of
an inducement:
(a) By an immediate or close family member of the professional accountant to a
counterparty with whom the professional accountant has a professional
relationship; or.
(b) To an immediate or close family member of the professional accountant by a
counterparty with whom the professional accountant has a professional
relationship.
R250.13 Where the professional accountant becomes aware of an inducement being offered
to or made by an immediate or close family member and concludes there is intent
to improperly influence the behaviour of the professional accountant or of the
counterparty, or considers a reasonable and informed third party would be likely to
conclude such intent exists, the professional accountant shall advise the immediate
or close family member not to offer or accept the inducement.
250.13 A1 The factors set out in paragraph 250.9 A3 are relevant in determining whether there
is actual or perceived intent to improperly influence the behaviour of the profes-
sional accountant or of the counterparty. Another factor that is relevant is the nature
or closeness of the relationship, between:
(a) The professional accountant and the immediate or close family member;
(b) The immediate or close family member and the counterparty; and
(c) The professional accountant and the counterparty.
For example, the offer of employment, outside of the normal recruitment process,
to the spouse of the professional accountant by a counterparty with whom the pro-
fessional accountant is negotiating a significant contract might indicate such intent.
250.13 A2 The application material in paragraph 250.10 A2 is also relevant in addressing threats
that might be created when there is actual or perceived intent to improperly influ-
ence the behaviour of the professional accountant, or of the counterparty even if the
immediate or close family member has followed the advice given pursuant to para-
graph R250.13.
Application of the Conceptual Framework
250.14 A1 Where the professional accountant becomes aware of an inducement offered in the
circumstances addressed in paragraph R250.12, threats to compliance with the fun-
damental principles might be created where:
(a) The immediate or close family member offers or accepts the inducement con-
trary to the advice of the professional accountant pursuant to paragraph
R250.13; or
ET – 60 SAICA Student Handbook 2024/2025

(b) The professional accountant does not have reason to believe an actual or per-
ceived intent to improperly influence the behaviour of the professional
accountant or of the counterparty exists.
250.14 A2 The application material in paragraphs 250.11 A1 to 250.11 A6 is relevant for the
purposes of identifying, evaluating and addressing such threats. Factors that are
relevant in evaluating the level of threats in these circumstances also include the
nature or closeness of the relationships set out in paragraph 250.13 A1.

Other Considerations
250.15 A1 If a professional accountant is offered an inducement by the employing organisation
relating to financial interest, compensation and incentives linked to performance,
the requirements and application material in Section 240 apply.
250.15 A2 If a professional accountant encounters or is made aware of inducements that might
result in non-compliance or suspected non-compliance with laws and regulations by
other individuals working for or under the direction of the employing organisation,
the requirement and application material set out in Section 260 apply.
250.15 A3 If a professional accountant faces pressure to offer or accept inducements that might
create threats to compliance with the fundamental principles, the requirement and
application material set out in Section 270 apply.

SECTION 260
RESPONDING TO NON-COMPLIANCE WITH LAWS
AND REGULATIONS
Introduction
260.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
260.2 A self-interest or intimidation threat to compliance with the principles of integrity
and professional behaviour is created when a professional accountant becomes
aware of non-compliance or suspected non-compliance with laws and regulations.
260.3 A professional accountant might encounter or be made aware of non-compliance or
suspected non-compliance in the course of carrying out professional activities. This
section guides the professional accountant in assessing the implications of the
matter and the possible courses of action when responding to non-compliance or
suspected non-compliance with:
(a) Laws and regulations generally recognised to have a direct effect on the deter-
mination of material amounts and disclosures in the employing organisation’s
financial statements; and
(b) Other laws and regulations that do not have a direct effect on the determination
of the amounts and disclosures in the employing organisation’s financial state-
ments, but compliance with which might be fundamental to the operating
aspects of the employing organisation’s business, to its ability to continue its
business, or to avoid material penalties.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 61

Objectives of the Professional Accountant in Relation to Non-compliance with Laws and

Regulations
260.4 A distinguishing mark of the accountancy profession is its acceptance of the respon-
sibility to act in the public interest. When responding to non-compliance or sus-
pected non-compliance, the objectives of the professional accountant are:
(a) To comply with the principles of integrity and professional behaviour;
(b) By alerting management or, where appropriate, those charged with govern-
ance of the employing organisation, to seek to:
(i) Enable them to rectify, remediate or mitigate the consequences of the
identified or suspected non-compliance; or
(ii) Deter the non-compliance where it has not yet occurred; and
(c) To take such further action as appropriate in the public interest.

Requirements and Application Material

General
260.5 A1 Non-compliance with laws and regulations (“non-compliance”) comprises acts of
omission or commission, intentional or unintentional, which are contrary to the pre-
vailing laws or regulations committed by the following parties:
(a) The professional accountant’s employing organisation;
(b) Those charged with governance of the employing organisation;
(c) Management of the employing organisation; or
(d) Other individuals working for or under the direction of the employing organ-
isation.
260.5 A2 Examples of laws and regulations which this section addresses include those that
deal with:
• Fraud, corruption and bribery.
• Money laundering, terrorist financing and proceeds of crime.
• Securities markets and trading.
• Banking and other financial products and services.
• Data protection.
• Tax and pension liabilities and payments.
• Environmental protection.
• Public health and safety.
260.5 A3 Non-compliance might result in fines, litigation or other consequences for the
employing organisation, potentially materially affecting its financial statements.
Importantly, such non-compliance might have wider public interest implications in
terms of potentially substantial harm to investors, creditors, employees or the gen-
eral public. For the purposes of this section, non-compliance that causes substantial
harm is one that results in serious adverse consequences to any of these parties in
financial or non-financial terms. Examples include the perpetration of a fraud result-
ing in significant financial losses to investors, and breaches of environmental laws
and regulations endangering the health or safety of employees or the public.
ET – 62 SAICA Student Handbook 2024/2025

R260.6 In some jurisdictions, there are legal or regulatory provisions governing how pro-
fessional accountants are required to address non-compliance or suspected non-
compliance. These legal or regulatory provisions might differ from or go beyond
the provisions in this section. When encountering such non-compliance or sus-
pected non-compliance, the professional accountant shall obtain an understanding
of those legal or regulatory provisions and comply with them, including:
(a) Any requirement to report the matter to an appropriate authority; and
(b) Any prohibition on alerting the relevant party.
260.6 A1 A prohibition on alerting the relevant party might arise, for example, pursuant to
anti-money laundering legislation.
260.7 A1 This section applies regardless of the nature of the employing organisation, includ-
ing whether or not it is a public interest entity.
260.7 A2 A professional accountant who encounters or is made aware of matters that are
clearly inconsequential is not required to comply with this section. Whether a matter
is clearly inconsequential is to be judged with respect to its nature and its impact,
financial or otherwise, on the employing organisation, its stakeholders and the
general public.
260.7 A3 This section does not address:
(a) Personal misconduct unrelated to the business activities of the employing
organisation; and
(b) Non-compliance by parties other than those specified in paragraph 260.5 A1.
The professional accountant might nevertheless find the guidance in this section
helpful in considering how to respond in these situations.

Responsibilities of the Employing Organisation’s Management and Those Charged with

Governance
260.8 A1 The employing organisation’s management, with the oversight of those charged with
governance, is responsible for ensuring that the employing organisation’s business
activities are conducted in accordance with laws and regulations. Management and
those charged with governance are also responsible for identifying and addressing
any non-compliance by:
(a) The employing organisation;
(b) An individual charged with governance of the employing organisation;
(c) A member of management; or
(d) Other individuals working for or under the direction of the employing organ-
isation.

Responsibilities of All Professional Accountants

R260.9 If protocols and procedures exist within the professional accountant’s employing
organisation to address non-compliance or suspected non-compliance, the pro-
fessional accountant shall consider them in determining how to respond to such non-
compliance.
260.9 A1 Many employing organisations have established protocols and procedures regard-
ing how to raise non-compliance or suspected non-compliance internally. These
protocols and procedures include, for example, an ethics policy or internal whistle-
blowing mechanism. Such protocols and procedures might allow matters to be
reported anonymously through designated channels.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 63

R260.10 Where a professional accountant becomes aware of a matter to which this section
applies, the steps that the professional accountant takes to comply with this section
shall be taken on a timely basis. For the purpose of taking timely steps, the pro-
fessional accountant shall have regard to the nature of the matter and the potential
harm to the interests of the employing organisation, investors, creditors, employees
or the general public.

Responsibilities of Senior Professional Accountants in Business

260.11 A1 Senior professional accountants in business (“senior professional accountants”) are
directors, officers or senior employees able to exert significant influence over, and
make decisions regarding, the acquisition, deployment and control of the employing
organisation’s human, financial, technological, physical and intangible resources.
There is a greater expectation for such individuals to take whatever action is appropri-
ate in the public interest to respond to non-compliance or suspected non-compliance
than other professional accountants within the employing organisation. This is
because of senior professional accountants’ roles, positions and spheres of influence
within the employing organisation.

Obtaining an Understanding of the Matter

R260.12 If, in the course of carrying out professional activities, a senior professional account-
ant becomes aware of information concerning non-compliance or suspected non-
compliance, the professional accountant shall obtain an understanding of the matter.
This understanding shall include:
(a) The nature of the non-compliance or suspected non-compliance and the
circumstances in which it has occurred or might occur;
(b) The application of the relevant laws and regulations to the circumstances; and
(c) An assessment of the potential consequences to the employing organisation,
investors, creditors, employees or the wider public.
260.12 A1 A senior professional accountant is expected to apply knowledge and expertise, and
exercise professional judgement. However, the professional accountant is not
expected to have a level of understanding of laws and regulations greater than that
which is required for the professional accountant’s role within the employing
organisation. Whether an act constitutes non-compliance is ultimately a matter to
be determined by a court or other appropriate adjudicative body.
260.12 A2 Depending on the nature and significance of the matter, the senior professional
accountant might cause, or take appropriate steps to cause, the matter to be investi-
gated internally. The professional accountant might also consult on a confidential
basis with others within the employing organisation or a professional body, or with
legal counsel.

Addressing the Matter

R260.13 If the senior professional accountant identifies or suspects that non-compliance has
occurred or might occur, the professional accountant shall, subject to paragraph
R260.9, discuss the matter with the professional accountant’s immediate superior,
if any. If the professional accountant’s immediate superior appears to be involved
in the matter, the professional accountant shall discuss the matter with the next
higher level of authority within the employing organisation.
260.13 A1 The purpose of the discussion is to enable a determination to be made as to how to
address the matter.
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R260.14 The senior professional accountant shall also take appropriate steps to:
(a) Have the matter communicated to those charged with governance;
(b) Comply with applicable laws and regulations, including legal or regulatory
provisions governing the reporting of non-compliance or suspected non-
compliance to an appropriate authority;
(c) Have the consequences of the non-compliance or suspected non-compliance
rectified, remediated or mitigated;
(d) Reduce the risk of re-occurrence; and
(e) Seek to deter the commission of the non-compliance if it has not yet occurred.
260.14 A1 The purpose of communicating the matter to those charged with governance is to
obtain their concurrence regarding appropriate actions to take to respond to the
matter and to enable them to fulfil their responsibilities.
260.14 A2 Some laws and regulations might stipulate a period within which reports of non-
compliance or suspected non-compliance are to be made to an appropriate authority.
R260.15 In addition to responding to the matter in accordance with the provisions of this
section, the senior professional accountant shall determine whether disclosure of the
matter to the employing organisation’s external auditor, if any, is needed.
260.15 A1 Such disclosure would be pursuant to the senior professional accountant’s duty or
legal obligation to provide all information necessary to enable the auditor to perform
the audit.
Determining Whether Further Action Is Needed
R260.16 The senior professional accountant shall assess the appropriateness of the response
of the professional accountant’s superiors, if any, and those charged with govern-
ance.
260.16 A1 Relevant factors to consider in assessing the appropriateness of the response of the
senior professional accountant’s superiors, if any, and those charged with govern-
ance include whether:
• The response is timely.
• They have taken or authorised appropriate action to seek to rectify, remediate or
mitigate the consequences of the non-compliance, or to avert the non-compliance
if it has not yet occurred.
• The matter has been disclosed to an appropriate authority where appropriate and,
if so, whether the disclosure appears adequate.
R260.17 In light of the response of the senior professional accountant’s superiors, if any, and
those charged with governance, the professional accountant shall determine if further
action is needed in the public interest.
260.17 A1 The determination of whether further action is needed, and the nature and extent of
it, will depend on various factors, including:
• The legal and regulatory framework.
• The urgency of the situation.
• The pervasiveness of the matter throughout the employing organisation.
• Whether the senior professional accountant continues to have confidence in the
integrity of the professional accountant’s superiors and those charged with gov-
ernance.
• Whether the non-compliance or suspected non-compliance is likely to recur.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 65

• Whether there is credible evidence of actual or potential substantial harm to the

interests of the employing organisation, investors, creditors, employees or the
general public.
260.17 A2 Examples of circumstances that might cause the senior professional accountant no
longer to have confidence in the integrity of the professional accountant superiors
and those charged with governance include situations where:
• The professional accountant suspects or has evidence of their involvement or
intended involvement in any non-compliance.
• Contrary to legal or regulatory requirements, they have not reported, or author-
ised the reporting of, the matter to an appropriate authority within a reasonable
period.
R260.18 The senior professional accountant shall exercise professional judgement in deter-
mining the need for, and nature and extent of, further action. In making this deter-
mination, the professional accountant shall take into account whether a reasonable
and informed third party would be likely to conclude that the professional account-
ant has acted appropriately in the public interest.
260.18 A1 Further action that the senior professional accountant might take includes:
• Informing the management of the parent entity of the matter if the employing
organisation is a member of a group.
• Disclosing the matter to an appropriate authority even when there is no legal or
regulatory requirement to do so.
• Resigning from the employing organisation.
260.18 A2 Resigning from the employing organisation is not a substitute for taking other actions
that might be needed to achieve the senior professional accountant’s objectives
under this section. In some jurisdictions, however, there might be limitations as to
the further actions available to the professional accountant. In such circumstances,
resignation might be the only available course of action.
Seeking Advice
260.19 A1 As assessment of the matter might involve complex analysis and judgements, the
senior professional accountant might consider:
• Consulting internally.
• Obtaining legal advice to understand the professional accountant’s options and
the professional or legal implications of taking any particular course of action.
• Consulting on a confidential basis with a regulatory or professional body.
Determining Whether to Disclose the Matter to an Appropriate Authority
260.20 A1 Disclosure of the matter to an appropriate authority would be precluded if doing so
would be contrary to law or regulation. Otherwise, the purpose of making disclosure
is to enable an appropriate authority to cause the matter to be investigated and action
to be taken in the public interest.
260.20 A2 The determination of whether to make such a disclosure depends in particular on
the nature and extent of the actual or potential harm that is or might be caused by
the matter to investors, creditors, employees or the general public. For example, the
senior professional accountant might determine that disclosure of the matter to an
appropriate authority is an appropriate course of action if:
• The employing organisation is engaged in bribery (for example, of local or
foreign government officials for purposes of securing large contracts).
ET – 66 SAICA Student Handbook 2024/2025

• The employing organisation is regulated and the matter is of such significance

as to threaten its licence to operate.
• The employing organisation is listed on a securities exchange and the matter
might result in adverse consequences to the fair and orderly market in the em-
ploying organisation’s securities or pose a systemic risk to the financial markets.
• It is likely that the employing organisation would sell products that are harmful
to public health or safety.
• The employing organisation is promoting a scheme to its clients to assist them
in evading taxes.
260.20 A3 The determination of whether to make such a disclosure will also depend on exter-
nal factors such as:
• Whether there is an appropriate authority that is able to receive the information,
and cause the matter to be investigated and action to be taken. The appropriate
authority will depend upon the nature of the matter. For example, the appropriate
authority would be a securities regulator in the case of fraudulent financial
reporting or an environmental protection agency in the case of a breach of
environmental laws and regulations.
• Whether there exists robust and credible protection from civil, criminal or pro-
fessional liability or retaliation afforded by legislation or regulation, such as
under whistle-blowing legislation or regulation.
• Whether there are actual or potential threats to the physical safety of the senior
professional accountant or other individuals.
R260.21 If the senior professional accountant determines that disclosure of the matter to an
appropriate authority is an appropriate course of action in the circumstances, that
disclosure is permitted pursuant to paragraph R114.3 of the Code. When making
such disclosure, the professional accountant shall act in good faith and exercise
caution when making statements and assertions.
Imminent Breach
R260.22 In exceptional circumstances, the senior professional accountant might become
aware of actual or intended conduct that the professional accountant has reason to
believe would constitute an imminent breach of a law or regulation that would cause
substantial harm to investors, creditors, employees or the general public. Having
first considered whether it would be appropriate to discuss the matter with manage-
ment or those charged with governance of the employing organisation, the pro-
fessional accountant shall exercise professional judgement and determine whether
to disclose the matter immediately to an appropriate authority in order to prevent or
mitigate the consequences of such imminent breach. If disclosure is made, that dis-
closure is permitted pursuant to paragraph R114.3 of the Code.
Documentation
260.23 A1 In relation to non-compliance or suspected non-compliance that falls within the
scope of this section, the senior professional accountant is encouraged to have the
following matters documented:
• The matter.
• The results of discussions with the professional accountant’s superiors, if any,
and those charged with governance and other parties.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 67

• How the professional accountant’s superiors, if any, and those charged with
governance have responded to the matter.
• The courses of action the professional accountant considered, the judgements
made and the decisions that were taken.
• How the professional accountant is satisfied that the professional accountant has
fulfilled the responsibility set out in paragraph R260.17.

Responsibilities of Professional Accountants Other than Senior Professional Accountants

R260.24 If, in the course of carrying out professional activities, a professional accountant
becomes aware of information concerning non-compliance or suspected non-
compliance, the professional accountant shall seek to obtain an understanding of the
matter. This understanding shall include the nature of the non-compliance or sus-
pected non-compliance and the circumstances in which it has occurred or might
occur.
260.24 A1 The professional accountant is expected to apply knowledge and expertise, and
exercise professional judgement. However, the professional accountant is not
expected to have a level of understanding of laws and regulations greater than that
which is required for the professional accountant’s role within the employing organ-
isation. Whether an act constitutes non-compliance is ultimately a matter to be
determined by a court or other appropriate adjudicative body.
260.24 A2 Depending on the nature and significance of the matter, the professional accountant
might consult on a confidential basis with others within the employing organisation
or a professional body, or with legal counsel.
R260.25 If the professional accountant identifies or suspects that non-compliance has occur-
red or might occur, the professional accountant shall, subject to paragraph R260.9,
inform an immediate superior to enable the superior to take appropriate action. If
the professional accountant’s immediate superior appears to be involved in the mat-
ter, the professional accountant shall inform the next higher level of authority within
the employing organisation.
R260.26 In exceptional circumstances, the professional accountant may determine that dis-
closure of the matter to an appropriate authority is an appropriate course of action.
If the professional accountant does so pursuant to paragraphs 260.20 A2 and A3, that
disclosure is permitted pursuant to paragraph R114.3 of the Code. When making
such disclosure, the professional accountant shall act in good faith and exercise
caution when making statements and assertions.

Documentation
260.27 A1 In relation to non-compliance or suspected non-compliance that falls within the
scope of this section, the professional accountant is encouraged to have the follow-
ing matters documented:
• The matter.
• The results of discussions with the professional accountant’s superior, manage-
ment and, where applicable, those charged with governance and other parties.
• How the professional accountant’s superior has responded to the matter.
• The courses of action the professional accountant considered, the judgements
made and the decisions that were taken.
ET – 68 SAICA Student Handbook 2024/2025

SECTION 270
PRESSURE TO BREACH THE FUNDAMENTAL PRINCIPLES
Introduction
270.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
270.2 Pressure exerted on, or by, a professional accountant might create an intimidation
or other threat to compliance with one or more of the fundamental principles. This
section sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.

Requirements and Application Material

General
R270.3 A professional accountant shall not:
(a) Allow pressure from others to result in a breach of compliance with the funda-
mental principles; or
(b) Place pressure on others that the professional accountant knows, or has reason
to believe, would result in the other individuals breaching the fundamental
principles.
270.3 A1 A professional accountant might face pressure that creates threats to compliance
with the fundamental principles, for example an intimidation threat, when under-
taking a professional activity. Pressure might be explicit or implicit and might come
from:
• Within the employing organisation, for example, from a colleague or superior.
• An external individual or organisation such as a vendor, customer or lender.
• Internal or external targets and expectations.
270.3 A2 Examples of pressure that might result in threats to compliance with the fundamen-
tal principles include:
• Pressure related to conflicts of interest:
o Pressure from a family member bidding to act as a vendor to the professional
accountant’s employing organisation to select the family member over
another prospective vendor.
See also Section 210, Conflicts of Interest.
• Pressure to influence preparation or presentation of information:
o Pressure to report misleading financial results to meet investor, analyst or
lender expectations.
o Pressure from elected officials on public sector professional accountants to
misrepresent programmes or projects to voters.
o Pressure from colleagues to misstate income, expenditure or rates of return
to bias decision-making on capital projects and acquisitions.
o Pressure from superiors to approve or process expenditures that are not legit-
imate business expenses.
o Pressure to suppress internal audit reports containing adverse findings. See
also Section 220, Preparation and Presentation of Information.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 69

• Pressure to act without sufficient expertise or due care:

o Pressure from superiors to inappropriately reduce the extent of work
performed.
o Pressure from superiors to perform a task without sufficient skills or training
or within unrealistic deadlines.
See also Section 230, Acting with Sufficient Expertise.
• Pressure related to financial interests:
o Pressure from superiors, colleagues or others, for example, those who might
benefit from participation in compensation or incentive arrangements to
manipulate performance indicators.
See also Section 240, Financial Interests, Compensation and Incentives Linked
to Financial Reporting and Decision Making.
• Pressure related to inducements:
o Pressure from others, either internal or external to the employing organ-
isation, to offer inducements to influence inappropriately the judgement or
decision making process of an individual or organisation.
o Pressure from colleagues to accept a bribe or other inducement, for example
to accept inappropriate gifts or entertainment from potential vendors in a
bidding process.
See also Section 250, Inducements, Including Gifts and Hospitality.
• Pressure related to non-compliance with laws and regulations:
o Pressure to structure a transaction to evade tax.
See also Section 260, Responding to Non-compliance with Laws and Regu-
lations.
ż Pressure related to level of fees
Pressure exerted by a professional accountant on another professional account-
ant to provide professional services at a fee level that does not allow for suf-
ficient and appropriate resources (including human, technological and intellectual
resources) to perform the services in accordance with technical and professional
standards.
See also Section 330, Fees and Other Types of Remuneration
270.3 A3 Factors that are relevant in evaluating the level of threats created by pressure
include:
• The intent of the individual who is exerting the pressure and the nature and
extent of the pressure.
• The application of laws, regulations, and professional standards to the circum-
stances.
• The culture and leadership of the employing organisation including the extent
to which they reflect or emphasise the importance of ethical behaviour and the
expectation that employees will act ethically. For example, a corporate culture
that tolerates unethical behaviour might increase the likelihood that the pressure
would result in a threat to compliance with the fundamental principles.
• Policies and procedures, if any, that the employing organisation has established,
such as ethics or human resources policies that address pressure.
270.3 A4 Discussing the circumstances creating the pressure and consulting with others about
those circumstances might assist the professional accountant to evaluate the level
ET – 70 SAICA Student Handbook 2024/2025

of the threat. Such discussion and consultation, which requires being alert to the
principle of confidentiality, might include:
• Discussing the matter with the individual who is exerting the pressure to seek to
resolve it.
• Discussing the matter with the professional accountant’s superior, if the superior
is not the individual exerting the pressure.
• Escalating the matter within the employing organisation, including when appro-
priate, explaining any consequential risks to the organisation, for example with:
o Higher levels of management.
o Internal or external auditors.
o Those charged with governance.
• Disclosing the matter in line with the employing organisation’s policies, includ-
ing ethics and whistleblowing policies, using any established mechanism, such
as a confidential ethics hotline.
• Consulting with:
o A colleague, superior, human resources personnel, or another professional
accountant;
o Relevant professional or regulatory bodies or industry associations; or
o Legal counsel.
270.3 A5 An example of an action that might eliminate threats created by pressure is the pro-
fessional accountant’s request for a restructure of, or segregation of, certain respon-
sibilities and duties so that the professional accountant is no longer involved with
the individual or entity exerting the pressure.

Documentation
270.4 A1 The professional accountant is encouraged to document:
• The facts.
• The communications and parties with whom these matters were discussed.
• The courses of action considered.
• How the matter was addressed.

Page
PART 3 – PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE
Section 300 Applying the Conceptual Framework – Professional accountants in
Public Practice ................................................................................................ 71
Section 310 Conflicts of Interest ........................................................................................ 77
Section 320 Professional Appointments ............................................................................. 81
Section 321 Second Opinions ............................................................................................. 85
Section 325 Objectivity of an Engagement Quality Reviewer and other Appropriate
Reviewers ....................................................................................................... 86
Section 330 Fees and Other Types of Remuneration ......................................................... 88
Section 340 Inducements, Including Gifts and Hospitality ................................................ 90
Section 350 Custody of Client Assets ................................................................................ 94
Section 360 Responding to Non-Compliance with Laws and Regulations ........................ 96
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 71

PART 3 – PROFESSIONAL ACCOUNTANTS IN PUBLIC

PRACTICE
SECTION 300
APPLYING THE CONCEPTUAL FRAMEWORK –
PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE
Introduction
300.1 This Part of the Code sets out requirements and application material for professional
accountants in public practice when applying the conceptual framework set out in
Section 120. It does not describe all of the facts and circumstances, including pro-
fessional activities, interests and relationships, that could be encountered by pro-
fessional accountants in public practice, which create or might create threats to com-
pliance with the fundamental principles. Therefore, the conceptual framework
requires professional accountants in public practice to be alert for such facts and
circumstances.
300.2 The requirements and application material that apply to professional accountants in
public practice are set out in:
• Part 3 – Professional Accountants in Public Practice, Sections 300 to 399, which
applies to all professional accountants in public practice, whether they provide
assurance services or not.
• Independence Standards as follows:
o Part 4A – Independence for Audit and Review Engagements, Sections 400 to
899, which applies to professional accountants in public practice when
performing audit and review engagements.
o Part 4B – Independence for Assurance Engagements Other than Audit and
Review Engagements, Sections 900 to 999, which applies to professional
accountants in public practice when performing assurance engagements
other than audit or review engagements.
300.3 In this Part, the term “professional accountant” refers to individual professional
accountants in public practice and their firms.

Requirements and Application Material

General
R300.4 A professional accountant shall comply with the fundamental principles set out in
Section 110 and apply the conceptual framework set out in Section 120 to identify,
evaluate and address threats to compliance with the fundamental principles.
R300.5 When dealing with an ethics issue, the professional accountant shall consider the
context in which the issue has arisen or might arise. Where an individual who is a
professional accountant in public practice is performing professional activities
pursuant to the professional accountant’s relationship with the firm, whether as a
contractor, employee or owner, the individual shall comply with the provisions in
Part 2 that apply to these circumstances.
300.5 A1 Examples of situations in which the provisions in Part 2 apply to a professional
accountant in public practice include:
• Facing a conflict of interest when being responsible for selecting a vendor for
the firm when an immediate family member of the professional accountant
ET – 72 SAICA Student Handbook 2024/2025

might benefit financially from the contract. The requirements and application
material set out in Section 210 apply in these circumstances.
• Preparing or presenting financial information for the professional accountant’s
client or firm. The requirements and application material set out in Section 220
apply in these circumstances.
• Being offered an inducement such as being regularly offered complimentary
tickets to attend sporting events by a supplier of the firm. The requirements and
application material set out in Section 250 apply in these circumstances.
• Facing pressure from an engagement partner to report chargeable hours inaccur-
ately for a client engagement. The requirements and application material set out
in Section 270 apply in these circumstances.
300.5 A2 The more senior the position of a professional accountant, the greater will be the
ability and opportunity to access information, and to influence policies, decisions
made and actions taken by others involved with the firm. To the extent that they are
able to do so, taking into account their position and seniority in the firm, accountants
are expected to encourage and promote an ethics-based culture in the firm and
exhibit ethical behaviour in dealings with individuals with whom, and entities with
which, the accountant or the firm has a professional or business relationship in
accordance with paragraph 120.13 A3. Examples of actions that might be taken
include the introduction, implementation and oversight of:
• Ethics education and training programs.
• Firm processes and performance evaluation and reward criteria that promote an
ethical culture.
• Ethics and whistle-blowing policies.
• Policies and procedures designed to prevent non-compliance with laws and
regulations.

Identifying Threats
300.6 A1 Threats to compliance with the fundamental principles might be created by a broad
range of facts and circumstances. The categories of threats are described in para-
graph 120.6 A3. The following are examples of facts and circumstances within each
of those categories of threats that might create threats for a professional accountant
when undertaking a professional service:
(a) Self-interest Threats
• A professional accountant having a direct financial interest in a client.
• A professional accountant quoting a low fee to obtain a new engagement
and the fee is so low that it might be difficult to perform the professional
service in accordance with applicable technical and professional standards
for that price.
• A professional accountant having a close business relationship with a
client.
• A professional accountant having access to confidential information that
might be used for personal gain.
• A professional accountant discovering a significant error when evaluating
the results of a previous professional service performed by a member of
the professional accountant’s firm.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 73

(b) Self-review Threats

• A professional accountant issuing an assurance report on the effectiveness
of the operation of financial systems after implementing the systems.
• A professional accountant having prepared the original data used to gener-
ate records that are the subject matter of the assurance engagement.
(c) Advocacy Threats
• A professional accountant promoting the interests of, or shares in, a client.
• A professional accountant acting as an advocate on behalf of a client in
litigation or disputes with third parties.
• A professional accountant lobbying in favour of legislation on behalf of a
client.
(d) Familiarity Threats
• A professional accountant having a close or immediate family member
who is a director or officer of the client.
• A director or officer of the client, or an employee in a position to exert
significant influence over the subject matter of the engagement, having
recently served as the engagement partner.
• An audit team member having a long association with the audit client.
• An individual who is being considered to serve as an appropriate reviewer,
as a safeguard to address a threat, having a close relationship with an indi-
vidual who performed the work.
(e) Intimidation Threats
• A professional accountant being threatened with dismissal from a client
engagement or the firm because of a disagreement about a professional
matter.
• A professional accountant feeling pressured to agree with the judgement
of a client because the client has more expertise on the matter in question.
• A professional accountant being informed that a planned promotion will
not occur unless the professional accountant agrees with an inappropriate
accounting treatment.
• A professional accountant having accepted a significant gift from a client
and being threatened that acceptance of this gift will be made public.
Identifying Threats Associated with the Use of Technology
300.6 A2 The following are examples of facts and circumstances relating to the use of tech-
nology that might create threats for a professional accountant when undertaking a
professional activity:
• Self-interest Threats
o The data available might not be sufficient for the effective use of the tech-
nology.
o The technology might not be appropriate for the purpose for which it is to be
used.
o The accountant might not have sufficient information and expertise, or access
to an expert with sufficient understanding, to use and explain the technology
and its appropriateness for the purpose intended.
(Ref: Para. 230.2).
ET – 74 SAICA Student Handbook 2024/2025

• Self-review Threats
o The technology was designed or developed using the knowledge, expertise
or judgment of the accountant or the firm.

Evaluating Threats
300.7 A1 The conditions, policies and procedures described in paragraph 120.6 A1 and
120.8 A2 might impact the evaluation of whether a threat to compliance with the
fundamental principles is at an acceptable level. Such conditions, policies and pro-
cedures might relate to:
(a) The client and its operating environment; and
(b) The firm and its operating environment.
300.7 A2 The professional accountant’s evaluation of the level of a threat is also impacted by
the nature and scope of the professional service.
The Client and its Operating Environment
300.7 A3 The professional accountant’s evaluation of the level of a threat might be impacted
by whether the client is:
(a) An audit client and whether the audit client is a public interest entity;
(b) An assurance client that is not an audit client; or
(c) A non-assurance client.
For example, providing a non-assurance service to an audit client that is a public
interest entity might be perceived to result in a higher level of threat to compliance
with the principle of objectivity with respect to the audit.
300.7 A4 The corporate governance structure, including the leadership of a client might pro-
mote compliance with the fundamental principles. Accordingly, a professional
accountant’s evaluation of the level of a threat might also be impacted by a client’s
operating environment. For example:
• The client requires appropriate individuals other than management to ratify or
approve the appointment of a firm to perform an engagement.
• The client has competent employees with experience and seniority to make
managerial decisions.
• The client has implemented internal procedures that facilitate objective choices
in tendering non-assurance engagements.
• The client has a corporate governance structure that provides appropriate over-
sight and communications regarding the firm’s services.

The Firm and its Operating Environment

300.7 A5 A professional accountant’s evaluation of the level of a threat might be impacted by
the work environment within the professional accountant’s firm and its operating
environment. For example:
• Leadership of the firm that promotes compliance with the fundamental prin-
ciples and establishes the expectation that assurance team members will act in
the public interest.
• Policies or procedures for establishing and monitoring compliance with the fun-
damental principles by all personnel.
• Compensation, performance appraisal and disciplinary policies and procedures
that promote compliance with the fundamental principles.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 75

• Management of the reliance on revenue received from a single client.

• The engagement partner having authority within the firm for decisions concern-
ing compliance with the fundamental principles, including any decisions about
accepting or providing services to a client.
• Educational, training and experience requirements.
• Processes to facilitate and address internal and external concerns or complaints.
300.7 A6 The professional accountant’s evaluation of the level of a threat associated with the
use of technology might also be impacted by the work environment within the
accountant’s firm and its operating environment. For example:
• Level of corporate oversight and internal controls over the technology.
• Assessments of the quality and functionality of technology that are undertaken
by a third-party.
• Training that is provided regularly to all relevant employees so they obtain and
maintain the professional competence to sufficiently understand, use and explain
the technology and its appropriateness for the purpose intended.
Consideration of New Information or Changes in Facts and Circumstances
300.7 A7 New information or changes in facts and circumstances might:
(a) Impact the level of a threat; or
(b) Affect the professional accountant’s conclusions about whether safeguards
applied continue to address identified threats as intended.
In these situations, actions that were already implemented as safeguards might no
longer be effective in addressing threats. Accordingly, the application of the con-
ceptual framework requires that the professional accountant re-evaluate and address
the threats accordingly. (Ref: Paras. R120.9 and R120.10).
300.7 A8 Examples of new information or changes in facts and circumstances that might
impact the level of a threat include:
• When the scope of a professional service is expanded.
• When the client becomes a listed entity or acquires another business unit.
• When the firm merges with another firm.
• When the professional accountant is jointly engaged by two clients and a dispute
emerges between the two clients.
• When there is a change in the professional accountant’s personal or immediate
family relationships.

Addressing Threats
300.8 A1 Paragraphs R120.10 to 120.10 A2 set out requirements and application material for
addressing threats that are not at an acceptable level.

Examples of Safeguards
300.8 A2 Safeguards vary depending on the facts and circumstances. Examples of actions that
in certain circumstances might be safeguards to address threats include:
• Assigning additional time and qualified personnel to required tasks when an
engagement has been accepted might address a self-interest threat.
• Having an appropriate reviewer who was not a member of the team review the
work performed or advise as necessary might address a self-review threat.
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• Using different partners and teams with separate reporting lines for the provision
of non-assurance services to an assurance client might address self-review,
advocacy or familiarity threats.
• Involving another firm to perform or re-perform part of the engagement might
address self-interest, self-review, advocacy, familiarity or intimidation threats.
• Disclosing to clients any referral fees or commission arrangements received for
recommending services or products might address a self-interest threat.
• Separating teams when dealing with matters of a confidential nature might
address a self-interest threat.
300.8 A3 The remaining sections of Part 3 and Independence Standards describe certain
threats that might arise during the course of performing professional services and
include examples of actions that might address threats.
Appropriate Reviewer
300.8 A4 An appropriate reviewer is a professional with the necessary knowledge, skills,
experience and authority to review, in an objective manner, the relevant work per-
formed or service provided. Such an individual might be a professional accountant.

Communicating with Those Charged with Governance

R300.9 When communicating with those charged with governance in accordance with the
Code, a professional accountant shall determine the appropriate individual(s) within
the entity’s governance structure with whom to communicate. If the professional
accountant communicates with a subgroup of those charged with governance, the
professional accountant shall determine whether communication with all of those
charged with governance is also necessary so that they are adequately informed.
300.9 A1 In determining with whom to communicate, a professional accountant might con-
sider:
(a) The nature and importance of the circumstances; and
(b) The matter to be communicated.
300.9 A2 Examples of a subgroup of those charged with governance include an audit com-
mittee or an individual member of those charged with governance.
R300.10 If a professional accountant communicates with individuals who have management
responsibilities as well as governance responsibilities, the professional accountant
shall be satisfied that communication with those individuals adequately informs all
of those in a governance role with whom the professional accountant would other-
wise communicate.
300.10 A1 In some circumstances, all of those charged with governance are involved in
managing the entity, for example, a small business where a single owner manages
the entity and no one else has a governance role. In these cases, if matters are com-
municated to individual(s) with management responsibilities, and those individual(s)
also have governance responsibilities, the professional accountant has satisfied the
requirement to communicate with those charged with governance.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 77

SECTION 310
CONFLICTS OF INTEREST
Introduction
310.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
310.2 A conflict of interest creates threats to compliance with the principle of objectivity
and might create threats to compliance with the other fundamental principles. Such
threats might be created when:
(a) A professional accountant provides a professional service related to a particu-
lar matter for two or more clients whose interests with respect to that matter
are in conflict; or
(b) The interests of a professional accountant with respect to a particular matter
and the interests of the client for whom the professional accountant provides
a professional service related to that matter are in conflict.
310.3 This section sets out specific requirements and application material relevant to
applying the conceptual framework to conflicts of interest. When a professional
accountant provides an audit, review or other assurance service, independence is
also required in accordance with Independence Standards.

Requirements and Application Material

General
R310.4 A professional accountant shall not allow a conflict of interest to compromise pro-
fessional or business judgement.
310.4 A1 Examples of circumstances that might create a conflict of interest include:
• Providing a transaction advisory service to a client seeking to acquire an audit
client, where the firm has obtained confidential information during the course
of the audit that might be relevant to the transaction.
• Providing advice to two clients at the same time where the clients are competing
to acquire the same company and the advice might be relevant to the parties’
competitive positions.
• Providing services to a seller and a buyer in relation to the same transaction.
• Preparing valuations of assets for two parties who are in an adversarial position
with respect to the assets.
• Representing two clients in the same matter who are in a legal dispute with each
other, such as during divorce proceedings, or the dissolution of a partnership.
• In relation to a licence agreement, providing an assurance report for a licensor
on the royalties due while advising the licensee on the amounts payable.
• Advising a client to invest in a business in which, for example, the spouse of the
professional accountant has a financial interest.
• Providing strategic advice to a client on its competitive position while having a
joint venture or similar interest with a major competitor of the client.
• Advising a client on acquiring a business which the firm is also interested in
acquiring.
• Advising a client on buying a product or service while having a royalty or com-
mission agreement with a potential seller of that product or service.
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Conflict Identification
General
R310.5 Before accepting a new client relationship, engagement, or business relationship, a
professional accountant shall take reasonable steps to identify circumstances that
might create a conflict of interest, and therefore a threat to compliance with one or
more of the fundamental principles. Such steps shall include identifying:
(a) The nature of the relevant interests and relationships between the parties
involved; and
(b) The service and its implication for relevant parties.
310.5 A1 An effective conflict identification process assists a professional accountant when
taking reasonable steps to identify interests and relationships that might create an
actual or potential conflict of interest, both before determining whether to accept an
engagement and throughout the engagement. Such a process includes considering
matters identified by external parties, for example clients or potential clients. The
earlier an actual or potential conflict of interest is identified, the greater the likeli-
hood of the professional accountant being able to address threats created by the con-
flict of interest.
310.5 A2 An effective process to identify actual or potential conflicts of interest will take into
account factors such as:
• The nature of the professional services provided.
• The size of the firm.
• The size and nature of the client base.
• The structure of the firm, for example, the number and geographic location of
offices.
310.5 A3 More information on client acceptance is set out in Section 320, Professional
Appointments. Changes in Circumstances
R310.6 A professional accountant shall remain alert to changes over time in the nature of
services, interests and relationships that might create a conflict of interest while
performing an engagement.
310.6 A1 The nature of services, interests and relationships might change during the engage-
ment. This is particularly true when a professional accountant is asked to conduct
an engagement in a situation that might become adversarial, even though the parties
who engage the professional accountant initially might not be involved in a dispute.
Network Firms
R310.7 If the firm is a member of a network, a professional accountant shall consider con-
flicts of interest that the professional accountant has reason to believe might exist
or arise due to interests and relationships of a network firm.
310.7 A1 Factors to consider when identifying interests and relationships involving a network
firm include:
• The nature of the professional services provided.
• The clients served by the network.
• The geographic locations of all relevant parties.

Threats Created by Conflicts of Interest

310.8 A1 In general, the more direct the connection between the professional service and the
matter on which the parties’ interests conflict, the more likely the level of the threat
is not at an acceptable level.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 79

310.8 A2 Factors that are relevant in evaluating the level of a threat created by a conflict of
interest include measures that prevent unauthorised disclosure of confidential infor-
mation when performing professional services related to a particular matter for two
or more clients whose interests with respect to that matter are in conflict. These
measures include:
• The existence of separate practice areas for specialty functions within the firm,
which might act as a barrier to the passing of confidential client information
between practice areas.
• Policies and procedures to limit access to client files.
• Confidentiality agreements signed by personnel and partners of the firm.
• Separation of confidential information physically and electronically.
• Specific and dedicated training and communication.
310.8 A3 Examples of actions that might be safeguards to address threats created by a conflict
of interest include:
• Having separate teams who are provided with clear policies and procedures on
maintaining confidentiality.
• Having an appropriate reviewer, who is not involved in providing the service or
otherwise affected by the conflict, review the work performed to assess whether
the key judgements and conclusions are appropriate.

Disclosure and Consent

General
R310.9 A professional accountant shall exercise professional judgement to determine whether
the nature and significance of a conflict of interest are such that specific disclosure
and explicit consent are necessary when addressing the threat created by the conflict
of interest.
310.9 A1 Factors to consider when determining whether specific disclosure and explicit con-
sent are necessary include:
• The circumstances creating the conflict of interest.
• The parties that might be affected.
• The nature of the issues that might arise.
• The potential for the particular matter to develop in an unexpected manner.
310.9 A2 Disclosure and consent might take different forms, for example:
• General disclosure to clients of circumstances where, as is common commercial
practice, the professional accountant does not provide professional services
exclusively to any one client (for example, in a particular professional service
and market sector). This enables the client to provide general consent accord-
ingly. For example, a professional accountant might make general disclosure in
the standard terms and conditions for the engagement.
• Specific disclosure to affected clients of the circumstances of the particular con-
flict in sufficient detail to enable the client to make an informed decision about
the matter and to provide explicit consent accordingly. Such disclosure might
include a detailed presentation of the circumstances and a comprehensive explan-
ation of any planned safeguards and the risks involved.
• Consent might be implied by clients’ conduct in circumstances where the pro-
fessional accountant has sufficient evidence to conclude that clients know the
circumstances at the outset and have accepted the conflict of interest if they do
not raise an objection to the existence of the conflict.
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310.9 A3 It is generally necessary:

(a) To disclose the nature of the conflict of interest and how any threats created
were addressed to clients affected by a conflict of interest; and
(b) To obtain consent of the affected clients to perform the professional services
when safeguards are applied to address the threat.
310.9 A4 If such disclosure or consent is not in writing, the professional accountant is encour-
aged to document:
(a) The nature of the circumstances giving rise to the conflict of interest;
(b) The safeguards applied to address the threats when applicable; and
(c) The consent obtained.
When Explicit Consent is Refused
R310.10 If a professional accountant has determined that explicit consent is necessary in
accordance with paragraph R310.9 and the client has refused to provide consent,
the professional accountant shall either:
(a) End or decline to perform professional services that would result in the con-
flict of interest; or
(b) End relevant relationships or dispose of relevant interests to eliminate the
threat or reduce it to an acceptable level.

Confidentiality
General
R310.11 A professional accountant shall remain alert to the principle of confidentiality,
including when making disclosures or sharing information within the firm or net-
work and seeking guidance from third parties.
310.11 A1 Subsection 114 sets out requirements and application material relevant to situations
that might create a threat to compliance with the principle of confidentiality.
When Disclosure to Obtain Consent would Breach Confidentiality
R310.12 When making specific disclosure for the purpose of obtaining explicit consent
would result in a breach of confidentiality, and such consent cannot therefore be
obtained, the firm shall only accept or continue an engagement if:
(a) The firm does not act in an advocacy role for one client in an adversarial posi-
tion against another client in the same matter;
(b) Specific measures are in place to prevent disclosure of confidential information
between the teams serving the two clients; and
(c) The firm is satisfied that a reasonable and informed third party would be likely
to conclude that it is appropriate for the firm to accept or continue the engage-
ment because a restriction on the firm’s ability to provide the professional
service would produce a disproportionate adverse outcome for the clients or
other relevant third parties.
310.12 A1 A breach of confidentiality might arise, for example, when seeking consent to
perform:
• A transaction-related service for a client in a hostile takeover of another client
of the firm.
• A forensic investigation for a client regarding a suspected fraud, where the firm
has confidential information from its work for another client who might be
involved in the fraud.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 81

Documentation
R310.13 In the circumstances set out in paragraph R310.12, the professional accountant shall
document:
(a) The nature of the circumstances, including the role that the professional
accountant is to undertake;
(b) The specific measures in place to prevent disclosure of information between
the teams serving the two clients; and
(c) Why it is appropriate to accept or continue the engagement.

SECTION 320
PROFESSIONAL APPOINTMENTS
Introduction
320.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
320.2 Acceptance of a new client relationship or changes in an existing engagement might
create a threat to compliance with one or more of the fundamental principles. This
section sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.

Requirements and Application Material

Client and Engagement Acceptance
General
320.3 A1 Threats to compliance with the principles of integrity or professional behaviour
might be created, for example, from questionable issues associated with the client
(its owners, management or activities). Issues that, if known, might create such a
threat include client involvement in illegal activities, dishonesty, questionable
financial reporting practices or other unethical behaviour.
320.3 A2 Factors that are relevant in evaluating the level of such a threat include:
• Knowledge and understanding of the client, its owners, management and those
charged with governance and business activities.
• The client’s commitment to address the questionable issues, for example, through
improving corporate governance practices or internal controls.
320.3 A3 A self-interest threat to compliance with the principle of professional competence
and due care is created if the team does not possess, or cannot acquire, the com-
petencies to perform the professional services.
320.3 A4 Factors that are relevant in evaluating the level of such a threat include:
• An appropriate understanding of:
o The nature of the client’s business;
o The complexity of its operations;
o The requirements of the engagement; and
o The purpose, nature and scope of the work to be performed.
• Knowledge of relevant industries or subject matter.
• Experience with relevant regulatory or reporting requirements.
ET – 82 SAICA Student Handbook 2024/2025

• Policies and procedures that the firm has implemented, as part of a system of
quality management in accordance with quality management standards such as
ISQM 1, that respond to quality risks relating to the firm’s ability to perform the
engagement in accordance with professional standards and applicable legal and
regulatory requirements.
The level of fees and the extent to which they have regard to the resources required,
taking into account the professional accountant’s commercial and market priorities.
320.3 A5 Examples of actions that might be safeguards to address a self-interest threat include:
• Assigning sufficient engagement personnel with the necessary competencies.
• Agreeing on a realistic time frame for the performance of the engagement.
• Using experts where necessary.

Changes in a Professional Appointment

General
R320.4 A professional accountant shall determine whether there are any reasons for not
accepting an engagement when the professional accountant:
(a) Is asked by a potential client to replace another professional accountant;
(b) Considers tendering for an engagement held by another professional account-
ant; or
(c) Considers undertaking work that is complementary or additional to that of
another professional accountant.
320.4 A1 There might be reasons for not accepting an engagement. One such reason might be
if a threat created by the facts and circumstances cannot be addressed by applying
safeguards. For example, there might be a self-interest threat to compliance with the
principle of professional competence and due care if a professional accountant
accepts the engagement before knowing all the relevant facts.
320.4 A2 If a professional accountant is asked to undertake work that is complementary or
additional to the work of an existing or predecessor accountant, a self-interest threat
to compliance with the principle of professional competence and due care might be
created, for example, as a result of incomplete information.
320.4 A3 A factor that is relevant in evaluating the level of such a threat is whether tenders
state that, before accepting the engagement, contact with the existing or predecessor
accountant will be requested. This contact gives the proposed accountant the oppor-
tunity to inquire whether there are any reasons why the engagement should not be
accepted.
320.4 A4 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Asking the existing or predecessor accountant to provide any known information
of which, in the existing or predecessor accountant’s opinion, the proposed
accountant needs to be aware before deciding whether to accept the engagement.
For example, inquiry might reveal previously undisclosed pertinent facts and
might indicate disagreements with the existing or predecessor accountant that
might influence the decision to accept the appointment.
• Obtaining information from other sources such as through inquiries of third par-
ties or background investigations regarding senior management or those charged
with governance of the client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 83

Communicating with the Existing or Predecessor Accountant

320.5A1 A proposed accountant will usually need the client’s permission, preferably in
writing, to initiate discussions with the existing or predecessor accountant.
R320.6 If unable to communicate with the existing or predecessor accountant, the proposed
accountant shall take other reasonable steps to obtain information about any possible
threats.
R320.6a SA If the proposed client refuses or fails to give permission for the proposed accountant
to communicate with the existing or predecessor accountant, the proposed account-
ant shall decline the appointment, unless there are exceptional circumstances of
which the proposed accountant has full knowledge, and the proposed accountant is
satisfied regarding all relevant facts, by some other means.

Communicating with the Proposed Accountant

R320.7 When an existing or predecessor accountant is asked to respond to a communication
from a proposed accountant, the existing or predecessor accountant shall:
(a) Comply with relevant laws and regulations governing the request; and
(b) Provide any information honestly and unambiguously.
320.7 A1 An existing or predecessor accountant is bound by confidentiality. Whether the
existing or predecessor accountant is permitted or required to discuss the affairs of a
client with a proposed accountant will depend on the nature of the engagement and:
(a) Whether the existing or predecessor accountant has permission from the client
for the discussion; and
(b) The legal and ethics requirements relating to such communications and dis-
closure, which might vary by jurisdiction.
320.7 A2 Circumstances where a professional accountant is or might be required to disclose
confidential information, or when disclosure might be appropriate, are set out in
paragraph 114.3 A1 of the Code.
R320.7a SA The proposed accountant shall treat any information provided by the existing or
predecessor accountant in the strictest confidence.

Changes in Audit or Review Appointments

R320.8 In the case of an audit or review of financial statements, a professional accountant
shall request the existing or predecessor accountant to provide known information
regarding any facts or other information of which, in the existing or predecessor
accountant’s opinion, the proposed accountant needs to be aware before deciding
whether to accept the engagement. Except for the circumstances involving non-
compliance or suspected non-compliance with laws and regulations set out in para-
graphs R360.21 and R360.22:
(a) If the client consents to the existing or predecessor accountant disclosing any
such facts or other information, the existing or predecessor accountant shall
provide the information honestly and unambiguously; and
(b) If the client fails or refuses to grant the existing or predecessor accountant
permission to discuss the client’s affairs with the proposed accountant, the
existing or predecessor accountant shall disclose this fact to the proposed
accountant, who shall carefully consider such failure or refusal when deter-
mining whether to accept the appointment.
ET – 84 SAICA Student Handbook 2024/2025

Client and Engagement Continuance

R320.9 For a recurring client engagement, a professional accountant shall periodically
review whether to continue with the engagement.
320.9 A1 Potential threats to compliance with the fundamental principles might be created
after acceptance which, had they been known earlier, would have caused the pro-
fessional accountant to decline the engagement. For example, a self-interest threat
to compliance with the principle of integrity might be created by improper earnings
management or balance sheet valuations.

Using the Work of an Expert

R320.10 When a professional accountant intends to use the work of an expert in the course
of undertaking a professional activity, the professional accountant shall determine
whether the use is appropriate for the intended purpose.
320.10 A1 Factors to consider when a professional accountant intends to use the work of an
expert include:
• The reputation and expertise of, and the resources available to the expert,
• Whether the expert is subject to applicable professional and ethics standards.
Such information might be gained from prior association with, or from consulting
others about, the expert.

Using the Output of Technology

R320.11 When a professional accountant intends to use the output of technology in the course
of undertaking a professional activity, the accountant shall determine whether the
use is appropriate for the intended purpose.
320.11 A1 Factors to consider when a professional accountant intends to use the output of tech-
nology include:
• The nature of the activity to be performed by the technology.
• The expected use of, or extent of reliance on, the output of the technology.
• Whether the accountant has the ability, or access to an expert with the ability, to
understand, use and explain the technology and its appropriateness for the pur-
pose intended.
• Whether the technology used has been appropriately tested and evaluated for the
purpose intended.
• Prior experience with the technology and whether its use for specific purposes
is generally accepted.
• The firm’s oversight of the design, development, implementation, operation,
maintenance, monitoring, updating or upgrading of the technology.
• The controls relating to the use of the technology, including procedures for
authorising user access to the technology and overseeing such use.
• The appropriateness of the inputs to the technology, including data and any
related decisions, and decisions made by individuals in the course of using the
technology.

Other Considerations
320.12 A1 When a professional accountant is considering using the work of experts or the out-
put of technology, a consideration is whether the accountant is in a position within
the firm to obtain information in relation to the factors necessary to determine
whether such use is appropriate.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 85

SECTION 321
SECOND OPINIONS
Introduction
321.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
321.2 Providing a second opinion to an entity that is not an existing client might create a
self-interest or other threat to compliance with one or more of the fundamental prin-
ciples. This section sets out specific requirements and application material relevant
to applying the conceptual framework in such circumstances.

Requirements and Application Material

General
321.3 A1 A professional accountant might be asked to provide a second opinion on the appli-
cation of accounting, auditing, reporting or other standards or principles to (a)
specific circumstances relating to an entity, or (b) transactions by or on behalf of a
company or an entity that is not an existing client. The second opinion could relate
to a matter that has been considered, or might be expected to have been, or might
be expected to be considered by that client’s existing or predecessor accountant. A
threat, for example, a self-interest threat to compliance with the principle of pro-
fessional competence and due care, might be created if the second opinion is not
based on the same facts that the existing or predecessor accountant had, or is based
on inadequate evidence.
321.3 A2 A factor that is relevant in evaluating the level of such a self-interest threat is the
circumstances of the request and all the other available facts and assumptions rele-
vant to the expression of a professional judgement.
321.3 A3 Examples of actions that might be safeguards to address such a self-interest threat
include:
• With the client’s permission, obtaining information from the existing or pre-
decessor accountant and confirming that the facts relevant to the issue are com-
plete.
• Describing the limitations surrounding any second opinion in communications
with the client.
• Having an appropriate reviewer who has not taken part in the second opinion,
review the draft second opinion.
(The following bullet has been elevated into a South African requirement R321.5
SA)
• Providing the existing or predecessor accountant with a copy of the opinion.
321.3 A4 SA With the client’s permission, a professional accountant may through enquiries of
the client and enquiries of the existing or predecessor accountant:
• Ascertain the circumstances surrounding the proposed engagement for a second
opinion.
• Ascertain whether the client has sought a second opinion from other professional
accountant(s).
R321.3a SA A professional accountant shall provide a second opinion in writing.
321.3a A1 SA Providing an oral and other forms of a second opinion can be misunderstood with-
out the support of a written report.
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R321.3b SA A professional accountant shall not provide a second opinion regarding an opin-
ion expressed on financial statements performed in terms of the ISAs.

When Permission to Communicate is Not Provided

R321.4 If an entity seeking a second opinion from a professional accountant will not permit
the professional accountant to communicate with the existing or predecessor
accountant, the professional accountant shall decline the appointment, unless there
are exceptional circumstances of which the professional accountant has full
knowledge, and the professional accountant is satisfied regarding all relevant facts,
by some other means.

Providing the Existing or Predecessor Accountant with a Copy of the Second Opinion
R321.5 SA A professional accountant shall, in terms of the engagement with the client, provide
the existing or predecessor accountant with a copy of the second opinion, at the
same time as it is given to the client.
321.5 A1 SA The purpose of providing the existing or predecessor accountant with a copy of the
second opinion is to ensure that the professional accountant and the existing or
predecessor accountant have the same information.

SECTION 325
OBJECTIVITY OF AN ENGAGEMENT QUALITY REVIEWER
AND OTHER APPROPRIATE REVIEWERS
Introduction
325.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
325.2 Appointing an engagement quality reviewer who has involvement in the work being
reviewed or close relationships with those responsible for performing that work
might create threats to compliance with the principle of objectivity.
325.3 This section sets out specific application material relevant to applying the concep-
tual framework in relation to the objectivity of an engagement quality reviewer.
325.4 An engagement quality reviewer is also an example of an appropriate reviewer as
described in paragraph 300.8 A4. Therefore, the application material in this section
might apply in circumstances where a professional accountant appoints an appro-
priate reviewer to review work performed as a safeguard to address identified threat

Application Material
General
325.5 A1 Quality engagements are achieved through planning and performing engagements
and reporting on them in accordance with professional standards and applicable
legal and regulatory requirements. ISQM 1 establishes the firm’s responsibilities
for its system of quality management and requires the firm to design and implement
responses to address quality risks related to engagement performance. Such responses
include establishing policies or procedures addressing engagement quality reviews
in accordance with ISQM 2.
325.5 A2 An engagement quality reviewer is a partner, other individual in the firm, or an
external individual, appointed by the firm to perform the engagement quality review.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 87

Identifying Threats
325.6 A1 The following are examples of circumstances where threats to the objectivity of a
professional accountant7 appointed as an engagement quality reviewer might be
created:
(a) Self-interest threat
• Two engagement partners each serving as an engagement quality reviewer
for the other’s engagement.
(b) Self-review threat
• An accountant serving as an engagement quality reviewer on an audit
engagement after previously serving as the engagement partner.
(c) Familiarity threat
• An accountant serving as an engagement quality reviewer has a close
relationship with or is an immediate family member of another individual
who is involved in the engagement.
(d) Intimidation threat
• An accountant serving as an engagement quality reviewer for an engage-
ment has a direct reporting line to the partner responsible for the engage-
ment.

Evaluating Threats
325.7 A1 Factors that are relevant in evaluating the level of threats to the objectivity of an
individual appointed as an engagement quality reviewer include:
• The role and seniority of the individual.
• The nature of the individual’s relationship with others involved on the engage-
ment.
• The length of time the individual was previously involved with the engagement
and the individual’s role.
• When the individual was last involved in the engagement prior to being appointed
as engagement quality reviewer and any subsequent relevant changes to the
circumstances of the engagement.
• The nature and complexity of issues that required significant judgment from the
individual in any previous involvement in the engagement.

Addressing Threats
325.8 A1 An example of an action that might eliminate an intimidation threat is reassigning
reporting responsibilities within the firm.
325.8 A2 An example of an action that might be a safeguard to address a self-review threat is
implementing a period of sufficient duration (a cooling-off period) before the indi-
vidual who was on the engagement is appointed as an engagement quality reviewer.

Cooling-off Period
325.8 A3 ISQM 2 requires the firm to establish policies or procedures that specify, as a con-
dition for eligibility, a cooling-off period of two years before the engagement partner

________________________

7 International Standard on Quality Management (ISQM) 2 (Paragraphs 13(b), 17 and 18) allows for other individuals
in the firm or an external individual to be appointed as an EQR. This role is not limited to a professional accountant.
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can assume the role of engagement quality reviewer. This serves to enable compli-
ance with the principle of objectivity and the consistent performance of quality en-
gagements.
325.8 A4 The cooling-off period required by ISQM 2 is distinct from, and does not modify,
the partner rotation requirements in Section 540, which are designed to address
threats to independence created by long association with an audit client.

SECTION 330
FEES AND OTHER TYPES OF REMUNERATION
Introduction
330.1 Professional accountants are required to comply with the fundamental principles and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
330.2 The level and nature of fee and other remuneration arrangements might create a self-
interest threat to compliance with one or more of the fundamental principles. This
section sets out specific application material relevant to applying the conceptual
framework in such circumstances.

Application Material
Level of Fees
330.3 A1 The level of fees quoted might impact a professional accountant’s ability to perform
professional services in accordance with technical and professional standards.
330.3 A2 A professional accountant might quote whatever fee is considered appropriate.
Quoting a fee lower than another professional accountant is not in itself unethical.
However, the level of fees quoted creates a self-interest threat to compliance with
the principle of professional competence and due care if the fee quoted is so low
that it might be difficult to perform the engagement in accordance with applicable
technical and professional standards.
330.3 A3 Factors that are relevant in evaluating the level of such a threat include:
• Whether the client is aware of the terms of the engagement and, in particular,
the basis on which fees are determined and which professional services are
covered.
• Whether the level of the fee is set by an independent third party such as a regu-
latory body.
330.3 A4 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Adjusting the level of fees or the scope of the engagement.
• Having an appropriate reviewer review the work performed.

Contingent Fees
R330.4 SA A professional accountant shall not charge contingent fees for the preparation of
an original or amended tax return, as contingent fees for these services create a
self-interest threat to objectivity that cannot be eliminated and safeguards are not
capable of being applied to reduce the threat to an acceptable level.
330.4 A1 Contingent fees are used for certain types of non-assurance services. However, con-
tingent fees might create threats to compliance with the fundamental principles,
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 89

particularly a self-interest threat to compliance with the principle of objectivity, in

certain circumstances.
330.4 A2 Factors that are relevant in evaluating the level of such threats include:
• The nature of the engagement.
• The range of possible fee amounts.
• The basis for determining the fee.
• Disclosure to intended users of the work performed by the professional account-
ant and the basis of remuneration.
• Quality management policies and procedures.
• Whether an independent third party is to review the outcome or result of the
transaction.
• Whether the level of the fee is set by an independent third party such as a regu-
latory body.
330.4 A3 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Having an appropriate reviewer who was not involved in performing the non-
assurance service review the work performed by the professional accountant.
• Obtaining an advance written agreement with the client on the basis of remuner-
ation.
330.4 A4 Requirements and application material related to contingent fees for services pro-
vided to audit or review clients and other assurance clients are set out in Independ-
ence Standards.

Referral Fees or Commissions

330.5 A1 A self-interest threat to compliance with the principles of objectivity and professional
competence and due care is created if a professional accountant pays or receives a
referral fee or receives a commission relating to a client. Such referral fees or com-
missions include, for example:
• A fee paid to another professional accountant for the purposes of obtaining new
client work when the client continues as a client of the existing accountant but
requires specialist services not offered by that professional accountant.
• A fee received for referring a continuing client to another professional account-
ant or other expert where the existing accountant does not provide the specific
professional service required by the client.
• A commission received from a third party (for example, a software vendor) in
connection with the sale of goods or services to a client.
330.5 A2 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Obtaining an advance agreement upfront and in writing from the client for com-
mission arrangements in connection with the sale by another party of goods or
services to the client might address a self-interest threat.
• Disclosing to clients, upfront and in writing any referral fees or commission
arrangements paid to, or received from, another professional accountant or third
party for recommending services or products might address a self-interest threat.
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Purchase or Sale of a Firm

330.6 A1 A professional accountant may purchase all or part of another firm on the basis that
payments will be made to individuals formerly owning the firm or to their heirs or
estates. Such payments are not referral fees or commissions for the purposes of this
section.

SECTION 340
INDUCEMENTS, INCLUDING GIFTS AND HOSPITALITY
Introduction
340.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
340.2 Offering or accepting inducements might create a self-interest, familiarity or intimi-
dation threat to compliance with the fundamental principles, particularly the prin-
ciples of integrity, objectivity and professional behaviour.
340.3 This section sets out requirements and application material relevant to applying the
conceptual framework in relation to the offering and accepting of inducements when
performing professional services that does not constitute non-compliance with laws
and regulations. This section also requires a professional accountant to comply with
relevant laws and regulations when offering or accepting inducements.

Requirements and Application Material

General
340.4 A1 An inducement is an object, situation, or action that is used as a means to influence
another individual’s behaviour, but not necessarily with the intent to improperly
influence that individual’s behaviour. Inducements can range from minor acts of
hospitality between professional accountants and existing or prospective clients to
acts that result in non-compliance with laws and regulations. An inducement can
take many different forms, for example:
• Gifts.
• Hospitality.
• Entertainment.
• Political or charitable donations.
• Appeals to friendship and loyalty.
• Employment or other commercial opportunities.
• Preferential treatment, rights or privileges.

Inducements Prohibited by Laws and Regulations

R340.5 In many jurisdictions, there are laws and regulations, such as those related to bribery
and corruption, that prohibit the offering or accepting of inducements in certain
circumstances. The professional accountant shall obtain an understanding of rele-
vant laws and regulations and comply with them when the professional accountant
encounters such circumstances.

Inducements Not Prohibited by Laws and Regulations

340.6 A1 The offering or accepting of inducements that is not prohibited by laws and regu-
lations might still create threats to compliance with the fundamental principles.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 91

Inducements with Intent to Improperly Influence Behaviour

R340.7 A professional accountant shall not offer, or encourage others to offer, any induce-
ment that is made, or which the professional accountant considers a reasonable and
informed third party would be likely to conclude is made, with the intent to improp-
erly influence the behaviour of the recipient or of another individual.
R340.8 A professional accountant shall not accept, or encourage others to accept, any induce-
ment that the professional accountant concludes is made, or considers a reasonable
and informed third party would be likely to conclude is made, with the intent to
improperly influence the behaviour of the recipient or of another individual.
340.9 A1 An inducement is considered as improperly influencing an individual’s behaviour
if it causes the individual to act in an unethical manner. Such improper influence
can be directed either towards the recipient or towards another individual who has
some relationship with the recipient. The fundamental principles are an appropriate
frame of reference for a professional accountant in considering what constitutes
unethical behaviour on the part of the professional accountant and, if necessary by
analogy, other individuals.
340.9 A2 A breach of the fundamental principle of integrity arises when a professional
accountant offers or accepts, or encourages others to offer or accept, an inducement
where the intent is to improperly influence the behaviour of the recipient or of
another individual.
340.9 A3 The determination of whether there is actual or perceived intent to improperly influ-
ence behaviour requires the exercise of professional judgement. Relevant factors to
consider might include:
• The nature, frequency, value and cumulative effect of the inducement.
• Timing of when the inducement is offered relative to any action or decision that
it might influence.
• Whether the inducement is a customary or cultural practice in the circumstances,
for example, offering a gift on the occasion of a religious holiday or wedding.
• Whether the inducement is an ancillary part of a professional service, for ex-
ample, offering or accepting lunch in connection with a business meeting.
• Whether the offer of the inducement is limited to an individual recipient or avail-
able to a broader group. The broader group might be internal or external to the
firm, such as other suppliers to the client.
• The roles and positions of the individuals at the firm or the client offering or
being offered the inducement.
• Whether the professional accountant knows, or has reason to believe, that
accepting the inducement would breach the policies and procedures of the client.
• The degree of transparency with which the inducement is offered.
• Whether the inducement was required or requested by the recipient.
• The known previous behaviour or reputation of the offeror.
Consideration of Further Actions
340.10 A1 If the professional accountant becomes aware of an inducement offered with actual
or perceived intent to improperly influence behaviour, threats to compliance with
the fundamental principles might still be created even if the requirements in para-
graphs R340.7 and R340.8 are met.
340.10 A2 Examples of actions that might be safeguards to address such threats include:
• Informing senior management of the firm or those charged with governance of
the client regarding the offer.
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• Amending or terminating the business relationship with the client.

Inducements with No Intent to Improperly Influence Behaviour

340.11 A1 The requirements and application material set out in the conceptual framework apply
when a professional accountant has concluded there is no actual or perceived intent
to improperly influence the behaviour of the recipient or of another individual.
340.11 A2 If such an inducement is trivial and inconsequential, any threats created will be at
an acceptable level.
340.11 A3 Examples of circumstances where offering or accepting such an inducement might
create threats even if the professional accountant has concluded there is no actual
or perceived intent to improperly influence behaviour include:
• Self-interest threats
o A professional accountant is offered hospitality from the prospective acquirer
of a client while providing corporate finance services to the client.
• Familiarity threats
o A professional accountant regularly takes an existing or prospective client to
sporting events.
• Intimidation threats
o A professional accountant accepts hospitality from a client, the nature of
which could be perceived to be inappropriate were it to be publicly disclosed.
340.11 A4 Relevant factors in evaluating the level of such threats created by offering or accept-
ing such an inducement include the same factors set out in paragraph 340.9 A3 for
determining intent.
340.11 A5 Examples of actions that might eliminate threats created by offering or accepting
such an inducement include:
• Declining or not offering the inducement.
• Transferring responsibility for the provision of any professional services to the
client to another individual who the professional accountant has no reason to
believe would be, or would be perceived to be, improperly influenced when pro-
viding the services.
340.11 A6 Examples of actions that might be safeguards to address such threats created by
offering or accepting such an inducement include:
• Being transparent with senior management of the firm or of the client about
offering or accepting an inducement.
• Registering the inducement in a log monitored by senior management of the firm
or another individual responsible for the firm’s ethics compliance or maintained
by the client.
• Having an appropriate reviewer, who is not otherwise involved in providing the
professional service, review any work performed or decisions made by the pro-
fessional accountant with respect to the client from which the professional
accountant accepted the inducement.
• Donating the inducement to charity after receipt and appropriately disclosing the
donation, for example, to a member of senior management of the firm or the
individual who offered the inducement.
• Reimbursing the cost of the inducement, such as hospitality, received.
• As soon as possible, returning the inducement, such as a gift, after it was initially
accepted.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 93

Immediate or Close Family Members

R340.12 A professional accountant shall remain alert to potential threats to the professional
accountant’s compliance with the fundamental principles created by the offering of
an inducement:
(a) By an immediate or close family member of the professional accountant to an
existing or prospective client of the professional accountant.
(b) To an immediate or close family member of the professional accountant by an
existing or prospective client of the professional accountant.
R340.13 Where the professional accountant becomes aware of an inducement being offered
to or made by an immediate or close family member and concludes there is intent
to improperly influence the behaviour of the professional accountant or of an exist-
ing or prospective client of the professional accountant, or considers a reasonable
and informed third party would be likely to conclude such intent exists, the pro-
fessional accountant shall advise the immediate or close family member not to offer
or accept the inducement.
340.13 A1 The factors set out in paragraph 340.9 A3 are relevant in determining whether there
is actual or perceived intent to improperly influence the behaviour of the pro-
fessional accountant or of the existing or prospective client. Another factor that is
relevant is the nature or closeness of the relationship, between:
(a) The professional accountant and the immediate or close family member;
(b) The immediate or close family member and the existing or prospective client;
and
(c) The professional accountant and the existing or prospective client.
For example, the offer of employment, outside of the normal recruitment process,
to the spouse of the professional accountant by a client for whom the professional
accountant is providing a business valuation for a prospective sale might indicate
such intent.
340.13 A2 The application material in paragraph 340.10 A2 is also relevant in addressing
threats that might be created when there is actual or perceived intent to improperly
influence the behaviour of the professional accountant, or of the existing or pro-
spective client even if the immediate or close family member has followed the
advice given pursuant to paragraph R340.13.

Application of the Conceptual Framework

340.14 A1 Where the professional accountant becomes aware of an inducement offered in the
circumstances addressed in paragraph R340.12, threats to compliance with the fun-
damental principles might be created where:
(a) The immediate or close family member offers or accepts the inducement con-
trary to the advice of the professional accountant pursuant to paragraph
R340.13; or
(b) The professional accountant does not have reason to believe an actual or
perceived intent to improperly influence the behaviour of the professional
accountant or of the existing or prospective client exists.
340.14 A2 The application material in paragraphs 340.11 A1 to 340.11 A6 is relevant for the
purposes of identifying, evaluating and addressing such threats. Factors that are
relevant in evaluating the level of threats in these circumstances also include the
nature or closeness of the relationships set out in paragraph 340.13 A1.
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Other Considerations
340.15 A1 If a professional accountant encounters or is made aware of inducements that might
result in non-compliance or suspected non-compliance with laws and regulations by
a client or individuals working for or under the direction of the client, the require-
ments and application material in Section 360 apply.
340.15 A2 If a firm, network firm or an audit team member is being offered gifts or hospitality
from an audit client, the requirement and application material set out in Section 420
apply.
340.15 A3 If a firm or an assurance team member is being offered gifts or hospitality from an
assurance client, the requirement and application material set out in Section 906
apply.

SECTION 350
CUSTODY OF CLIENT ASSETS
Introduction
350.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
350.2 Holding client assets whilst providing professional services creates a self-interest or
other threat to compliance with the fundamental principles of professional behav-
iour and objectivity. This section sets out specific requirements and application
material relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

Before Taking Custody
R350.3 A professional accountant shall not assume custody of client money or other assets
unless permitted to do so by law and in accordance with any conditions under which
such custody may be taken.
R350.4 As part of client and engagement acceptance procedures related to assuming custody
of client money or assets, a professional accountant shall:
(a) Make inquiries about the source of the assets; and
(b) Consider related legal and regulatory obligations.
(350.4 A1 has been elevated into a South African requirement R350.4a SA)
R350.4a SA Inquiries about the source of client assets might reveal, for example, that the assets
were derived from illegal activities, such as money laundering. The professional
accountant shall not accept or hold the assets in such circumstances, and the pro-
visions of Section 360 would apply.

After Taking Custody

R350.5 A professional accountant entrusted with money or other assets belonging to others
shall:
(a) Comply with the laws and regulations relevant to holding and accounting for
the assets;
(b) Keep the assets separately from personal or firm assets;
(c) Use the assets only for the purpose for which they are intended; and
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 95

(d) Be ready at all times to account for the assets and any income, dividends, or
gains generated, to any entity or individuals entitled to that accounting.
Client Monies
R350.6 SA If a professional accountant is entrusted with client monies, which come into the
professional accountant’s possession or under the professional accountant’s con-
trol and for which the professional accountant is responsible to account to a client,
the professional accountant shall:
(a) Not refer to such client monies as being “in trust” or in a “trust account” as
this could be misleading;
(b) Maintain one or more bank accounts with an institution or institutions regis-
tered in terms of the Banks Act, 1990 (Act 94 of 1990), that are separate from
the professional accountant’s own bank account;
(c) Appropriately designate such bank accounts. This includes a general bank
account in the professional accountant’s name where all client monies are
held (such as ABC’s Client Account), or a specific account named and oper-
ated per relevant client;
(d) Deposit client monies without delay to the credit of such client account;
(e) Maintain such records as may reasonably be expected to ensure that the client
monies can be readily identified as being the property of the client, for example,
detailed bookkeeping and being able to supply the client with an analysis of
the account/s;
(f) Perform a reconciliation between the designated bank account and the client
monies ledger account/s; and
(g) Not hold client monies indefinitely unless specifically allowed by laws and
regulations. Professional accountants are encouraged to hold client monies
for a limited period, depending on the professional service provided.
Client Assets other than Monies
R350.7 SA If a professional accountant is entrusted with client assets other than client monies
which come into the professional accountant’s possession or under the professional
accountant’s control and for which the professional accountant is responsible to
account to a client, the professional accountant shall:
(a) Not refer to such client assets as being held “in trust” or in a “trust account”
as this could be misleading;
(b) Maintain such records as may be reasonably expected to ensure that the client
assets can readily be identified as being the property of the client; and
(c) If client assets are in the form of documents of title to money, or documents of
title that can be converted into money, make such arrangements as may be
appropriate in the circumstances to safeguard such documents against un-
authorised use.

Possible Measures of Protection

R350.8 SA A professional accountant shall apply appropriate measures to protect the client
assets.
350.8 A1 SA Examples of measures may include:
(a) If the professional accountant administers a large number of client accounts
that hold client monies the professional accountant may utilise an umbrella
account with sub-accounts for each client;
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(b) If the professional service requires the professional accountant to be entrusted

with client monies for an unusually long period and the professional account-
ant is not the auditor or assurance provider, the professional accountant shall
request the client to open a separate bank account and provide the pro-
fessional accountant with appropriate power of attorney or signatory rights
over the account;
(c) Before taking custody of client assets the professional accountant shall con-
sider whether the firm’s indemnity and fidelity insurance is sufficient to cover
incidents of fraud or theft; and
(d) Where a formal engagement letter is entered into covering the professional
service involving custody of client assets, the engagement letter shall address
the risks and responsibilities relating to such client assets.

Custody of Client Assets for Audit or Other Assurance Clients

R350.9 SA A professional accountant shall not accept custody of an audit or assurance client’s
assets unless the threat to independence can be eliminated or reduced to an accept-
able level. The independence requirements in paragraphs R600.7 – R600.8 apply
for audit and review engagements and paragraphs R950.6 – R950.7 apply to other
assurance engagements.

SECTION 360
RESPONDING TO NON-COMPLIANCE WITH LAWS AND
REGULATIONS
Introduction
360.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
360.2 A self-interest or intimidation threat to compliance with the fundamental principles
of integrity and professional behaviour is created when a professional accountant
becomes aware of non-compliance or suspected non-compliance with laws and
regulations.
360.3 A professional accountant might encounter or be made aware of non-compliance or
suspected non-compliance in the course of providing a professional service to a
client. This section guides the professional accountant in assessing the implications
of the matter and the possible courses of action when responding to non-compliance
or suspected non-compliance with:
(a) Laws and regulations generally recognised to have a direct effect on the deter-
mination of material amounts and disclosures in the client’s financial state-
ments; and
(b) Other laws and regulations that do not have a direct effect on the determination
of the amounts and disclosures in the client’s financial statements, but com-
pliance with which might be fundamental to the operating aspects of the
client’s business, to its ability to continue its business, or to avoid material
penalties.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 97

Objectives of the Professional Accountant in Relation to Non-compliance with Laws and

Regulations
360.4 A distinguishing mark of the accountancy profession is its acceptance of the respon-
sibility to act in the public interest. When responding to non-compliance or sus-
pected non-compliance, the objectives of the professional accountant are:
(a) To comply with the principles of integrity and professional behaviour;
(b) By alerting management or, where appropriate, those charged with govern-
ance of the client, to seek to:
(i) Enable them to rectify, remediate or mitigate the consequences of the
identified or suspected non-compliance; or
(ii) Deter the commission of the non-compliance where it has not yet
occurred; and
(c) To take such further action as appropriate in the public interest.

Requirements and Application Material

General
360.5 A1 Non-compliance with laws and regulations (“non-compliance”) comprises acts of
omission or commission, intentional or unintentional, which are contrary to the pre-
vailing laws or regulations committed by the following parties:
(a) A client;
(b) Those charged with governance of a client;
(c) Management of a client; or
(d) Other individuals working for or under the direction of a client.
360.5 A2 Examples of laws and regulations which this section addresses include those that
deal with:
• Fraud, corruption and bribery.
• Money laundering, terrorist financing and proceeds of crime.
• Securities markets and trading.
• Banking and other financial products and services.
• Data protection.
• Tax and pension liabilities and payments.
• Environmental protection.
• Public health and safety.
360.5 A3 Non-compliance might, result in fines, litigation or other consequences for the client
potentially materially affecting its financial statements. Importantly, such non-
compliance might have wider public interest implications in terms of potentially
substantial harm to investors, creditors, employees or the general public. For the
purposes of this section, an act that causes substantial harm is one that results in
serious adverse consequences to any of these parties in financial or non-financial
terms. Examples include the perpetration of a fraud resulting in significant financial
losses to investors, and breaches of environmental laws and regulations endangering
the health or safety of employees or the public.
R360.6 In some jurisdictions, there are legal or regulatory provisions governing how pro-
fessional accountants should address non-compliance or suspected non-compliance.
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These legal or regulatory provisions might differ from or go beyond the provisions
in this section. When encountering such non-compliance or suspected non-
compliance, the professional accountant shall obtain an understanding of those legal
or regulatory provisions and comply with them, including:
(a) Any requirement to report the matter to an appropriate authority; and
(b) Any prohibition on alerting the client.
360.6 A1 A prohibition on alerting the client might arise, for example, pursuant to anti-money
laundering legislation.
360.7 A1 This section applies regardless of the nature of the client, including whether or not
it is a public interest entity.
360.7 A2 A professional accountant who encounters or is made aware of matters that are
clearly inconsequential is not required to comply with this section. Whether a matter
is clearly inconsequential is to be judged with respect to its nature and its impact,
financial or otherwise, on the client, its stakeholders and the general public.
360.7 A3 This section does not address:
(a) Personal misconduct unrelated to the business activities of the client; and
(b) Non-compliance by parties other than those specified in paragraph 360.5 A1.
This includes, for example, circumstances where a professional accountant has
been engaged by a client to perform a due diligence assignment on a third party
entity and the identified or suspected non-compliance has been committed by
that third-party.
The professional accountant might nevertheless find the guidance in this section
helpful in considering how to respond in these situations.

Responsibilities of Management and Those Charged with Governance

360.8 A1 Management, with the oversight of those charged with governance, is responsible
for ensuring that the client’s business activities are conducted in accordance with
laws and regulations. Management and those charged with governance are also
responsible for identifying and addressing any non-compliance by:
(a) The client;
(b) An individual charged with governance of the entity;
(c) A member of management; or
(d) Other individuals working for or under the direction of the client.

Responsibilities of All Professional Accountants

R360.9 Where a professional accountant becomes aware of a matter to which this section
applies, the steps that the professional accountant takes to comply with this section
shall be taken on a timely basis. In taking timely steps, the professional accountant
shall have regard to the nature of the matter and the potential harm to the interests
of the entity, investors, creditors, employees or the general public.

Audits of Financial Statements

Obtaining an Understanding of the Matter
R360.10 If a professional accountant engaged to perform an audit of financial statements
becomes aware of information concerning non-compliance or suspected non-
compliance, the professional accountant shall obtain an understanding of the matter.
This understanding shall include the nature of the non-compliance or suspected non-
compliance and the circumstances in which it has occurred or might occur.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 99

360.10 A1 The professional accountant might become aware of the non-compliance or sus-
pected non-compliance in the course of performing the engagement or through
information provided by other parties.
360.10 A2 The professional accountant is expected to apply knowledge and expertise, and
exercise professional judgement. However, the professional accountant is not
expected to have a level of knowledge of laws and regulations greater than that
which is required to undertake the engagement. Whether an act constitutes non-
compliance is ultimately a matter to be determined by a court or other appropriate
adjudicative body.
360.10 A3 Depending on the nature and significance of the matter, the professional accountant
might consult on a confidential basis with others within the firm, a network firm,
the Institute, the Regulatory Board, or with legal counsel.
R360.11 If the professional accountant identifies or suspects that non-compliance has occur-
red or might occur, the professional accountant shall discuss the matter with the
appropriate level of management and, where appropriate, those charged with
governance.
360.11 A1 The purpose of the discussion is to clarify the professional accountant’s understand-
ing of the facts and circumstances relevant to the matter and its potential con-
sequences. The discussion also might prompt management or those charged with
governance to investigate the matter.
360.11 A2 The appropriate level of management with whom to discuss the matter is a question
of professional judgement. Relevant factors to consider include:
• The nature and circumstances of the matter.
• The individuals actually or potentially involved.
• The likelihood of collusion.
• The potential consequences of the matter.
• Whether that level of management is able to investigate the matter and take
appropriate action.
360.11 A3 The appropriate level of management is usually at least one level above the individ-
ual or individuals involved or potentially involved in the matter. In the context of a
group, the appropriate level might be management at an entity that controls the
client.
360.11 A4 The professional accountant might also consider discussing the matter with internal
auditors, where applicable.
R360.12 If the professional accountant believes that management is involved in the non-
compliance or suspected non-compliance, the professional accountant shall discuss
the matter with those charged with governance.

Addressing the Matter

R360.13 In discussing the non-compliance or suspected non-compliance with management
and, where appropriate, those charged with governance, the professional accountant
shall advise them to take appropriate and timely actions, if they have not already
done so, to:
(a) Rectify, remediate or mitigate the consequences of the non-compliance;
(b) Deter the commission of the non-compliance where it has not yet occurred; or
(c) Disclose the matter to an appropriate authority where required by law or regu-
lation or where considered necessary in the public interest.
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R360.14 The professional accountant shall consider whether management and those charged
with governance understand their legal or regulatory responsibilities with respect to
the non-compliance or suspected non-compliance.
360.14 A1 If management and those charged with governance do not understand their legal or
regulatory responsibilities with respect to the matter, the professional accountant
might suggest appropriate sources of information or recommend that they obtain
legal advice.
R360.15 The professional accountant shall comply with applicable:
(a) Laws and regulations, including legal or regulatory provisions governing the
reporting of non-compliance or suspected non-compliance to an appropriate
authority; and
(b) Requirements under auditing standards, including those relating to:
• Identifying and responding to non-compliance, including fraud.
• Communicating with those charged with governance.
• Considering the implications of the non-compliance or suspected non-
compliance for the auditor’s report.
360.15 A1 Some laws and regulations might stipulate a period within which reports of non-
compliance or suspected non-compliance are to be made to an appropriate authority.
Communication with Respect to Groups
R360.16 Where a professional accountant becomes aware of non-compliance or suspected
non-compliance in either of the following two situations in the context of a group,
the professional accountant shall communicate the matter to the group engagement
partner unless prohibited from doing so by law or regulation:
(a) The professional accountant performs audit work related to a component for
purposes of the group audit; or
(b) The professional accountant is engaged to perform an audit of the financial
statements of a legal entity or business unit that is part of a group for purposes
other than the group audit, for example, a statutory audit.
The communication to the group engagement partner shall be in addition to
responding to the matter in accordance with the provisions of this section.
360.16 A1 The purpose of the communication is to enable the group engagement partner to be
informed about the matter and to determine, in the context of the group audit,
whether and, if so, how to address it in accordance with the provisions in this sec-
tion. The communication requirement in paragraph R360.16 applies regardless of
whether the group engagement partner’s firm or network is the same as or different
from the professional accountant’s firm or network.
R360.17 Where the group engagement partner becomes aware of non-compliance or sus-
pected non-compliance in the course of a group audit, the group engagement partner
shall consider whether the matter might be relevant to:
(a) One or more components subject to audit work for purposes of the group au-
dit; or
(b) One or more legal entities or business units that are part of the group and whose
financial statements are subject to audit for purposes other than the group
audit, for example, a statutory audit.
This consideration shall be in addition to responding to the matter in the context of
the group audit in accordance with the provisions of this section.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 101

R360.18 If the non-compliance or suspected non-compliance might be relevant to one or

more of the components specified in paragraph R360.17(a) and legal entities or
business units specified in paragraph R360.17 (b), the group engagement partner
shall take steps to have the matter communicated to those performing audit work at
the components, legal entities or business units unless prohibited from doing so by
law or regulation. If necessary, the group engagement partner shall arrange for
appropriate inquiries to be made (either of management or from publicly available
information) as to whether the relevant legal entities or business units specified in
paragraph R360.17(b) are subject to audit and, if so, to ascertain to the extent prac-
ticable the identity of the auditors.
360.18 A1 The purpose of the communication is to enable those responsible for audit work at
the components, legal entities or business units to be informed about the matter and
to determine whether and, if so, how to address it in accordance with the provisions
in this section. The communication requirement applies regardless of whether the
group engagement partner’s firm or network is the same as or different from the
firms or networks of those performing audit work at the components, legal entities
or business units.
Determining Whether Further Action Is Needed
R360.19 The professional accountant shall assess the appropriateness of the response of
management and, where applicable, those charged with governance.
360.19 A1 Relevant factors to consider in assessing the appropriateness of the response of
management and, where applicable, those charged with governance include whether:
• The response is timely.
• The non-compliance or suspected non-compliance has been adequately investi-
gated.
• Action has been, or is being, taken to rectify, remediate or mitigate the con-
sequences of any non-compliance.
• Action has been, or is being, taken to deter the commission of any non-
compliance where it has not yet occurred.
• Appropriate steps have been, or are being, taken to reduce the risk of re-
occurrence, for example, additional controls or training.
• The non-compliance or suspected non-compliance has been disclosed to an
appropriate authority where appropriate and, if so, whether the disclosure
appears adequate.
R360.20 In light of the response of management and, where applicable, those charged with
governance, the professional accountant shall determine if further action is needed
in the public interest.
360.20 A1 The determination of whether further action is needed, and the nature and extent of
it, will depend on various factors, including:
• The legal and regulatory framework.
• The urgency of the situation.
• The pervasiveness of the matter throughout the client.
• Whether the professional accountant continues to have confidence in the integ-
rity of management and, where applicable, those charged with governance.
• Whether the non-compliance or suspected non-compliance is likely to recur.
• Whether there is credible evidence of actual or potential substantial harm to the
interests of the entity, investors, creditors, employees or the general public.
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360.20 A2 Examples of circumstances that might cause the professional accountant no longer
to have confidence in the integrity of management and, where applicable, those
charged with governance include situations where:
• The professional accountant suspects or has evidence of their involvement or
intended involvement in any non-compliance.
• The professional accountant is aware that they have knowledge of such non-
compliance and, contrary to legal or regulatory requirements, have not reported,
or authorised the reporting of, the matter to an appropriate authority within a
reasonable period.
R360.21 The professional accountant shall exercise professional judgement in determining
the need for, and nature and extent of, further action. In making this determination,
the professional accountant shall take into account whether a reasonable and
informed third party would be likely to conclude that the professional accountant
has acted appropriately in the public interest.
360.21 A1 Further action that the professional accountant might take includes:
• Disclosing the matter to an appropriate authority even when there is no legal or
regulatory requirement to do so.
• Withdrawing from the engagement and the professional relationship where per-
mitted by law or regulation.
360.21 A2 Withdrawing from the engagement and the professional relationship is not a sub-
stitute for taking other actions that might be needed to achieve the professional
accountant’s objectives under this section. In some jurisdictions, however, there
might be limitations as to the further actions available to the professional account-
ant. In such circumstances, withdrawal might be the only available course of action.
R360.22 Where the professional accountant has withdrawn from the professional relation-
ship pursuant to paragraphs R360.20 and 360.21 A1, the professional accountant
shall, on request by the proposed accountant pursuant to paragraph R320.8, provide
all relevant facts and other information concerning the identified or suspected non-
compliance to the proposed accountant. The predecessor accountant shall do so,
even in the circumstances addressed in paragraph R320.8(b) where the client fails
or refuses to grant the predecessor accountant permission to discuss the client’s
affairs with the proposed accountant, unless prohibited by law or regulation.
360.22 A1 The facts and other information to be provided are those that, in the predecessor
accountant’s opinion, the proposed accountant needs to be aware of before deciding
whether to accept the audit appointment. Section 320 addresses communications
from proposed accountants
R360.23 If the proposed accountant is unable to communicate with the predecessor account-
ant, the proposed accountant shall take reasonable steps to obtain information about
the circumstances of the change of appointment by other means.
360.23 A1 Other means to obtain information about the circumstances of the change of appoint-
ment include inquiries of third parties or background investigations of management
or those charged with governance
360.24 A1 As assessment of the matter might involve complex analysis and judgements, the
professional accountant might consider:
• Consulting internally.
• Obtaining legal advice to understand the professional accountant’s options and
the professional or legal implications of taking any particular course of action.
• Consulting on a confidential basis with a regulatory or professional body.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 103

Determining Whether to Disclose the Matter to an Appropriate Authority

360.25 A1 Disclosure of the matter to an appropriate authority would be precluded if doing so
would be contrary to law or regulation. Otherwise, the purpose of making disclosure
is to enable an appropriate authority to cause the matter to be investigated and action
to be taken in the public interest.
360.25 A2 The determination of whether to make such a disclosure depends in particular on
the nature and extent of the actual or potential harm that is or might be caused by
the matter to investors, creditors, employees or the general public. For example, the
registered auditor might determine that disclosure of the matter to an appropriate
authority is an appropriate course of action if:
• The entity is engaged in bribery (for example, of local or foreign government
officials for purposes of securing large contracts).
• The entity is regulated and the matter is of such significance as to threaten its
license to operate.
• The entity is listed on a securities exchange and the matter might result in
adverse consequences to the fair and orderly market in the entity’s securities or
pose a systemic risk to the financial markets.
• It is likely that the entity would sell products that are harmful to public health or
safety.
• The entity is promoting a scheme to its clients to assist them in evading taxes.
360.25 A3 The determination of whether to make such a disclosure will also depend on exter-
nal factors such as:
• Whether there is an appropriate authority that is able to receive the information,
and cause the matter to be investigated and action to be taken. The appropriate
authority will depend on the nature of the matter. For example, the appropriate
authority would be a securities regulator in the case of fraudulent financial
reporting or an environmental protection agency in the case of a breach of en-
vironmental laws and regulations.
• Whether there exists robust and credible protection from civil, criminal or pro-
fessional liability or retaliation afforded by legislation or regulation, such as
under whistle-blowing legislation or regulation.
• Whether there are actual or potential threats to the physical safety of the profes-
sional accountant or other individuals.
R360.26 If the professional accountant determines that disclosure of the non-compliance or
suspected non-compliance to an appropriate authority is an appropriate course of
action in the circumstances, that disclosure is permitted pursuant to paragraph
R114.3 of the Code. When making such disclosure, the professional accountant
shall act in good faith and exercise caution when making statements and assertions.
The professional accountant shall also consider whether it is appropriate to inform
the client of the professional accountant intentions before disclosing the matter.

Imminent Breach
R360.27 In exceptional circumstances, the professional accountant might become aware of
actual or intended conduct that the professional accountant has reason to believe
would constitute an imminent breach of a law or regulation that would cause sub-
stantial harm to investors, creditors, employees or the general public. Having first
considered whether it would be appropriate to discuss the matter with management
or those charged with governance of the entity, the professional accountant shall
exercise professional judgement and determine whether to disclose the matter
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immediately to an appropriate authority in order to prevent or mitigate the con-

sequences of such imminent breach. If disclosure is made, that disclosure is permit-
ted pursuant to paragraph R114.3 of the Code.

Documentations
R360.28 In relation to non-compliance or suspected non-compliance that falls within the
scope of this section, the professional accountant shall document:
• How management and, where applicable, those charged with governance have
responded to the matter.
• The courses of action the professional accountant considered, the judgements
made and the decisions that were taken, having regard to the reasonable and
informed third party test.
• How the professional accountant is satisfied that the professional accountant has
fulfilled the responsibility set out in paragraph R360.20.
360.28 A1 This documentation is in addition to complying with the documentation require-
ments under applicable auditing standards. ISAs, for example, require a professional
accountant performing an audit of financial statements to:
• Prepare documentation sufficient to enable an understanding of significant
matters arising during the audit, the conclusions reached, and significant pro-
fessional judgements made in reaching those conclusions;
• Document discussions of significant matters with management, those charged
with governance, and others, including the nature of the significant matters dis-
cussed and when and with whom the discussions took place; and
• Document identified or suspected non-compliance, and the results of discussion
with management and, where applicable, those charged with governance and
other parties outside the entity.

Professional Services Other than Audits of Financial Statements

Obtaining an Understanding of the Matter and Addressing It with Management and Those
Charged with Governance
R360.29 If a professional accountant engaged to provide a professional service other than an
audit of financial statements becomes aware of information concerning non-
compliance or suspected non-compliance, the professional accountant shall seek to
obtain an understanding of the matter. This understanding shall include the nature
of the non-compliance or suspected non-compliance and the circumstances in which
it has occurred or might be about to occur.
360.29 A1 The professional accountant is expected to apply knowledge and expertise, and
exercise professional judgement. However, the professional accountant is not ex-
pected to have a level of understanding of laws and regulations beyond that which
is required for the professional service for which the professional accountant was
engaged. Whether an act constitutes actual non-compliance is ultimately a matter to
be determined by a court or other appropriate adjudicative body.
360.29 A2 Depending on the nature and significance of the matter, the professional accountant
might consult on a confidential basis with others within the firm, a network firm or
the Institute, the Regulatory Board, or with legal counsel.
R360.30 If the professional accountant identifies or suspects that non-compliance has occur-
red or might occur, the professional accountant shall discuss the matter with the
appropriate level of management. If the professional accountant has access to those
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 105

charged with governance, the professional accountant shall also discuss the matter
with them where appropriate.
360.30 A1 The purpose of the discussion is to clarify the professional accountant’s understand-
ing of the facts and circumstances relevant to the matter and its potential conse-
quences. The discussion also might prompt management or those charged with
governance to investigate the matter.
360.30 A2 The appropriate level of management with whom to discuss the matter is a question
of professional judgement. Relevant factors to consider include:
• The nature and circumstances of the matter.
• The individuals actually or potentially involved.
• The likelihood of collusion.
• The potential consequences of the matter.
• Whether that level of management is able to investigate the matter and take
appropriate action.
Communicating the Matter to the Entity’s External Auditor
R360.31 If the professional accountant is performing a non-audit service for:
(a) An audit client of the firm; or
(b) A component of an audit client of the firm,
the professional accountant shall communicate the non-compliance or suspected
non-compliance within the firm, unless prohibited from doing so by law or regu-
lation. The communication shall be made in accordance with the firm’s protocols
or procedures. In the absence of such protocols and procedures, it shall be made
directly to the audit engagement partner.
R360.32 If the professional accountant is performing a non-audit service for:
(a) An audit client of a network firm; or
(b) A component of an audit client of a network firm,
the professional accountant shall consider whether to communicate the non-
compliance or suspected non-compliance to the network firm. Where the commu-
nication is made, it shall be made in accordance with the network’s protocols or
procedures. In the absence of such protocols and procedures, it shall be made dir-
ectly to the audit engagement partner.
R360.33 If the professional accountant is performing a non-audit service for a client that is
not:
(a) An audit client of the firm or a network firm; or
(b) A component of an audit client of the firm or a network firm,
the professional accountant shall consider whether to communicate the non-
compliance or suspected non-compliance to the firm that is the client’s external
auditor, if any.
Relevant Factors to Consider
360.34 A1 Factors relevant to considering the communication in accordance with paragraphs
R360.31 to R360.33 include:
• Whether doing so would be contrary to law or regulation.
• Whether there are restrictions about disclosure imposed by a regulatory agency
or prosecutor in an ongoing investigation into the non-compliance or suspected
non-compliance.
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• Whether the purpose of the engagement is to investigate potential non-

compliance within the entity to enable it to take appropriate action.
• Whether management or those charged with governance have already informed
the entity’s external auditor about the matter.
• The likely materiality of the matter to the audit of the client’s financial statements
or, where the matter relates to a component of a group, its likely materiality to
the audit of the group financial statements.
Purpose of Communication
360.35 A1 In the circumstances addressed in paragraphs R360.31 to R360.33, the purpose of
the communication is to enable the audit engagement partner to be informed about
the non-compliance or suspected non-compliance and to determine whether and, if
so, how to address it in accordance with the provisions of this section.
Considering Whether Further Action Is Needed
R360.36 The professional accountant shall also consider whether further action is needed in
the public interest.
360.36 A1 Whether further action is needed, and the nature and extent of it, will depend on
factors such as:
• The legal and regulatory framework.
• The appropriateness and timeliness of the response of management and, where
applicable, those charged with governance.
• The urgency of the situation.
• The involvement of management or those charged with governance in the
matter.
• The likelihood of substantial harm to the interests of the client, investors, credit-
ors, employees or the general public.
360.36 A2 Further action by the professional accountant might include:
• Disclosing the matter to an appropriate authority even when there is no legal or
regulatory requirement to do so.
• Withdrawing from the engagement and the professional relationship where per-
mitted by law or regulation.
360.36 A3 In considering whether to disclose to an appropriate authority, relevant factors to
take into account include:
• Whether doing so would be contrary to law or regulation.
• Whether there are restrictions about disclosure imposed by a regulatory agency
or prosecutor in an ongoing investigation into the non-compliance or suspected
non-compliance.
• Whether the purpose of the engagement is to investigate potential non-
compliance within the entity to enable it to take appropriate action.
R360.37 If the professional accountant determines that disclosure of the non-compliance or
suspected non-compliance to an appropriate authority is an appropriate course of
action in the circumstances, that disclosure is permitted pursuant to paragraph
R114.3 of the Code. When making such disclosure, the professional accountant
shall act in good faith and exercise caution when making statements and assertions.
The professional accountant shall also consider whether it is appropriate to inform
the client of the professional accountant’s intentions before disclosing the matter.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 107

Imminent Breach
R360.38 In exceptional circumstances, the professional accountant might become aware of
actual or intended conduct that the professional accountant has reason to believe
would constitute an imminent breach of a law or regulation that would cause sub-
stantial harm to investors, creditors, employees or the general public. Having first
considered whether it would be appropriate to discuss the matter with management
or those charged with governance of the entity, the professional accountant shall
exercise professional judgement and determine whether to disclose the matter im-
mediately to an appropriate authority in order to prevent or mitigate the consequences
of such imminent breach of law or regulation. If disclosure is made, that disclosure
is permitted pursuant to paragraph R114.3 of the Code.
Seeking Advice
360.39 A1 The professional accountant might consider:
• Consulting internally.
• Obtaining legal advice to understand the professional or legal implications of
taking any particular course of action.
• Consulting on a confidential basis with a regulatory or professional body.
Documentation
360.40 A1 In relation to non-compliance or suspected non-compliance that falls within the
scope of this section, the registered auditor is encouraged to document:
• The matter.
• The results of discussion with management and, where applicable, those charged
with governance and other parties.
• How management and, where applicable, those charged with governance have
responded to the matter.
• The courses of action the registered auditor considered, the judgements made
and the decisions that were taken.
• How the registered auditor is satisfied that the registered auditor has fulfilled
the responsibility set out in paragraph R360.36

Page
PART 4A – INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS
Section 400 Applying the Conceptual Framework to Independence for Audit
and Review Engagements ............................................................................... 108
Section 410 Fees ................................................................................................................. 130
Section 411 Compensation and Evaluation Policies .......................................................... 140
Section 420 Gifts and Hospitality ....................................................................................... 141
Section 430 Actual or Threatened Litigation ..................................................................... 141
Section 510 Financial Interests ........................................................................................... 142
Section 511 Loans and Guarantees ..................................................................................... 145
Section 520 Business Relationships ................................................................................... 146
Section 521 Family and Personal Relationships................................................................. 148
ET – 108 SAICA Student Handbook 2024/2025

Page
Section 522 Recent Service with an Audit Client .............................................................. 150
Section 523 Serving as a Director or Officer of an Audit Client ....................................... 151
Section 524 Employment with an Audit Client .................................................................. 152
Section 525 Temporary Personnel Assignments ................................................................ 154
Section 540 Long Association of Personnel (Including Partner Rotation) with an
Audit Client .................................................................................................... 155
Section 600 Provision of Non-Assurance Services to an Audit Client .............................. 159
Subsection 601 – Accounting and Bookkeeping Services .............................................. 167
Subsection 602 – Administrative Services ...................................................................... 169
Subsection 603 – Valuation Services .............................................................................. 170
Subsection 604 – Tax Services ........................................................................................ 171
Subsection 605 – Internal Audit Services........................................................................ 178
Subsection 606 – Information Technology Systems Services ........................................ 180
Subsection 607 – Litigation Support Services ................................................................. 182
Subsection 608 – Legal Services ..................................................................................... 184
Subsection 609 – Recruiting Services ............................................................................. 187
Subsection 610 – Corporate Finance Services ................................................................ 188
Section 800 Reports on Special Purpose Financial Statements that Include a Restriction
on Use and Distribution (Audit and Review Engagements) .......................... 190

INDEPENDENCE STANDARDS
(PARTS 4A and 4B)

PART 4A – INDEPENDENCE FOR AUDIT AND REVIEW

ENGAGEMENTS
SECTION 400
APPLYING THE CONCEPTUAL FRAMEWORK TO
INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS
Introduction
General
400.1 It is in the public interest and required by the Code that professional accountants in
public practice be independent when performing audit or review engagements.
400.2 This Part applies to both audit and review engagements unless otherwise stated. The
terms “audit,” “audit team,” “audit engagement,” “audit client,” and “audit report”
apply equally to review, review team, review engagement, review client, and review
engagement report.
400.3 In this Part, the term “professional accountant” refers to individual professional
accountants in public practice and their firms.
400.4 ISQM 1 requires a firm to design, implement and operate a system of quality
management for audits or reviews of financial statements performed by the firm. As
part of this system of quality management, ISQM 1 requires the firm to establish
quality objectives that address the fulfilment of responsibilities in accordance with
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 109

relevant ethical requirements, including those related to independence., Under ISQM

1, relevant ethical requirements are those related to the firm, its personnel and, when
applicable, others subject to the independence requirements to which the firm and
the firm’s engagements are subject. ISAs and ISREs establish responsibilities for
engagement partners and engagement teams at the level of the engagement for
audits and reviews, respectively. The allocation of responsibilities within a firm will
depend on its size, structure and organisation. Many of the provisions of this Part
do not prescribe the specific responsibility of individuals within the firm for actions
related to independence, instead referring to “firm” for ease of reference. A firm
assigns operational responsibility for compliance with independence requirements
to an individual(s) in accordance with ISQM1. In addition, an individual professional
accountant remains responsible for compliance with any provisions that apply to
that professional accountant’s activities, interests or relationships.
400.5 Independence is linked to the principles of objectivity and integrity. It comprises:
(a) Independence of mind – the state of mind that permits the expression of a con-
clusion without being affected by influences that compromise professional
judgement, thereby allowing an individual to act with integrity, and exercise
objectivity and professional scepticism.
(b) Independence in appearance – the avoidance of facts and circumstances that
are so significant that a reasonable and informed third party would be likely
to conclude that a firm’s, or an audit team member’s, integrity, objectivity or
professional scepticism has been compromised.
In this Part, references to an individual or firm being “independent” mean that the
individual or firm has complied with the provisions of this Part.
400.6 When performing audit engagements, the Code requires firms to comply with the
fundamental principles and be independent. This Part sets out specific requirements
and application material on how to apply the conceptual framework to maintain
independence when performing such engagements. The conceptual framework set
out in Section 120 applies to independence as it does to the fundamental principles
set out in Section 110. Section 405 sets out specific requirements and application
material applicable in a group audit.
400.7 This Part describes:
(a) Facts and circumstances, including professional activities, interests and
relationships, that create or might create threats to independence;
(b) Potential actions, including safeguards, that might be appropriate to address
any such threats; and
(c) Some situations where the threats cannot be eliminated or there can be no
safeguards to reduce them to an acceptable level.

Engagement Team and Audit Team

400.8 This Part applies to all audit team members, including engagement team members.
400.9 An engagement team for an audit engagement includes all partners and staff in the
firm who perform audit work on the engagement, and any other individuals who
perform audit procedures who are from:
(a) A network firm; or
(b) A firm that is not a network firm, or another service provider.
For example, an individual from a component auditor firm who performs audit pro-
cedures on the financial information of a component for purposes of a group audit
is a member of the engagement team for the group audit.
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400.10 In ISQM 1, a service provider includes an individual or organisation external to the

firm that provides a resource that is used in the performance of engagements. Ser-
vice providers exclude the firm, a network firm or other structures or organisations
in the network.
400.11 An audit engagement might involve experts within, or engaged by, the firm, a net-
work firm, or a component auditor firm outside a group auditor firm’s network, who
assist in the engagement. Depending on the role of the individuals, they might be
engagement team or audit team members. For example:
• Individuals with expertise in a specialised area of accounting or auditing who
perform audit procedures are engagement team members. These include, for
example, individuals with expertise in accounting for income taxes or in analys-
ing complex information produced by automated tools and techniques for the
purpose of identifying unusual or unexpected relationships.
• Individuals within, or engaged by, the firm who have direct influence over the
outcome of the audit engagement through consultation regarding technical or
industry-specific issues, transactions or events for the engagement are audit
team members but not engagement team members.
However, individuals who are external experts are neither engagement team nor
audit team members.
400.12 If the audit engagement is subject to an engagement quality review, the engagement
quality reviewer and any other individuals performing the engagement quality
review are audit team members but not engagement team members.

Public Interest Entities

400.13 Some of the requirements and application material set out in this Part are applicable
only to the audit of financial statements of public interest entities, reflecting signifi-
cant public interest in the financial condition of these entities due to the potential
impact of their financial well-being on stakeholders.
400.14 Factors to consider in evaluating the extent of public interest in the financial con-
dition of an entity include:
• The nature of the business or activities, such as taking on financial obligations
to the public as part of the entity’s primary business.
• Whether the entity is subject to regulatory supervision designed to provide con-
fidence that the entity will meet its financial obligations.
• Size of the entity.
• The importance of the entity to the sector in which it operates including how
easily replaceable it is in the event of financial failure.
• Number and nature of stakeholders including investors, customers, creditors and
employees.
• The potential systemic impact on other sectors and the economy as a whole, in
the event of financial failure of the entity.
400.15 Stakeholders have heightened expectations regarding the independence of a firm
performing an audit engagement for a public interest entity because of the signifi-
cance of the public interest in the financial condition of the entity. The purpose of
the requirements and application material for public interest entities as described in
paragraph 400.13 is to meet these expectations, thereby enhancing stakeholders’
confidence in the entity’s financial statements that can be used when assessing the
entity’s financial condition.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 111

Reports that Include a Restriction on Use and Distribution

400.16 An audit report might include a restriction on use and distribution. If it does and the
conditions set out in Section 800 are met, then the independence requirements in
this Part may be modified as provided in Section 800.

Assurance Engagements other than Audit and Review Engagements

400.17 Independence standards for assurance engagements that are not audit or review
engagements are set out in Part 4B – Independence for Assurance Engagements
Other than Audit and Review Engagements.

Requirements and Application Material

General
R400.18 A firm performing an audit engagement shall be independent.
R400.19 A firm shall apply the conceptual framework set out in Section 120 to identify,
evaluate and address threats to independence in relation to an audit engagement.

Prohibition on Assuming Management Responsibilities

R400.20 A firm or a network firm shall not assume a management responsibility for an audit
client.
400.20 A1 Management responsibilities involve controlling, leading and directing an entity,
including making decisions regarding the acquisition, deployment and control of
human, financial, technological, physical and intangible resources.
400.20 A2 When a firm or a network firm assumes a management responsibility for an audit
client, self-review, self-interest and familiarity threats are created. Assuming a
management responsibility might also create an advocacy threat because the firm
or network firm becomes too closely aligned with the views and interests of
management.
400.20 A3 Determining whether an activity is a management responsibility depends on the
circumstances and requires the exercise of professional judgment. Examples of
activities that would be considered a management responsibility include:
• Setting policies and strategic direction.
• Hiring or dismissing employees.
• Directing and taking responsibility for the actions of employees in relation to
the employees ‘work for the entity.
• Authorising transactions.
• Controlling or managing bank accounts or investments.
• Deciding which recommendations of the firm or network firm or other third
parties to implement.
• Reporting to those charged with governance on behalf of management.
• Taking responsibility for:
o The preparation and fair presentation of the financial statements in accord-
ance with the applicable financial reporting framework.
o Designing, implementing, monitoring or maintaining internal control.
400.20 A4 Subject to compliance with paragraph R400.21, providing advice and recommen-
dations to assist the management of an audit client in discharging its responsibilities
is not assuming a management responsibility. The provision of advice and
ET – 112 SAICA Student Handbook 2024/2025

recommendations to an audit client might create a self-review threat and is

addressed in Section 600.
R400.21 When performing a professional activity for an audit client, the firm shall be satis-
fied that client management makes all judgments and decisions that are the proper
responsibility of management. This includes ensuring that the client’s management:
(a) Designates an individual who possesses suitable skill, knowledge and experi-
ence to be responsible at all times for the client’s decisions and to oversee the
activities. Such an individual, preferably within senior management, would
understand:
(i) The objectives, nature and results of the activities; and
(ii) The respective client and firm or network firm responsibilities.
However, the individual is not required to possess the expertise to perform or
re-perform the activities.
(b) Provides oversight of the activities and evaluates the adequacy of the results
of the activities performed for the client’s purpose.
(c) Accepts responsibility for the actions, if any, to be taken arising from the
results of the activities.
400.21 A1 When technology is used in performing a professional activity for an audit client,
the requirements in paragraphs R400.20 and R400.21 apply regardless of the nature
or extent of such use of the technology.

Public Interest Entities

R400.22 For the purposes of this Part, a firm shall treat an entity as a public interest entity
when it falls within any of the following categories:
(a) A publicly traded entity;
(b) An entity one of whose main functions is to take deposits from the public;
(c) An entity one of whose main functions is to provide insurance to the public;
or
(d) An entity specified as such by law, regulation or professional standards to
meet the purpose described in paragraph 400.15.
400.22 A1 When terms other than public interest entity are applied to entities by law, regulation
or professional standards to meet the purpose described in paragraph 400.10, such
terms are regarded as equivalent terms. However, if law, regulation or professional
standards designate entities as “public interest entities” for reasons unrelated to the
purpose described in paragraph 400.10, that designation does not necessarily mean
that such entities are public interest entities for the purpose of the Code.
400.22 SA A client’s public interest score, as calculated in terms of the South African Com-
panies Act No. 71 of 2008 (Act No. 71 of 2008), should not be used to determine
whether the client is a public interest entity in terms of this Code. The two concepts
should not be confused or used interchangeably.
R400.23 In complying with the requirement in paragraph R400.22, a firm shall take into
account more explicit definitions established by law, regulation or professional
standards for the categories set out in paragraph R400.22 (a) to (c).
400.23 A1 The categories set out in paragraph R400.22(a) to (c) are broadly defined and no
recognition is given to any size or other factors that can be relevant in a specific
jurisdiction. The IESBA Code therefore provides for those bodies responsible for
setting ethics standards for professional accountants to more explicitly define these
categories by, for example:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 113

•
Making reference to specific public markets for trading securities.
•
Making reference to the local law or regulation defining banks or insurance
companies.
• Incorporating exemptions for specific types of entities, such as an entity with
mutual ownership.
• Setting size criteria for certain types of entities.
Considering the guidance above, paragraph R400.23 SA more explicitly defines
specific types of entities for South Africa, taking into account paragraph R400.22
(a) to (c).
400.23 A2 Paragraph R400.22 (d) anticipates that those bodies responsible for setting ethics
standards for professional accountants will add categories of public interest entities
to meet the purpose described in paragraph 400.15, taking into account factors such
as those set out in paragraph 400.14. Depending on the facts and circumstances in
a specific jurisdiction, such categories could include:
• Pension funds.
• Collective investment vehicles.
• Private entities with large numbers of stakeholders (other than investors).
• Not-for-profit organisations or governmental entities.
• Public utilities.
Considering the guidance above, paragraph R400.23 SA adds certain categories of
public interest entities to meet the purpose described in paragraph 400.15, taking
into account the factors set out in paragraph 400.14.
R400.23 SA Given the factors set out in paragraph 400.14, the purpose described in paragraph
400.15, the broadly defined categories of public interest entities in R400.22, and
the guidance from the IESBA in 400.23 A1 and 400.23 A2, a firm shall treat the
following entities as public interest entities:
(a) Publicly traded entities.
(b) Public entities listed in Schedule 2 of the Public Finance Management Act
No. 1 of 1999, excluding any subsidiary or entity under the ownership control8
of these public entities.
(c) Other public entities or institutions, as referred to in Section 4(3) of the Public
Audit Act No. 25 of 2004, including any subsidiary or entity under the owner-
ship control of these public entities and public entities listed in (b) above,
authorised in terms of legislation to receive money for a public purpose:
(i) with annual expenditure in excess of R5 billion; or
(ii) that are responsible for the administration of funds for the benefit of
the public in excess of R10 billion as at financial year-end.
(d) Universities, as defined in the Higher Education Act No. 101 of 1997, exclud-
ing private universities registered in terms of that Act.
(e) Banks, as defined in the Banks Act No. 94 of 1990, and Mutual Banks, as
defined in the Mutual Banks Act No. 124 of 1993.
(f) Market infrastructures, as defined in the Financial Markets Act No. 19 of
2012.
(g) Insurers, as defined in the Insurance Act No. 18 of 2017.

________________________

8 Ownership control is defined in the Public Finance Management Act No1. of 1999.
ET – 114 SAICA Student Handbook 2024/2025

(h) Collective Investment Schemes, including hedge funds, as defined in the Col-
lective Investment Schemes Control Act No. 45 of 2002, that hold assets in
excess of R30 billion.
(i) Funds, as defined in the Pension Funds Act No. 24 of 1956, that hold or are
otherwise responsible for safeguarding client assets in excess of R30 billion.
(j) Pension Fund Administrators, in terms of Section 13B of the Pension Funds
Act No. 24 of 1956, with total assets under administration in excess of
R30 billion.
(k) Financial Services Providers, as defined in the Financial Advisory and Inter-
mediary Services Act No. 37 of 2002, holding financial products and funds on
behalf of clients in excess of R30 billion.
(l) Medical Schemes, as defined in the Medical Schemes Act No. 131 of 1998,
with a membership in excess of 89 000 beneficiaries as at financial year-end.
(m) Authorised users of an exchange, as defined in the Financial Markets Act
No. 19 of 2012, that hold or are otherwise responsible for safeguarding client
assets in excess of R30 billion.
(n) Other issuers of debt and equity instruments to the public9.
400.24 A1 A firm is encouraged to determine whether to treat other entities as public interest
entities for the purposes of this Part. When making this determination, the firm might
consider the factors set out in paragraph 400.14 as well as the following factors:
• Whether the entity is likely to become a public interest entity in the near future.
• Whether in similar circumstances, a predecessor firm has applied independence
requirements for public interest entities to the entity.
• Whether in similar circumstances, the firm has applied independence require-
ments for public interest entities to other entities.
• Whether the entity has been specified as not being a public interest entity by law,
regulation or professional standards.
• Whether the entity or other stakeholders requested the firm to apply independ-
ence requirements for public interest entities to the entity and, if so, whether
there are any reasons for not meeting this request.
• The entity’s corporate governance arrangements, for example, whether those
charged with governance are distinct from the owners or management.
Public Disclosure – Application of Independence Requirements for Public Interest Entities
R400.25 Subject to paragraph R400.26, when a firm has applied the independence require-
ments for public interest entities as described in paragraph 400.13 in performing an
audit of the financial statements of an entity, the firm shall publicly disclose that
fact in a manner deemed appropriate, taking into account the timing and accessibil-
ity of the information to stakeholders.
R400.26 As an exception to paragraph R400.25, a firm may not make such a disclosure if
doing so will result in disclosing confidential future plans of the entity.

________________________

9 For the purposes of R400.23 SA (n), “the public” shall mean the public in general or large sectors of the public,
such as participants in Broad-Based Black Economic Empowerment schemes or participants in offers to large in-
dustry sectors that result in the debt or equity instruments being owned by a large number and wide range of stake-
holders.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 115

Related Entities
R400.27 As defined, an audit client that is a publicly traded entity in accordance with para-
graphs R400.22 and R400.23 includes all of its related entities. For all other entities,
references to an audit client in this Part include related entities over which the client
has direct or indirect control. When the audit team knows, or has reason to believe,
that a relationship or circumstance involving any other related entity of the client is
relevant to the evaluation of the firm’s independence from the client, the audit team
shall include that related entity when identifying, evaluating and addressing threats
to independence.
[Paragraphs 400.28 to 400.29 are intentionally left blank]

Period During which Independence is Required

R400.30 Independence, as required by this Part, shall be maintained during both:
(a) The engagement period; and
(b) The period covered by the financial statements.
400.30 A1 The engagement period starts when the engagement team begins to perform the
audit. The engagement period ends when the audit report is issued. When the engage-
ment is of a recurring nature, it ends at the later of the notification by either party
that the professional relationship has ended or the issuance of the final audit report.
R400.31 If an entity becomes an audit client during or after the period covered by the finan-
cial statements on which the firm will express an opinion, the firm shall determine
whether any threats to independence are created by:
(a) Financial or business relationships with the audit client during or after the
period covered by the financial statements but before accepting the audit
engagement; or
(b) Previous services provided to the audit client by the firm or a network firm.
400.31 A1 Threats to independence are created if a non-assurance service was provided to an
audit client during, or after the period covered by the financial statements, but
before the engagement team begins to perform the audit, and the service would not
be permitted during the engagement period.
400.31 A2 A factor to be considered in such circumstances is whether the results of the service
provided might form part of or affect the accounting records, the internal controls
over financial reporting, or the financial statements on which the firm will express
an opinion
400.31 A3 Examples of actions that might be safeguards to address such threats to independ-
ence include:
• Not assigning professionals who performed the non-assurance service be mem-
bers of the engagement team.
• Having an appropriate reviewer review the audit work and non-assurance ser-
vice as appropriate.
• Engaging another firm outside of the network to evaluate the results of the non-
assurance service or having another firm outside of the network re-perform the
non-assurance service to the extent necessary to enable the other firm to take
responsibility for the service.
400.31 A4 A threat to independence created by the provision of a non-assurance service by a
firm or a network firm prior to the audit engagement period or prior to the period
ET – 116 SAICA Student Handbook 2024/2025

covered by the financial statements on which the firm will express an opinion is
eliminated or reduced to an acceptable level if the results of such service have been
used or implemented in a period audited by another firm.

Audit Clients that are Public Interest Entities

R400.32 A firm shall not accept appointment as auditor of a public interest entity to which
the firm or the network firm has provided a non-assurance service prior to such
appointment that might create a self-review threat in relation to the financial state-
ments on which the firm will express an opinion unless:
(a) The provision of such service ceases before the commencement of the audit
engagement period;
(b) The firm takes action to address any threats to its independence; and
(c) The firm determines that, in the view of a reasonable and informed third party,
any threats to the firm’s independence have been or will be eliminated or
reduced to an acceptable level.
400.32 A1 Actions that might be regarded by a reasonable and informed third party as elimin-
ating or reducing to an acceptable level any threats to independence created by the
provision of non-assurance services to a public interest entity prior to appointment
as auditor of that entity include:
• The results of the service had been subject to auditing procedures in the course
of the audit of the prior year’s financial statements by a predecessor firm.
• The firm engages a professional accountant, who is not a member of the firm
expressing the opinion on the financial statements, to perform a review of the
first audit engagement affected by the self-review threat consistent with the
objective of an engagement quality review.
• The public interest entity engages another firm outside of the network to:
(i) Evaluate the results of the non-assurance service; or
(ii) Re-perform the service,
to the extent necessary to enable the other firm to take responsibility for the
result of the service.
[Paragraphs 400.33 to 400.39 are intentionally left blank]

Communication with those Charged with Governance

400.40 A1 Paragraphs R300.9 and R300.10 set out requirements with respect to communi-
cating with those charged with governance.
400.40 A2 Even when not required by the Code, applicable professional standards, laws or
regulations, regular communication is encouraged between a firm and those charged
with governance of the client regarding relationships and other matters that might,
in the firm’s opinion, reasonably bear on independence. Such communication
enables those charged with governance to:
(a) Consider the firm’s judgements in identifying and evaluating threats;
(b) Consider how threats have been addressed including the appropriateness of
safeguards when they are available and capable of being applied; and
(c) Take appropriate action.
Such an approach can be particularly helpful with respect to intimidation and famil-
iarity threats.
[Paragraphs 400.41 to 400.49 are intentionally left blank]
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 117

Network Firms
400.50 A1 Firms frequently form larger structures with other firms and entities to enhance their
ability to provide professional services. Whether these larger structures create a net-
work depends on the particular facts and circumstances. It does not depend on
whether the firms and entities are legally separate and distinct.
R400.51 A network firm shall be independent of the audit clients of the other firms within
the network as required by this Part.
400.51 A1 The independence requirements in this Part that apply to a network firm apply to
any entity that meets the definition of a network firm. It is not necessary for the
entity also to meet the definition of a firm. For example, a consulting practice or
professional law practice might be a network firm but not a firm.
R400.52 When associated with a larger structure of other firms and entities, a firm shall:
(a) Exercise professional judgement to determine whether a network is created by
such a larger structure;
(b) Consider whether a reasonable and informed third party would be likely to
conclude that the other firms and entities in the larger structure are associated
in such a way that a network exists; and
(c) Apply such judgement consistently throughout such a larger structure.
R400.53 When determining whether a network is created by a larger structure of firms and
other entities, a firm shall conclude that a network exists when such a larger struc-
ture is aimed at co-operation and:
(a) It is clearly aimed at profit or cost sharing among the entities within the struc-
ture. (Ref: Para. 400.53 A2);
(b) The entities within the structure share common ownership, control or manage-
ment. (Ref: Para. 400.53 A3);
(c) The entities within the structure share common quality management policies
and procedures. (Ref: Para. 400.53 A4);
(d) The entities within the structure share a common business strategy. (Ref:
Para. 400.53 A5);
(e) The entities within the structure share the use of a common brand name.
(Ref: Para. 400.53 A6, 400.53 A7); or
(f) The entities within the structure share a significant part of professional
resources. (Ref: Para 400.53 A8, 400.53 A9).
400.53 A1 There might be other arrangements between firms and entities within a larger struc-
ture that constitute a network, in addition to those arrangements described in para-
graph R400.53. However, a larger structure might be aimed only at facilitating the
referral of work, which in itself does not meet the criteria necessary to constitute a
network.
400.53 A2 The sharing of immaterial costs does not in itself create a network. In addition, if
the sharing of costs is limited only to those costs related to the development of audit
methodologies, manuals or training courses, this would not in itself create a network.
Further, an association between a firm and an otherwise unrelated entity jointly to
provide a service or develop a product does not in itself create a network.
(Ref: Para. R400.53(a)).
400.53 A3 Common ownership, control or management might be achieved by contract or other
means. (Ref: Para. R400.53(b)).
400.53 A4 Common quality management policies and procedures are those designed, imple-
mented and operated across the larger structure. (Ref: Para. R400.53(c)).
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400.53 A5 Sharing a common business strategy involves an agreement by the entities to achieve
common strategic objectives. An entity is not a network firm merely because it
co-operates with another entity solely to respond jointly to a request for a proposal
for the provision of a professional service. (Ref: Para. R400.53(d)).
400.53 A6 A common brand name includes common initials or a common name. A firm is using
a common brand name if it includes, for example, the common brand name as part
of, or along with, its firm name when a partner of the firm signs an audit report.
(Ref: Para. R400.53(e)).
400.53 A7 Even if a firm does not belong to a network and does not use a common brand name
as part of its firm name, it might appear to belong to a network if its stationery or
promotional materials refer to the firm being a member of an association of firms.
Accordingly, if care is not taken in how a firm describes such membership, a per-
ception might be created that the firm belongs to a network. (Ref: Para. R400.53(e)).
400.53 A8 Professional resources include:
• Common systems that enable firms to exchange information such as client data,
billing and time records.
• Partners and other personnel.
• Technical departments that consult on technical or industry specific issues,
transactions or events for assurance engagements.
• Audit methodology or audit manuals.
• Training courses and facilities. (Ref: Para. R400.53(f)).
400.53 A9 Whether the shared professional resources are significant depends on the circum-
stances. For example:
• The shared resources might be limited to common audit methodology or audit
manuals, with no exchange of personnel or client or market information. In such
circumstances, it is unlikely that the shared resources would be significant. The
same applies to a common training endeavour.
• The shared resources might involve the exchange of personnel or information,
such as where personnel are drawn from a shared pool, or where a common
technical department is created within the larger structure to provide partici-
pating firms with technical advice that the firms are required to follow. In such
circumstances, a reasonable and informed third party is more likely to conclude
that the shared resources are significant. (Ref: Para. R400.53(f)).
R400.54 If a firm or a network sells a component of its practice, and the component continues
to use all or part of the firm’s or network’s name for a limited time, the relevant
entities shall determine how to disclose that they are not network firms when pre-
senting themselves to outside parties.
400.54 A1 The agreement for the sale of a component of a practice might provide that, for a
limited period of time, the sold component can continue to use all or part of the
name of the firm or the network, even though it is no longer connected to the firm
or the network. In such circumstances, while the two entities might be practicing
under a common name, the facts are such that they do not belong to a larger structure
aimed at cooperation. The two entities are therefore not network firms.
[Paragraphs 400.55 to 400.59 are intentionally left blank]

General Documentation of Independence for Audit and Review Engagements

R400.60 A firm shall document conclusions regarding compliance with this Part, and the
substance of any relevant discussions that support those conclusions. In particular:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 119

(a)
When safeguards are applied to address a threat, the firm shall document the
nature of the threat and the safeguards in place or applied; and
(b) When a threat required significant analysis and the firm concluded that the
threat was already at an acceptable level, the firm shall document the nature
of the threat and the rationale for the conclusion.
400.60 A1 Documentation provides evidence of the firm’s judgements in forming conclusions
regarding compliance with this Part. However, a lack of documentation does not
determine whether a firm considered a particular matter or whether the firm is
independent.
[Paragraphs 400.61 to 400.69 are intentionally left blank]

Mergers and Acquisitions

When a Client Merger Creates a Threat
400.70 A1 An entity might become a related entity of an audit client because of a merger or
acquisition. A threat to independence and, therefore, to the ability of a firm to con-
tinue an audit engagement might be created by previous or current interests or
relationships between a firm or network firm and such a related entity.
R400.71 In the circumstances set out in paragraph 400.70 A1,
(a) The firm shall identify and evaluate previous and current interests and relation-
ships with the related entity that, taking into account any actions taken to
address the threat, might affect its independence and therefore its ability to
continue the audit engagement after the effective date of the merger or acqui-
sition; and
(b) Subject to paragraph R400.72, the firm shall take steps to end any interests or
relationships that are not permitted by the Code by the effective date of the
merger or acquisition.
R400.72 As an exception to paragraph R400.71(b), if the interest or relationship cannot
reasonably be ended by the effective date of the merger or acquisition, the firm shall:
(a) Evaluate the threat that is created by the interest or relationship; and
(b) Discuss with those charged with governance the reasons why the interest or
relationship cannot reasonably be ended by the effective date and the evalu-
ation of the level of the threat.
400.72 A1 In some circumstances, it might not be reasonably possible to end an interest or
relationship creating a threat by the effective date of the merger or acquisition. This
might be because the firm provides a non-assurance service to the related entity,
which the entity is not able to transition in an orderly manner to another provider
by that date.
400.72 A2 Factors that are relevant in evaluating the level of a threat created by mergers and
acquisitions when there are interests and relationships that cannot reasonably be
ended include:
• The nature and significance of the interest or relationship.
• The nature and significance of the related entity relationship (for example,
whether the related entity is a subsidiary or parent).
• The length of time until the interest or relationship can reasonably be ended.
R400.73 If, following the discussion set out in paragraph R400.72(b), those charged with
governance request the firm to continue as the auditor, the firm shall do so only if:
(a) The interest or relationship will be ended as soon as reasonably possible but
no later than six months after the effective date of the merger or acquisition;
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(b) Any individual who has such an interest or relationship, including one that has
arisen through performing a non-assurance service that would not be permit-
ted by Section 600 and its subsections, will not be a member of the engage-
ment team for the audit or the individual responsible for the engagement
quality review; and
(c) Transitional measures will be applied, as necessary, and discussed with those
charged with governance.
400.73 A1 Examples of such transitional measures include:
• Having a professional accountant review the audit or non-assurance work as
appropriate.
• Having a professional accountant, who is not a member of the firm expressing
the opinion on the financial statements, perform a review that is consistent with
the objective of an engagement quality review.
• Engaging another firm to evaluate the results of the non-assurance service or
having another firm re-perform the non-assurance service to the extent neces-
sary to enable the other firm to take responsibility for the service.
R400.74 The firm might have completed a significant amount of work on the audit prior to
the effective date of the merger or acquisition and might be able to complete the
remaining audit procedures within a short period of time. In such circumstances, if
those charged with governance request the firm to complete the audit while con-
tinuing with an interest or relationship identified in paragraph 400.70 A1, the firm
shall only do so if it:
(a) Has evaluated the level of the threat and discussed the results with those
charged with governance;
(b) Complies with the requirements of paragraph R400.73(a) to (c); and
(c) Ceases to be the auditor no later than the date that the audit report is issued.
If Objectivity Remains Compromised
R400.75 Even if all the requirements of paragraphs R400.71 to R400.74 could be met, the
firm shall determine whether the circumstances identified in paragraph 400.70 A1
create a threat that cannot be addressed such that objectivity would be compromised.
If so, the firm shall cease to be the auditor.
Documentation
R400.76 The firm shall document:
(a) Any interests or relationships identified in paragraph 400.70 A1 that will not
be ended by the effective date of the merger or acquisition and the reasons
why they will not be ended;
(b) The transitional measures applied;
(c) The results of the discussion with those charged with governance; and
(d) The reasons why the previous and current interests and relationships do not
create a threat such that objectivity would be compromised.
[Paragraphs 400.77 to 400.79 are intentionally left blank.]

Breach of an Independence Provision for Audit and Review Engagements

When a Firm Identifies a Breach
R400.80 If a firm concludes that a breach of a requirement in this Part has occurred, the firm
shall:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 121

(a) End, suspend or eliminate the interest or relationship that created the breach
and address the consequences of the breach;
(b) Consider whether any legal or regulatory requirements apply to the breach
and, if so:
(i) Comply with those requirements; and
(ii) Consider reporting the breach to a professional or regulatory body or
oversight authority if such reporting is common practice or expected
in the relevant jurisdiction;
(c) Promptly communicate the breach in accordance with its policies and pro-
cedures to:
(i) The engagement partner;
(ii) The individual with operational responsibility for compliance with
independence requirements;
(iii) Other relevant personnel in the firm and, where appropriate, the net-
work; and
(iv) Those subject to the independence requirements in Part 4A who need
to take appropriate action;
(d) Evaluate the significance of the breach and its impact on the firm’s objectivity
and ability to issue an audit report; and
(e) Depending on the significance of the breach, determine:
(i) Whether to end the audit engagement; or
(ii) Whether it is possible to take action that satisfactorily addresses the
consequences of the breach and whether such action can be taken and
is appropriate in the circumstances.
In making this determination, the firm shall exercise professional judgement
and take into account whether a reasonable and informed third party would be
likely to conclude that the firm’s objectivity would be compromised, and
therefore, the firm would be unable to issue an audit report.
400.80 A1 A breach of a provision of this Part might occur despite the firm having a system of
quality management designed to address independence requirements. It might be
necessary to end the audit engagement because of the breach.
400.80 A2 The significance and impact of a breach on the firm’s objectivity and ability to issue
an audit report will depend on factors such as:
• The nature and duration of the breach.
• The number and nature of any previous breaches with respect to the current audit
engagement.
• Whether an audit team member had knowledge of the interest or relationship
that created the breach.
• Whether the individual who created the breach is an audit team member or
another individual for whom there are independence requirements.
• If the breach relates to an audit team member, the role of that individual.
• If the breach was created by providing a professional service, the impact of that
service, if any, on the accounting records or the amounts recorded in the finan-
cial statements on which the firm will express an opinion.
• The extent of the self-interest, advocacy, intimidation or other threats created by
the breach.
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400.80 A3 Depending upon the significance of the breach, examples of actions that the firm
might consider to address the breach satisfactorily include:
• Removing the relevant individual from the audit team.
• Using different individuals to conduct an additional review of the affected audit
work or to re-perform that work to the extent necessary.
• Recommending that the audit client engage another firm to review or re-perform
the affected audit work to the extent necessary.
• If the breach relates to a non-assurance service that affects the accounting rec-
ords or an amount recorded in the financial statements, engaging another firm
to evaluate the results of the non-assurance service or having another firm re-
perform the non-assurance service to the extent necessary to enable the other
firm to take responsibility for the service.
R400.81 If the firm determines that action cannot be taken to address the consequences of
the breach satisfactorily, the firm shall inform those charged with governance as
soon as possible and take the steps necessary to end the audit engagement in com-
pliance with any applicable legal or regulatory requirements. Where ending the
engagement is not permitted by laws or regulations, the firm shall comply with any
reporting or disclosure requirements.
R400.82 If the firm determines that action can be taken to address the consequences of the
breach satisfactorily, the firm shall discuss with those charged with governance:
(a) The significance of the breach, including its nature and duration;
(b) How the breach occurred and how it was identified;
(c) The action proposed or taken and why the action will satisfactorily address
the consequences of the breach and enable the firm to issue an audit report;
(d) The conclusion that, in the firm’s professional judgement, objectivity has not
been compromised and the rationale for that conclusion; and
(e) Any steps proposed or taken by the firm to reduce or avoid the risk of further
breaches occurring.
Such discussion shall take place as soon as possible unless an alternative timing is
specified by those charged with governance for reporting less significant breaches.
Communication of Breaches to Those Charged with Governance
400.83 A1 Paragraphs R300.9 and R300.10 set out requirements with respect to communi-
cating with those charged with governance.
R400.84 With respect to breaches, the firm shall communicate in writing to those charged
with governance:
(a) All matters discussed in accordance with paragraph R400.82 and obtain the
concurrence of those charged with governance that action can be, or has been,
taken to satisfactorily address the consequences of the breach; and
(b) A description of:
(i) The firm’s policies and procedures relevant to the breach designed to
provide it with reasonable assurance that independence is maintained;
and
(ii) Any steps that the firm has taken, or proposes to take, to reduce or
avoid the risk of further breaches occurring.
R400.85 If those charged with governance do not concur that the action proposed by the firm
in accordance with paragraph R400.80(e)(ii) satisfactorily addresses the conse-
quences of the breach, the firm shall take the steps necessary to end the audit
engagement in accordance with paragraph R400.81.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 123

Breaches Before the Previous Audit Report Was Issued

R400.86 If the breach occurred prior to the issuance of the previous audit report, the firm
shall comply with the provisions of Part 4A in evaluating the significance of the
breach and its impact on the firm’s objectivity and its ability to issue an audit report
in the current period.
R400.87 The firm shall also:
(a) Consider the impact of the breach, if any, on the firm’s objectivity in relation
to any previously issued audit reports, and the possibility of withdrawing such
audit reports; and
(b) Discuss the matter with those charged with governance.

Documentation
R400.88 In complying with the requirements in paragraphs R400.80 to R400.87, the firm
shall document:
(a) The breach;
(b) The actions taken;
(c) The key decisions made;
(d) All the matters discussed with those charged with governance; and
(e) Any discussions with a professional or regulatory body or oversight authority.
R400.89 If the firm continues with the audit engagement, it shall document:
(a) The conclusion that, in the firm’s professional judgement, objectivity has not
been compromised; and
(b) The rationale for why the action taken satisfactorily addressed the conse-
quences of the breach so that the firm could issue an audit report.

SECTION 405
GROUP AUDITS
Introduction
405.1 Section 400 requires a firm to be independent when performing an audit engage-
ment, and to apply the conceptual framework set out in Section 120 to identify,
evaluate and address threats to independence. This section sets out specific require-
ments and application material relevant to applying the conceptual framework when
performing a group audit engagement.

Requirements and Application Material

General
405.2 A1 ISAs apply to an audit of group financial statements. ISA 600 (Revised) deals with
special considerations that apply to an audit of group financial statements, including
when component auditors are involved. ISA 600 (Revised) requires the group
engagement partner to take responsibility for confirming whether the component
auditors understand and will comply with the relevant ethical requirements, includ-
ing those related to independence, that apply to the group audit. The independence
requirements referred to in ISA 600 (Revised), or other relevant auditing standards
applicable to group audits that are equivalent to ISA 600 (Revised), are those spe-
cified in this section.
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405.2 A2 A component auditor firm that participates in a group audit engagement might sep-
arately issue an audit opinion on the financial statements of the component audit
client. Depending on the circumstances, the component auditor firm might need to
comply with different independence requirements when performing audit work for
a group audit and separately issuing an audit opinion on the financial statements of
the component audit client for statutory, regulatory or other reasons.

Communication Between a Group Auditor Firm and a Component Auditor Firm

R405.3 ISA 600 (Revised) requires the group engagement partner to take responsibility to
make a component auditor aware of the relevant ethical requirements that are
applicable given the nature and the circumstances of the group audit engagement.
When making the component auditor firm aware of the relevant ethical require-
ments, the group auditor firm shall communicate at appropriate times the necessary
information to enable the component auditor firm to meet its responsibilities under
this section.
405.3 A1 Examples of matters the group auditor firm might communicate include:
• Whether the group audit client is a public interest entity and the relevant ethical
requirements applicable to the group audit engagement.
• The related entities and other components within the group audit client that are
relevant to the independence considerations applicable to the component auditor
firm and the group audit team members within, or engaged by, that firm.
• The period during which the component auditor firm is required to be independ-
ent.
• Whether an audit partner who performs work at the component for purposes of
the group audit is a key audit partner for the group audit.
R405.4 ISA 600 (Revised) also requires the group engagement partner to request the com-
ponent auditor to communicate whether the component auditor has complied with
the relevant ethical requirements, including those related to independence, that
apply to the group audit engagement. For the purposes of this section, such a request
shall include the communication of:
(a) Any independence matters that require significant judgment; and
(b) In relation to those matters, the component auditor firm’s conclusion whether
the threats to its independence are at an acceptable level, and the rationale for
that conclusion.
405.4 A1 If a matter comes to the attention of the group engagement partner that indicates
that a threat to independence exists, ISA 220 (Revised) requires the group engage-
ment partner to evaluate the threat and take appropriate action.

Independence Considerations Applicable to Individuals

Members of the Group Audit Team Within, or Engaged by, a Group Auditor Firm and Its
Network Firms
R405.5 Members of the group audit team within, or engaged by, the group auditor firm and
its network firms shall be independent of the group audit client in accordance with
the requirements of this Part that are applicable to the audit team.

Other Members of the Group Audit Team

R405.6 Members of the group audit team within, or engaged by, a component auditor firm
outside the group auditor firm’s network shall be independent of:
(a) The component audit client;
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 125

(b) The entity on whose group financial statements the group auditor firm
expresses an opinion; and
(c) Any entity over which the entity in subparagraph (b) has direct or indirect
control, provided that such entity has direct or indirect control over the com-
ponent audit client,
in accordance with the requirements of this Part that are applicable to the audit team.
R405.7 In relation to related entities or components within the group audit client other than
those covered in paragraph R405.6, a member of the group audit team within, or
engaged by, a component auditor firm outside the group auditor firm’s network shall
notify the component auditor firm about any relationship or circumstance the indi-
vidual knows, or has reason to believe, might create a threat to the individual’s inde-
pendence in the context of the group audit.
405.7 A1 Examples of relationships or circumstances involving the individual or any of the
individual’s immediate family members, as applicable, that are relevant to the indi-
vidual’s consideration when complying with paragraph R405.7 include:
• A direct or material indirect financial interest in an entity that has control over
the group audit client if the group audit client is material to that entity (see Sec-
tion 510).
• A loan or guarantee involving: (see Section 511)
o An entity that is not a bank or similar institution unless the loan or guarantee
is immaterial; or
o A bank or similar institution unless the loan or guarantee is made under
normal lending procedures, terms and conditions.
• A business relationship that is significant or involves a material financial interest
(see Section 520).
• An immediate family member who is: (see Section 521)
o A director or officer of an entity; or
o An employee in a position to exert significant influence over the preparation
of an entity’s accounting records or financial statements.
• The individual serving as, or having recently served as: (see Section 522 and
Section 523)
o A director or officer of an entity; or
o An employee in a position to exert significant influence over the preparation
of an entity’s accounting records or financial statements.
R405.8 Upon receiving the notification as set out in paragraph R405.7, the component
auditor firm shall evaluate and address any threats to independence created by the
individual’s relationship or circumstance.

Independence Considerations Applicable to a Group Auditor Firm

R405.9 A group auditor firm shall be independent of the group audit client in accordance
with the requirements of this Part that are applicable to a firm.

Independence Considerations Applicable to Network Firms of a Group Auditor Firm

R405.10 A network firm of the group auditor firm shall be independent of the group audit
client in accordance with the requirements of this Part that are applicable to a net-
work firm.
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Independence Considerations Applicable to Component Auditor Firms outside a Group

Auditor Firm’s Network
All Group Audit Clients
R405.11 A component auditor firm outside the group auditor firm’s network shall:
(a) Be independent of the component audit client in accordance with the require-
ments set out in this Part that are applicable to a firm with respect to all audit
clients;
(b) Apply the relevant requirements in paragraphs R510.4(a), R510.7 and R510.9
with respect to financial interests in the entity on whose group financial state-
ments the group auditor firm expresses an opinion; and
(c) Apply the relevant requirements in Section 511 with respect to loans and guar-
antees involving the entity on whose group financial statements the group
auditor firm expresses an opinion.
R405.12 When a component auditor firm outside the group auditor firm’s network knows, or
has reason to believe, that a relationship or circumstance involving the group audit
client, beyond those addressed in paragraph R405.11(b) and (c), is relevant to the
evaluation of the component auditor firm’s independence from the component audit
client, the component auditor firm shall include that relationship or circumstance
when identifying, evaluating and addressing threats to independence.
R405.13 When a component auditor firm outside the group auditor firm’s network knows, or
has reason to believe, that a relationship or circumstance of a firm within the com-
ponent auditor firm’s network with the component audit client or the group audit
client creates a threat to the component auditor firm’s independence, the component
auditor firm shall evaluate and address any such threat.
Period During which Independence is Required
405.14 A1 The references to the financial statements and the audit report in paragraphs R400.30
and 400.30 A1 mean the group financial statements and the audit report on the group
financial statements, respectively, when applied in this section.
Group Audit Clients that are Not Public Interest Entities
R405.15 When the group audit client is not a public interest entity, a component auditor firm
outside the group auditor firm’s network shall be independent of the component
audit client in accordance with the requirements set out in this Part that are applic-
able to audit clients that are not public interest entities for the purposes of the group
audit.
405.15 A1 Where a component auditor firm outside the group auditor firm’s network also per-
forms an audit engagement for a component audit client that is a public interest
entity for reasons other than the group audit, for example, a statutory audit, the
independence requirements that are relevant to audit clients that are public interest
entities apply to that engagement.
Group Audit Clients that are Public Interest Entities
Non-Assurance Services
R405.16 Subject to paragraph R405.17, when the group audit client is a public interest entity,
a component auditor firm outside the group auditor firm’s network shall comply
with the provisions in Section 600 that are applicable to public interest entities with
respect to the provision of non-assurance services to the component audit client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 127

405.16 A1 Where the group audit client is a public interest entity, a component auditor firm
outside the group auditor firm’s network is prohibited from, for example:
• Providing accounting and bookkeeping services to a component audit client that
is not a public interest entity (see Subsection 601).
• Designing the information technology system, or an aspect of it, for a compon-
ent audit client that is not a public interest entity where such information tech-
nology system generates information for the component audit client’s account-
ing records or financial statements (see Subsection 606).
• Acting in an advocacy role for a component audit client that is not a public in-
terest entity in resolving a dispute or litigation before a tribunal or court (see
Subsection 608).
405.16 A2 The financial information on which a component auditor firm outside the group
auditor firm’s network performs audit procedures is relevant to the evaluation of the
self-review threat that might be created by the component auditor firm’s provision
of a non-assurance service, and therefore the application of Section 600. For ex-
ample, if the component auditor firm’s audit procedures are limited to a specific
item such as inventory, the results of any non-assurance service that form part of or
affect the accounting records or the financial information related to the accounting
for, or the internal controls over, inventory are relevant to the evaluation of the self-
review threat.
R405.17 As an exception to paragraph R405.16, a component auditor firm outside the group
auditor firm’s network may provide a non-assurance service that is not prohibited
under Section 600 to a component audit client without communicating information
about the proposed non assurance service to those charged with governance of the
group audit client or obtaining their concurrence regarding the provision of that ser-
vice as addressed by paragraphs R600.21 to R600.24.

Key Audit Partners

R405.18 The group engagement partner shall determine whether an audit partner who
performs audit work at a component for purposes of the group audit is a key audit
partner for the group audit. If so, the group engagement partner shall:
(a) Communicate that determination to that individual; and
(b) Indicate:
(i) In the case of all group audit clients, that the individual is subject to
paragraph R411.4, and
(ii) In the case of group audit clients that are public interest entities, that
the individual is also subject to paragraphs R524.6, R540.5(c) and
R540.20.
405.18 A1 A key audit partner makes key decisions or judgments on significant matters with
respect to the audit of the group financial statements on which the group auditor
firm expresses an opinion in the group audit.

Changes in Components
All Group Audit Clients
R405.19 When an entity that is not a related entity becomes a component within the group
audit client, the group auditor firm shall apply paragraphs R400.71 to R400.76.
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Changes in Component Auditor Firms

All Group Audit Clients
405.20 A1 There might be circumstances in which the group auditor firm requests another firm
to perform audit work as a component auditor firm during or after the period covered
by the group financial statements, for example due to a client merger or acquisition.
A threat to the component auditor firm’s independence might be created by:
(a) Financial or business relationships of the component auditor firm with the
component audit client during or after the period covered by the group finan-
cial statements but before the component auditor firm agrees to perform the
audit work; or
(b) Previous services provided to the component audit client by the component
auditor firm.
405.20 A2 Paragraphs 400.31 A1 to A3 set out application material that is applicable for a com-
ponent auditor firm’s assessment of threats to independence if a non-assurance ser-
vice was provided by the component auditor firm to the component audit client
during or after the period covered by the group financial statements, but before the
component auditor firm begins to perform the audit work for the purposes of the
group audit, and the service would not be permitted during the engagement period.
405.20 A3 Paragraph 400.31 A4 sets out application material that is applicable for a component
auditor firm’s assessment of threats to independence if a non-assurance service was
provided by the component auditor firm to the component audit client prior to the
period covered by the group financial statements.

Group Audit Clients that are Public Interest Entities

405.21 A1 Paragraphs R400.32 and 400.32 A1 are applicable when a component auditor firm
agrees to perform audit work for group audit purposes in relation to a group audit
client that is a public interest entity if the component auditor firm has previously
provided a non-assurance service to the component audit client.
405.21 A2 Paragraphs R600.25 and 600.25 A1 are applicable in relation to a non-assurance
service provided, either currently or previously, by a component auditor firm to a
component audit client when the group audit client subsequently becomes a public
interest entity.

Breach of an Independence Provision at a Component Auditor Firm

405.22 A1 A breach of a provision of this section might occur despite a component auditor
firm having a system of quality management designed to address independence
requirements. Paragraphs R405.23 to R405.29 are relevant to a group auditor firm’s
determination as to whether it would be able to use a component auditor firm’s work
if a breach has occurred at the component auditor firm.
405.22 A2 In the case of a breach at a component auditor firm within the group auditor firm’s
network, paragraphs R400.80 to R400.89 also apply to the group auditor firm in
relation to the group audit, as applicable.
When a Component Auditor Firm Identifies a Breach
R405.23 If a component auditor firm concludes that a breach of this section has occurred, the
component auditor firm shall:
(a) End, suspend or eliminate the interest or relationship that created the breach
and address the consequences of the breach;
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 129

(b) Evaluate the significance of the breach and its impact on the component audi-
tor firm’s objectivity and ability to perform audit work for the purposes of the
group audit;
(c) Depending on the significance of the breach, determine whether it is possible
to take action that satisfactorily addresses the consequences of the breach and
whether such action can be taken and is appropriate in the circumstances; and
(d) Promptly communicate in writing the breach to the group engagement partner,
including the component auditor firm’s assessment of the significance of the
breach and any actions proposed or taken to address the consequences of the
breach.
405.23 A1 Paragraphs 400.80 A2 and A3 set out application material relevant to the component
auditor firm’s evaluation of the significance and impact of the breach on the com-
ponent auditor firm’s objectivity and ability to issue an opinion or conclusion on
the audit work performed at the component for purposes of the group audit, and its
consideration of any actions that might be taken to address the consequences of the
breach satisfactorily.
R405.24 Upon receipt of the component auditor firm’s communication of the breach, the
group engagement partner shall:
(a) Review the component auditor firm’s assessment of the significance of the
breach and its impact on the component auditor firm’s objectivity, and any
action that can be or has been taken to address the consequences of the breach;
(b) Evaluate the group auditor firm’s ability to use the work of the component
auditor firm for the purposes of the group audit; and
(c) Determine the need for any further action.
R405.25 In applying paragraph R405.24, the group engagement partner shall exercise pro-
fessional judgment and take into account whether a reasonable and informed third
party would be likely to conclude that the component auditor firm’s objectivity is
compromised, and therefore, the group auditor firm is unable to use the work of the
component auditor firm for the purposes of the group audit.
405.25 A1 If the group engagement partner determines that the consequences of the breach
have been satisfactorily addressed by the component auditor firm and does not com-
promise the component auditor firm’s objectivity, the group auditor firm may con-
tinue to use the work of the component auditor firm for the group audit. In certain
circumstances, the group engagement partner might determine that additional actions
are needed to satisfactorily address the breach in order to use the component auditor
firm’s work. Examples of such action include the group auditor firm performing
specific procedures on the areas impacted by the breach or requesting the compon-
ent auditor firm to perform appropriate remedial work on the affected areas.
405.25 A2 ISA 600 (Revised) sets out that if there has been a breach by a component auditor
and the breach has not been satisfactorily addressed, the group auditor cannot use
the work of that component auditor. In those circumstances, the group engagement
partner might find other means to obtain the necessary audit evidence on the com-
ponent audit client’s financial information. Examples of such means include the
group auditor firm performing the necessary audit work on the component audit
client’s financial information or requesting another component auditor firm to per-
form such audit work.

Discussion with Those Charged with Governance of the Group Audit Client
405.26 A1 With respect to breaches by a component auditor firm within the group auditor
firm’s network, paragraph R400.84 applies.
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R405.27 With respect to breaches by a component auditor firm outside the group auditor
firm’s network, the group auditor firm shall discuss with those charged with govern-
ance of the group audit client:
(a) The component auditor firm’s assessment of the significance and impact of
the breach on the component auditor firm’s objectivity, including the nature
and duration of the breach, and the action that can be or has been taken; and
(b) Whether:
(i) The action will satisfactorily address, or has addressed, the conse-
quences of the breach; or
(ii) The group auditor firm will use other means to obtain the necessary
audit evidence on the component audit client’s financial information.
Such discussion shall take place as soon as possible unless an alternative timing is
specified by those charged with governance for reporting less significant breaches.
R405.28 The group auditor firm shall communicate in writing to those charged with govern-
ance of the group audit client all matters discussed in accordance with paragraph
R405.27 and obtain the concurrence of those charged with governance that the
action can be or has been taken to satisfactorily address the consequences of the
breach.
R405.29 If those charged with governance do not concur that the action that can be or has
been taken would satisfactorily address the consequences of the breach at the com-
ponent auditor firm, the group auditor firm shall not use the work performed by the
component auditor firm for the purposes of the group audit.

SECTION 410
FEES
Introduction
410.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
410.2 Section 330 sets out a requirement and application material relevant to applying the
conceptual framework where the level and nature of fee and other remuneration
arrangements might create a self-interest threat to compliance with one or more of
the fundamental principles. This section sets out specific requirements and appli-
cation material relevant to applying the conceptual framework to identify, evaluate
and address threats to independence arising from fees charged to audit clients.

Requirements and Application Material

General
410.3 A1 Fees for professional services are usually negotiated with and paid by an audit client
and might create threats to independence. This practice is generally recognised and
accepted by intended users of financial statements.
410.3 A2 When the audit client is a public interest entity, stakeholders have heightened ex-
pectations regarding the firm’s independence. As transparency can serve to better
inform the views and decisions of those charged with governance and a wide range
of stakeholders, this section provides for disclosure of fee-related information to
both those charged with governance and stakeholders more generally for audit
clients that are public interest entities.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 131

410.3 A3 For the purposes of this section, audit fees comprise fees or other types of remuner-
ation for an audit or review of financial statements. Where reference is made to the
fee for the audit of the financial statements, this does not include any fee for an audit
of special purpose financial statements or a review of financial statements.
(Ref: Para. R410.23(a), 410.25 A1 and R410.31(a))

Fees Paid by an Audit Client

410.4 A1 When fees are negotiated with and paid by an audit client, this creates a self-interest
threat and might create an intimidation threat to independence.
410.4 A2 The application of the conceptual framework requires that before a firm or network
firm accepts an audit or any other engagement for an audit client, the firm deter-
mines whether the threats to independence created by the fees proposed to the client
are at an acceptable level. The application of the conceptual framework also requires
the firm to re-evaluate such threats when facts and circumstances change during the
engagement period for the audit.
410.4 A3 Factors that are relevant in evaluating the level of threats created when fees for an
audit or any other engagement are paid by the audit client include:
• The level of the fees and the extent to which they have regard to the resources
required, taking into account the firm’s commercial and market priorities.
• Any linkage between fees for the audit and those for services other than audit
and the relative size of both elements.
• The extent of any dependency between the level of the fee for, and the outcome
of, the service.
• Whether the fee is for services to be provided by the firm or a network firm.
• The level of the fee in the context of the service to be provided by the firm or a
network firm.
• The operating structure and the compensation arrangements of the firm and net-
work firms.
• The significance of the client, or a third party referring the client, to the firm,
network firm, partner or office.
• The nature of the client, for example whether the client is a public interest entity.
• The relationship of the client to the related entities to which the services other
than audit are provided, for example when the related entity is a sister entity.
• The involvement of those charged with governance in appointing the auditor
and agreeing fees, and the apparent emphasis they and client management place
on the quality of the audit and the overall level of the fees.
• Whether the level of the fee is set by an independent third party, such as a regu-
latory body.
• Whether the quality of the firm’s audit work is subject to the review of an inde-
pendent third party, such as an oversight body.
410.4 A4 The conditions, policies and procedures described in paragraph 120.15 A3 (particu-
larly a system of quality management designed, implemented and operated by the
firm in accordance with quality management standards issued by the IAASB) might
also impact the evaluation of whether the threats to independence are at an accept-
able level
410.4 A5 The requirements and application material that follow identify circumstances which
might need to be further evaluated when determining whether the threats are at an
ET – 132 SAICA Student Handbook 2024/2025

acceptable level. For those circumstances, application material includes examples

of additional factors that might be relevant in evaluating the threats.

Level of Audit Fees

410.5 A1 Determining the fees to be charged to an audit client, whether for audit or other ser-
vices, is a business decision of the firm taking into account the facts and circum-
stances relevant to that specific engagement, including the requirements of technical
and professional standards.
410.5 A2 Factors that are relevant in evaluating the level of self-interest and intimidation
threats created by the level of the audit fee paid by the audit client include:
• The firm’s commercial rationale for the audit fee.
• Whether undue pressure has been, or is being, applied by the client to reduce the
audit fee.
410.5 A3 Examples of actions that might be safeguards to address such threats include:
• Having an appropriate reviewer who does not take part in the audit engagement
assess the reasonableness of the fee proposed, having regard to the scope and
complexity of the engagement.
• Having an appropriate reviewer who did not take part in the audit engagement
review the work performed.

Impact of Other Services Provided to an Audit Client

R410.6 Subject to paragraph R410.7, a firm shall not allow the audit fee to be influenced
by the provision of services other than audit to an audit client by the firm or a net-
work firm.
410.6 A1 The audit fee ordinarily reflects a combination of matters, such as those identified
in paragraph 410.23 A1. However, the provision of other services to an audit client
is not an appropriate consideration in determining the audit fee.
R410.7 As an exception to paragraph R410.6, when determining the audit fee, the firm may
take into consideration the cost savings achieved as a result of experience derived
from the provision of services other than audit to an audit client.

Contingent Fees
410.8 A1 Contingent fees are fees calculated on a predetermined basis relating to the outcome
of a transaction or the result of the services performed. A contingent fee charged
through an intermediary is an example of an indirect contingent fee. In this section,
a fee is not regarded as being contingent if established by a court or other public
authority.
R410.9 A firm shall not charge directly or indirectly a contingent fee for an audit engage-
ment.
R410.10 A firm or network firm shall not charge directly or indirectly a contingent fee for a
non-assurance service provided to an audit client, if:
(a) The fee is charged by the firm expressing the opinion on the financial state-
ments and the fee is material or expected to be material to that firm;
(b) The fee is charged by a network firm that participates in a significant part of
the audit and the fee is material or expected to be material to that firm; or
(c) The outcome of the non-assurance service, and therefore the amount of the
fee, is dependent on a future or contemporary judgement related to the audit
of a material amount in the financial statements.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 133

410.10 A1 Paragraphs R410.9 and R410.10 preclude a firm or a network firm from entering
into certain contingent fee arrangements with an audit client. Even if a contingent
fee arrangement is not precluded when providing a non-assurance service to an audit
client, it might still impact the level of the self-interest threat.
410.10 A2 Factors that are relevant in evaluating the level of such a threat include:
• The range of possible fee amounts.
• Whether an appropriate authority determines the outcome on which the contin-
gent fee depends.
• Disclosure to intended users of the work performed by the firm and the basis of
remuneration.
• The nature of the service.
• The effect of the event or transaction on the financial statements.
410.10 A3 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Having an appropriate reviewer who was not involved in performing the non-
assurance service review the work performed by the firm.
• Obtaining an advance written agreement with the client on the basis of remuner-
ation.

Total Fees – Proportion of Fees for Services Other than Audit to Audit Fee
410.11 A1 The level of the self-interest threat might be impacted when a large proportion of
fees charged by the firm or network firms to an audit client is generated by providing
services other than audit to the client, due to concerns about the potential loss of
either the audit engagement or other services. Such circumstances might also create
an intimidation threat. A further consideration is a perception that the firm or net-
work firm focuses on the non-audit relationship, which might create a threat to the
auditor’s independence.
410.11 A2 Factors that are relevant in evaluating the level of such threats include:
• The ratio of fees for services other than audit to the audit fee.
• The length of time during which a large proportion of fees for services other
than audit to the audit fee has existed.
• The nature, scope and purposes of the services other than audit, including:
o Whether they are recurring services.
o Whether law or regulation mandates the services to be performed by the firm.
410.11A3 Examples of actions that might be safeguards to address such self-interest or intim-
idation threats include:
• Having an appropriate reviewer who was not involved in the audit or the service
other than audit review the relevant audit work.
• Reducing the extent of services other than audit provided to the audit client.

Total Fees – Overdue Fees

410.12 A1 The level of the self-interest threat might be impacted if fees payable by an audit
client for the audit or services other than audit are overdue during the period of the
audit engagement.
410.12 A2 It is generally expected that the firm will obtain payment of such fees before the
audit report is issued.
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410.12 A3 Factors that are relevant in evaluating the level of such a self-interest threat include:
• The significance of the overdue fees to the firm.
• The length of time the fees have been overdue.
• The firm’s assessment of the ability and willingness of the audit client to pay
the overdue fees.
410.12 A4 Examples of actions that might be safeguards to address such a threat include:
• Obtaining partial payment of overdue fees.
• Having an appropriate reviewer who did not take part in the audit engagement
review the audit work.
R410.13 When a significant part of the fees due from an audit client remains unpaid for a
long time, the firm shall determine:
(a) Whether the overdue fees might be equivalent to a loan to the client, in which
case the requirements and application material set out in section 511 are
applicable; and
(b) Whether it is appropriate for the firm to be re-appointed or continue the audit
engagement.

Total Fees – Fee Dependency

All Audit Clients
410.14 A1 When the total fees generated from an audit client by the firm expressing the audit
opinion represent a large proportion of the total fees of that firm, the dependence
on, and concern about the potential loss of, fees from audit and other services from
that client impact the level of the self-interest threat and create an or intimidation
threat.
410.14 A2 In calculating the total fees of the firm, the firm might use financial information
available from the previous financial year and estimate the proportion based on that
information if appropriate.
410.14 A3 Factors that are relevant in evaluating the level of such self-interest and intimidation
threats include:
• The operating structure of the firm.
• Whether the firm is expected to diversify such that any dependence on the audit
client is reduced
• 410.14 A4Examples of actions that might be safeguards to address such threats
include:
• Having an appropriate reviewer who is not a member of the firm review the
audit work.
• Reducing the extent of services other than audit provided to the audit client.
• Increasing the client base of the firm to reduce dependence on the client.
• Increasing the extent of services provided to other clients.
410.14 A5 A self-interest or intimidation threat is created when the fees generated by a firm
from an audit client represent a large proportion of the revenue of one partner or
one office of the firm.
410.14 A6 Factors that are relevant in evaluating the level of such threats include:
• The qualitative and quantitative significance of the audit client to the partner or
office.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 135

• The extent to which the compensation of the partner, or the partners in the office,
is dependent upon the fees generated from the client.
410.14 A7 Examples of actions that might be safeguards to address such self-interest or intim-
idation threats include:
• Having an appropriate reviewer who was not involved in the audit engagement
review the audit work.
• Ensuring that the compensation of the partner is not significantly influenced by
the fees generated from the client.
• Reducing the extent of services other than audit provided by the partner or office
to the audit client.
• Increasing the client base of the partner or the office to reduce dependence on
the client.
• Increasing the extent of services provided by the partner or the office to other
clients.
Audit Clients that are Not Public Interest Entities
R410.15 When for each of five consecutive years total fees from an audit client that is not a
public interest entity represent, or are likely to represent, more than 30% of the total
fees received by the firm, the firm shall determine whether either of the following
actions might be a safeguard to reduce the threats created to an acceptable level, and
if so, apply it:
(a) Prior to the audit opinion being issued on the fifth year’s financial statements,
have a professional accountant, who is not a member of the firm expressing
the opinion on the financial statements, review the fifth year’s audit work; or
(b) After the audit opinion on the fifth year’s financial statements has been issued,
and before the audit opinion is issued on the sixth year’s financial statements,
have a professional accountant, who is not a member of the firm expressing
the opinion on the financial statements, or a professional body review the fifth
year’s audit work.
R410.16 If the total fees described in paragraph R410.15 continue to exceed 30%, the firm
shall each year determine whether either of the actions in paragraph R410.15 applied
to the relevant year’s engagement might be a safeguard to address the threats created
by the total fees received by the firm from the client, and if so, apply it.
R410.17 When two or more firms are engaged to conduct an audit of the client’s financial
statements, the involvement of the other firm in the audit may be regarded each year
as an action equivalent to that in paragraph R410.15 (a), if:
(a) The circumstances addressed by paragraph R410.15 apply to only one of the
firms expressing the audit opinion; and
(b) Each firm performs sufficient work to take full individual responsibility for
the audit opinion.
Audit Clients that are Public Interest Entities
R410.18 When for each of two consecutive years the total fees from an audit client that is a
public interest entity represent, or are likely to represent, more than 15% of the total
fees received by the firm, the firm shall determine whether, prior to the audit opinion
being issued on the second year’s financial statements, a review, consistent with the
objective of an engagement quality review, performed by a professional accountant
who is not a member of the firm expressing the opinion on the financial statements
(“pre-issuance review”) might be a safeguard to reduce the threats to an acceptable
level, and if so, apply it.
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R410.19 When two or more firms are engaged to conduct an audit of the client’s financial
statements, the involvement of the other firm in the audit may be regarded each year
as an action equivalent to that in paragraph R410.18, if:
(a) The circumstances addressed by paragraph R410.18 apply to only one of the
firms expressing the audit opinion; and
(b) Each firm performs sufficient work to take full individual responsibility for
the audit opinion.
R410.20 Subject to paragraph R410.21, if the circumstances described in paragraph R410.18
continue for five consecutive years, the firm shall cease to be the auditor after the
audit opinion for the fifth year is issued.
R410.21 As an exception to paragraph R410.20, the firm may continue to be the auditor after
five consecutive years if there is a compelling reason to do so having regard to the
public interest, provided that:
(a) The firm consults with a regulatory or professional body in the relevant juris-
diction and it concurs that having the firm continue as the auditor would be in
the public interest; and
(b) Before the audit opinion on the sixth and any subsequent year’s financial state-
ments is issued, the firm engages a professional accountant, who is not a mem-
ber of the firm expressing the opinion on the financial statements, to perform
a pre-issuance review.
410.21 A1 A factor which might give rise to a compelling reason is the lack of viable alterna-
tive firms to carry out the audit engagement, having regard to the nature and location
of the client’s business.

Transparency of Information Regarding Fees for Audit Clients that are Public Interest
Entities
Communication About Fee-related Information with Those Charged with Governance
410.22 A1 Communication by the firm of fee-related information (for both audit and services
other than audit) with those charged with governance assists in their assessment of
the firm’s independence. Effective communication in this regard also allows for a
two-way open exchange of views and information about, for example, the expect-
ations that those charged with governance might have regarding the scope and extent
of audit work and impact on the audit fee.
Fees for the Audit of the Financial Statements
R410.23 Subject to paragraph R410.24, the firm shall communicate in a timely manner with
those charged with governance of an audit client that is a public interest entity:
(a) Fees paid or payable to the firm or network firms for the audit of the financial
statements on which the firm expresses an opinion; and
(b) Whether the threats created by the level of those fees are at an acceptable level,
and if not, any actions the firm has taken or proposes to take to reduce such
threats to an acceptable level.
410.23 A1 The objective of such communication is to provide the background and context to
the fees for the audit of the financial statements on which the firm expresses an
opinion to enable those charged with governance to consider the independence of
the firm. The nature and extent of matters to be communicated will depend on the
facts and circumstances and might include for example:
• Considerations affecting the level of the fees such as:
o The scale, complexity and geographic spread of the audit client’s operations.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 137

o The time spent or expected to be spent commensurate with the scope and
complexity of the audit.
o The cost of other resources utilised or expended in performing the audit.
o The quality of record keeping and processes for financial statements prep-
aration.
• Adjustments to the fees quoted or charged during the period of the audit, and the
reasons for any such adjustments.
• Changes to laws and regulations and professional standards relevant to the audit
that impacted the fees.
410.23 A2 The firm is encouraged to provide such information as soon as practicable and com-
municate proposed adjustments as appropriate.
R410.24 As an exception to paragraph R410.23, the firm may determine not to communicate
the information set out in paragraph R410.23 to those charged with governance of
an entity that is (directly or indirectly) wholly-owned by another public interest
entity provided that:
(a) The entity is consolidated into group financial statements prepared by that
other public interest entity; and
(b) The firm or a network firm expresses an opinion on those group financial
statements.
Fees for Other Services
R410.25 Subject to paragraph R410.27, the firm shall communicate in a timely manner with
those charged with governance of an audit client that is a public interest entity:
(a) The fees, other than those disclosed under paragraph R410.23 (a), charged to
the client for the provision of services by the firm or a network firm during
the period covered by the financial statements on which the firm expresses an
opinion. For this purpose, such fees shall only include fees charged to the
client and its related entities over which the client has direct or indirect control
that are consolidated in the financial statements on which the firm will express
an opinion; and
(b) As set out in paragraph 410.11 A1, where the firm has identified that there is
an impact on the level of the self-interest threat or that there is an intimidation
threat to independence created by the proportion of fees for services other than
audit relative to the audit fee:
(i) Whether such threats are at an acceptable level; and
(ii) If not, any actions that the firm has taken or proposes to take to reduce
such threats to an acceptable level.
410.25 A1 The objective of such communication is to provide the background and context to
the fees for other services to enable those charged with governance to consider the
independence of the firm. The nature and extent of matters to be communicated will
depend on the facts and circumstances and might include for example:
• The amount of fees for other services that are required by law or regulation.
• The nature of other services provided and their associated fees.
• Information on the nature of the services provided under a general policy
approved by those charged with governance and associated fees.
• The proportion of fees referred to in paragraph R410.25(a) to the aggregate of
the fees charged by the firm and network firms for the audit of the financial
statements on which the firm expresses an opinion.
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R410.26 The firm shall include in the communication required by paragraph R410.25(a) the
fees, other than those disclosed under paragraph R410.23(a), charged to any other
related entities over which the audit client has direct or indirect control for the pro-
vision of services by the firm or a network firm, when the firm knows, or has reason
to believe, that such fees are relevant to the evaluation of the firm’s independence.
410.26 A1 Factors the firm might consider when determining whether the fees, other than those
disclosed under paragraph R410.23(a), charged to such other related entities, indi-
vidually and in the aggregate, for the provision of services by the firm or a network
firm are relevant to the evaluation of the firm’s independence include:
• The extent of the audit client’s involvement in the appointment of the firm or
network firm for the provision of such services, including the negotiation of
fees.
• The significance of the fees paid by the other related entities to the firm or a
network firm.
• The proportion of fees from the other related entities to the fees paid by the
client.
R410.27 As an exception to paragraph R410.25, the firm may determine not to communicate
the information set out in paragraph R410.25 to those charged with governance of
an entity that is (directly or indirectly) wholly-owned by another public interest
entity provided that:
(a) The entity is consolidated into group financial statements prepared by that
other public interest entity; and
(b) The firm or a network firm expresses an opinion on those group financial
statements.
Fee Dependency
R410.28 Where the total fees from an audit client that is a public interest entity represent, or
are likely to represent, more than 15% of the total fees received by the firm, the firm
shall communicate with those charged with governance:
(a) That fact and whether this situation is likely to continue;
(b) The safeguards applied to address the threats created, including, where rele-
vant, the use of a pre-issuance review (Ref: Para R410.18); and
(c) Any proposal to continue as the auditor under paragraph R410.21.
Public Disclosure of Fee-related Information
410.29 A1 In view of the public interest in the audits of public interest entities, it is beneficial
for stakeholders to have visibility about the professional relationships between the
firm and the audit client which might reasonably be thought to be relevant to the
evaluation of the firm’s independence. In a wide number of jurisdictions, there
already exist requirements regarding the disclosure of fees by an audit client for
both audit and services other than audit paid and payable to the firm and network
firms. Such disclosures often require the disaggregation of fees for services other
than audit into different categories.
R410.30 If laws and regulations do not require an audit client to disclose audit fees, fees for
services other than audit paid or payable to the firm and network firms and infor-
mation about fee dependency, the firm shall discuss with those charged with gov-
ernance of an audit client that is a public interest entity:
(a) The benefit to the client’s stakeholders of the client making such disclosures
that are not required by laws and regulations in a manner deemed appropriate,
taking into account the timing and accessibility of the information; and
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 139

(b) The information that might enhance the users’ understanding of the fees paid
or payable and their impact on the firm’s independence.
410.30 A1 Examples of information relating to fees that might enhance the users’ understand-
ing of the fees paid or payable and their impact on the firm’s independence include:
• Comparative information of the prior year’s fees for audit and services other
than audit.
• The nature of services and their associated fees as disclosed under paragraph
R410.31(b).
• Safeguards applied when the total fees from the client represent or are likely to
represent more than 15% of the total fees received by the firm.
R410.31 After the discussion with those charged with governance as set out in paragraph
R410.30, to the extent that the audit client that is a public interest entity does not
make the relevant disclosure, subject to paragraph R410.32, the firm shall publicly
disclose:
(a) Fees paid or payable to the firm and network firms for the audit of the financial
statements on which the firm expresses an opinion;
(b) Fees, other than those disclosed under (a), charged to the client for the pro-
vision of services by the firm or a network firm during the period covered by
the financial statements on which the firm expresses an opinion. For this pur-
pose, such fees shall only include fees charged to the client and its related
entities over which the client has direct or indirect control that are consoli-
dated in the financial statements on which the firm will express an opinion;
(c) Any fees, other than those disclosed under (a) and (b), charged to any other
related entities over which the audit client has direct or indirect control for the
provision of services by the firm or a network firm when the firm knows, or
has reason to believe, that such fees are relevant to the evaluation of the firm’s
independence; and
(d) If applicable, the fact that the total fees received by the firm from the audit
client represent, or are likely to represent, more than 15% of the total fees
received by the firm for two consecutive years, and the year that this situation
first arose.
410.31 A1 The firm might also disclose other information relating to fees that will enhance the
users’ understanding of the fees paid or payable and the firm’s independence, such
as the examples described in paragraph 410.30 A1.
410.31 A2 Factors the firm might consider when making the determination required by para-
graph R410.31(c) are set out in paragraph 410.26 A1.
410.31 A3 When disclosing fee-related information in compliance with paragraph R410.31,
the firm might disclose the information in a manner deemed appropriate taking into
account the timing and accessibility of the information to stakeholders, for example:
• On the firm’s website.
• In the firm’s transparency report.
• In an audit quality report.
• Through targeted communication to specific stakeholders, for example a letter
to the shareholders.
• In the auditor’s report.
R410.32 As an exception to paragraph R410.31, the firm may determine not to publicly dis-
close the information set out in paragraph R410.31 relating to:
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(a) A parent entity that also prepares group financial statements provided that the
firm or a network firm expresses an opinion on the group financial statements;
or
(b) An entity (directly or indirectly) wholly-owned by another public interest
entity provided that:
(i) The entity is consolidated into group financial statements prepared by
that other public interest entity; and
(ii) The firm or a network firm expresses an opinion on those group finan-
cial statements.
Considerations for Review Clients
R410.33 This section sets out requirements for a firm to communicate fee-related information
of an audit client that is a public interest entity and to disclose publicly fee-related
information to the extent that the client does not disclose such information. As an
exception to those requirements, the firm may determine not to communicate or
pursue disclosure of such information where a review client is not also an audit client.

SECTION 411
COMPENSATION AND EVALUATION POLICIES
Introduction
411.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
411.2 A firm’s evaluation or compensation policies might create a self-interest threat. This
section sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.

Requirements and Application Material

General
411.3 A1 When an audit team member for a particular audit client is evaluated on or compen-
sated for selling non-assurance services to that audit client, the level of the self-
interest threat will depend on:
(a) What proportion of the compensation or evaluation is based on the sale of
such services;
(b) The role of the individual on the audit team; and
(c) Whether the sale of such non-assurance services influences promotion
decisions.
411.3 A2 Examples of actions that might eliminate such a self-interest threat include:
• Revising the compensation plan or evaluation process for that individual.
• Removing that individual from the audit team.
411.3 A3 An example of an action that might be a safeguard to address such a self-interest
threat is having an appropriate reviewer review the work of the audit team member.
R411.4 A firm shall not evaluate or compensate a key audit partner based on that partner’s
success in selling non-assurance services to the partner’s audit client. This require-
ment does not preclude normal profit-sharing arrangements between partners of a
firm.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 141

SECTION 420
GIFTS AND HOSPITALITY
Introduction
420.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
420.2 Accepting gifts and hospitality from an audit client might create a self-interest,
familiarity or intimidation threat. This section sets out a specific requirement and
application material relevant to applying the conceptual framework in such circum-
stances.

Requirement and Application Material

R420.3 A firm, network firm or an audit team member shall not accept gifts and hospitality
from an audit client, unless the value is trivial and inconsequential.
420.3 A1 Where a firm, network firm or audit team member is offering or accepting an induce-
ment to or from an audit client, the requirements and application material set out in
Section 340 apply and non-compliance with these requirements might create threats
to independence.
420.3 A2 The requirements set out in Section 340 relating to offering or accepting induce-
ments do not allow a firm, network firm or audit team member to accept gifts and
hospitality where the intent is to improperly influence behaviour even if the value
is trivial and inconsequential.

SECTION 430
ACTUAL OR THREATENED LITIGATION
Introduction
430.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
430.2 When litigation with an audit client occurs, or appears likely, self-interest and intimi-
dation threats are created. This section sets out specific application material relevant
to applying the conceptual framework in such circumstances.

Application Material
General
430.3 A1 The relationship between client management and audit team members must be char-
acterised by complete candour and full disclosure regarding all aspects of a client’s
operations. Adversarial positions might result from actual or threatened litigation
between an audit client and the firm, a network firm or an audit team member. Such
adversarial positions might affect management’s willingness to make complete dis-
closures and create self-interest and intimidation threats.
430.3 A2 Factors that are relevant in evaluating the level of such threats include:
• The materiality of the litigation.
• Whether the litigation relates to a prior audit engagement.
430.3 A3 If the litigation involves an audit team member, an example of an action that might
eliminate such self-interest and intimidation threats is removing that individual from
the audit team.
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430.3 A4 An example of an action that might be a safeguard to address such self-interest and
intimidation threats is to have an appropriate reviewer review the work performed.

SECTION 510
FINANCIAL INTERESTS
Introduction
510.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
510.2 Holding a financial interest in an audit client might create a self-interest threat. This
section sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.

Requirements and Application Material

General
510.3 A1 A financial interest might be held directly or indirectly through an intermediary such
as a collective investment vehicle, an estate or a trust. When a beneficial owner has
control over the intermediary or ability to influence its investment decisions, the
Code defines that financial interest to be direct. Conversely, when a beneficial owner
has no control over the intermediary or ability to influence its investment decisions,
the Code defines that financial interest to be indirect.
510.3 A2 This section contains references to the “materiality” of a financial interest. In deter-
mining whether such an interest is material to an individual, the combined net worth
of the individual and the individual’s immediate family members may be taken into
account.
510.3 A3 Factors that are relevant in evaluating the level of a self-interest threat created by
holding a financial interest in an audit client include:
• The role of the individual holding the financial interest.
• Whether the financial interest is direct or indirect.
• The materiality of the financial interest.

Financial Interests Held by the Firm, a Network Firm, Audit Team Members and Others
R510.4 Subject to paragraph R510.5, a direct financial interest or a material indirect finan-
cial interest in the audit client shall not be held by:
(a) The firm or a network firm;
(b) An audit team member, or any of that individual’s immediate family;
(c) Any other partner in the office in which an engagement partner practices in
connection with the audit engagement, or any of that other partner’s immedi-
ate family; or
(d) Any other partner or managerial employee who provides non-audit services
to the audit client, except for any whose involvement is minimal, or any of
that individual’s immediate family.
510.4 A1 The office in which the engagement partner practices in connection with an audit
engagement is not necessarily the office to which that partner is assigned. When the
engagement partner is located in a different office from that of the other engagement
team members, professional judgement is needed to determine the office in which
the partner practices in connection with the engagement.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 143

R510.5 As an exception to paragraph R510.4, an immediate family member identified in

subparagraphs R510.4(c) or (d) may hold a direct or material indirect financial
interest in an audit client, provided that:
(a) The family member received the financial interest because of employment
rights, for example through pension or share option plans, and, when neces-
sary, the firm addresses the threat created by the financial interest; and
(b) The family member disposes of or forfeits the financial interest as soon as
practicable when the family member has or obtains the right to do so, or in the
case of a stock option, when the family member obtains the right to exercise
the option.

Financial Interests in an Entity Controlling an Audit Client

R510.6 When an entity has a controlling interest in an audit client and the client is material
to the entity, neither the firm, nor a network firm, nor an audit team member, nor
any of that individual’s immediate family shall hold a direct or material indirect
financial interest in that entity.

Financial Interests Held as Trustee

R510.7 Paragraph R510.4 shall also apply to a financial interest in an audit client held in a
trust for which the firm, network firm or individual acts as trustee, unless:
(a) None of the following is a beneficiary of the trust: the trustee, the audit team
member or any of that individual’s immediate family, the firm or a network
firm;
(b) The interest in the audit client held by the trust is not material to the trust;
(c) The trust is not able to exercise significant influence over the audit client; and
(d) None of the following can significantly influence any investment decision
involving a financial interest in the audit client: the trustee, the audit team mem-
ber or any of that individual’s immediate family, the firm or a network firm.

Financial Interests in Common with the Audit Client

R510.8 (a) A firm, or a network firm, or an audit team member, or any of that individual’s
immediate family shall not hold a financial interest in an entity when an audit
client also has a financial interest in that entity, unless:
(i) The financial interests are immaterial to the firm, the network firm, the
audit team member and that individual’s immediate family member
and the audit client, as applicable; or
(ii) The audit client cannot exercise significant influence over the entity.
(b) Before an individual who has a financial interest described in paragraph
R510.8(a) can become an audit team member, the individual or that individ-
ual’s immediate family member shall either:
(i) Dispose of the interest; or
(ii) Dispose of enough of the interest so that the remaining interest is no
longer material.

Financial Interests Received Unintentionally

R510.9 If a firm, a network firm or a partner or employee of the firm or a network firm, or
any of that individual’s immediate family, receives a direct financial interest or a
material indirect financial interest in an audit client by way of an inheritance, gift,
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as a result of a merger or in similar circumstances and the interest would not other-
wise be permitted to be held under this section, then:
(a) If the interest is received by the firm or a network firm, or an audit team mem-
ber or any of that individual’s immediate family, the financial interest shall be
disposed of immediately, or enough of an indirect financial interest shall be
disposed of so that the remaining interest is no longer material; or
(b) (i) If the interest is received by an individual who is not an audit team
member, or by any of that individual’s immediate family, the financial
interest shall be disposed of as soon as possible, or enough of an indirect
financial interest shall be disposed of so that the remaining interest is
no longer material; and
(ii) Pending the disposal of the financial interest, when necessary the firm
shall address the threat created.

Financial Interests – Other Circumstances

Immediate Family
510.10 A1 A self-interest, familiarity, or intimidation threat might be created if an audit team
member, or any of that individual’s immediate family, or the firm or a network firm
has a financial interest in an entity when a director or officer or controlling owner
of the audit client is also known to have a financial interest in that entity.
510.10 A2 Factors that are relevant in evaluating the level of such threats include:
• The role of the individual on the audit team.
• Whether ownership of the entity is closely or widely held.
• Whether the interest allows the investor to control or significantly influence the
entity.
• The materiality of the financial interest.
510.10 A3 An example of an action that might eliminate such a self-interest, familiarity, or
intimidation threat is removing the audit team member with the financial interest
from the audit team.
510.10 A4 An example of an action that might be a safeguard to address such a self-interest
threat is having an appropriate reviewer review the work of the audit team member.
Close Family
510.10 A5 A self-interest threat might be created if an audit team member knows that a close
family member has a direct financial interest or a material indirect financial interest
in the audit client.
510.10 A6 Factors that are relevant in evaluating the level of such a threat include:
• The nature of the relationship between the audit team member and the close
family member.
• Whether the financial interest is direct or indirect.
• The materiality of the financial interest to the close family member.
510.10 A7 Examples of actions that might eliminate such a self-interest threat include:
• Having the close family member dispose, as soon as practicable, of all of the
financial interest or dispose of enough of an indirect financial interest so that the
remaining interest is no longer material.
• Removing the individual from the audit team.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 145

510.10 A8 An example of an action that might be a safeguard to address such a self-interest

threat is having an appropriate reviewer review the work of the audit team member.

Other Individuals
510.10 A9 A self-interest threat might be created if an audit team member knows that a finan-
cial interest in the audit client is held by individuals such as:
• Partners and professional employees of the firm or network firm, apart from those
who are specifically not permitted to hold such financial interests by paragraph
R510.4, or their immediate family members.
• Individuals with a close personal relationship with an audit team member.
510.10 A10 Factors that are relevant in evaluating the level of such a threat include:
• The firm’s organisational, operating and reporting structure.
• The nature of the relationship between the individual and the audit team member.
510.10 A11 An example of an action that might eliminate such a self-interest threat is removing
the audit team member with the personal relationship from the audit team.
510.10 A12 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Excluding the audit team member from any significant decision-making con-
cerning the audit engagement.
• Having an appropriate reviewer review the work of the audit team member.
Retirement Benefit Plan of a Firm or Network Firm
510.10 A13 A self-interest threat might be created if a retirement benefit plan of a firm or a
network firm holds a direct or material indirect financial interest in an audit client.

SECTION 511
LOANS AND GUARANTEES
Introduction
511.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
511.2 A loan or a guarantee of a loan with an audit client might create a self-interest threat.
This section sets out specific requirements and application material relevant to
applying the conceptual framework in such circumstances.

Requirements and Application Material

General
511.3 A1 This section contains references to the “materiality” of a loan or guarantee. In deter-
mining whether such a loan or guarantee is material to an individual, the combined
net worth of the individual and the individual’s immediate family members may be
taken into account.
Loans and Guarantees with an Audit Client
R511.4 A firm, a network firm, an audit team member, or any of that individual’s immediate
family shall not make or guarantee a loan to an audit client or any directors or
officer of an audit client, unless the loan or guarantee is immaterial to:
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(a) The firm, the network firm or the individual making the loan or guarantee, as
applicable; and
(b) The client, or the director or officer of the client.

Loans and Guarantees with an Audit Client that is a Bank or Similar Institution
R511.5 A firm, a network firm, an audit team member, or any of that individual’s immediate
family shall not accept a loan, or a guarantee of a loan, from an audit client that is a
bank or a similar institution unless the loan or guarantee is made under normal lend-
ing procedures, terms and conditions.
511.5 A1 Examples of loans include mortgages, bank overdrafts, car loans, and credit card
balances.
511.5 A2 Even if a firm or network firm receives a loan from an audit client that is a bank or
similar institution under normal lending procedures, terms and conditions, the loan
might create a self-interest threat if it is material to the audit client or firm receiving
the loan.
511.5 A3 An example of an action that might be a safeguard to address such a self-interest
threat is having the work reviewed by an appropriate reviewer, who is not an audit
team member, from a network firm that is not a beneficiary of the loan.

Deposits or Brokerage Accounts

R511.6 A firm, a network firm, an audit team member, or any of that individual’s immediate
family shall not have deposits or a brokerage account with an audit client that is a
bank, broker or similar institution, unless the deposit or account is held under nor-
mal commercial terms.

Loans and Guarantees with an Audit Client that is Not a Bank or Similar Institution
R511.7 A firm, a network firm, an audit team member, or any of that individual’s immediate
family shall not accept a loan from, or have a borrowing guaranteed by, an audit
client that is not a bank or similar institution, or any directors or officer of an audit
client, unless the loan or guarantee is immaterial to:
(a) The firm, the network firm, or the individual receiving the loan or guarantee,
as applicable; and
(b) The client, or the director or officer of the client.

SECTION 520
BUSINESS RELATIONSHIPS
Introduction
520.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
520.2 A close business relationship with an audit client or its management might create a
self-interest or intimidation threat. This section sets out specific requirements and
application material relevant to applying the conceptual framework in such circum-
stances.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 147

Requirements and Application Material

General
520.3 A1 This section contains references to the “materiality” of a financial interest and the
“significance” of a business relationship. In determining whether such a financial
interest is material to an individual, the combined net worth of the individual and
the individual’s immediate family members may be taken into account.
520.3 A2 Examples of a close business relationship arising from a commercial relationship or
common financial interest include:
• Having a financial interest in a joint venture with either the client or a controlling
owner, director or officer or other individual who performs senior managerial
activities for that client.
• Arrangements to combine one or more services or products of the firm or a net-
work firm with one or more services or products of the client and to market the
package with reference to both parties.
• Arrangements under which the firm or a network firm sells, resells, distributes
or markets the client’s products or services, or the client sells, resells, distributes
or markets the firm or a network firm’s products or services.
• Arrangements under which the firm or a network firm develops jointly with the
client, products or solutions which one or both parties sell or license to third
parties.
520.3 A3 An example that might create a close business relationship, depending on the facts
and circumstances, is an arrangement under which the firm or a network firm licenses
products or solutions to or from a client.

Firm, Network Firm, Audit Team Member or Immediate Family Business Relationships
R520.4 A firm, a network firm or an audit team member shall not have a close business
relationship with an audit client or its management unless any financial interest is
immaterial and the business relationship is insignificant to the client or its manage-
ment and the firm, the network firm or the audit team member, as applicable.
520.4 A1 A self-interest or intimidation threat might be created if there is a close business
relationship between the audit client or its management and the immediate family
of an audit team member.

Common Interests in Closely-Held Entities

R520.5 A firm, a network firm, an audit team member, or any of that individual’s immediate
family shall not have a business relationship involving the holding of an interest in
a closely-held entity when an audit client or a director or officer of the client, or any
group thereof, also holds an interest in that entity, unless:
(a) The business relationship is insignificant to the firm, the network firm, or the
individual as applicable, and the client;
(b) The financial interest is immaterial to the investor or group of investors; and
(c) The financial interest does not give the investor, or group of investors, the
ability to control the closely-held entity.

Buying Goods or Services

520.6 A1 The purchase of goods and services, including the licensing of technology from an
audit client by a firm, a network firm, an audit team member, or any of that individ-
ual’s immediate family does not usually create a threat to independence if the
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transaction is in the normal course of business and at arm’s length. However, such
transactions might be of such a nature and magnitude that they create a self-interest
threat.
520.6 A2 Examples of actions that might eliminate such a self-interest threat include:
• Eliminating or reducing the magnitude of the transaction.
• Removing the individual from the audit team.

Providing, Selling, Reselling or Licensing Technology

520.7 A1 Where a firm or a network firm provides, sells, resells or licenses technology:
(a) To an audit client; or
(b) To an entity that provides services using such technology to audit clients of
the firm or network firm,
depending on the facts and circumstances, the requirements and application material
in Section 600 apply.

SECTION 521
FAMILY AND PERSONAL RELATIONSHIPS
Introduction
521.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
521.2 Family or personal relationships with client personnel might create a self-interest,
familiarity or intimidation threat. This section sets out specific requirements and
application material relevant to applying the conceptual framework in such circum-
stances.

Requirements and Application Material

General
521.3 A1 A self-interest, familiarity or intimidation threat might be created by family and
personal relationships between an audit team member and a director or officer or,
depending on their role, certain employees of the audit client.
521.3 A2 Factors that are relevant in evaluating the level of such threats include:
• The individual’s responsibilities on the audit team.
• The role of the family member or other individual within the client, and the
closeness of the relationship.

Immediate Family of an Audit Team Member

521.4 A1 A self-interest, familiarity or intimidation threat is created when an immediate fam-
ily member of an audit team member is an employee in a position to exert significant
influence over the client’s financial position, financial performance or cash flows.
521.4 A2 Factors that are relevant in evaluating the level of such threats include:
• The position held by the immediate family member.
• The role of the audit team member.
521.4 A3 An example of an action that might eliminate such a self-interest, familiarity or in-
timidation threat is removing the individual from the audit team.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 149

521.4 A4 An example of an action that might be a safeguard to address such a self-interest,

familiarity or intimidation threat is structuring the responsibilities of the audit team
so that the audit team member does not deal with matters that are within the respon-
sibility of the immediate family member.
R521.5 An individual shall not participate as an audit team member when any of that indi-
vidual’s immediate family:
(a) Is a director or officer of the audit client;
(b) Is an employee in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on which the firm
will express an opinion; or
(c) Was in such position during any period covered by the engagement or the
financial statements.

Close Family of an Audit Team Member

521.6 A1 A self-interest, familiarity or intimidation threat is created when a close family
member of an audit team member is:
(a) A director or officer of the audit client; or
(b) An employee in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on which the firm
will express an opinion.
521.6 A2 Factors that are relevant in evaluating the level of such threats include:
• The nature of the relationship between the audit team member and the close
family member.
• The position held by the close family member.
• The role of the audit team member.
521.6 A3 An example of an action that might eliminate such a self-interest, familiarity or
intimidation threat is removing the individual from the audit team.
521.6 A4 An example of an action that might be a safeguard to address such a self-interest,
familiarity or intimidation threat is structuring the responsibilities of the audit team
so that the audit team member does not deal with matters that are within the respon-
sibility of the close family member.

Other Close Relationships of an Audit Team Member

R521.7 An audit team member shall consult in accordance with firm policies and proced-
ures if the audit team member has a close relationship with an individual who is not
an immediate or close family member, but who is:
(a) A director or officer of the audit client; or
(b) An employee in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on which the firm
will express an opinion.
521.7 A1 Factors that are relevant in evaluating the level of a self-interest, familiarity or
intimidation threat created by such a relationship include:
• The nature of the relationship between the individual and the audit team member.
• The position the individual holds with the client.
• The role of the audit team member.
521.7 A2 An example of an action that might eliminate such a self-interest, familiarity or
intimidation threat is removing the individual from the audit team.
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521.7 A3 An example of an action that might be a safeguard to address such a self-interest,

familiarity or intimidation threat is structuring the responsibilities of the audit team
so that the audit team member does not deal with matters that are within the respon-
sibility of the individual with whom the audit team member has a close relationship.

Relationships of Partners and Employees of the Firm

R521.8 Partners and employees of the firm shall consult in accordance with firm policies
and procedures if they are aware of a personal or family relationship between:
(a) A partner or employee of the firm or network firm who is not an audit team
member; and
(b) A director or officer of the audit client or an employee of the audit client in a
position to exert significant influence over the preparation of the client’s
accounting records or the financial statements on which the firm will express
an opinion.
521.8 A1 Factors that are relevant in evaluating the level of a self-interest, familiarity or
intimidation threat created by such a relationship include:
• The nature of the relationship between the partner or employee of the firm and
the director or officer or employee of the client.
• The degree of interaction of the partner or employee of the firm with the audit
team.
• The position of the partner or employee within the firm.
• The position the individual holds with the client.
521.8 A2 Examples of actions that might be safeguards to address such self-interest, famili-
arity or intimidation threats include:
• Structuring the partner’s or employee’s responsibilities to reduce any potential
influence over the audit engagement.
• Having an appropriate reviewer review the relevant audit work performed.

SECTION 522
RECENT SERVICE WITH AN AUDIT CLIENT
Introduction
522.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
522.2 If an audit team member has recently served as a director or officer, or employee of
the audit client, a self-interest, self-review or familiarity threat might be created. This
section sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.

Requirements and Application Material

Service During Period Covered by the Audit Report
R522.3 The audit team shall not include an individual who, during the period covered by
the audit report:
(a) Had served as a director or officer of the audit client; or
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 151

(b) Was an employee in a position to exert significant influence over the prepar-
ation of the client’s accounting records or the financial statements on which
the firm will express an opinion.

Service Prior to Period Covered by the Audit Report

522.4 A1 A self-interest, self-review or familiarity threat might be created if, before the period
covered by the audit report, an audit team member:
(a) Had served as a director or officer of the audit client; or
(b) Was an employee in a position to exert significant influence over the prepar-
ation of the client’s accounting records or financial statements on which the
firm will express an opinion.
For example, a threat would be created if a decision made or work performed by the
individual in the prior period, while employed by the client, is to be evaluated in the
current period as part of the current audit engagement.
522.4 A2 Factors that are relevant in evaluating the level of such threats include:
• The position the individual held with the client.
• The length of time since the individual left the client.
• The role of the audit team member.
522.4 A3 An example of an action that might be a safeguard to address such a self-interest,
self-review or familiarity threat is having an appropriate reviewer review the work
performed by the audit team member.

SECTION 523
SERVING AS A DIRECTOR OR OFFICER OF AN AUDIT
CLIENT
Introduction
523.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
523.2 Serving as a director or officer of an audit client creates self-review and self-interest
threats. This section sets out specific requirements and application material relevant
to applying the conceptual framework in such circumstances.

Requirements and Application Material

Service as Director or Officer
R523.3 A partner or employee of the firm or a network firm shall not serve as a director or
officer of an audit client of the firm.

Service as Company Secretary

R523.4 A partner or employee of the firm or a network firm shall not serve as Company
Secretary for an audit client of the firm, unless:
(a) This practice is specifically permitted under local law, professional rules or
practice;
(b) Management makes all relevant decisions; and
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(c) The duties and activities performed are limited to those of a routine and
administrative nature, such as preparing minutes and maintaining statutory
returns.
523.4 A1 The position of Company Secretary has different implications in different jurisdic-
tions. Duties might range from: administrative duties (such as personnel manage-
ment and the maintenance of company records and registers) to duties as diverse as
ensuring that the company complies with regulations or providing advice on cor-
porate governance matters. Usually this position is seen to imply a close association
with the entity. Therefore, a threat is created if a partner or employee of the firm or
a network firm serves as Company Secretary for an audit client. (More information
on providing non-assurance services to an audit client is set out in Section 600, Pro-
vision of Non-assurance Services to an Audit Client.)

SECTION 524
EMPLOYMENT WITH AN AUDIT CLIENT
Introduction
524.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
524.2 Employment relationships with an audit client might create a self-interest, familiar-
ity or intimidation threat. This section sets out specific requirements and application
material relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

All Audit Clients
524.3 A1 A familiarity or intimidation threat might be created if any of the following individ-
uals have been an audit team member or partner of the firm or a network firm:
• A director or officer of the audit client.
• An employee in a position to exert significant influence over the preparation of
the client’s accounting records or the financial statements on which the firm will
express an opinion.
Former Partner or Audit Team Member Restrictions
R524.4 The firm shall ensure that no significant connection remains between the firm or a
network firm and:
(a) A former partner who has joined an audit client of the firm; or
(b) A former audit team member who has joined the audit client, if either has
joined the audit client as:
(i) A director or officer; or
(ii) An employee in a position to exert significant influence over the prep-
aration of the client’s accounting records or the financial statements on
which the firm will express an opinion.
A significant connection remains between the firm or a network firm and the indi-
vidual, unless:
(a) The individual is not entitled to any benefits or payments from the firm or
network firm that are not made in accordance with fixed pre-determined
arrangements;
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 153

(b) Any amount owed to the individual is not material to the firm or the network
firm; and
(c) The individual does not continue to participate or appear to participate in the
firm’s or the network firm’s business or professional activities.
524.4 A1 Even if the requirements of paragraph R524.4 are met, a familiarity or intimidation
threat might still be created.
524.4 A2 A familiarity or intimidation threat might also be created if a former partner of the
firm or network firm has joined an entity in one of the positions described in para-
graph 524.3 A1 and the entity subsequently becomes an audit client of the firm.
524.4 A3 Factors that are relevant in evaluating the level of such threats include:
• The position the individual has taken at the client.
• Any involvement the individual will have with the audit team.
• The length of time since the individual was an audit team member or partner of
the firm or network firm.
• The former position of the individual within the audit team, firm or network firm.
An example is whether the individual was responsible for maintaining regular
contact with the client’s management or those charged with governance.
524.4 A4 Examples of actions that might be safeguards to address such familiarity or intimi-
dation threats include:
• Modifying the audit plan.
• Assigning to the audit team individuals who have sufficient experience relative
to the individual who has joined the client.
• Having an appropriate reviewer review the work of the former audit team mem-
ber.

Audit Team Members Entering Employment with a Client

R524.5 A firm or network firm shall have policies and procedures that require audit team
members to notify the firm or network firm when entering employment negotiations
with an audit client.
524.5 A1 A self-interest threat is created when an audit team member participates in the audit
engagement while knowing that the audit team member will, or might, join the
client at some time in the future.
524.5 A2 An example of an action that might eliminate such a self-interest threat is removing
the individual from the audit team.
524.5 A3 An example of an action that might be a safeguard to address such a self-interest
threat is having an appropriate reviewer review any significant judgements made by
that individual while on the team.

Audit Clients that are Public Interest Entities

Key Audit Partners
R524.6 Subject to paragraph R524.8, if an individual who was a key audit partner with
respect to an audit client that is a public interest entity joins the client as:
(a) A director or officer; or
(b) An employee in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on which the firm
will express an opinion,
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independence is compromised unless, subsequent to the individual ceasing to be a

key audit partner:
(i) The audit client has issued audited financial statements covering a period of
not less than twelve months; and
(ii) The individual was not an audit team member with respect to the audit of
those financial statements.
Senior or Managing Partner (Chief Executive or Equivalent) of the Firm
R524.7 Subject to paragraph R524.8, if an individual who was the Senior or Managing Part-
ner (Chief Executive or equivalent) of the firm joins an audit client that is a public
interest entity as:
(a) A director or officer; or
(b) An employee in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on which the firm
will express an opinion,
independence is compromised, unless twelve months have passed since the individ-
ual was the Senior or Managing Partner (Chief Executive or equivalent) of the firm.
Business Combinations
R524.8 As an exception to paragraphs R524.6 and R524.7, independence is not compro-
mised if the circumstances set out in those paragraphs arise as a result of a business
combination and:
(a) The position was not taken in contemplation of the business combination;
(b) Any benefits or payments due to the former partner from the firm or a network
firm have been settled in full, unless made in accordance with fixed pre-
determined arrangements and any amount owed to the partner is not material
to the firm or network firm as applicable;
(c) The former partner does not continue to participate or appear to participate in
the firm’s or network firm’s business or professional activities; and
(d) The firm discusses the former partner’s position held with the audit client with
those charged with governance.

SECTION 525
TEMPORARY PERSONNEL ASSIGNMENTS
Introduction
525.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
525.2 The loan of personnel to an audit client might create a self-review, advocacy or
familiarity threat. This section sets out specific requirements and application ma-
terial relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

General
525.3 A1 Examples of actions that might be safeguards to address threats created by the loan
of personnel by a firm or a network firm to an audit client include:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 155

• Conducting an additional review of the work performed by the loaned personnel

might address a self-review threat.
• Not including the loaned personnel as an audit team member might address a
familiarity or advocacy threat.
• Not giving the loaned personnel audit responsibility for any function or activity
that the personnel performed during the loaned personnel assignment might
address a self-review threat.
525.3 A2 When familiarity and advocacy threats are created by the loan of personnel by a
firm or a network firm to an audit client, such that the firm or the network firm
becomes too closely aligned with the views and interests of management, safe-
guards are often not available.
R525.4 A firm or network firm shall not loan personnel to an audit client unless the firm or
network firm is satisfied that:
(a) Such assistance is provided only for a short period of time;
(b) Such personnel will not assume management responsibilities and the audit
client will be responsible for directing and supervising the activities of such
personnel;
(c) Any threat to the independence of the firm or network firm arising from the
professional services undertaken by such personnel is eliminated or safe-
guards are applied to reduce such threat to an acceptable level; and
(d) Such personnel will not undertake or be involved in professional services that
the firm or network firm is prohibited from performing by the Code.

SECTION 540
LONG ASSOCIATION OF PERSONNEL (INCLUDING PARTNER
ROTATION) WITH AN AUDIT CLIENT
Introduction
540.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
540.2 When an individual is involved in an audit engagement over a long period of time,
familiarity and self-interest threats might be created. This section sets out require-
ments and application material relevant to applying the conceptual framework in
such circumstances.

Requirements and Application Material10

All Audit Clients
540.3 A1 Although an understanding of an audit client and its environment is fundamental to
audit quality, a familiarity threat might be created as a result of an individual’s long
association as an audit team member with:
(a) The audit client and its operations;
(b) The audit client’s senior management; or

________________________

10 To be read in conjunction with the Section 92 of the South African Companies Act, 2008 (Act No 71of 2008) for the
audits of companies in South Africa.
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(c) The financial statements on which the firm will express an opinion or the
financial information which forms the basis of the financial statements.
540.3 A2 A self-interest threat might be created as a result of an individual’s concern about
losing a longstanding client or an interest in maintaining a close personal relation-
ship with a member of senior management or those charged with governance. Such
a threat might influence the individual’s judgement inappropriately.
540.3 A3 Factors that are relevant to evaluating the level of such familiarity or self-interest
threats include:
(a) In relation to the individual:
• The overall length of the individual’s relationship with the client, includ-
ing if such relationship existed while the individual was at a prior firm.
• How long the individual has been an engagement team member, and the
nature of the roles performed.
• The extent to which the work of the individual is directed, reviewed and
supervised by more senior personnel.
• The extent to which the individual, due to the individual’s seniority, has
the ability to influence the outcome of the audit, for example, by making
key decisions or directing the work of other engagement team members.
• The closeness of the individual’s personal relationship with senior man-
agement or those charged with governance.
• The nature, frequency and extent of the interaction between the individual
and senior management or those charged with governance.
(b) In relation to the audit client:
• The nature or complexity of the client’s accounting and financial reporting
issues and whether they have changed.
• Whether there have been any recent changes in senior management or
those charged with governance.
• Whether there have been any structural changes in the client’s organisation
which impact the nature, frequency and extent of interactions the individ-
ual might have with senior management or those charged with governance.
540.3 A4 The combination of two or more factors might increase or reduce the level of the
threats. For example, familiarity threats created over time by the increasingly close
relationship between an individual and a member of the client’s senior management
would be reduced by the departure of that member of the client’s senior manage-
ment.
540.3 A5 An example of an action that might eliminate the familiarity and self-interest threats
created by an individual being involved in an audit engagement over a long period
of time would be rotating the individual off the audit team.
540.3 A6 Examples of actions that might be safeguards to address such familiarity or self-
interest threats include:
• Changing the role of the individual on the audit team or the nature and extent of
the tasks the individual performs.
• Having an appropriate reviewer who was not an audit team member review the
work of the individual.
• Performing regular independent internal or external quality reviews of the
engagement.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 157

R540.4 If a firm decides that the level of the threats created can only be addressed by rotating
the individual off the audit team, the firm shall determine an appropriate period
during which the individual shall not:
(a) Be a member of the engagement team for the audit engagement;
(b) Perform an engagement quality review, or a review consistent with the object-
ive of an engagement quality review, for the engagement; or
(c) Exert direct influence on the outcome of the audit engagement.
The period shall be of sufficient duration to allow the familiarity and self-interest
threats to be addressed. In the case of a public interest entity, paragraphs R540.5 to
R540.20 also apply.
Audit Clients that are Public Interest Entities
R540.5 Subject to paragraphs R540.7 to R540.9, in respect of an audit of a public interest
entity, an individual shall not act in any of the following roles, or a combination of
such roles, for a period of more than seven cumulative years (the “time-on” period):
(a) The engagement partner;
(b) The individual appointed as responsible for performing the engagement qual-
ity control review; or
(c) Any other key audit partner role.
After the time-on period, the individual shall serve a “cooling-off” period in accord-
ance with the provisions in paragraphs R540.11 to R540.19.
R540.6 In calculating the time-on period, the count of years shall not be restarted unless the
individual ceases to act in any one of the roles in paragraph R540.5(a) to (c) for a
minimum period. This minimum period is a consecutive period equal to at least the
cooling-off period determined in accordance with paragraphs R540.11 to R540.13
as applicable to the role in which the individual served in the year immediately
before ceasing such involvement.
540.6 A1 For example, an individual who served as engagement partner for four years fol-
lowed by three years off can only act thereafter as a key audit partner on the same
audit engagement for three further years (making a total of seven cumulative years).
Thereafter, that individual is required to cool off in accordance with paragraph
R540.14.
R540.7 As an exception to paragraph R540.5, key audit partners whose continuity is espe-
cially important to audit quality may, in rare cases due to unforeseen circumstances
outside the firm’s control, and with the concurrence of those charged with govern-
ance, be permitted to serve an additional year as a key audit partner as long as the
threat to independence can be eliminated or reduced to an acceptable level.
540.7 A1 For example, a key audit partner may remain in that role on the audit team for up to
one additional year in circumstances where, due to unforeseen events, a required
rotation was not possible, as might be the case due to serious illness of the intended
engagement partner. In such circumstances, this will involve the firm discussing
with those charged with governance the reasons why the planned rotation cannot
take place and the need for any safeguards to reduce any threat created.
R540.8 If an audit client becomes a public interest entity, a firm shall take into account the
length of time an individual has served the audit client as a key audit partner before
the client becomes a public interest entity in determining the timing of the rotation.
If the individual has served the audit client as a key audit partner for a period of five
cumulative years or less when the client becomes a public interest entity, the number
ET – 158 SAICA Student Handbook 2024/2025

of years the individual may continue to serve the client in that capacity before rotat-
ing off the engagement is seven years less the number of years already served. As
an exception to paragraph R540.5, if the individual has served the audit client as a
key audit partner for a period of six or more cumulative years when the client
becomes a public interest entity, the individual may continue to serve in that cap-
acity with the concurrence of those charged with governance for a maximum of two
additional years before rotating off the engagement.
R540.9 When a firm has only a few people with the necessary knowledge and experience
to serve as a key audit partner on the audit of a public interest entity, rotation of key
audit partners might not be possible. As an exception to paragraph R540.5, if an
independent regulatory body in the relevant jurisdiction has provided an exemption
from partner rotation in such circumstances, an individual may remain a key audit
partner for more than seven years, in accordance with such exemption. This is pro-
vided that the independent regulatory body has specified other requirements which
are to be applied, such as the length of time that the key audit partner may be
exempted from rotation or a regular independent external review10.
Other Considerations Relating to the Time-on Period
R540.10 In evaluating the threats created by an individual’s long association with an audit
engagement, a firm shall give particular consideration to the roles undertaken and
the length of an individual’s association with the audit engagement prior to the
individual becoming a key audit partner.
540.10 A1 There might be situations where the firm, in applying the conceptual framework,
concludes that it is not appropriate for an individual who is a key audit partner to
continue in that role even though the length of time served as a key audit partner is
less than seven years.
Cooling-off Period
R540.11 If the individual acted as the engagement partner for seven cumulative years, the
cooling-off period shall be five consecutive years.
R540.12 Where the individual has been appointed as responsible for the engagement quality
control review and has acted in that capacity for seven cumulative years, the cool-
ing-off period shall be three consecutive years.
R540.13 If the individual has acted as a key audit partner other than in the capacities set out
in paragraphs R540.11 and R540.12 for seven cumulative years, the cooling-off
period shall be two consecutive years.
540.14 A1 The partner rotation requirements in this section are distinct from, and do not mod-
ify, the cooling-off period required by ISQM 2 as a condition for eligibility before
the engagement partner can assume the role of engagement quality reviewer (see
paragraph 325.8 A4).
Service in a combination of key audit partner roles
R540.15 If the individual acted in a combination of key audit partner roles and served as the
engagement partner for four or more cumulative years, the cooling-off period shall
be five consecutive years.
R540.16 Subject to paragraph R540.16(a), if the individual acted in a combination of key
audit partner roles and served as the key audit partner responsible for the engage-
ment quality review for four or more cumulative years, the cooling-off period shall
be three consecutive years.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 159

R540.17 If an individual has acted in a combination of engagement partner and engagement

quality review roles for four or more cumulative years during the time-on period,
the cooling-off period shall:
(a) As an exception to paragraph R540.15, be five consecutive years where the
individual has been the engagement partner for three or more years; or
(b) Be three consecutive years in the case of any other combination.
R540.18 If the individual acted in any combination of key audit partner roles other than those
addressed in paragraphs R540.14 to R540.16, the cooling-off period shall be two
consecutive years.
Service at a Prior Firm
R540.19 In determining the number of years that an individual has been a key audit partner
as set out in paragraph R540.5, the length of the relationship shall, where relevant,
include time while the individual was a key audit partner on that engagement at a
prior firm.
[Paragraphs 540.20 is intentionally left blank]
Restrictions on Activities During the Cooling-off Period
R540.21 For the duration of the relevant cooling-off period, the individual shall not:
(a) Be an engagement team member or perform an engagement quality review, or
a review consistent with the objective of an engagement quality review for the
audit engagement;
(b) Consult with the engagement team or the client regarding technical or industry-
specific issues, transactions or events affecting the audit engagement (other
than discussions with the engagement team limited to work undertaken or con-
clusions reached in the last year of the individual’s time-on period where this
remains relevant to the audit);
(c) Be responsible for leading or coordinating the professional services provided
by the firm or a network firm to the audit client, or overseeing the relationship
of the firm or a network firm with the audit client; or
(d) Undertake any other role or activity not referred to above with respect to the
audit client, including the provision of non-assurance services that would
result in the individual:
(i) Having significant or frequent interaction with senior management or
those charged with governance; or
(ii) Exerting direct influence on the outcome of the audit engagement.
540.21 A1 The provisions of paragraph R540.20 are not intended to prevent the individual from
assuming a leadership role in the firm or a network firm, such as that of the Senior
or Managing Partner (Chief Executive or equivalent).

SECTION 600
PROVISION OF NON-ASSURANCE SERVICES TO AN AUDIT
CLIENT
Introduction
600.1 Firms are required to comply with the fundamental principles, be independent, and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
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600.2 Firms and network firms might provide a range of non-assurance services to their
audit clients, consistent with their skills and expertise. Providing non-assurance ser-
vices to audit clients might create threats to compliance with the fundamental prin-
ciples and threats to independence.
600.3 This section sets out requirements and application material relevant to applying the
conceptual framework to identify, evaluate and address threats to independence
when providing non-assurance services to audit clients. The subsections that follow
set out specific requirements and application material relevant when a firm or net-
work firm provides certain non-assurance services to audit clients and indicate the
types of threats that might be created as a result.
600.4 Some of the subsections include requirements that expressly prohibit a firm or net-
work firm from providing certain services to an audit client because the threats cre-
ated cannot be eliminated and safeguards are not capable of being applied to reduce
the threats to an acceptable level.
600.5 New business practices, the evolution of financial markets and changes in technol-
ogy are some developments that make it impossible to draw up an all-inclusive list
of non-assurance services that firms and network firms might provide to an audit
client. The conceptual framework and the general provisions in this section apply
when a firm proposes to a client to provide a non-assurance service for which there
are no specific requirements and application material.
600.6 The requirements and application material in this section apply where a firm or a
network firm:
(a) Uses technology to provide a non-assurance service to an audit client; or
(b) Provides, sells, resells or licenses technology resulting in the provision of a
non-assurance service by the firm or a network firm:
(i) To an audit client; or
(ii) To an entity that provides services using such technology to audit clients
of the firm or network firm.

Requirements and Application Material

General
Non-Assurance Services Provisions in Laws or Regulations
600.7 A1 Paragraphs R100.6 to 100.7 A1 set out requirements and application material relating
to compliance with the Code. If there are laws and regulations in a jurisdiction
relating to the provision of non-assurance services to audit clients that differ from
or go beyond those set out in this section, firms providing non-assurance services
to which such provisions apply need to be aware of those differences and comply
with the more stringent provisions.
Risk of Assuming Management Responsibilities when Providing a Non-Assurance Service
600.8 A1 When a firm or a network firm provides a non-assurance service to an audit client,
there is a risk that the firm or network firm will assume a management responsibility
unless the firm or network firm is satisfied that the requirements in paragraph
R400.21 have been complied with.
Accepting an Engagement to Provide a Non-Assurance Service
R600.9 Before a firm or a network firm accepts an engagement to provide a non-assurance
service to an audit client, the firm shall apply the conceptual framework to identify,
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 161

evaluate and address any threat to independence that might be created by providing
that service.

Identifying and Evaluating Threats

All Audit Clients
600.10 A1 A description of the categories of threats that might arise when a firm or a network
firm provides a non-assurance service to an audit client is set out in paragraph 120.6
A3.
600.10 A2 Factors that are relevant in identifying the different threats that might be created by
providing a non-assurance service to an audit client, and evaluating the level of such
threats include:
• The nature, scope, intended use and purpose of the service.
• The manner in which the service will be provided, such as the personnel to be
involved and their location.
• The client’s dependency on the service, including the frequency with which the
service will be provided.
• The legal and regulatory environment in which the service is provided.
• Whether the client is a public interest entity.
• The level of expertise of the client’s management and employees with respect
to the type of service provided.
• The extent to which the client determines significant matters of judgment.
(Ref: Para. R400.20 to R400.21).
• Whether the outcome of the service will affect the accounting records or matters
reflected in the financial statements on which the firm will express an opinion,
and, if so:
o The extent to which the outcome of the service will have a material effect on
the financial statements.
o The degree of subjectivity involved in determining the appropriate amounts
or treatment for those matters reflected in the financial statements.
• The nature and extent of the impact of the service, if any, on the systems that
generate information that forms a significant part of the client’s:
o Accounting records or financial statements on which the firm will express
an opinion.
o Internal controls over financial reporting.
• The degree of reliance that will be placed on the outcome of the service as part
of the audit.
• The fee relating to the provision of the non-assurance service.
600.10 A3 Subsections 601 to 610 include examples of additional factors that are relevant in
identifying threats to independence created by providing certain non-assurance
services, and evaluating the level of such threats.
Materiality in relation to financial statements
600.11 A1 Materiality is a factor that is relevant in evaluating threats created by providing a
non-assurance service to an audit client. Subsections 601 to 610 refer to materiality
in relation to an audit client’s financial statements. The concept of materiality in
relation to an audit is addressed in ISA 320, Materiality in Planning and Performing
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an Audit, and in relation to a review in ISRE 2400 (Revised), Engagements to Review

Historical Financial Statements. The determination of materiality involves the exer-
cise of professional judgment and is impacted by both quantitative and qualitative
factors. It is also affected by perceptions of the financial information needs of users.
600.11 A2 Where the Code expressly prohibits the provision of a non-assurance service to an
audit client, a firm or a network firm is not permitted to provide that service, regard-
less of the materiality of the outcome or results of the non-assurance service on the
financial statements on which the firm will express an opinion.
Providing advice and recommendations
600.12 A1 Providing advice and recommendations might create a self-review threat. Whether
providing advice and recommendations creates a self-review threat involves making
the determination set out in paragraph R600.14. Where the audit client is not a pub-
lic interest entity and a self-review threat is identified, the firm is required to apply
the conceptual framework to evaluate and address the threat. If the audit client is a
public interest entity, paragraphs R600.7 and R600.18 apply.
Multiple non-assurance services provided to the same audit client
R600.13 When a firm or a network firm provides multiple non-assurance services to an audit
client, the firm shall consider whether, in addition to the threats created by each
service individually, the combined effect of such services creates or impacts threats
to independence.
600.13 A1 In addition to paragraph 600.10 A2, factors that are relevant in a firm’s evaluation
of the level of threats to independence created where multiple non-assurance services
are provided to an audit client might include whether:
•The combined effect of providing multiple services increases the level of threat
created by each service assessed individually.
•The combined effect of providing multiple services increases the level of any
threat arising from the overall relationship with the audit client.
Self-review threats
600.14 A1 When a firm or a network firm provides a non-assurance service to an audit client,
there might be a risk of the firm auditing its own or the network firm’s work, thereby
giving rise to a self-review threat. A self-review threat is the threat that a firm or a
network firm will not appropriately evaluate the results of a previous judgment
made or an activity performed by an individual within the firm or network firm as
part of a non-assurance service on which the audit team will rely when forming a
judgment as part of an audit.
R600.15 Before providing a non-assurance service to an audit client, a firm or a network firm
shall determine whether the provision of that service might create a self-review
threat by evaluating whether there is a risk that:
(a) The results of the service will form part of or affect the accounting records,
the internal controls over financial reporting, or the financial statements on
which the firm will express an opinion; and
(b) In the course of the audit of those financial statements on which the firm will
express an opinion, the audit team will evaluate or rely on any judgments made
or activities performed by the firm or network firm when providing the service.
Audit Clients that are Public Interest Entities
600.16 A1 When the audit client is a public interest entity, stakeholders have heightened ex-
pectations regarding the firm’s independence. These heightened expectations are
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 163

relevant to the reasonable and informed third party test used to evaluate a self-
review threat created by providing a non-assurance service to an audit client that is
a public interest entity.
600.16 A2 Where the provision of a non-assurance service to an audit client that is a public
interest entity creates a self-review threat, that threat cannot be eliminated, and safe-
guards are not capable of being applied to reduce that threat to an acceptable level.
Self-review threats
R600.17 A firm or a network firm shall not provide a non-assurance service to an audit client
that is a public interest entity if the provision of that service might create a self-
review threat in relation to the audit of the financial statements on which the firm
will express an opinion. (Ref: Para. 600.14 A1 and R600.15).
Providing advice and recommendations
R600.18 As an exception to paragraph R600.17, a firm or a network firm may provide advice
and recommendations to an audit client that is a public interest entity in relation to
information or matters arising in the course of an audit provided that the firm:
(a) Does not assume a management responsibility (Ref: Para. R400.20 and
R400.21); and
(b) Applies the conceptual framework to identify, evaluate and address threats,
other than self-review threats, to independence that might be created by the
provision of that advice.
600.18 A1 Examples of advice and recommendations that might be provided in relation to
information or matters arising in the course of an audit include:
• Advising on accounting and financial reporting standards or policies and finan-
cial statement disclosure requirements.
• Advising on the appropriateness of financial and accounting control and the
methods used in determining the stated amounts in the financial statements and
related disclosures.
• Proposing adjusting journal entries arising from audit findings.
• Discussing findings on internal controls over financial reporting and processes
and recommending improvements.
• Discussing how to resolve account reconciliation problems.
• Advising on compliance with group accounting policies.
Addressing Threats
All Audit Clients
600.19 A1 Paragraphs R120.10 to 120.10 A2 include a requirement and application material
that are relevant when addressing threats to independence, including a description
of safeguards.
600.19 A2 Threats to independence created by providing a non-assurance service or multiple
services to an audit client vary depending on the facts and circumstances of the audit
engagement and the nature of the service. Such threats might be addressed by apply-
ing safeguards or by adjusting the scope of the proposed service.
600.19 A3 Examples of actions that might be safeguards to address such threats include:
• Using professionals who are not audit team members to perform the service.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed.
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• Obtaining pre-clearance of the outcome of the service from an appropriate

authority (for example, a tax authority).
600.19 A4 Safeguards might not be available to reduce the threats created by providing a non-
assurance service to an audit client to an acceptable level. In such a situation, the
application of the conceptual framework requires the firm or network firm to:
(a) Adjust the scope of the proposed service to eliminate the circumstances that
are creating the threats;
(b) Decline or end the service that creates the threats that cannot be eliminated or
reduced to an acceptable level; or
(c) End the audit engagement.
Communication with Those Charged With Governance Regarding Non-Assurance Services
All Audit Clients
600.20 A1 Paragraphs 400.40 A1 and 400.40 A2 are relevant to a firm’s communication with
those charged with governance in relation to the provision of non-assurance services.
Audit Clients that are Public Interest Entities
600.21 A1 Paragraphs R600.22 to R600.24 require a firm to communicate with those charged
with governance of a public interest entity before the firm or network firm provides
non-assurance services to entities within the corporate structure of which the public
interest entity forms part that might create threats to the firm’s independence from
the public interest entity. The purpose of the communication is to enable those
charged with governance of the public interest entity to have effective oversight of
the independence of the firm that audits the financial statements of that public
interest entity.
600.21 A2 To facilitate compliance with such requirements, a firm might agree with those
charged with governance of the public interest entity a process that addresses when
and with whom the firm is to communicate. Such a process might:
• Establish the procedure for the provision of information about a proposed non-
assurance service which might be on an individual engagement basis, under a
general policy, or on any other agreed basis.
• Identify the entities to which the process would apply, which might include other
public interest entities within the corporate structure.
• Identify any services that can be provided to the entities identified in paragraph
R600.22 without specific approval of those charged with governance if they
agree as a general policy that these services are not prohibited under this section
and would not create threats to the firm’s independence or, if any such threats
are created, they would be at an acceptable level.
• Establish how those charged with governance of multiple public interest entities
within the same corporate structure have determined that authority for approving
services is to be allocated.
• Establish a procedure to be followed where the provision of information neces-
sary for those charged with governance to evaluate whether a proposed service
might create a threat to the firm’s independence is prohibited or limited by pro-
fessional standards, laws or regulations, or might result in the disclosure of sen-
sitive or confidential information.
• Specify how any issues not covered by the process might be resolved.
R600.22 Before a firm that audits the financial statements of a public interest entity, or a net-
work firm accepts an engagement to provide a non-assurance service to:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 165

(A) That public interest entity;

(B) Any entity that controls, directly or indirectly, that public interest entity; or
(C) Any entity that is controlled directly or indirectly by that public interest entity,
the firm shall, unless already addressed when establishing a process agreed with
those charged with governance:
(a) Inform those charged with governance of the public interest entity that the
firm has determined that the provision of the service:
(i) Is not prohibited; and
(ii) Will not create a threat to the firm’s independence as auditor of the
public interest entity or that any identified threat is at an acceptable level
or, if not, will be eliminated or reduced to an acceptable level; and
(b) Provide those charged with governance of the public interest entity with infor-
mation to enable them to make an informed assessment about the impact of
the provision of the service on the firm’s independence.
600.22 A1 Examples of information that might be provided to those charged with governance
of the public interest entity in relation to a particular non-assurance service include:
• The nature and scope of the service to be provided.
• The basis and amount of the proposed fee.
• Where the firm has identified any threats to independence that might be created
by the provision of the proposed service, the basis for the firm’s assessment that
the threats are at an acceptable level or, if not, the actions the firm or network
firm will take to eliminate or reduce any threats to independence to an acceptable
level.
• Whether the combined effect of providing multiple services creates threats to
independence or changes the level of previously identified threats.
R600.23 A firm or a network firm shall not provide a non-assurance service to any of the
entities referred to in paragraph R600.22 unless those charged with governance of
the public interest entity have concurred either under a process agreed with those
charged with governance or in relation to a specific service with:
(a) The firm’s conclusion that the provision of the service will not create a threat
to the firm’s independence as auditor of the public interest entity, or that any
identified threat is at an acceptable level or, if not, will be eliminated, or re-
duced to an acceptable level; and
(b) The provision of that service.
R600.24 As an exception to paragraphs R600.22 and R600.23, where a firm is prohibited by
applicable professional standards, laws or regulations from providing information
about the proposed non-assurance service to those charged with governance of the
public interest entity, or where the provision of such information would result in
disclosure of sensitive or confidential information, the firm may provide the pro-
posed service provided that:
(a) The firm provides such information as it is able without breaching its legal or
professional obligations;
(b) The firm informs those charged with governance of the public interest entity
that the provision of the service will not create a threat to the firm’s independ-
ence from the public interest entity, or that any identified threat is at an accept-
able level or, if not, will be eliminated or reduced to an acceptable level; and
(c) Those charged with governance do not disagree with the firm’s conclusion in
(b).
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R600.25 The firm or the network firm, having taken into account any matters raised by those
charged with governance of the audit client that is a public interest entity or by the
entity referred to in paragraph R600.22 that is the recipient of the proposed service,
shall decline the non-assurance service or the firm shall end the audit engagement
if:
(a) The firm or the network firm is not permitted to provide any information to
those charged with governance of the audit client that is a public interest entity,
unless such a situation is addressed in a process agreed in advance with those
charged with governance; or
(b) Those charged with governance of an audit client that is a public interest entity
disagree with the firm’s conclusion that the provision of the service will not
create a threat to the firm’s independence from the client or that any identified
threat is at an acceptable level or, if not, will be eliminated or reduced to an
acceptable level.

Audit Client that Later Becomes a Public Interest Entity

R600.26 A non-assurance service provided, either currently or previously, by a firm or a net-
work firm to an audit client compromises the firm’s independence when the client
becomes a public interest entity unless:
(a) The previous non-assurance service complies with the provisions of this sec-
tion that relate to audit clients that are not public interest entities;
(b) Non-assurance services currently in progress that are not permitted under this
section for audit clients that are public interest entities are ended before or, if
that is not possible, as soon as practicable after, the client becomes a public
interest entity; and
(c) The firm and those charged with governance of the client that becomes a
public interest entity agree and take further actions to address any threats to
independence that are not at an acceptable level.
600.26 A1 Examples of actions that the firm might recommend to the audit client include en-
gaging another firm to:
• Review or re-perform the affected audit work to the extent necessary.
• Evaluate the results of the non-assurance service or re-perform the non-assurance
service to the extent necessary to enable the other firm to take responsibility for
the service.

Considerations for Certain Related Entities

R600.27 This section includes requirements that prohibit firms and network firms from pro-
viding certain non-assurance services to audit clients. As an exception to those
requirements and the requirement in paragraph R400.20, a firm or a network firm
may assume management responsibilities or provide certain non-assurance services
that would otherwise be prohibited to the following related entities of the client on
whose financial statements the firm will express an opinion:
(a) An entity that has direct or indirect control over the client;
(b) An entity with a direct financial interest in the client if that entity has signifi-
cant influence over the client and the interest in the client is material to such
entity; or
(c) (An entity which is under common control with the client, provided that all of
the following conditions are met:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 167

(i) The firm or a network firm does not express an opinion on the financial
statements of the related entity;
(ii) The firm or a network firm does not assume a management responsibil-
ity, directly or indirectly, for the entity on whose financial statements
the firm will express an opinion;
(iii) The services do not create a self-review threat; and
(iv) The firm addresses other threats created by providing such services that
are not at an acceptable level.
Documentation
600.28 A1 Documentation of the firm’s conclusions regarding compliance with this section in
accordance with paragraphs R400.60 and 400.60 A1 might include:
• Key elements of the firm’s understanding of the nature of the non-assurance
service to be provided and whether and how the service might impact the finan-
cial statements on which the firm will express an opinion.
• The nature of any threat to independence that is created by providing the service
to the audit client, including whether the results of the service will be subject to
audit procedures.
• The extent of management’s involvement in the provision and oversight of the
proposed non-assurance service.
• Any safeguards that are applied, or other actions taken to address a threat to
independence.
• The firm’s rationale for determining that the service is not prohibited and that
any identified threat to independence is at an acceptable level.
• In relation to the provision of a proposed non-assurance service to the entities
referred to in paragraph R600.22, the steps taken to comply with paragraphs
R600.22 to R600.24.

SUBSECTION 601 – ACCOUNTING AND BOOKKEEPING SERVICES

Introduction
601.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing accounting and
bookkeeping services to an audit client.

Requirements and Application Material

General
601.2 A1 Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the applicable financial reporting framework. These
responsibilities include:
• Determining accounting policies and the accounting treatment in accordance
with those policies.
• Preparing or changing source documents or originating data, in electronic or
other form, evidencing the occurrence of a transaction. Examples include:
o Purchase orders.
o Payroll time records.

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o Customer orders.
• Originating or changing journal entries.
• Determining or approving the account classifications of transactions.

Description of Service11
601.3 A1 Accounting and bookkeeping services comprise a broad range of services including:
• Preparing accounting records or financial statements.
• Recording transactions.
• Providing payroll services.
• Resolving account reconciliation problems.
• Converting existing financial statements from one financial reporting framework
to another.

Potential Threats Arising from the Provision of Accounting and Bookkeeping Services
All Audit Clients
601.4 A1 Providing accounting and bookkeeping services to an audit client creates a self-
review threat when there is a risk that the results of the services will affect the
accounting records or the financial statements on which the firm will express an
opinion
Audit Clients that are Not Public Interest Entities
R601.5 A firm or a network firm shall not provide to an audit client that is not a public
interest entity accounting and bookkeeping services including preparing financial
statements on which the firm will express an opinion or financial information which
forms the basis of such financial statements, unless:
(a) The services are of a routine or mechanical nature; and
(b) The firm addresses any threats that are created by providing such services that
are not at an acceptable level.
601.5 A1 Accounting and bookkeeping services that are routine or mechanical:
(a) Involve information, data or material in relation to which the client has made
any judgments or decisions that might be necessary; and
(b) Require little or no professional judgment.
601.5 A2 Accounting and bookkeeping services can either be manual or automated. In deter-
mining whether an automated service is routine or mechanical, factors to be con-
sidered include the activities performed by, and the output of, the technology, and
whether the technology provides an automated service that is based on or requires
the expertise or judgment of the firm or network firm
601.5 A3 Examples of services, whether manual or automated, that might be regarded as
routine or mechanical include:
• Preparing payroll calculations or reports based on client-originated data for
approval and payment by the client.
• Recording recurring transactions for which amounts are easily determinable from
source documents or originating data, such as a utility bill where the client has
determined or approved the appropriate account classification.

________________________

11 To be considered with the requirements of the South African Companies Act, 2008 (Act No 71 of 2008) Section 90(2).
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 169

• Calculating depreciation on fixed assets when the client determines the account-
ing policy and estimates of useful life and residual values.
• Posting transactions coded by the client to the general ledger.
• Posting client-approved entries to the trial balance.
• Preparing financial statements based on information in the client-approved trial
balance and preparing related notes based on client-approved records.
The firm or a network firm may provide such services to audit clients that are not
public interest entities provided that the firm or network firm complies with the
requirements of paragraph R400.21 to ensure that it does not assume a management
responsibility in connection with the service and with the requirement in paragraph
R601.5 (b).
601.5 A4 Examples of actions that might be safeguards to address a self-review threat created
when providing accounting and bookkeeping services of a routine and mechanical
nature to an audit client that is not a public interest include:
• Using professionals who are not audit team members to perform the service.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed.

Audit Clients that are Public Interest Entities

R601.6 A firm or a network firm shall not provide accounting and bookkeeping services to
an audit client that is a public interest entity.
R601.7 As an exception to paragraph R601.6, a firm or network firm may prepare statutory
financial statements for a related entity of a public interest entity audit client included
in subparagraph (c) or (d) of the definition of a related entity provided that:
(a) The audit report on the group financial statements of the public interest entity
has been issued;
(b) The firm or network firm does not assume management responsibility and
applies the conceptual framework to identify, evaluate and address threats to
independence;
(c) The firm or network firm does not prepare the accounting records underlying
the statutory financial statements of the related entity and those financial state-
ments are based on client approved information; and
(d) The statutory financial statements of the related entity will not form the basis
of future group financial statements of that public interest entity.

SUBSECTION 602 – ADMINISTRATIVE SERVICES

Introduction
602.1 In addition to the specific application material in this subsection, the requirements
and application material in paragraphs 600.1 to R600.28A1 are relevant to applying
the conceptual framework when providing administrative services.

Application Material
Description of Service
602.2 A1 Administrative services involve assisting clients with their routine or mechanical
tasks within the normal course of operations.
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602.2 A2 Examples of administrative services include:

• Word processing services.
• Preparing administrative or statutory forms for client approval.
• Submitting such forms as instructed by the client.
• Monitoring statutory filing dates and advising an audit client of those dates.

Potential Threats Arising from the Provision of Administrative Services

All Audit Clients
602.3 A1 Providing administrative services to an audit client does not usually create a threat
when such services are clerical in nature and require little to no professional judg-
ment.

SUBSECTION 603 – VALUATION SERVICES

Introduction
603.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28A1 are
relevant to applying the conceptual framework when providing valuation services
to an audit client.

Requirements and Application Material

Description of Service
603.2 A1 A valuation comprises the making of assumptions with regard to future develop-
ments, the application of appropriate methodologies and techniques, and the com-
bination of both to compute a certain value, or range of values, for an asset, a liability
or for the whole or part of an entity.
603.2 A2 If a firm or network firm is requested to perform a valuation to assist an audit client
with its tax reporting obligations or for tax planning purposes and the results of the
valuation have no effect on the accounting records or the financial statements other
than through accounting entries related to tax, the requirements and application
material set out in paragraphs 604.17 A1 to 604.19 A1, relating to such services,
apply.

Potential Threats Arising from the Provision of Valuation Services

All Audit Clients
603.3 A1 Providing a valuation service to an audit client might create a self-review threat
when there is a risk that the results of the service will affect the accounting records
or the financial statements on which the firm will express an opinion. Such a service
might also create an advocacy threat.
603.3 A2 Factors that are relevant in identifying self-review or advocacy threats created by
providing valuation services to an audit client, and evaluating the level of such threats
include:
• The use and purpose of the valuation report.
• Whether the valuation report will be made public.
• The extent to which the valuation methodology is supported by law or regu-
lation, other precedent or established practice.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 171

• The extent of the client’s involvement in determining and approving the valu-
ation methodology and other significant matters of judgment.
• The degree of subjectivity inherent in the item for valuations involving standard
or established methodologies.
• Whether the valuation will have a material effect on the financial statements.
• The extent of the disclosures related to the valuation in the financial statements.
• The volatility of the amounts involved as a result of dependence on future events.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R603.5 applies
Audit Clients that are Not Public Interest Entities
603.3 A3 Examples of actions that might be safeguards to address self-review or advocacy
threats created by providing a valuation service to an audit client that is not a public
interest entity include:
• Using professionals who are not audit team members to perform the service
might address self-review or advocacy threats.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed might address a self-review threat.
R603.4 A firm or a network firm shall not provide a valuation service to an audit client that
is not a public interest entity if:
(a) The valuation involves a significant degree of subjectivity; and
(b) The valuation will have a material effect on the financial statements on which
the firm will express an opinion.
603.4 A1 Certain valuations do not involve a significant degree of subjectivity. This is likely
to be the case when the underlying assumptions are either established by law or
regulation or when the techniques and methodologies to be used are based on gener-
ally accepted standards or prescribed by law or regulation. In such circumstances,
the results of a valuation performed by two or more parties are not likely to be ma-
terially different.

Audit Clients that are Public Interest Entities

Self-review Threats
R603.5 A firm or a network firm shall not provide a valuation service to an audit client that
is a public interest entity if the provision of such valuation service might create a
self-review threat. (Ref: Para. R600.15 and R600.17).
Advocacy Threats
603.5 A1 An example of an action that might be a safeguard to address an advocacy threat
created by providing a valuation service to an audit client that is a public interest
entity is using professionals who are not audit team members to perform the service.

SUBSECTION 604 – TAX SERVICES

Introduction
604.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28A1 are
relevant to applying the conceptual framework when providing a tax service to an
audit client.
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Requirements and Application Material

Description of Service
604.2 A1 Tax services comprise a broad range of services. This subsection deals specifically
with:
• Tax return preparation.
• Tax calculations for the purpose of preparing the accounting entries.
• Tax advisory services.
• Tax planning services.
• Tax services involving valuations.
• Assistance in the resolution of tax disputes.
604.2 A2 It is possible to consider tax services under broad headings, such as tax planning or
compliance. However, such services are often interrelated in practice and might be
combined with other types of non-assurance services provided by the firm such as
corporate finance services. It is, therefore, impracticable to categorise generically
the threats to which specific tax services give rise.

Potential Threats Arising from the Provision of Tax Services

604.3 A1 Providing tax services to an audit client might create a self-review threat when there
is a risk that the results of the services will affect the accounting records or the finan-
cial statements on which the firm will express an opinion. Such services might also
create an advocacy threat.
604.3 A2 Factors that are relevant in identifying self-review or advocacy threats created by
providing any tax service to an audit client and evaluating the level of such threats
include:
• The particular characteristics of the engagement.
• The level of tax expertise of the client’s employees.
• The system by which the tax authorities assess and administer the tax in question
and the role of the firm or network firm in that process.
• The complexity of the relevant tax regime and the degree of judgement neces-
sary in applying it.
All Audit Clients
R604.4 A firm or a network firm shall not provide a tax service or recommend a transaction
to an audit client if the service or transaction relates to marketing, planning, or opin-
ing in favour of a tax treatment that was initially recommended, directly or indir-
ectly, by the firm or network firm, and a significant purpose of the tax treatment or
transaction is tax avoidance, unless the firm is confident that the proposed treatment
has a basis in applicable tax law or regulation that is likely to prevail.
604.4 A1 Unless the tax treatment has a basis in applicable tax law or regulation that the firm
is confident is likely to prevail, providing the non-assurance service described in
paragraph R604.4 creates self-interest, self-review and advocacy threats that cannot
be eliminated and safeguards are not capable of being applied to reduce such threats
to an acceptable level.

A. Tax Return Preparation

Description of Service
604.5 A1 Tax return preparation services include:
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 173

• Assisting clients with their tax reporting obligations by drafting and compiling
information, including the amount of tax due (usually on standardised forms)
required to be submitted to the applicable tax authorities.
• Advising on the tax return treatment of past transactions.
• Responding on behalf of the audit client to the tax authorities’ requests for add-
itional information and analysis (for example, providing explanations of and
technical support for the approach being taken).

Potential Threats Arising from the Provision of Tax Return Preparation Services
All Audit Clients
604.6 A1 Providing tax return preparation services does not usually create a threat because:
(a) Tax return preparation services are based on historical information and prin-
cipally involve analysis and presentation of such historical information under
existing tax law, including precedents and established practice; and
(b) Tax returns are subject to whatever review or approval process the tax author-
ity considers appropriate.

B. Tax Calculations for the Purpose of Preparing Accounting Entries

Description of Service
604.7 A1 Tax calculation services involves the preparation of calculations of current and
deferred tax liabilities or assets for the purpose of preparing accounting entries
supporting tax assets or liabilities in the financial statements of the audit client.

Potential Threats Arising from the Provision of Tax Calculation Services

All Audit Clients
604.8 A1 Preparing tax calculations of current and deferred tax liabilities (or assets) for an
audit client for the purpose of preparing accounting entries that support such bal-
ances creates a self-review threat.

Audit Clients that are Not Public Interest Entities

604.9 A1 In addition to the factors in paragraph 604.3 A2, a factor that is relevant in evaluating
the level of self-review threat created when preparing such calculations for an audit
client is whether the calculation might have a material effect on the financial state-
ments on which the firm will express an opinion.
604.9 A2 Examples of actions that might be safeguards to address such a self-review threat
when the audit client is not a public interest entity include:
• Using professionals who are not audit team members to perform the service.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed.

Audit Clients that are Public Interest Entities

R604.10 A firm or a network firm shall not prepare tax calculations of current and deferred
tax liabilities (or assets) for an audit client that is a public interest entity. (Ref:
Para. R600.15 and R600.17).
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C. Tax Planning and Other Tax Advisory Services

Description of Service
604.11 A1 Tax advisory and tax planning services comprise a broad range of services, such as
advising the client how to structure its affairs in a tax efficient manner or advising
on the application of a new tax law or regulation.

Potential Threats Arising from the Provision of Tax Advisory and Tax Planning Services
All Audit clients
604.12 A1 Providing tax advisory and tax planning services to an audit client might create a
self-review threat when there is a risk that the results of the services will affect the
accounting records or the financial statements on which the firm will express an
opinion. Such services might also create an advocacy threat.
604.12 A2 Providing tax advisory and tax planning services will not create a self-review threat
if such services:
(a) Are supported by a tax authority or other precedent;
(b) Are based on an established practice (being a practice that has been commonly
used and has not been challenged by the relevant tax authority); or
(c) Have a basis in tax law that the firm is confident is likely to prevail.
604.12 A3 In addition to paragraph 604.3 A2, factors that are relevant in identifying self-review
or advocacy threats created by providing tax planning services to audit clients, and
evaluating the level of such threats include:
• The degree of subjectivity involved in determining the appropriate treatment for
the tax advice in the financial statements.
• Whether the tax treatment is supported by a private ruling or has otherwise been
cleared by the tax authority before the preparation of the financial statements.
• The extent to which the outcome of the tax advice might have a material effect
on the financial statements.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R604.15 applies.
When Effectiveness of Tax Advice Is Dependent on a Particular Accounting Treatment or
Presentation
R604.13 A firm or a network firm shall not provide tax advisory and tax planning services to
an audit client when:
(a) The effectiveness of the tax advice depends on a particular accounting treat-
ment or presentation in the financial statements and:
(b) The audit team has doubt as to the appropriateness of the related accounting
treatment or presentation under the relevant financial reporting framework
Audit Clients that are Not Public Interest Entities
604.14 A1 Examples of actions that might be safeguards to address self-review or advocacy
threats created by providing tax advisory and tax planning services to an audit client
that is not a public interest entity include:
• Using professionals who are not audit team members to perform the service
might address self-review or advocacy threats.
• Having an appropriate reviewer, who was not involved in providing the service,
review the audit work or service performed might address a self-review threat.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 175

• Obtaining pre-clearance from the tax authorities might address self-review or

advocacy threats.

Audit Clients that are Public Interest Entities

Self-review Threats
R604.15 A firm or a network firm shall not provide tax advisory and tax planning services to
an audit client that is a public interest entity if the provision of such services might
create a self-review threat. (Ref: Para. R600.15, R600.17, 604.12 A2).
Advocacy Threats
604.15 A1 Examples of actions that might be safeguards to address an advocacy threat created
by providing tax advisory and tax planning services to an audit client that is a public
interest entity include:
• Using professionals who are not audit team members to perform the service.
• Obtaining pre-clearance from the tax authorities.

D. Tax Services Involving Valuations

Description of Service
604.16 A1 The provision of tax services involving valuations might arise in a range of circum-
stances including:
• Merger and acquisition transactions.
• Group restructurings and corporate reorganisations.
• Transfer pricing studies.
• Stock-based compensation arrangements.

Potential Threats Arising from the Provision of Tax Services involving Valuations
All Audit Clients
604.17 A1 Providing a valuation for tax purposes to an audit client might create a self-review
threat when there is a risk that the results of the service will affect the accounting
records or the financial statements on which the firm will express an opinion. Such
a service might also create an advocacy threat.
604.17 A2 When a firm or a network firm performs a valuation for tax purposes to assist an
audit client with its tax reporting obligations or for tax planning purposes, the result
of the valuation might:
(a) Have no effect on the accounting records or the financial statements other than
through accounting entries related to tax. In such situations, the requirements
and application material set out in this subsection apply.
(b) Affect the accounting records or the financial statements in ways not limited
to accounting entries related to tax, for example, if the valuation leads to a
revaluation of assets. In such situations, the requirements and application
material set out in subsection 603 relating to valuation services apply.
604.17 A3 Performing a valuation for tax purposes for an audit client will not create a self-
review threat if:
(a) The underlying assumptions are either established by law or regulation, or are
widely accepted; or
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(b) The techniques and methodologies to be used are based on generally accepted
standards or prescribed by law or regulation, and the valuation is subject to
external review by a tax authority or similar regulatory authority.

Audit Clients that are Not Public Interest Entities

604.18 A1 A firm or a network firm might perform a valuation for tax purposes for an audit
client that is not a public interest entity where the result of the valuation only affects
the accounting records or the financial statements through accounting entries related
to tax This would not usually create threats if the effect on the financial statements
is immaterial or the valuation, as incorporated in a tax return or other filing, is sub-
ject to external review by a tax authority or similar regulatory authority.
604.18 A2 If the valuation that is performed for tax purposes is not subject to an external review
and the effect is material to the financial statements, in addition to paragraph
604.3 A2, the following factors are relevant in evaluating the level of self-review or
advocacy threats created by providing those services to an audit client that is not a
public interest entity, and evaluating the level of such threats:
• The extent to which the valuation methodology is supported by tax law or regu-
lation, other precedent or established practice.
• The degree of subjectivity inherent in the valuation.
• The reliability and extent of the underlying data.
604.18 A3 Examples of actions that might be safeguards to address such threats for an audit
client that is not a public interest entity include:
• Using professionals who are not audit team members to perform the service
might address self-review or advocacy threats.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed might address a self-review threat.
• Obtaining pre-clearance from the tax authorities might address self-review or
advocacy threats.

Audit Clients that are Public Interest Entities

Self-review Threats
R604.19 A firm or a network firm shall not perform a valuation for tax purposes for an audit
client that is a public interest entity if the provision of that service might create a
self-review threat. (Ref: Para. R600.15, R600.17, 604.17 A3).
Advocacy Threats
604.19 A1 Examples of actions that might be safeguards to address an advocacy threat created
by providing valuation for tax purposes for an audit client that is a public interest
entity include:
• Using professionals who are not audit team members to perform the service.
• Obtaining pre-clearance from the tax authorities.

E. Assistance in the Resolution of Tax Disputes

Description of Service
604.20 A1 A non-assurance service to provide assistance to an audit client in the resolution of
tax disputes might arise from a tax authority’s consideration of tax calculations and
treatments. Such a service might include, for example, providing assistance when the
tax authorities have notified the client that arguments on a particular issue have been
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 177

rejected and either the tax authority or the client refers the matter for determination
in a formal proceeding before a tribunal or court.

Potential Threats Arising from the Provision of Assistance in the Resolution of Tax
Disputes
All Audit Clients
604.21 A1 Providing assistance in the resolution of tax disputes to an audit client might create
a self-review threat when there is a risk that the results of the service will affect the
accounting records or the financial statements on which the firm will express an
opinion. Such a service might also create an advocacy threat.
604.22 A1 In addition to those identified in paragraph 604.3 A2, factors that are relevant in
identifying self-review or advocacy threats created by assisting an audit client in the
resolution of tax disputes, and evaluating the level of such threats include:
• The role management plays in the resolution of the dispute.
• The extent to which the outcome of the dispute will have a material effect on the
financial statements on which the firm will express an opinion.
• Whether the firm or network firm provided the advice that is the subject of the
tax dispute.
• The extent to which the matter is supported by tax law or regulation, other pre-
cedent, or established practice.
• Whether the proceedings are conducted in public.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R604.24 applies.
Audit Clients that are Not Public Interest Entities
604.23 A1 Examples of actions that might be safeguards to address self-review or advocacy
threats created by assisting an audit client that is not a public interest entity in the
resolution of tax disputes include:
• Using professionals who are not audit team members to perform the service
might address self-review or advocacy threats.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or the service performed might address a self-review threat.
Audit Clients that are Public Interest Entities
Self-review Threats
R604.24 A firm or a network firm shall not provide assistance in the resolution of tax disputes
to an audit client that is a public interest entity if the provision of that assistance
might create a self-review threat. (Ref: Para. R600.15 and R600.17).
Advocacy Threats
604.24 A1 An example of an action that might be a safeguard to address an advocacy threat for
an audit client that is a public interest entity is using professionals who are not audit
team members to perform the service.

Resolution of Tax Matters Including Acting as An Advocate Before a Tribunal or Court

Audit Clients that are Not Public Interest Entities
R604.25 A firm or a network firm shall not provide tax services that involve assisting in the
resolution of tax disputes to an audit client that is not a public interest entity if:
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(a) The services involve acting as an advocate for the audit client before a tribunal
or court in the resolution of a tax matter; and
(b) The amounts involved are material to the financial statements on which the
firm will express an opinion.

Audit Clients that are Public Interest Entities

R604.26 A firm or a network firm shall not provide tax services that involve assisting in the
resolution of tax disputes to an audit client that is a public interest entity if the ser-
vices involve acting as an advocate for the audit client before a tribunal or court.
604.27 A1 Paragraph R604.25 and R604.26 do not preclude a firm or network firm from having
a continuing advisory role in relation to the matter that is being heard before a tri-
bunal or court, for example:
• Responding to specific requests for information.
• Providing factual accounts or testimony about the work performed.
• Assisting the client in analysing the tax issues related to the matter.
604.27 A2 What constitutes a “tribunal or court” depends on how tax proceedings are heard in
the particular jurisdiction.

SUBSECTION 605 – INTERNAL AUDIT SERVICES

Introduction
605.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing an internal audit
service to an audit client.

Requirements and Application Material

All Audit Clients
605.2 A1 Internal audit services comprise a broad range of activities and might involve assist-
ing the audit client in the performance of one or more aspects of its internal audit
activities. Internal audit activities might include:
• Monitoring of internal control – reviewing controls, monitoring their operation
and recommending improvements to them.
• Examining financial and operating information by:
o Reviewing the means used to identify, measure, classify and report financial
and operating information.
o Inquiring specifically into individual items including detailed testing of
transactions, balances and procedures.
• Reviewing the economy, efficiency and effectiveness of operating activities
including non-financial activities of an entity.
• Reviewing compliance with:
o Laws, regulations and other external requirements.
o Management policies, directives and other internal requirements.
605.2 A2 The scope and objectives of internal audit activities vary widely and depend on the
size and structure of the entity and the requirements of management and those
charged with governance as well as the needs and expectations of management. As
they might involve matters that are operational in nature, they do not necessarily
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 179

relate to matters that will be subject to consideration in relation to the audit of the
financial statements.

Risk of Assuming Management Responsibility When Providing an Internal Audit Service

R605.3 Paragraph R400.20 precludes a firm or a network firm from assuming a manage-
ment responsibility When providing an internal audit service to an audit client, the
firm shall be satisfied that:
(a) The client designates an appropriate and competent resource, who reports to
those charged with governance to:
(i) Be responsible at all times for internal audit activities; and
(ii) Acknowledge responsibility for designing, implementing, monitoring
and maintaining internal control.
(b) The client reviews, assesses and approves the scope, risk and frequency of the
internal audit services;
(c) The client evaluates the adequacy of the internal audit services and the find-
ings resulting from their performance;
(d) The client evaluates and determines which recommendations resulting from
internal audit services to implement and manages the implementation process;
and
(e) The client reports to those charged with governance the significant findings
and recommendations resulting from the internal audit services.
605.3 A1 Performing part of the client’s internal audit activities increases the possibility that
individuals within the firm or network firm providing internal audit services will
assume a management responsibility.
605.3 A2 Examples of internal audit services that involve assuming management responsibil-
ities include:
• Setting internal audit policies or the strategic direction of internal audit activities.
• Directing and taking responsibility for the actions of the entity’s internal audit
employees.
• Deciding which recommendations resulting from internal audit activities to
implement.
• Reporting the results of the internal audit activities to those charged with gov-
ernance on behalf of management.
• Performing procedures that form part of the internal control, such as reviewing
and approving changes to employee data access privileges.
• Taking responsibility for designing, implementing, monitoring and maintaining
internal control.
• Performing outsourced internal audit services, comprising all or a substantial
portion of the internal audit function, where the firm or network firm is respon-
sible for determining the scope of the internal audit work; and might have respon-
sibility for one or more of the matters noted above.

Potential Threats Arising from the Provision of Internal Audit Services

All Audit Clients
605.4 A1 Providing internal audit services to an audit client might create a self-review threat
when there is a risk that the results of the services impact the audit of the financial
statements on which the firm will express an opinion.
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605.4 A2 When a firm uses the work of an internal audit function in an audit engagement,
ISAs require the performance of procedures to evaluate the adequacy of that work.
Similarly, when a firm or network firm accepts an engagement to provide internal
audit services to an audit client, the results of those services might be used in con-
ducting the external audit. This might create a self-review threat because it is pos-
sible that the engagement team will use the results of the internal audit service for
purposes of the audit engagement without:
(a) Appropriately evaluating those results; or
(b) Exercising the same level of professional scepticism as would be exercised
when the internal audit work is performed by individuals who are not mem-
bers of the firm.
605.4 A3 Factors that are relevant in identifying a self-review threat created by providing
internal audit services to an audit client, and evaluating the level of such a threat
include:
• The materiality of the related financial statements amounts.
• The risk of misstatement of the assertions related to those financial statement
amounts.
• The degree of reliance that the engagement team will place on the work of the
internal audit service.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R605.6 applies.
Audit Clients that are Not Public Interest Entities
605.5 A1 An example of an action that might be a safeguard to address a self-review threat
created by the provision of an internal audit service to an audit client that is not a
public interest entity is using professionals who are not audit team members to
perform the service.
Audit Clients that are Public Interest Entities
R605.6 A firm or a network firm shall not provide internal audit services to an audit client
that is a public interest entity, if the provision of such services might create a self-
review threat. (Ref: Para. R600.15 and R600.17).
605.6 A1 Examples of the services that are prohibited under paragraph R605.6 include internal
audit services relate to:
• The internal controls over financial reporting.
• Financial accounting systems that generate information for the client’s account-
ing records or financial statements on which the firm will express an opinion.
• Amounts or disclosures that relate to the financial statements on which the firm
will express an opinion.

SUBSECTION 606 – INFORMATION TECHNOLOGY SYSTEMS

SERVICES
Introduction
606.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing an information tech-
nology (IT) systems service to an audit client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 181

Requirements and Application Material

Description of Service
606.2 A1 IT systems services comprise a broad range of services including:
• Designing or developing hardware or software IT systems.
• Implementing IT systems, including installation, configuration, interfacing, or
customisation.
• Operating, maintaining, monitoring, updating or upgrading IT systems.
• Collecting or storing data or managing (directly or indirectly) the hosting of data.
606.2 A2 The IT systems might:
(a) Aggregate source data;
(b) Form part of the internal control over financial reporting; or
(c) Generate information that affects the accounting records or financial state-
ments, including related disclosures.
However, the IT systems might also involve matters that are unrelated to the audit
client’s accounting records or the internal control over financial reporting or finan-
cial statements.

Risk of Assuming Management Responsibility When Providing an IT Systems Service

R606.3 Paragraph R400.20 precludes a firm or a network firm from assuming a manage-
ment responsibility. When providing IT systems services to an audit client, the firm
or network firm shall be satisfied that:
(a) The client acknowledges its responsibility for establishing and monitoring a
system of internal controls;
(b) The client, through a competent individual (or individuals), preferably within
senior management, makes all management decisions that are the proper
responsibility of management with respect to the design, development, imple-
mentation, operation, maintenance, monitoring, updating or upgrading of the
IT systems;
(c) The client evaluates the adequacy and results of the design, development,
implementation, operation, maintenance, monitoring, updating or upgrading
of the IT system; and
(d) The client is responsible for operating the IT system and for the data it gener-
ates and uses.
606.3 A1 Examples of IT systems services that result in the assumption of a management
responsibility include where a firm or a network firm:
• Stores data or manages (directly or indirectly) the hosting of data on behalf of
the audit client. Such services include:
o Acting as the only access to a financial or non-financial information system
of the audit client.
o Taking custody of or storing the audit client’s data or records such that the
audit client’s data or records are otherwise incomplete.
o Providing electronic security or back-up services, such as business continu-
ity or a disaster recovery function, for the audit client’s data or records.
• Operates, maintains, or monitors the audit client’s IT systems, network or web-
site.
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606.3 A2 The collection, receipt, transmission and retention of data provided by an audit
client in the course of an audit or to enable the provision of a permissible service to
that client does not result in an assumption of management responsibility.

Potential Threats Arising from the Provision of IT Systems Services

All Audit Clients
606.4 A1 Providing IT systems services to an audit client might create a self-review threat
when there is a risk that the results of the services will affect the audit of the finan-
cial statements on which the firm will express an opinion.
606.4 A2 Factors that are relevant in identifying a self-review threat created by providing IT
systems services to an audit client, and evaluating the level of such a threat include:
• The nature of the service.
• The nature of IT systems and the extent to which the IT systems service impacts
or interacts with the client’s accounting records, internal controls over financial
reporting or financial statements.
• The degree of reliance that will be placed on the particular IT systems as part of
the audit.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R606.6 applies.
606.4 A3 Examples of IT systems services that create a self-review threat when they form part
of or affect an audit client’s accounting records or system of internal control over
financial reporting include:
• Designing, developing, implementing, operating, maintaining, monitoring, up-
dating or upgrading IT systems, including those related to cybersecurity.
• Supporting an audit client’s IT systems, including network and software
applications.
• Implementing accounting or financial information reporting software, whether
or not it was developed by the firm or a network firm.

Audit Clients that are Not Public Interest Entities

606.5 A1 An example of an action that might be a safeguard to address a self-review threat
created by the provision of an IT systems service to an audit client that is not a public
interest entity using professionals who are not audit team members to perform the
service.

Audit Clients that are Public Interest Entities

R606.6 A firm or a network firm shall not provide IT systems services to an audit client that
is a public interest entity if the provision of such services might create a self-review
threat. (Ref: Para. R600.15 and R600.17)

SUBSECTION 607 – LITIGATION SUPPORT SERVICES

Introduction
607.1 In addition to the specific requirements and application material in paragraphs 600.1
to R600.28 A1 are relevant to applying the conceptual framework when providing
a litigation support service to an audit client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 183

Requirements and Application Material

Description of Service
607.2 A1 Litigation support services might include activities such as:
• Assisting with document management and retrieval.
• Acting as a witness, including an expert witness.
• Calculating estimated damages or other amounts that might become receivable
or payable as the result of litigation or other legal dispute.
• Forensic or investigative services.

Potential Threats Arising from the Provision of Litigation Support Services

All Audit Clients
607.3 A1 Providing litigation support services to an audit client might create a self-review
threat when there is a risk that the results of the services will affect the accounting
records or the financial statements on which the firm will express an opinion. Such
services might also create an advocacy threat.
607.4 A1 Factors that are relevant in identifying self-review or advocacy threats created by
providing litigation support services to an audit client, and evaluating the level of
such threats include:
• The legal and regulatory environment in which the service is provided.
• The nature and characteristics of the service.
• The extent to which the outcome of the litigation support service might involve
estimating, or might affect the estimation of, damages or other amounts that
might have a material effect on the financial statements on which the firm will
express an opinion.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R607.6 applies.
607.4 A2 If a firm or a network firm provides a litigation support service to an audit client
and the service might involve estimating, or might affect the estimation of, damages
or other amounts that affect the financial statements on which the firm will express
an opinion, the requirements and application material set out in Subsection 603
related to valuation services apply.
Audit Clients that are Not Public Interest Entities
607.5 A1 An example of an action that might be a safeguard to address a self-review or advo-
cacy threat created by providing a litigation support service to an audit client that is
not a public interest entity is using a professional who was not an audit team member
to perform the service.
Audit Clients that are Public Interest Entities
Self-review Threats
R607.6 A firm or a network firm shall not provide litigation support services to an audit
client that is a public interest entity if the provision of such services might create a
self-review threat. (Ref: Para. R600.15 and R600.17).
607.6 A1 An example of a service that is prohibited because it might create a self-review
threat is providing advice in connection with a legal proceeding where there is a risk
that the outcome of the service affects the quantification of any provision or other
amount in the financial statements on which the firm will express an opinion.
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Advocacy Threats
607.6 A2 An example of an action that might be a safeguard to address an advocacy threat
created by providing a litigation support service to an audit client that is a public
interest entity is using a professional who was not an audit team member to perform
the service.

Acting as a Witness
All Audit Clients
607.7 A1 A professional within the firm or the network firm might give evidence to a tribunal
or court as a witness of fact or as an expert witness.
(a) A witness of fact is an individual who gives evidence to a tribunal or court
based on his or her direct knowledge of facts or events.
(b) An expert witness is an individual who gives evidence, including opinions on
matters, to a tribunal or court based on that individual’s expertise.
607.7 A2 A threat to independence is not created when an individual, in relation to a matter
that involves an audit client, acts as a witness of fact and in the course of doing so
provides an opinion within the individual’s area of expertise in response to a ques-
tion asked in the course of giving factual evidence.
607.7 A3 The advocacy threat created when acting as an expert witness on behalf of an audit
client is at an acceptable level if a firm or a network firm is:
(a) Appointed by a tribunal or court to act as an expert witness in a matter involv-
ing a client; or
(b) Engaged to advise or act as an expert witness in relation to a class action (or
an equivalent group representative action) provided that:
(i) The firm’s audit clients constitute less than 20% of the members of the
class or group (in number and in value);
(ii) No audit client is designated to lead the class or group; and
(iii) No audit client is authorised by the class or group to determine the
nature and scope of the services to be provided by the firm or the terms
on which such services are to be provided.
Audit Clients that are Not Public Interest Entities
607.8 A1 An example of an action that might be a safeguard to address an advocacy threat for
an audit client that is not a public interest entity is using a professional to perform
the service who is not, and has not been, an audit team member.
Audit Clients that are Public Interest Entities
R607.9 A firm or a network firm, or an individual within a firm or a network firm, shall not
act for an audit client that is a public interest entity as an expert witness in a matter
unless the circumstances set out in paragraph 607.7 A3 apply.

SUBSECTION 608 – LEGAL SERVICES

Introduction
608.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing a legal service to an
audit client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 185

Requirements and Application Material

All Audit Clients
608.2 A1 Legal services are defined as any services for which the individual providing the
services must either:
(a) Have the required legal training to practice law; or
(b) Be admitted to practice law before the courts of the jurisdiction in which such
services are to be provided.
608.2 A2 This subsection deals specifically with:
• Providing legal advice.
• Acting as general counsel.
• Acting in an advocacy role.

Potential Threats Arising from Providing Legal Services

All Audit Clients
608.3 A1 Providing legal services to an audit client might create a self-review threat when
there is a risk that the results of the services will affect the accounting records or the
financial statements on which the firm will express an opinion. Such services might
also create an advocacy threat.

A. Providing Legal Advice

Description of Service
608.4 A1 Depending on the jurisdiction, providing legal advice might include a wide and
diversified range of service areas including both corporate and commercial services
to audit clients, such as:
• Contract support.
• Supporting an audit client in executing a transaction.
• Mergers and acquisitions.
• Supporting and assisting an audit client’s internal legal department.
• Legal due diligence and restructuring.

Potential Threats Arising from Providing Legal Advice

All Audit Clients
608.5 A1 Factors that are relevant in identifying self-review or advocacy threats created by
providing legal advice to an audit client, and evaluating the level of such threats
include:
• The materiality of the specific matter in relation to the client’s financial state-
ments.
• The complexity of the legal matter and the degree of judgement necessary to
provide the service.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R608.7 applies.
608.5 A2 Examples of legal advice that might create a self-review threat include:
• Estimating a potential loss arising from a lawsuit for the purpose of recording a
provision in the client’s financial statements.
ET – 186 SAICA Student Handbook 2024/2025

• Interpreting provisions in contracts that might give rise to liabilities reflected in

the client’s financial statements.
608.5 A3 Negotiating on behalf of an audit client might create an advocacy threat or might
result in the firm or network firm assuming a management responsibility.
Audit Clients that are Not Public Interest Entities
608.6 A1 Examples of actions that might be safeguards to address self-review or advocacy
threats created by providing legal advice to an audit client that is not a public interest
entity include:
• Using professionals who are not audit team members to perform the service
might address a self-review or advocacy threat.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or the service performed might address a self-review threat.
Audit Clients that are Public Interest Entities
Self-review Threats
R608.7 A firm or a network firm shall not provide legal advice to an audit client that is a
public interest entity if the provision of such a service might create a self-review
threat. (Ref: Para. R600.15 and R600.17).
Advocacy Threats
608.8 A1 The considerations in paragraphs 608.5 A1 and 608.5 A3 to 608.6 A1 are also rele-
vant to evaluating and addressing advocacy threats that might be created by provid-
ing legal advice to an audit client that is a public interest entity.

B. Acting as General Counsel

All Audit Clients
R608.9 A partner or employee of the firm or the network firm shall not serve as General
Counsel of an audit client.
608.9 A1 The position of General Counsel is usually a senior management position with broad
responsibility for the legal affairs of a company.

C. Acting in an Advocacy Role

Potential Threats Arising from Acting in an Advocacy Role Before a Tribunal or Court
Audit Clients that are Not Public Interest Entities
R608.10 A firm or a network firm shall not act in an advocacy role for an audit client that is
not a public interest entity in resolving a dispute or litigation before a tribunal or
court when the amounts involved are material to the financial statements on which
the firm will express an opinion.
608.10 A1 Examples of actions that might be safeguards to address a self-review or advocacy
threat created when acting in an advocacy role for an audit client that is not a public
interest entity include:
• Using professionals who are not audit team members to perform the service.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or the service performed.
Audit Clients that are Public Interest Entities
R608.11 A firm or a network firm shall not act in an advocacy role for an audit client that is
a public interest entity in resolving a dispute or litigation before a tribunal or court.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 187

SUBSECTION 609 – RECRUITING SERVICES

Introduction
609.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing a recruiting service
to an audit client.

Requirements and Application Material

Description of Service
609.2 A1 Recruiting services might include activities such as:
• Developing a job description.
• Developing a process for identifying and selecting potential candidates.
• Searching for or seeking out candidates.
• Screening potential candidates for the role by:
o Reviewing the professional qualifications or competence of applicants and
determining their suitability for the position.
o Undertaking reference checks of prospective candidates.
o Interviewing and selecting suitable candidates and advising on candidates’
competence.
• Determining employment terms and negotiating details, such as salary, hours
and other compensation.

Risk of Assuming Management Responsibility When Providing a Recruiting Service

R609.3 Paragraph R400.20 precludes a firm or a network firm from assuming a manage-
ment responsibility. When providing a recruiting service to an audit client, the firm
shall be satisfied that:
(a) The client assigns the responsibility to make all management decisions with
respect to hiring the candidate for the position to a competent employee, pref-
erably within senior management; and
(b) The client makes all management decisions with respect to the hiring process,
including:
• Determining the suitability of prospective candidates and selecting suit-
able candidates for the position.
• Determining employment terms and negotiating details, such as salary,
hours and other compensation.

Potential Threats Arising from Providing Recruiting Services

All Audit Clients
609.4 A1 Providing recruiting services to an audit client might create a self-interest, familiar-
ity or intimidation threat.
609.4 A2 Providing the following services does not usually create a threat as long as individ-
uals within the firm or the network firm do not assume a management responsibility:
• Reviewing the professional qualifications of a number of applicants and provid-
ing advice on their suitability for the position.
• Interviewing candidates and advising on a candidate’s competence for financial
accounting, administrative or control positions.
ET – 188 SAICA Student Handbook 2024/2025

609.4 A3 Factors that are relevant in identifying self-interest, familiarity or intimidation threats
created by providing recruiting services to an audit client, and evaluating the level
of such threats include:
• The nature of the requested assistance.
• The role of the individual to be recruited.
• Any conflicts of interest or relationships that might exist between the candidates
and the firm providing the advice or service.
609.4 A4 An example of an action that might be a safeguard to address such a self-interest,
familiarity or intimidation threat is using professionals who are not audit team
members to perform the service.
Recruiting Services that are Prohibited
R609.5 When providing recruiting services to an audit client, the firm or the network firm
shall not act as a negotiator on the client’s behalf.
R609.6 A firm or a network firm shall not provide a recruiting service to an audit client if
the service relates to:
(a) Searching for or seeking out candidates;
(b) Undertaking reference checks of prospective candidates,
(c) Recommending the person to be appointed; or
(d) Advising on the terms of employment, remuneration or related benefits of a
particular candidate,
with respect to the following positions:
(i) A director or officer of the entity; or
(ii) A member of senior management in a position to exert significant influence
over the preparation of the client’s accounting records or the financial state-
ments on which the firm will express an opinion.

SUBSECTION 610 – CORPORATE FINANCE SERVICES

Introduction
610.1 In addition to the specific requirements and application material in this subsection,
the requirements and application material in paragraphs 600.1 to R600.28 A1 are
relevant to applying the conceptual framework when providing a corporate finance
service to an audit client.

Requirements and Application Material

Description of Service
610.2 A1 Examples of corporate finance services include:
• Assisting an audit client in developing corporate strategies.
• Identifying possible targets for the audit client to acquire.
• Advising on disposal transactions.
• Assisting in finance raising transactions.
• Providing structuring advice.
• Providing advice on the structuring of a corporate finance transaction or on
financing arrangements.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 189

Potential Threats Arising from the Provision of Corporate Finance Services

All Audit Clients
610.3 A1 Providing corporate finance services to an audit client might create a self-review
threat when there is a risk that the results of the services will affect the accounting
records or the financial statements on which the firm will express an opinion. Such
services might also create an advocacy threat.
610.4 A1 Factors that are relevant in identifying self-review or advocacy threats created by
providing corporate finance services to an audit client, and evaluating the level of
such threats include:
• The degree of subjectivity involved in determining the appropriate treatment for
the outcome or consequences of the corporate finance advice in the financial
statements.
• The extent to which:
o The outcome of the corporate finance advice will directly affect amounts
recorded in the financial statements.
o The outcome of the corporate finance service might have a material effect
on the financial statements.
When a self-review threat for an audit client that is a public interest entity has been
identified, paragraph R610.8 applies.
Corporate Finance Services that are Prohibited
R610.5 A firm or a network firm shall not provide corporate finance services to an audit
client that involve promoting, dealing in, or underwriting shares, debt or other fin-
ancial instruments issued by the audit client or providing advice on investment in
such shares, debt or other financial instruments.
R610.6 A firm or a network firm shall not provide advice in relation to corporate finance
services to an audit client where:
(a) The effectiveness of such advice depends on a particular accounting treatment
or presentation in the financial statements on which the firm will express an
opinion; and
(b) The audit team has doubt as to the appropriateness of the related accounting
treatment or presentation under the relevant financial reporting framework.
Audit Clients that are Not Public Interest Entities
610.7 A1 Examples of actions that might be safeguards to address self-review or advocacy
threats created by providing corporate finance services to an audit client that is not
a public interest entity include:
• Using professionals who are not audit team members to perform the service
might address self-review or advocacy threats.
• Having an appropriate reviewer who was not involved in providing the service
review the audit work or service performed might address a self-review threat.
Audit Clients that are Public Interest Entities
Self-review Threats
R610.8 A firm or a network firm shall not provide corporate finance services to an audit
client that is a public interest entity if the provision of such services might create a
self-review threat. (Ref: Para. R600.15 and R600.17).
ET – 190 SAICA Student Handbook 2024/2025

Advocacy Threats
610.8 A1 An example of an action that might be a safeguard to address advocacy threats cre-
ated by providing corporate finance services to an audit client that is a public interest
entity is using professionals who are not audit team members to perform the service.

SECTION 800
REPORTS ON SPECIAL PURPOSE FINANCIAL STATEMENTS
THAT INCLUDE A RESTRICTION ON USE AND DISTRIBUTION
(AUDIT AND REVIEW ENGAGEMENTS)
Introduction
800.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
800.2 This section sets out certain modifications to Part 4A which are permitted in certain
circumstances involving audits of special purpose financial statements where the
report includes a restriction on use and distribution. In this section, an engagement
to issue a restricted use and distribution report in the circumstances set out in para-
graph R800.3 is referred to as an “eligible audit engagement.”

Requirements and Application Material

General
R800.3 When a firm intends to issue a report on an audit of special purpose financial state-
ments which includes a restriction on use and distribution, the independence require-
ments set out in Part 4A shall be eligible for the modifications that are permitted by
this section, but only if:
(a) The firm communicates with the intended users of the report regarding the
modified independence requirements that are to be applied in providing the
service; and
(b) The intended users of the report understand the purpose and limitations of the
report and explicitly agree to the application of the modifications.
800.3 A1 The intended users of the report might obtain an understanding of the purpose and
limitations of the report by participating, either directly, or indirectly through a rep-
resentative who has authority to act for the intended users, in establishing the nature
and scope of the engagement. In either case, this participation helps the firm to com-
municate with intended users about independence matters, including the circum-
stances that are relevant to applying the conceptual framework. It also allows the
firm to obtain the agreement of the intended users to the modified independence
requirements.
R800.4 Where the intended users are a class of users who are not specifically identifiable
by name at the time the engagement terms are established, the firm shall subsequently
make such users aware of the modified independence requirements agreed to by
their representative.
800.4 A1 For example, where the intended users are a class of users such as lenders in a syndi-
cated loan arrangement, the firm might describe the modified independence require-
ments in an engagement letter to the representative of the lenders. The representative
might then make the firm’s engagement letter available to the members of the group
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 191

of lenders to meet the requirement for the firm to make such users aware of the
modified independence requirements agreed to by the representative.
R800.5 When the firm performs an eligible audit engagement, any modifications to Part 4A
shall be limited to those set out in paragraphs R800.7 to R800.14. The firm shall not
apply these modifications when an audit of financial statements is required by law
or regulation.
R800.6 If the firm also issues an audit report that does not include a restriction on use and
distribution for the same client, the firm shall apply Part 4A to that audit engagement.

Public Interest Entities

R800.7 When the firm performs an eligible audit engagement, the firm does not need to apply
the independence requirements set out in Part 4A that apply only to public interest
entity audit engagements.

Related Entities
R800.8 When the firm performs an eligible audit engagement, references to “audit client”
in Part 4A do not need to include its related entities. However, when the audit team
knows or has reason to believe that a relationship or circumstance involving a related
entity of the client is relevant to the evaluation of the firm’s independence of the
client, the audit team shall include that related entity when identifying, evaluating
and addressing threats to independence.

Networks and Network Firms

R800.9 When the firm performs an eligible audit engagement, the specific requirements
regarding network firms set out in Part 4A do not need to be applied. However,
when the firm knows or has reason to believe that threats to independence are cre-
ated by any interests and relationships of a network firm, the firm shall evaluate and
address any such threat.

Financial Interests, Loans and Guarantees, Close Business Relationships, and Family and
Personal Relationships
R800.10 When the firm performs an eligible audit engagement:
(a) The relevant provisions set out in Sections 510, 511, 520, 521, 522, 524 and
525 need apply only to the members of the engagement team, their immediate
family members and, where applicable, close family members;
(b) The firm shall identify, evaluate and address any threats to independence cre-
ated by interests and relationships, as set out in Sections 510, 511, 520, 521,
522, 524 and 525, between the audit client and the following audit team
members:
(i) Those who provide consultation regarding technical or industry specific
issues, transactions or events; and
(ii) Those who perform an engagement quality review, or a review consist-
ent with the objective of an engagement quality review, for the engage-
ment; and
(c) The firm shall evaluate and address any threats that the engagement team has
reason to believe are created by interests and relationships between the audit
client and others within the firm who can directly influence the outcome of
the audit engagement.
ET – 192 SAICA Student Handbook 2024/2025

800.10 A1 Others within a firm who can directly influence the outcome of the audit engagement
include those who recommend the compensation, or who provide direct supervisory,
management or other oversight, of the audit engagement partner in connection with
the performance of the audit engagement including those at all successively senior
levels above the engagement partner through to the individual who is the firm’s
Senior or Managing Partner (Chief Executive or equivalent).
R800.11 When the firm performs an eligible audit engagement, the firm shall evaluate and
address any threats that the engagement team has reason to believe are created by
financial interests in the audit client held by individuals, as set out in paragraphs
R510.4(c) and (d), R510.5, R510.7 and 510.10 A5 and A9.
R800.12 When the firm performs an eligible audit engagement, the firm, in applying the pro-
visions set out in paragraphs R510.4(a), R510.6 and R510.7 to interests of the firm,
shall not hold a material direct or a material indirect financial interest in the audit
client.

Employment with an Audit Client

R800.13 When the firm performs an eligible audit engagement, the firm shall evaluate and
address any threats created by any employment relationships as set out in paragraphs
524.3 A1 to 524.5 A3.

Providing Non-Assurance Services

R800.14 If the firm performs an eligible audit engagement and provides a non-assurance ser-
vice to the audit client, the firm shall comply with Sections 410 to 430 and Section
600, including its subsections, subject to paragraphs R800.7 to R800.9.

Page
PART 4B – INDEPENDENCE FOR ASSURANCE ENGAGEMENTS
OTHER THAN AUDIT AND REVIEW ENGAGEMENTS
Section 900 Applying the Conceptual Framework to Independence for Assurance
Engagements Other than Audit and Review Engagements ............................ 193
Section 905 Fees ................................................................................................................. 200
Section 906 Gifts and Hospitality ....................................................................................... 203
Section 907 Actual or Threatened Litigation ..................................................................... 204
Section 910 Financial Interests ........................................................................................... 204
Section 911 Loans and Guarantees ..................................................................................... 206
Section 920 Business Relationships ................................................................................... 208
Section 921 Family and Personal Relationships................................................................. 209
Section 922 Recent Service with an Assurance Client ....................................................... 211
Section 923 Serving as a Director or Officer of an Assurance Client ................................ 212
Section 924 Employment with an Assurance Client .......................................................... 213
Section 940 Long Association of Personnel with an Assurance Client ............................. 214
Section 950 Provision of Non-Assurance Services to Assurance Clients .......................... 216
Section 990 Reports that include a Restriction on Use and Distribution
(Assurance Engagements Other than Audit and Review Engagements)........ 219
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 193

PART 4B – INDEPENDENCE FOR ASSURANCE

ENGAGEMENTS OTHER THAN AUDIT AND REVIEW
ENGAGEMENTS
SECTION 900
APPLYING THE CONCEPTUAL FRAMEWORK TO
INDEPENDENCE FOR ASSURANCE ENGAGEMENTS
OTHER THAN AUDIT AND REVIEW ENGAGEMENTS
Introduction
General
900.1 This Part applies to assurance engagements other than audit engagements and review
engagements. Examples of such engagements include:
• Assurance on an entity’s key performance indicators.
• Assurance on an entity’s compliance with law or regulation.
• Assurance on performance criteria, such as value for money, achieved by a public
sector body.
• Assurance on the effectiveness of an entity’s system of internal control.
• Assurance on an entity’s non-financial information, for example, environmental,
social and governance disclosures, including greenhouse gas statement.
• An audit of specific elements, accounts or items of a financial statement.
900.2 In this Part, the term “professional accountant” refers to individual professional
accountants in public practice and their firms.
900.3 ISQM 1 requires a firm to design, implement and operate a system of quality man-
agement for assurance engagements performed by the firm. As part of this system
of quality management, ISQM 1 requires the firm to establish quality objectives that
address the fulfilment of responsibilities in accordance with relevant ethical require-
ments, including those related to independence. Under ISQM 1, relevant ethical
requirements are those related to the firm, its personnel and, when applicable, others
subject to the independence requirements to which the firm and the firm’s engage-
ments are subject. In addition ISAEs and ISAs establish responsibilities for engage-
ment partners and engagement teams at the level of the engagement. The allocation
of responsibilities within a firm will depend on its size, structure and organisation.
Many of the provisions of Part 4B do not prescribe the specific responsibility of
individuals within the firm for actions related to independence, instead referring to
“firm” for ease of reference. A firm assigns operational responsibility for compliance
with dependence requirements to an individual(s) in accordance with ISMC 1. Add-
itionally, an individual professional accountant remains responsible for compliance
with any provisions that apply to that professional accountant’s activities, interests
or relationships.
900.4 Independence is linked to the principles of objectivity and integrity. It comprises:
(a) Independence of mind – the state of mind that permits the expression of a con-
clusion without being affected by influences that compromise professional
judgement, thereby allowing an individual to act with integrity, and exercise
objectivity and professional scepticism.
(b) Independence in appearance – the avoidance of facts and circumstances that
are so significant that a reasonable and informed third party would be likely
ET – 194 SAICA Student Handbook 2024/2025

to conclude that a firm’s or an assurance team member’s integrity, objectivity

or professional scepticism has been compromised.
In this Part, references to an individual or firm being “independent” mean that the
individual or firm has complied with the provisions of this Part.
900.5 When performing assurance engagements, the Code requires firms to comply with
the fundamental principles and be independent. This Part sets out specific require-
ments and application material on how to apply the conceptual framework to main-
tain independence when performing assurance engagements other than audit or
review engagements. The conceptual framework set out in Section 120 applies to
independence as it does to the fundamental principles set out in Section 110.
900.6 This Part describes:
(a) Facts and circumstances, including professional activities, interests and rela-
tionships, that create or might create threats to independence;
(b) Potential actions, including safeguards, that might be appropriate to address
any such threats; and
(c) Some situations where the threats cannot be eliminated or there can be no safe-
guards to reduce the threats to an acceptable level.

Description of Assurance Engagements

900.7 In an assurance engagement, the firm aims to obtain sufficient appropriate evidence
in order to express a conclusion designed to enhance the degree of confidence of
the intended users other than the responsible party about the subject matter infor-
mation. ISAE 3000 (Revised) describes the elements and objectives of assurance
engagement conducted under that Standard, and the Assurance Framework provides
a general description of assurance engagements. An assurance engagement might
either be an attestation engagement or a direct engagement.
900.8 In this Part the term ‘assurance engagement’ refers to assurance engagements other
than audit engagements or review engagement.

Reports that Include a Restriction on Use and Distribution

900.9 An assurance report might include a restriction on use and distribution. If it does
and the conditions set out in Section 990 are met, then the independence require-
ments in this Part may be modified as provided in Section 990.

Audit and Review Engagements

900.10 Independence standards for audit and review engagements are set out in Part 4A –
Independence for Audit and Review Engagements. If a firm performs both an assur-
ance engagement and an audit or review engagement for the same client, the require-
ments in Part 4A continue to apply to the firm, a network firm and the audit or review
team members.

Requirements and Application Material

General
R900.11 A firm performing an assurance engagement shall be independent of the assurance
client.
900.11 A1 For the purposes of this Part, the assurance client in an assurance engagement is the
responsible party and also, in an attestation engagement, the party taking responsi-
bility for the subject matter information (who might be the same as the responsible
party).
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 195

900.11 A2 The roles of the parties involved in an assurance engagement might differ and affect
the application of the independence provisions in this Part. In the majority of attes-
tation engagements, the responsible party and the party taking responsibility for the
subject matter information are the same. This includes those circumstances where
the responsible party involves another party to measure or evaluate the underlying
subject matter against the criteria (the measurer or evaluator) where the responsible
party takes responsibility for the subject matter information as well as the under-
lying subject matter. However, the responsible party or the engaging party might
appoint another party to prepare the subject matter information on the basis that this
party is to take responsibility for the subject matter information. In this circum-
stance, the responsible party and the party responsible for the subject matter infor-
mation are both assurance clients for the purposes of this Part.
900.11 A3 In addition to the responsible party and, in an attestation engagement, the party taking
responsibility for the subject matter information, there might be other parties in
relation to the engagement. For example, there might be a separate engaging party
or a party who is a measurer or evaluator other than the party taking responsibility
for the subject matter information. In these circumstances, applying the conceptual
framework requires the professional accountant to identify and evaluate threats to
the fundamental principles created by any interests or relationships with such par-
ties, including whether any conflicts of interest might exist as described in Section
310.
R900.12 A firm shall apply the conceptual framework set out in Section 120 to identify,
evaluate and address threats to independence in relation to an assurance engage-
ment.

Prohibition on Assuming Management Responsibilities

R900.13 A firm shall not assume a management responsibility related to the underlying sub-
ject matter and, in an attestation engagement, the subject matter information of an
assurance engagement provided by the firm. If the firm assumes a management
responsibility as part of any other service provided to the assurance client, the firm
shall ensure that the responsibility is not related to the underlying subject matter
and, in an attestation engagement, the subject matter information of the assurance
engagement provided by the firm.
900.13 A1 Management responsibilities involve controlling, leading and directing an entity,
including making decisions regarding the acquisition, deployment and control of
human, financial, technological, physical and intangible resources.
900.13 A2 When a firm assumes a management responsibility related to the underlying subject
matter and, in an attestation engagement, the subject matter information of an
assurance engagement, self-review, self-interest and familiarity threats are created.
Assuming a management responsibility might create an advocacy threat because the
firm becomes too closely aligned with the views and interests of management.
900.13 A3 Determining whether an activity is a management responsibility depends on the cir-
cumstances and requires the exercise of professional judgment. Examples of activ-
ities that would be considered a management responsibility include:
• Setting policies and strategic direction.
• Hiring or dismissing employees.
• Directing and taking responsibility for the actions of employees in relation to
the employees’ work for the entity.
• Authorising transactions.
• Controlling or managing bank accounts or investments.
ET – 196 SAICA Student Handbook 2024/2025

• Deciding which recommendations of the firm or other third parties to implement.

• Reporting to those charged with governance on behalf of management.
• Taking responsibility for designing, implementing, monitoring and maintaining
internal control.
900.13 A4 Examples of IT systems services that result in the assumption of a management
responsibility in relation to the underlying subject matter and, in an attestation
engagement, the subject matter information of an assurance engagement, include
where a firm:
• Stores data or manages (directly or indirectly) the hosting of data related to the
underlying subject matter or subject matter information. Such services include:
o Acting as the only access to the data or records related to the underlying
subject matter or subject matter information.
o Taking custody of or storing the data or records related to the underlying
subject matter or subject matter information such that the assurance client’s
data or records are otherwise incomplete.
o Providing electronic security or back-up services, such as business continu-
ity or a disaster recovery function, for the assurance client’s data or records
related to the underlying subject matter or subject matter information.
• Operates, maintains, or monitors an assurance client’s IT systems, network or
website related to the underlying subject matter or subject matter information.
900.13 A5 The collection, receipt, transmission and retention of data provided by an assurance
client in the course of an assurance engagement or to enable the provision of a per-
missible non-assurance service to the assurance client does not result in an assump-
tion of management responsibility.
900.13 A6 Subject to compliance with paragraph R900.14, providing advice and recommen-
dations to assist the management of an assurance client in discharging its responsi-
bilities is not assuming a management responsibility.
R900.14 When performing a professional activity for an assurance client that is related to the
underlying subject matter and, in an attestation engagement, the subject matter
information of the assurance engagement, the firm shall be satisfied that client man-
agement makes all related judgments and decisions that are the proper responsibility
of management. This includes ensuring that the client’s management:
(a) Designates an individual who possesses suitable skill, knowledge and experi-
ence to be responsible at all times for the client’s decisions and to oversee the
activities. Such an individual, preferably within senior management, would
understand:
(i) The objectives, nature and results of the activities; and
(ii) The respective client and firm responsibilities.
However, the individual is not required to possess the expertise to perform or
re-perform the activities.
(b) Provides oversight of the activities and evaluates the adequacy of the results
of the activity performed for the client’s purpose; and
(c) Accepts responsibility for the actions, if any, to be taken arising from the
results of the activities.
900.14 A1 When technology is used in performing a professional activity for an assurance
client, the requirements in paragraphs R900.13 and R900.14 apply regardless of the
nature or extent of such use of the technology.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 197

Multiple Responsible Parties and Parties Taking Responsibility for the Subject Matter
Information
900.15 A1 In some assurance engagements, whether an attestation engagement or direct engage-
ment, there might be several responsible parties or, in an attestation engagement,
several parties taking responsibility for the subject matter information. In determin-
ing whether it is necessary to apply the provisions in this Part to each individual
responsible party or each individual party taking responsibility for the subject matter
information in such engagements, the firm may take into account certain matters.
These matters include whether an interest or relationship between the firm, or an
assurance team member, and a particular responsible party or party taking respon-
sibility for the subject matter information would create a threat to independence that
is not trivial and inconsequential in the context of the subject matter information.
This determination will take into account factors such as:
(a) The materiality of the underlying subject matter or subject matter information
for which the particular party is responsible in the context of the overall assur-
ance engagement.
(b) The degree of public interest associated with the assurance engagement.
If the firm determines that the threat created by any such interest or relationship
with a particular party would be trivial and inconsequential, it might not be neces-
sary to apply all of the provisions of this section to that party.

Network Firms
R900.16 When a firm knows or has reason to believe that interests and relationships of a
network firm create a threat to the firm’s independence, the firm shall evaluate and
address any such threat.
900.16A1 Network firms are discussed in paragraphs 400.50 A1 to 400.54 A1.

Related Entities
R900.17 When the assurance team knows or has reason to believe that a relationship or cir-
cumstance involving a related entity of the assurance client is relevant to the evalu-
ation of the firm’s independence from the client, the assurance team shall include
that related entity when identifying, evaluating and addressing threats to independ-
ence.
[Paragraphs 900.18 to 900.29 are intentionally left blank]

Period During which Independence is Required

R900.30 Independence, as required by this Part, shall be maintained during both:
(a) The engagement period; and
(b) The period covered by the subject matter information.
900.30 A1 The engagement period starts when the engagement team begins to perform assur-
ance services with respect to the particular engagement. The engagement period
ends when the assurance report is issued. When the engagement is of a recurring
nature, it ends at the later of the notification by either party that the professional
relationship has ended or the issuance of the final assurance report.
R900.31 If an entity becomes an assurance client during or after the period covered by the
subject matter information on which the firm will express a conclusion, the firm
shall determine whether any threats to independence are created by:
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(a) Financial or business relationships with the assurance client during or after the
period covered by the subject matter information but before accepting the
assurance engagement; or
(b) Previous services provided to the assurance client.
R900.32 Threats to independence are created if a non-assurance service was provided to the
assurance client during, or after the period covered by the subject matter information,
but before the engagement team begins to perform assurance services, and the ser-
vice would not be permitted during the engagement period. In such circumstances,
the firm shall evaluate and address any threat to independence created by the service.
If the threats are not at an acceptable level, the firm shall only accept the assurance
engagement if the threats are reduced to an acceptable level.
900.32 A1 Examples of actions that might be safeguards to address such threats include:
• Using professionals who are not assurance team members to perform the ser-
vice.
• Having an appropriate reviewer review the assurance and non-assurance work
as appropriate.
R900.33 If a non-assurance service that would not be permitted during the engagement
period has not been completed and it is not practical to complete or end the service
before the commencement of professional services in connection with the assurance
engagement, the firm shall only accept the assurance engagement if:
(a) The firm is satisfied that:
(i) The non-assurance service will be completed within a short period of
time; or
(ii) The client has arrangements in place to transition the service to another
provider within a short period of time;
(b) The firm applies safeguards when necessary during the service period; and
(c) The firm discusses the matter with the party engaging the firm or those charged
with governance of the assurance client.

Communication with Those Charged With Governance

900.34 A1 Paragraphs R300.9 to 300.9 A2 set out requirements and application material that
is relevant to communications with a party engaging the firm or those charged with
governance of the assurance client.
900.34 A2 Communication with a party engaging the firm or those charged with governance
of the assurance client might be appropriate when significant judgments are made,
and conclusions reached, to address threats to independence in relation to an assur-
ance engagement because the subject matter information of that engagement is the
outcome of a previously performed non-assurance service.
[Paragraphs 900.35 to 900.39 are intentionally left blank]

General Documentation of Independence for Assurance Engagements

R900.40 A firm shall document conclusions regarding compliance with this Part, and the
substance of any relevant discussions that support those conclusions. In particular:
(a) When safeguards are applied to address a threat, the firm shall document the
nature of the threat and the safeguards in place or applied; and
(b) When a threat required significant analysis and the firm concluded that the
threat was already at an acceptable level, the firm shall document the nature
of the threat and the rationale for the conclusion.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 199

900.40 A1 Documentation provides evidence of the firm’s judgements in forming conclusions

regarding compliance with this Part. However, a lack of documentation does not
determine whether a firm considered a particular matter or whether the firm is
independent.
[Paragraphs 900.41 to 900.49 are intentionally left blank]

Breach of an Independence Provision for Assurance Engagements

When a Firm Identifies a Breach
R900.50 If a firm concludes that a breach of a requirement in this Part has occurred, the firm
shall:
(a) End, suspend or eliminate the interest or relationship that created the breach;
(b) Evaluate the significance of the breach and its impact on the firm’s objectivity
and ability to issue an assurance report; and
(c) Determine whether action can be taken that satisfactorily addresses the con-
sequences of the breach.
In making this determination, the firm shall exercise professional judgement and
take into account whether a reasonable and informed third party would be likely to
conclude that the firm’s objectivity would be compromised, and therefore, the firm
would be unable to issue an assurance report.
R900.51 If the firm determines that action cannot be taken to address the consequences of
the breach satisfactorily, the firm shall, as soon as possible, inform the party that
engaged the firm or those charged with governance, as appropriate. The firm shall
also take the steps necessary to end the assurance engagement in compliance with
any applicable legal or regulatory requirements relevant to ending the assurance
engagement.
R900.52 If the firm determines that action can be taken to address the consequences of the
breach satisfactorily, the firm shall discuss the breach and the action it has taken or
proposes to take with the party that engaged the firm or those charged with govern-
ance, as appropriate. The firm shall discuss the breach and the proposed action on a
timely basis, taking into account the circumstances of the engagement and the breach.
R900.53 If the party that engaged the firm does not, or those charged with governance do not
concur that the action proposed by the firm in accordance with paragraph R900.50(c)
satisfactorily addresses the consequences of the breach, the firm shall take the steps
necessary to end the assurance engagement in compliance with any applicable legal
or regulatory requirements relevant to ending the assurance engagement.

Documentation
R900.54 In complying with the requirements in paragraphs R900.50 to R900.53, the firm
shall document:
(a) The breach;
(b) The actions taken;
(c) The key decisions made; and
(d) All the matters discussed with the party that engaged the firm or those charged
with governance.
R900.55 If the firm continues with the assurance engagement, it shall document:
(a) The conclusion that, in the firm’s professional judgement, objectivity has not
been compromised; and
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(b) The rationale for why the action taken satisfactorily addressed the conse-
quences of the breach so that the firm could issue an assurance report.

SECTION 905
FEES
Introduction
905.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
905.2 The nature and level of fees or other types of remuneration might create a self-
interest or intimidation threat. This section sets out specific requirements and appli-
cation material relevant to applying the conceptual framework to identify, evaluate
and address threats to independence arising from fees charged to assurance clients.

Requirements and Application Material

Fees Paid by an Assurance Client
905.3 A1 When fees are negotiated with and paid by an assurance client, this creates a self-
interest threat and might create an intimidation threat to independence.
905.3 A2 The application of the conceptual framework requires that before a firm accepts an
assurance engagement for an assurance client, the firm determines whether the
threats to independence created by the fees proposed to the client are at an accept-
able level. The application of the conceptual framework also requires the firm to
re-evaluate such threats when facts and circumstances change during the engagement
period.
905.3 A3 Factors that are relevant in evaluating the level of threats created when fees are paid
by the assurance client include:
• The level of the fees for the assurance engagement and the extent to which they
have regard to the resources required, taking into account the firm’s commercial
and market priorities.
• The extent of any dependency between the level of the fee for, and the outcome
of, the service.
• The level of the fee in the context of the service to be provided by the firm or a
network firm.
• The significance of the client to the firm or partner.
• The nature of the client.
• The nature of the assurance engagement.
• The involvement of those charged with governance in agreeing fees.
• Whether the level of the fee is set by an independent third party, such as a regu-
latory body.
905.3 A4 The conditions, policies and procedures described in paragraphs 120.15 A3 (par-
ticularly the existence of a quality management system designed and implemented
by a firm in accordance with quality management standards issued by the IAASB)
might also impact the evaluation of whether the threats to independence are at an
acceptable level.
905.3 A5 The requirements and application material that follow identify circumstances which
might need to be further evaluated when determining whether the threats are at an
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 201

acceptable level. For those circumstances, application material includes examples

of additional factors that might be relevant in evaluating the threats.

Level of Fees for Assurance Engagements

905.4 A1 Determining the fees to be charged to an assurance client, whether for assurance or
other services, is a business decision of the firm taking into account the facts and
circumstances relevant to that specific engagement, including the requirements of
technical and professional standards.
905.4 A2 Factors that are relevant in evaluating the level of self-interest and intimidation
threats created by the level of the fee for an assurance engagement when paid by the
assurance client include:
• The firm’s commercial rationale for the fee for the assurance engagement.
• Whether undue pressure has been, or is being, applied by the client to reduce the
fee for the assurance engagement.
905.4 A3 Examples of actions that might be safeguards to address such threats include:
• Having an appropriate reviewer who does not take part in the assurance engage-
ment assess the reasonableness of the fee proposed, having regard to the scope
and complexity of the engagement.
• Having an appropriate reviewer who did not take part in the assurance engage-
ment review the work performed.

Contingent Fees
905.5 A1 Contingent fees are fees calculated on a predetermined basis relating to the outcome
of a transaction or the result of the services performed. A contingent fee charged
through an intermediary is an example of an indirect contingent fee. In this section,
a fee is not regarded as being contingent if established by a court or other public
authority.
R905.6 A firm shall not charge directly or indirectly a contingent fee for an assurance
engagement.
R905.7 A firm shall not charge directly or indirectly a contingent fee for a non-assurance
service provided to an assurance client if the outcome of the non-assurance service,
and therefore, the amount of the fee, is dependent on a future or contemporary judge-
ment related to a matter that is material to the subject matter information of the
assurance engagement.
905.7 A1 Paragraphs R905.7 and R905.8 preclude a firm from entering into certain contingent
fee arrangements with an assurance client. Even if a contingent fee arrangement is
not precluded when providing a non-assurance service to an assurance client, it might
still impact the level of the self-interest threat.
905.7 A2 Factors that are relevant in evaluating the level of such a threat include:
• The range of possible fee amounts.
• Whether an appropriate authority determines the outcome on which the contin-
gent fee depends.
• Disclosure to intended users of the work performed by the firm and the basis of
remuneration.
• The nature of the service.
• The effect of the event or transaction on the subject matter information.
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905.7 A3 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Having an appropriate reviewer who was not involved in performing the non-
assurance service review the relevant assurance work.
• Obtaining an advance written agreement with the client on the basis of remuner-
ation.

Total FeesʊOverdue Fees

905.8 A1 The level of the self-interest threat might be impacted if fees payable by the assur-
ance client for the assurance engagement or other services are overdue during the
period of the assurance engagement.
905.8 A2 It is generally expected that the firm will obtain payment of such fees before the
assurance report is issued.
905.8 A3 Factors that are relevant in evaluating the level of such a self-interest threat include:
• The significance of the overdue fees to the firm.
• The length of time the fees have been overdue.
• The firm’s assessment of the ability and willingness of the client or other relevant
party to pay the overdue fee.
905.8 A4 Examples of actions that might be safeguards to address such a threat include:
• Obtaining partial payment of overdue fees.
• Having an appropriate reviewer who did not take part in the assurance engage-
ment review the work performed.
R905.9 When a significant part of the fees due from an assurance client remains unpaid for
a long time, the firm shall determine:
(a) Whether the overdue fees might be equivalent to a loan to the client, in which
case the requirements and application material set out in Section 911 are
applicable; and
(b) Whether it is appropriate for the firm to be re-appointed or continue the assur-
ance engagement.

Total FeesʊFee Dependency

905.10 A1 When the total fees generated from an assurance client by the firm expressing the
conclusion in an assurance engagement represent a large proportion of the total fees
of that firm, the dependence on, that client and concern about the potential loss, of
fees from that client impact the level of the self-interest threat and create an intimi-
dation threat.
905.10 A2 A self-interest and intimidation threat is created in the circumstances described in
paragraph 905.10 A1 even if the assurance client is not responsible for negotiating
or paying the fees for the assurance engagement.
905.10 A3 In calculating the total fees of the firm, the firm might use financial information
available from the previous financial year and estimate the proportion based on that
information if appropriate.
905.10 A4 Factors that are relevant in evaluating the level of such self-interest and intimidation
threats include:
• The operating structure of the firm.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 203

• Where the firm is expected to diversify such that any dependence on the assur-
ance client is reduced.
905.10 A5 Examples of actions that might be safeguards to address such threats include:
• Reducing the extent of services other than assurance engagements provided to
the client.
• Increasing the client base of the firm to reduce dependence on the assurance
client.
905.10 A6 A self-interest or intimidation threat is created when the fees generated by a firm
from an assurance client represent a large proportion of the revenue from an indi-
vidual partner’s clients.
905.10 A7 Factors that are relevant in evaluating the level of such threats include:
• The qualitative and quantitative significance of the assurance client to the partner.
• The extent to which the compensation of the partner is dependent upon the fees
generated from the client.
905.10 A8 Examples of actions that might be safeguards to address such a self-interest or
intimidation threat include:
• Having an appropriate reviewer who was not an assurance team member review
the work.
• Ensuring that the compensation of the partner is not significantly influenced by
the fees generated from the assurance client.
• Increasing the client base of the partner to reduce dependence on the client.

SECTION 906
GIFTS AND HOSPITALITY
Introduction
906.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
906.2 Accepting gifts and hospitality from an assurance client might create a self-interest,
familiarity or intimidation threat. This section sets out a specific requirement and
application material relevant to applying the conceptual framework in such circum-
stances.

Requirement and Application Material

R906.3 A firm or an assurance team member shall not accept gifts and hospitality from an
assurance client, unless the value is trivial and inconsequential.
906.3 A1 Where a firm or assurance team member is offering or accepting an inducement to
or from an assurance client, the requirements and application material set out in
Section 340 apply and non-compliance with these requirements might create threats
to independence.
906.3 A2 The requirements set out in Section 340 relating to offering or accepting induce-
ments do not allow a firm or assurance team member to accept gifts and hospitality
where the intent is to improperly influence behaviour even if the value is trivial and
inconsequential.
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SECTION 907
ACTUAL OR THREATENED LITIGATION
Introduction
907.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
907.2 When litigation with an assurance client occurs, or appears likely, self-interest and
intimidation threats are created. This section sets out specific application material
relevant to applying the conceptual framework in such circumstances.

Application Material
General
907.3 A1 The relationship between client management and assurance team members must be
characterised by complete candour and full disclosure regarding all aspects of a
client’s operations. Adversarial positions might result from actual or threatened liti-
gation between an assurance client and the firm or an assurance team member. Such
adversarial positions might affect management’s willingness to make complete dis-
closures and create self-interest and intimidation threats.
907.3 A2 Factors that are relevant in evaluating the level of such threats include:
• The materiality of the litigation.
• Whether the litigation relates to a prior assurance engagement.
907.3 A3 If the litigation involves an assurance team member, an example of an action that
might eliminate such self-interest and intimidation threats is removing that individ-
ual from the assurance team.
907.3 A4 An example of an action that might be a safeguard to address such self-interest and
intimidation threats is having an appropriate reviewer review the work performed.

SECTION 910
FINANCIAL INTERESTS
Introduction
910.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
910.2 Holding a financial interest in an assurance client might create a self-interest threat.
This section sets out specific requirements and application material relevant to
applying the conceptual framework in such circumstances.

Requirements and Application Material

General
910.3 A1 A financial interest might be held directly or indirectly through an intermediary such
as a collective investment vehicle, an estate or a trust. When a beneficial owner has
control over the intermediary or ability to influence its investment decisions, the
Code defines that financial interest to be direct. Conversely, when a beneficial owner
has no control over the intermediary or ability to influence its investment decisions,
the Code defines that financial interest to be indirect.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 205

910.3 A2 This section contains references to the “materiality” of a financial interest. In deter-
mining whether such an interest is material to an individual, the combined net worth
of the individual and the individual’s immediate family members may be taken into
account.
910.3 A3 Factors that are relevant in evaluating the level of a self-interest threat created by
holding a financial interest in an assurance client include:
• The role of the individual holding the financial interest.
• Whether the financial interest is direct or indirect.
• The materiality of the financial interest.

Financial Interests Held by the Firm, Assurance Team Members and Immediate Family
R910.4 A direct financial interest or a material indirect financial interest in the assurance
client shall not be held by:
(a) The firm; or
(b) An assurance team member or any of that individual’s immediate family.

Financial Interests in an Entity Controlling an Assurance Client

R910.5 When an entity has a controlling interest in the assurance client and the client is
material to the entity, neither the firm, nor an assurance team member, nor any of
that individual’s immediate family shall hold a direct or material indirect financial
interest in that entity.

Financial Interests Held as Trustee

R910.6 Paragraph R910.4 shall also apply to a financial interest in an assurance client held
in a trust for which the firm or individual acts as trustee unless:
(a) None of the following is a beneficiary of the trust: the trustee, the assurance
team member or any of that individual’s immediate family, or the firm;
(b) The interest in the assurance client held by the trust is not material to the trust;
(c) The trust is not able to exercise significant influence over the assurance client;
and
(d) None of the following can significantly influence any investment decision
involving a financial interest in the assurance client: the trustee, the assurance
team member or any of that individual’s immediate family, or the firm.

Financial Interests Received Unintentionally

R910.7 If a firm, an assurance team member, or any of that individual’s immediate family,
receives a direct financial interest or a material indirect financial interest in an assur-
ance client by way of an inheritance, gift, as a result of a merger, or in similar
circumstances and the interest would not otherwise be permitted to be held under
this section, then:
(a) If the interest is received by the firm, the financial interest shall be disposed
of immediately, or enough of an indirect financial interest shall be disposed
of so that the remaining interest is no longer material; or
(b) If the interest is received by an assurance team member, or by any of that
individual’s immediate family, the individual who received the financial in-
terest shall immediately dispose of the financial interest, or dispose of enough
of an indirect financial interest so that the remaining interest is no longer
material.
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Financial Interests – Other Circumstances

Close Family
910.8 A1 A self-interest threat might be created if an assurance team member knows that a
close family member has a direct financial interest or a material indirect financial
interest in the assurance client.
910.8 A2 Factors that are relevant in evaluating the level of such a threat include:
• The nature of the relationship between the assurance team member and the close
family member.
• Whether the financial interest is direct or indirect.
• The materiality of the financial interest to the close family member.
910.8 A3 Examples of actions that might eliminate such a self-interest threat include:
• Having the close family member dispose, as soon as practicable, of all of the
financial interest or dispose of enough of an indirect financial interest so that the
remaining interest is no longer material.
• Removing the individual from the assurance team.
910.8 A4 An example of an action that might be a safeguard to address such a self-interest
threat is having an appropriate reviewer review the work of the assurance team
member.

Other Individuals
910.8 A5 A self-interest threat might be created if an assurance team member knows that a
financial interest is held in the assurance client by individuals such as:
• Partners and professional employees of the firm, apart from those who are
specifically not permitted to hold such financial interests by paragraph R910.4,
or their immediate family members.
• Individuals with a close personal relationship with an assurance team member.
910.8 A6 An example of an action that might eliminate such a self-interest threat is removing
the assurance team member with the personal relationship from the assurance team.
910.8 A7 Examples of actions that might be safeguards to address such a self-interest threat
include:
• Excluding the assurance team member from any significant decision-making
concerning the assurance engagement.
• Having an appropriate reviewer review the work of the assurance team member.

SECTION 911
LOANS AND GUARANTEES
Introduction
911.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence͘
911.2 A loan or a guarantee of a loan with an assurance client might create a self-interest
threat. This section sets out specific requirements and application material relevant
to applying the conceptual framework in such circumstances.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 207

Requirements and Application Material

General
911.3 A1 This section contains references to the “materiality” of a loan or guarantee. In deter-
mining whether such a loan or guarantee is material to an individual, the combined
net worth of the individual and the individual’s immediate family members may be
taken into account.

Loans and Guarantees with an Assurance Client

R911.4 A firm, an assurance team member, or any of that individual’s immediate family
shall not make or guarantee a loan to an assurance client or any director or officer
of an assurance client, unless the loan or guarantee is immaterial to both:
(a) The firm or the individual making the loan or guarantee, as applicable; and
(b) The client, or the director or officer of the client.

Loans and Guarantees with an Assurance Client that is a Bank or Similar Institution
R911.5 A firm, an assurance team member, or any of that individual’s immediate family
shall not accept a loan, or a guarantee of a loan, from an assurance client that is a
bank or a similar institution unless the loan or guarantee is made under normal lend-
ing procedures, terms and conditions.
911.5 A1 Examples of loans include mortgages, bank overdrafts, car loans and credit card
balances.
911.5 A2 Even if a firm receives a loan from an assurance client that is a bank or similar
institution under normal lending procedures, terms and conditions, the loan might
create a self-interest threat if it is material to the assurance client or firm receiving
the loan.
911.5 A3 An example of an action that might be a safeguard to address such a self-interest
threat is having the work reviewed by an appropriate reviewer, who is not an assur-
ance team member, from a network firm that is not a beneficiary of the loan.

Deposit or Brokerage Accounts

R911.6 A firm, an assurance team member, or any of that individual’s immediate family
shall not have deposits or a brokerage account with an assurance client that is a
bank, broker, or similar institution, unless the deposit or account is held under nor-
mal commercial terms.

Loans and Guarantees with an Assurance Client that is not a Bank or Similar Institution
R911.7 A firm or an assurance team member, or any of that individual’s immediate family,
shall not accept a loan from, or have a borrowing guaranteed by, an assurance client
that is not a bank or similar institution, or any director or officer of an assurance
client, unless the loan or guarantee is immaterial to both:
(a) The firm, or the individual receiving the loan or guarantee, as applicable; and
(b) The client, or the director or officer of the client.
ET – 208 SAICA Student Handbook 2024/2025

SECTION 920
BUSINESS RELATIONSHIPS
Introduction
920.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence͘
920.2 A close business relationship with an assurance client or its management might
create a self-interest or intimidation threat. This section sets out specific require-
ments and application material relevant to applying the conceptual framework in
such circumstances.

Requirements and Application Material

General
920.3 A1 This section contains references to the “materiality” of a financial interest and the
“significance” of a business relationship. In determining whether such a financial
interest is material to an individual, the combined net worth of the individual and
the individual’s immediate family members may be taken into account.
920.3 A2 Examples of a close business relationship arising from a commercial relationship or
common financial interest include:
• Having a financial interest in a joint venture with either the assurance client or
a controlling owner, director or officer or other individual who performs senior
managerial activities for that client.
• Arrangements to combine one or more services or products of the firm with one
or more services or products of the client and to market the package with ref-
erence to both parties.
• Arrangements under which the firm sells, resells, distributes or markets the
client’s products or services, or the client sells, resells, distributes or markets the
firm’s products or services.
• Arrangements under which a firm develops jointly with the client, products or
solutions which one or both parties sell or license to third parties.
920.3 A3 An example that might create a close business relationship, depending on the facts
and circumstances, is an arrangement under which the firm licenses products or
solutions to or from the assurance client.

Firm, Assurance Team Member or Immediate Family Business Relationships

R920.4 A firm or an assurance team member shall not have a close business relationship with
an assurance client or its management unless any financial interest is immaterial
and the business relationship is insignificant to the client or its management and the
firm or the assurance team member, as applicable.
920.4 A1 A self-interest or intimidation threat might be created if there is a close business
relationship between the assurance client or its management and the immediate
family of an assurance team member.

Buying Goods or Services

920.5 A1 The purchase of goods and services from an assurance client by a firm, or an assur-
ance team member, or any of that individual’s immediate family does not usually
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 209

create a threat to independence if the transaction is in the normal course of business

and at arm’s length.
However, such transactions might be of such a nature and magnitude that they create
a self-interest threat.
920.5 A2 Examples of actions that might eliminate such a self-interest threat include:
• Eliminating or reducing the magnitude of the transaction.
• Removing the individual from the assurance team.

Providing, Selling, Reselling or Licensing Technology

920.6 A1 Where a firm provides, sells, resells or licenses technology:
(a) To an assurance client; or
(b) To an entity that provides services using such technology to assurance clients
of the firm,
depending on the facts and circumstances, the requirements and application material
in Section 950 apply.

SECTION 921
FAMILY AND PERSONAL RELATIONSHIPS
Introduction
921.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
921.2 Family or personal relationships with client personnel might create a self-interest,
familiarity or intimidation threat. This section sets out specific requirements and
application material relevant to applying the conceptual framework in such circum-
stances.

Requirements and Application Material

General
921.3 A1 A self-interest, familiarity or intimidation threat might be created by family and
personal relationships between an assurance team member and a director or officer
or, depending on their role, certain employees of the assurance client.
921.3 A2 Factors that are relevant in evaluating the level of such threats include:
• The individual’s responsibilities on the assurance team.
• The role of the family member or other individual within the assurance client,
and the closeness of the relationship.

Immediate Family of an Assurance Team Member

921.4 A1 A self-interest, familiarity or intimidation threat is created when an immediate family
member of an assurance team member is an employee in a position to exert signifi-
cant influence over the underlying subject matter of the assurance engagement.
921.4 A2 Factors that are relevant in evaluating the level of such threats include:
• The position held by the immediate family member.
• The role of the assurance team member.
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921.4 A3 An example of an action that might eliminate such a self-interest, familiarity or

intimidation threat is removing the individual from the assurance team.
921.4 A4 An example of an action that might be a safeguard to address such a self-interest,
familiarity or intimidation threat is structuring the responsibilities of the assurance
team so that the assurance team member does not deal with matters that are within
the responsibility of the immediate family member.
R921.5 An individual shall not participate as an assurance team member when any of that
individual’s immediate family:
(a) Is a director or officer of the assurance client;
(b) In an attestation engagement, is an employee in a position to exert significant
influence over the subject matter information of the assurance engagement; or
(c) Was in such a position during any period covered by the engagement or the
subject matter information.

Close Family of an Assurance Team Member

921.6 A1 A self-interest, familiarity or intimidation threat is created when a close family
member of an assurance team member is:
(a) A director or officer of the assurance client; or
(b) An employee in a position to exert significant influence over the underlying
subject matter or, in an attestation engagement, an employee in a position to
exert significant influence over the subject matter information of the assurance
engagement.
921.6 A2 Factors that are relevant in evaluating the level of such threats include:
• The nature of the relationship between the assurance team member and the close
family member.
• The position held by the close family member.
• The role of the assurance team member.
921.6 A3 An example of an action that might eliminate such a self-interest, familiarity or
intimidation threat is removing the individual from the assurance team.
921.6 A4 An example of an action that might be a safeguard to address such a self-interest,
familiarity or intimidation threat is structuring the responsibilities of the assurance
team so that the assurance team member does not deal with matters that are within
the responsibility of the close family member.

Other Close Relationships of an Assurance Team Member

R921.7 An assurance team member shall consult in accordance with firm policies and pro-
cedures if the assurance team member has a close relationship with an individual
who is not an immediate or close family member, but who is:
(a) A director or officer of the assurance client; or
(b) An employee in a position to exert significant influence over the underlying
subject matter or, in at attestation engagement, an employee in a position to
exert significant influence over the subject matter information of the assurance
engagement.
921.7 A1 Factors that are relevant in evaluating the level of a self-interest, familiarity or
intimidation threat created by such relationships include:
• The nature of the relationship between the individual and the assurance team
member.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 211

• The position the individual holds with the client.

• The role of the assurance team member.
921.7 A2 An example of an action that might eliminate such a self-interest, familiarity or
intimidation threat is removing the individual from the assurance team.
921.7 A3 An example of an action that might be a safeguard to address such a self-interest,
familiarity or intimidation threat is structuring the responsibilities of the assurance
team so that the assurance team member does not deal with matters that are within
the responsibility of the individual with whom the assurance team member has a
close relationship.

Relationships of Partners and Employees of the Firm

921.8 A1 A self-interest, familiarity or intimidation threat might be created by a personal or
family relationship between:
(a) A partner or employee of the firm who is not an assurance team member; and
(b) Any of the following individuals at the assurance client:
(i) A director or officer;
(ii) An employee in a position to exert significant influence over the under-
lying subject matter or, in an attestation engagement, an employee in a
position to exert significant influence over the subject matter infor-
mation of the assurance engagement.
921.8 A2 Factors that are relevant in evaluating the level of such threats include:
• The nature of the relationship between the partner or employee of the firm and
the director or officer or employee of the client.
• The degree of interaction of the partner or employee of the firm with the assur-
ance team.
• The position of the partner or employee within the firm.
• The role of the individual within the client.
921.8 A3 Examples of actions that might be safeguards to address such self-interest, familiar-
ity or intimidation threats include:
• Structuring the partner’s or employee’s responsibilities to reduce any potential
influence over the assurance engagement.
• Having an appropriate reviewer review the relevant assurance work performed.

SECTION 922
RECENT SERVICE WITH AN ASSURANCE CLIENT
Introduction
922.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
922.2 If an assurance team member has recently served as a director or officer or employee
of the assurance client, a self-interest, self-review or familiarity threat might be
created. This section sets out specific requirements and application material relevant
to applying the conceptual framework in such circumstances.
ET – 212 SAICA Student Handbook 2024/2025

Requirements and Application Material

Service During the Period Covered by the Assurance Report
R922.3 The assurance team shall not include an individual who, during the period covered
by the assurance report:
(a) Had served as a director or officer of the assurance client; or
(b) was an employee in a position to exert significant influence over the under-
lying subject matter or, in an attestation engagement, an employee in a posi-
tion to exert significant influence over the subject matter information of the
assurance engagement.

Service Prior to the Period Covered by the Assurance Report

922.4 A1 A self-interest, self-review or familiarity threat might be created if, before the period
covered by the assurance report, an assurance team member:
(a) Had served as a director or officer of the assurance client; or
(b) was an employee in a position to exert significant influence over the under-
lying subject matter or, in an attestation engagement, an employee in a posi-
tion to exert significant influence over the subject matter information of the
assurance engagement.
For example, a threat would be created if a decision made or work performed by the
individual in the prior period, while employed by the client, is to be evaluated in the
current period as part of the current assurance engagement.
922.4 A2 Factors that are relevant in evaluating the level of such threats include:
• The position the individual held with the client.
• The length of time since the individual left the client.
• The role of the assurance team member.
922.4 A3 An example of an action that might be a safeguard to address such a self-interest,
self-review or familiarity threat is having an appropriate reviewer review the work
performed by the assurance team member.

SECTION 923
SERVING AS A DIRECTOR OR OFFICER OF AN ASSURANCE
CLIENT
Introduction
923.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
923.2 Serving as a director or officer of an assurance client creates self-review and self-
interest threats. This section sets out specific requirements and application material
relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

Service as Director or Officer
R923.3 A partner or employee of the firm shall not serve as a director or officer of an assur-
ance client of the firm.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 213

Service as Company Secretary

R923.4 A partner or employee of the firm shall not serve as Company Secretary for an assur-
ance client of the firm unless:
(a) This practice is specifically permitted under local law, professional rules or
practice;
(b) Management makes all decisions; and
(c) The duties and activities performed are limited to those of a routine and admin-
istrative nature, such as preparing minutes and maintaining statutory returns.
923.4 A1 The position of Company Secretary has different implications in different juris-
dictions. Duties might range from: administrative duties (such as personnel manage-
ment and the maintenance of company records and registers) to duties as diverse as
ensuring that the company complies with regulations or providing advice on corpor-
ate governance matters. Usually this position is seen to imply a close association
with the entity. Therefore, a threat is created if a partner or employee of the firm
serves as Company Secretary for an assurance client. (More information on provid-
ing non-assurance services to an assurance client is set out in Section 950, Provision
of Non-assurance Services to an Assurance Client.)

SECTION 924
EMPLOYMENT WITH AN ASSURANCE CLIENT
Introduction
924.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
924.2 Employment relationships with an assurance client might create a self-interest,
familiarity or intimidation threat. This section sets out specific requirements and
application material relevant to applying the conceptual framework in such circum-
stances.

Requirements and Application Material

General
924.3 A1 A familiarity or intimidation threat might be created if any of the following individ-
uals have been an assurance team member or partner of the firm:
(a) A director or officer of the assurance client.
(b) An employee in a position to exert significant influence over the underlying
subject matter or, in an attestation engagement, an employee who is in a posi-
tion to exert significant influence over the subject matter information of the
assurance engagement.

Former Partner or Assurance Team Member Restrictions

R924.4 If a former partner has joined an assurance client of the firm or a former assurance
team member has joined the assurance client as:
(a) A director or officer; or
(b) An employee in a position to exert significant influence over the underlying
subject matter or, in an attestation engagement, an employee in a position to
exert significant influence over the subject matter information of the assurance
engagement,
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the individual shall not continue to participate in the firm’s business or professional
activities.
924.4 A1 Even if one of the individuals described in paragraph R924.4 has joined the assur-
ance client in such a position and does not continue to participate in the firm’s busi-
ness or professional activities, a familiarity or intimidation threat might still be
created.
924.4 A2 A familiarity or intimidation threat might also be created if a former partner of the
firm has joined an entity in one of the positions described in paragraph 924.3 A1
and the entity subsequently becomes an assurance client of the firm.
924.4 A3 Factors that are relevant in evaluating the level of such threats include:
• The position the individual has taken at the client.
• Any involvement the individual will have with the assurance team.
• The length of time since the individual was an assurance team member or partner
of the firm. The former position of the individual within the assurance team or
firm. An example is whether the individual was responsible for maintaining
regular contact with the client’s management or those charged with governance.
924.4 A4 Examples of actions that might be safeguards to address such a familiarity or intim-
idation threat include:
• Making arrangements such that the individual is not entitled to any benefits or
payments from the firm, unless made in accordance with fixed pre-determined
arrangements.
• Making arrangements such that any amount owed to the individual is not material
to the firm.
• Modifying the plan for the assurance engagement.
• Assigning to the assurance team individuals who have sufficient experience
relative to the individual who has joined the client.
• Having an appropriate reviewer review the work of the former assurance team
member.
Assurance Team Members Entering Employment Negotiations with a Client
R924.5 A firm shall have policies and procedures that require assurance team members to
notify the firm when entering employment negotiations with an assurance client.
924.5 A1 A self-interest threat is created when an assurance team member participates in the
assurance engagement while knowing that the assurance team member will, or might,
join the client sometime in the future.
924.5 A2 An example of an action that might eliminate such a self-interest threat is removing
the individual from the assurance engagement.
924.5 A3 An example of an action that might be a safeguard to address such a self-interest
threat is having an appropriate reviewer review any significant judgements made by
that assurance team member while on the team.

SECTION 940
LONG ASSOCIATION OF PERSONNEL WITH AN ASSURANCE
CLIENT
Introduction
940.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 215

940.2 When an individual is involved in an assurance engagement of a recurring nature

over a long period of time, familiarity and self-interest threats might be created. This
section sets out requirements and application material relevant to applying the con-
ceptual framework in such circumstances.

Requirements and Application Material

General
940.3 A1 A familiarity threat might be created as a result of an individual’s long association
with:
(a) The assurance client;
(b) The assurance client’s senior management; or
(c) The underlying subject matter or, in an attestation engagement subject matter
information of the assurance engagement.
940.3 A2 A self-interest threat might be created as a result of an individual’s concern about
losing a longstanding assurance client or an interest in maintaining a close personal
relationship with a member of senior management or those charged with govern-
ance. Such a threat might influence the individual’s judgement inappropriately.
940.3 A3 Factors that are relevant to evaluating the level of such familiarity or self-interest
threats include:
• The nature of the assurance engagement.
• How long the individual has been an assurance team member, the individual’s
seniority on the team, and the nature of the roles performed, including if such a
relationship existed while the individual was at a prior firm.
• The extent to which the work of the individual is directed, reviewed and super-
vised by more senior personnel.
• The extent to which the individual, due to the individual’s seniority, has the
ability to influence the outcome of the assurance engagement, for example, by
making key decisions or directing the work of other engagement team members.
• The closeness of the individual’s personal relationship with the assurance client
or, if relevant, senior management.
• The nature, frequency and extent of interaction between the individual and the
assurance client.
• Whether the nature or complexity of the subject matter or subject matter infor-
mation has changed.
• Whether there have been any recent changes in the individual or individuals at
the assurance client who are responsible for the underlying subject matter or, in
an attestation engagement, the subject matter information or, if relevant, senior
management.
940.3 A4 The combination of two or more factors might increase or reduce the level of the
threats. For example, familiarity threats created over time by the increasingly close
relationship between an assurance team member and an individual at the assurance
client who is in a position to exert significant influence over the underlying subject
matter or, in an attestation engagement, the subject matter information, would be
reduced by the departure of that individual from the client.
940.3 A5 An example of an action that might eliminate the familiarity and self-interest threats
in relation to a specific engagement would be rotating the individual off the assur-
ance team.
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940.3 A6 Examples of actions that might be safeguards to address such familiarity or self-
interest threats include:
• Changing the role of the individual on the assurance team or the nature and
extent of the tasks the individual performs.
• Having an appropriate reviewer who was not an assurance team member review
the work of the individual.
• Performing regular independent internal or external quality reviews of the
engagement.
R940.4 If a firm decides that the level of the threats created can only be addressed by
rotating the individual off the assurance team, the firm shall determine an appropri-
ate period during which the individual shall not:
(a) Be a member of the engagement team for the assurance engagement;
(b) Perform an engagement quality review, or a review consistent with the object-
ive of an engagement quality review, for the engagement; or
(c) Exert direct influence on the outcome of the assurance engagement.
The period shall be of sufficient duration to allow the familiarity and self-interest
threats to be addressed.

SECTION 950
PROVISION OF NON-ASSURANCE SERVICES TO ASSURANCE
CLIENTS
Introduction
950.1 Firms are required to comply with the fundamental principles, be independent, and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
950.2 Firms might provide a range of non-assurance services to their assurance clients,
consistent with their skills and expertise. Providing certain non-assurance services
to assurance clients might create threats to compliance with the fundamental prin-
ciples and threats to independence.
950.3 This section sets out requirements and application material relevant to applying the
conceptual framework to identify, evaluate and address threats to independence
when providing non-assurance services to assurance clients.
950.4 New business practices, the evolution of financial markets and changes in technol-
ogy are some developments that make it impossible to draw up an all-inclusive list
of non-assurance services that firms might provide to an assurance client. The con-
ceptual framework and the general provisions in this section apply when a firm pro-
poses to a client to provide a non-assurance service for which there are no specific
requirements and application material.
950.5 The requirements and application material in this section apply where a firm:
(a) Uses technology to provide a non-assurance service to an assurance client; or
(b) Provides, sells, resells or licenses technology resulting in the provision of a
non-assurance service by the firm:
(i) To an assurance client; or
(ii) To an entity that provides services using such technology to assurance
clients of the firm.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 217

Requirements and Application Material

General
Risk of Assuming Management Responsibilities When Providing a Non-Assurance Service
950.6 A1 When a firm provides a non-assurance service to an assurance client, there is a risk
that a firm will assume a management responsibility in relation to the underlying
subject matter and, in an attestation engagement, the subject matter information of
the assurance engagement unless the firm is satisfied that the requirements in para-
graphs R900.13 and R900.14 have been complied with.

Accepting an Engagement to Provide a Non-Assurance Service

R950.7 Before a firm accepts an engagement to provide a non-assurance service to an assur-
ance client, the firm shall apply the conceptual framework to identify, evaluate and
address any threat to independence that might be created by providing that service.
Identifying and Evaluating Threats
950.8 A1 A description of the categories of threats that might arise when a firm provides a
non-assurance service to an assurance client is set out in paragraph 120.6 A3.
950.8 A2 Factors that are relevant in identifying and evaluating the different threats that might
be created by providing a non-assurance service to an assurance client include:
• The nature, scope, intended use and purpose of the service.
• The manner in which the service will be provided, such as the personnel to be
involved and their location.
• The client’s dependency on the service, including the frequency with which the
service will be provided.
• The legal and regulatory environment in which the service is provided.
• Whether the client is a public interest entity.
• The level of expertise of the client’s management and employees with respect
to the type of service provided.
• Whether the outcome of the service will affect the underlying subject matter and,
in an attestation engagement, matters reflected in the subject matter or subject
matter information of the assurance engagement, and, if so:
o The extent to which the outcome of the service will have a material effect on
the underlying subject matter and, in an attestation engagement, the subject
matter information of the assurance engagement.
o The extent to which the assurance client determines significant matters of
judgement (Ref: Para. R900.13 to R900.14).
• The degree of reliance that will be placed on the outcome of the service as part
of the assurance engagement.
• The fee relating to the provision of the non-assurance service.
Materiality in Relation to an Assurance Client’s Information
950.9 A1 Materiality is a factor that is relevant in evaluating threats created by providing a
non-assurance service to an assurance client. The concept of materiality in relation
to an assurance client’s subject matter information is addressed in International
Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engage-
ments other than Audits or Reviews of Historical Financial Information. The deter-
mination of materiality involves the exercise of professional judgement and is
ET – 218 SAICA Student Handbook 2024/2025

impacted by both quantitative and qualitative factors. It is also affected by percep-

tions of the financial or other information needs of users.
Multiple Non-assurance Services Provided to the Same Assurance Client
950.10 A1 A firm might provide multiple non-assurance services to an assurance client. In these
circumstances the combined effect of threats created by providing those services is
relevant to the firm’s evaluation of threats.
Self-Review Threats
950.11 A1 A self-review threat might be created if, in an attestation engagement, the firm is
involved in the preparation of subject matter information which subsequently
becomes the subject matter information of an assurance engagement. Examples of
non-assurance services that might create such self-review threats when providing
services related to the subject matter information of an assurance engagement
include:
• Developing and preparing prospective information and subsequently issuing an
assurance report on this information.
• Performing a valuation that is related to or forms part of the subject matter infor-
mation of an assurance engagement.
• Designing, developing, implementing, operating, maintaining, monitoring, up-
dating or upgrading IT systems or IT controls and subsequently undertaking an
assurance engagement on a statement or report prepared about the IT systems or
IT controls.
• Designing, developing, implementing, operating, maintaining, monitoring, up-
dating or upgrading IT systems and subsequently issuing an assurance report on
subject matter information, such as elements of non-financial information, that
is prepared from information generated by such IT systems.
Assurance clients that are public interest entities
950.12 A1 Expectations about a firm’s independence are heightened when an assurance engage-
ment is undertaken by a firm for a public interest entity and the results of that engage-
ment will be:
(a) Made available publicly, including to shareholders and other stakeholders; or
(b) Provided to an entity or organisation established by law or regulation to over-
see the operation of a business sector or activity.
Consideration of these expectations forms part of the reasonable and informed third
party test applied when determining whether to provide a non-assurance service to
an assurance client.
950.12 A2 If a self-review threat exists in relation to an engagement undertaken in the circum-
stances described in paragraph 950.11 A1 (b), the firm is encouraged to disclose the
existence of that self-review threat and the steps taken to address it to the party en-
gaging the firm or those charged with governance of the assurance client and to the
entity or organisation established by law or regulation to oversee the operation of a
business sector or activity to which the results of the engagement will be provided.
Addressing Threats
950.13 A1 Paragraphs 120.10 to 120.10 A2 include a requirement and application material that
are relevant when addressing threats to independence, including a description of
safeguards.
950.13 A2 Threats to independence created by providing a non-assurance service or multiple
services to an assurance client vary depending on facts and circumstances of the
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 219

assurance engagement and the nature of the service. Such threats might be addressed
by applying safeguards or by adjusting the scope of the proposed service.
950.13 A3 Examples of actions that might be safeguards to address such threats include:
• Using professionals who are not assurance team members to perform the service.
• Having an appropriate reviewer who was not involved in providing the service
review the assurance work or service performed.
950.13 A4 Safeguards might not be available to reduce the threat created by providing a non-
assurance service to an assurance client to an acceptable level. In such a situation,
the application of the conceptual framework requires the firm to:
(a) Adjust the scope of the proposed service to eliminate the circumstances that
are creating the threat;
(b) Decline or end the service that creates the threat that cannot be eliminated or
reduced to an acceptable level; or
(c) End the assurance engagement.

SECTION 990
REPORTS THAT INCLUDE A RESTRICTION ON USE AND
DISTRIBUTION (ASSURANCE ENGAGEMENTS OTHER THAN
AUDIT AND REVIEW ENGAGEMENTS)
Introduction
990.1 Firms are required to comply with the fundamental principles, be independent and
apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats to independence.
990.2 This section sets out certain modifications to Part 4B which are permitted in certain
circumstances involving assurance engagements where the report includes a restric-
tion on use and distribution. In this section, an engagement to issue a restricted use
and distribution assurance report in the circumstances set out in paragraph R990.3
is referred to as an “eligible assurance engagement.”

Requirements and Application Material

General
R990.3 When a firm intends to issue a report on an assurance engagement which includes
a restriction on use and distribution, the independence requirements set out in Part
4B shall be eligible for the modifications that are permitted by this section, but only
if:
(a) The firm communicates with the intended users of the report regarding the
modified independence requirements that are to be applied in providing the
service; and
(b) The intended users of the report understand the purpose, subject matter infor-
mation and limitations of the report and explicitly agree to the application of
the modifications.
990.3 A1 The intended users of the report might obtain an understanding of the purpose, sub-
ject matter information, and limitations of the report by participating, either directly,
or indirectly through a representative who has authority to act for the intended users,
in establishing the nature and scope of the engagement. In either case, this par-
ticipation helps the firm to communicate with intended users about independence
ET – 220 SAICA Student Handbook 2024/2025

matters, including the circumstances that are relevant to applying the conceptual
framework. It also allows the firm to obtain the agreement of the intended users to
the modified independence requirements.
R990.4 Where the intended users are a class of users who are not specifically identifiable
by name at the time the engagement terms are established, the firm shall subsequently
make such users aware of the modified independence requirements agreed to by
their representative.
990.4 A1 For example, where the intended users are a class of users such as lenders in a
syndicated loan arrangement, the firm might describe the modified independence
requirements in an engagement letter to the representative of the lenders. The repre-
sentative might then make the firm’s engagement letter available to the members of
the group of lenders to meet the requirement for the firm to make such users aware
of the modified independence requirements agreed to by the representative.
R990.5 When the firm performs an eligible assurance engagement, any modifications to
Part 4B shall be limited to those modifications set out in paragraphs R990.7 and
R990.8.
R990.6 If the firm also issues an assurance report that does not include a restriction on use
and distribution for the same client, the firm shall apply Part 4B to that assurance
engagement.

Financial Interests, Loans and Guarantees, Close Business, Family and Personal
Relationships
R990.7 When the firm performs an eligible assurance engagement:
(a) The relevant provisions set out in Sections 910, 911, 920, 921, 922 and 924
need apply only to the members of the engagement team, and their immediate
and close family members;
(b) The firm shall identify, evaluate and address any threats to independence cre-
ated by interests and relationships, as set out in Sections 910, 911, 920, 921,
922 and 924, between the assurance client and the following assurance team
members;
(i) Those who provide consultation regarding technical or industry specific
issues, transactions or events; and
(ii) Those who perform an engagement quality review, or a review consist-
ent with the objective of an engagement quality review, for the engage-
ment; and
(c) The firm shall evaluate and address any threats that the engagement team has
reason to believe are created by interests and relationships between the assur-
ance client and others within the firm who can directly influence the outcome
of the assurance engagement, as set out in Sections 910, 911, 920, 921, 922
and 924.
990.7 A1 Others within the firm who can directly influence the outcome of the assurance
engagement include those who recommend the compensation, or who provide direct
supervisory, management or other oversight, of the assurance engagement partner
in connection with the performance of the assurance engagement.
R990.8 When the firm performs an eligible assurance engagement, the firm shall not hold
a material direct or a material indirect financial interest in the assurance client.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 221

Effective Date
The Code is effective.

CHANGES TO THE CODE – TAX PLANNING

AND RELATED SERVICES
CONTENTS

Page
SECTION 280 ....................................................................................................................... 221
TAX PLANNING ACTIVITIES .......................................................................................... 221
Introduction...................................................................................................................... 221
Requirements and Application Material .......................................................................... 221
SECTION 380 ....................................................................................................................... 230
TAX PLANNING SERVICES ............................................................................................. 230
Introduction...................................................................................................................... 230
Requirements and Application Material .......................................................................... 230
SECTION 321 ....................................................................................................................... 239
EFFECTIVE DATE .............................................................................................................. 240

PART 2 – PROFESSIONAL ACCOUNTANTS IN BUSINESS

[Section 280 will be added after paragraph 270.4 A1]

SECTION 280
TAX PLANNING ACTIVITIES
Introduction
280.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
280.2 Performing tax planning activities might create self-interest, self-review, advocacy
or intimidation threats to compliance with the fundamental principles.
280.3 This section sets out requirements and application material relevant to applying the
conceptual framework in relation to the performance of tax planning activities. This
section also requires a professional accountant to comply with relevant tax laws and
regulations when performing such activities.

Requirements and Application Material

General
Professional Accountants’ Public Interest Role in Relation to Tax Planning Activities
280.4 A1 Professional accountants play an important role in tax planning by contributing their
expertise and experience to assist employing organisations in meeting their tax
ET – 222 SAICA Student Handbook 2024/2025

planning goals while complying with tax laws and regulations. In doing so, account-
ants help to facilitate a more efficient and effective operation of a jurisdiction’s tax
system, which is in the public interest.
280.4 A2 Employing organisations are entitled to organise their affairs for tax planning pur-
poses. While there are a variety of ways to achieve such purposes, employing organ-
isations have a responsibility to pay taxes as determined by the relevant tax laws and
regulations. In this regard, professional accountants’ role is to use their expertise and
experience to assist their employing organisations in achieving their tax planning
goals and meeting their tax obligations. However, when accountants provide such
assistance, it might involve certain tax minimisation arrangements that, although
not prohibited by tax laws and regulations, might create threats to compliance with
the fundamental principles.
280.4 A3 It is ultimately for a tribunal, court or other appropriate adjudicative body to deter-
mine whether a tax planning arrangement complies with the relevant tax laws and
regulations.
Description of Tax Planning Activities
280.5 A1 Tax planning activities are advisory activities designed to assist an employing
organisation in planning or structuring its affairs in a tax-efficient manner.
280.5 A2 Tax planning activities cover a broad range of topics or areas. Examples of such
activities include:
• Advising management on structuring the employing organisation’s international
operations to minimise its overall taxes.
• Advising on the structuring of transfer pricing arrangements, taking into account
tax-related transfer pricing guidelines.
• Advising management on the utilisation of losses in a tax-efficient manner for
the employing organisation.
• Advising the employing organisation on the structuring of its capital distribution
strategy in a tax-efficient manner.
• Advising management on structuring the employing organisation’s compen-
sation strategy for senior executives to optimise the tax benefits for the employ-
ing organisation.
• Advising a non-profit employing organisation on how to structure its business
to avoid breaching its non-profit status.
• Advising management on structuring the employing organisation’s investments
to take advantage of tax incentives offered by jurisdictions or localities.
280.5 A3 Tax planning activities do not include activities that are generally referred to as tax
compliance or tax preparation, which are activities to assist the employing organ-
isation in fulfilling its filing, reporting, payment and other obligations under tax
laws and regulations. However, if a tax activity comprises both tax planning and tax
compliance, the portion that relates to tax planning is covered by this section.
280.5 A4 This section applies regardless of the nature of the employing organisation, includ-
ing whether it is a public interest entity.

Related Activities
280.6 A1 There might be circumstances where a professional accountant is involved in per-
forming a related activity for an employing organisation that is based on or linked
to a tax planning arrangement developed by a third-party provider. In such circum-
stances, the provisions of this section apply to the underlying tax planning
arrangement.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 223

280.6 A2 Examples of such related activities include:

• Assisting the employing organisation in resolving a dispute with the tax author-
ity on the tax planning arrangement
• Representing the employing organisation in administrative or court proceedings
regarding the tax planning arrangement.
• Implementing the tax planning arrangement for the employing organisation.
• Advising the employing organisation on an acquisition where the valuation
depends on the tax planning arrangement established by the target.

Compliance with Laws and Regulations

280.7 A1 This section does not address tax evasion, which is illegal.

Anti-avoidance Laws and Regulations

R280.8 Where there are laws and regulations, including those that might be referred to as
anti-avoidance rules, that limit or prohibit certain tax planning arrangements, a pro-
fessional accountant shall obtain an understanding of those laws and regulations and
advise the employing organisation to comply with them when performing tax plan-
ning activities.

Non-compliance with Tax Laws and Regulations

280.8 A1 If, in the course of performing a tax planning activity, a professional accountant
becomes aware of tax evasion or suspected tax evasion, or other non-compliance or
suspected non-compliance with tax laws and regulations by an employing organ-
isation, management, those charged with governance or other individuals working
for or under the direction of the employing organisation, the requirements and appli-
cation material set out in Section 260 apply.

Responsibilities of Management and Those Charged with Governance of the Employing

Organisation
280.9 A1 In relation to tax planning, management, with the oversight of those charged with
governance, has a number of responsibilities, including:
• Ensuring that the employing organisation’s tax affairs are conducted in accord-
ance with the relevant tax laws and regulations.
• Maintaining all the books and records and implementing the systems of internal
control necessary to enable the employing organisation to fulfil its tax com-
pliance obligations.
• Engaging experts to advise on relevant aspects of the tax planning arrangement.
• Deciding whether to accept and implement the professional accountant’s recom-
mendation or advice on a tax planning arrangement.
• Authorising the submission of the employing organisation’s tax returns and
dealing with the relevant tax authorities in a timely manner.
• Making such disclosures to the relevant tax authorities as might be required by
tax laws and regulations or as might be necessary to support a tax position,
including details of any tax planning arrangements.
• Making appropriate disclosure of tax strategy, policies or other tax-related
matters in the financial statements or other relevant public documents in accord-
ance with applicable reporting requirements.
• Ensuring that the employing organisation’s tax planning arrangements are con-
sistent with any publicly disclosed tax strategy or policies.
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Responsibilities of All Professional Accountants

R280.10 As part of performing a tax planning activity for an employing organisation, the pro-
fessional accountant shall obtain an understanding of the nature of the tax planning
activity, including:
(a) The purpose, facts and circumstances of the tax planning arrangement; and
(b) The relevant tax laws and regulations.
280.11 A1 A professional accountant is expected to apply professional competence and due
care in accordance with Subsection 113 when performing a tax planning activity.
The accountant is also expected to have an inquiring mind and exercise professional
judgment in accordance with Section 120 when considering the specific facts and
circumstances relating to the tax planning activity.

Basis for Recommending or Otherwise Advising on a Tax Planning Arrangement

R280.12 A professional accountant shall recommend or otherwise advise on a tax planning
arrangement for an employing organisation only if the accountant has determined
that there is a credible basis in laws and regulations for the arrangement.
280.12 A1 The determination of whether there is a credible basis involves the exercise of pro-
fessional judgment by the professional accountant. This determination will vary from
jurisdiction to jurisdiction based on the relevant laws and regulations at the time.
280.12 A2 If the professional accountant determines that the tax planning arrangement does not
have a credible basis in laws and regulations, paragraph R280.12 does not preclude
the accountant from explaining to the accountant’s immediate superior or other
responsible individual within the employing organisation the accountant’s rationale
for the determination or advising on an alternative arrangement that has a credible
basis.
280.12 A3 Paragraph R280.12 also does not preclude the professional accountant from assist-
ing the employing organisation to remediate or rectify a tax planning arrangement
which lacks a credible basis. Such type of activity is a related activity as described
in paragraphs 280.6 A1 and A2. This includes, for example:
• Assisting the employing organisation to restructure a tax planning arrangement
to achieve a credible basis as part of a tax dispute resolution activity.
• Agreeing with the employing organisation appropriate changes to the tax plan-
ning arrangement to achieve a credible basis as part of representing the employ-
ing organisation in administrative or court proceedings.
280.12 A4 Examples of actions that a professional accountant might take to determine that
there is a credible basis in relation to a particular tax planning arrangement include:
• Reviewing the relevant facts and circumstances, including the economic purpose
and substance of the arrangement.
• Assessing the reasonableness of any assumptions.
• Reviewing the relevant tax legislation.
• Reviewing legislative proceedings that discuss the intent of the relevant tax
legislation.
• Reviewing relevant literature such as court decisions, professional or industry
journals, and tax authority rulings or guidance.
• Considering whether the basis used for the proposed arrangement is an estab-
lished practice that has not been challenged by the relevant tax authorities.
• Considering how likely the proposed arrangement would be accepted by the
relevant tax authorities if all the relevant facts and circumstances were disclosed.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 225

• Consulting with legal counsel or other experts within or outside the employing
organisation regarding what a reasonable interpretation of the relevant tax laws
and regulations might be.
• Consulting with the relevant tax authorities, where applicable.
R280.13 If the professional accountant becomes aware of circumstances that might impact
the previous determination of the credible basis, the accountant shall re-assess the
validity of that basis.

Consideration of the Overall Tax Planning Recommendation or Advice

R280.14 In addition to determining that there is a credible basis for the tax planning arrange-
ment, the professional accountant shall exercise professional judgment and consider
the reputational, commercial and wider economic consequences that could arise
from the way stakeholders might view the arrangement.
280.14 A1 The reputational and commercial consequences might relate to personal or business
implications to the employing organisation or implications to the reputation of the
employing organisation and the profession from a prolonged dispute with the rele-
vant tax or other authorities. The implications to the employing organisation might
involve adverse publicity, costs, fines or penalties, loss of management time over
a significant period, and potential adverse consequences for the employing organ-
isation.
280.14 A2 An awareness of the wider economic consequences might take into account the pro-
fessional accountant’s general understanding of the current economic environment
and the impact of the tax planning arrangement on the tax base of the jurisdiction,
or the relative impacts of the arrangement on the tax bases of multiple jurisdictions,
where the employing organisation operates.
R280.15 If, having considered the matters set out in paragraph R280.14, the professional
accountant decides not to recommend or otherwise advise on a tax planning arrange-
ment that the employing organisation would like to pursue, the accountant shall
inform management and, if appropriate, those charged with governance, of this and
explain the basis for the accountant’s conclusion.

Tax Planning Arrangements Involving Multiple Jurisdictions

280.16 A1 There might be circumstances where a professional accountant becomes aware that
an employing organisation is obtaining a tax benefit from accounting for the same
transaction in more than one jurisdiction, especially if there is no tax treaty between
the jurisdictions. In such circumstances, while the employing organisation might be
in compliance with the tax laws and regulations of each jurisdiction, the accountant
might advise management to disclose to the relevant tax authorities the particular
facts and circumstances and the tax benefits derived from the transaction in the dif-
ferent jurisdictions.
280.16 A2 Relevant factors the professional accountant might consider in determining whether
to make such disclosure include:
• The significance of the tax benefits in the relevant jurisdictions.
• Stakeholders’ perceptions of the employing organisation if the facts and circum-
stances were known to the stakeholders.
• Whether there are globally or nationally accepted principles or practices regard-
ing disclosure of similar situations to the tax authorities in the relevant juris-
dictions.
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Circumstances of Uncertainty
280.17 A1 In determining whether there is a credible basis for the tax planning arrangement, a
professional accountant might encounter circumstances giving rise to uncertainty as
to whether a proposed tax planning arrangement will be in compliance with the rele-
vant tax laws and regulations. Such uncertainty makes it more challenging for the
accountant to determine that there is a credible basis in laws and regulations for the
tax planning arrangement and might, therefore, create threats to compliance with
the fundamental principles.
280.17 A2 Circumstances that might give rise to uncertainty include:
• Difficulty in establishing an adequate factual basis.
• Difficulty in establishing an adequate basis of assumptions.
• Lack of clarity in the tax laws and regulations and their interpretation, including:
o Gaps in the tax laws and regulations.
o Challenges to previous court rulings.
o Conflicting tax laws and regulations in different jurisdictions in circum-
stances involving cross-border transactions.
o Innovative business models not addressed by the current tax laws and
regulations.
o Recent court or tax authority rulings or positions that cast doubt on similar
tax planning arrangements.
o Complexity in interpreting or applying the tax laws and regulations from a
technical or legal point of view.
o Lack of a legal precedent, ruling or position.
• Lack of clarity regarding the economic purpose and substance of the tax plan-
ning arrangement.
• Lack of clarity about the ultimate beneficiaries of the tax planning arrangement.
R280.18 Where there is uncertainty as to whether a tax planning arrangement is or will be in
compliance with the relevant tax laws and regulations, a professional accountant
shall discuss the uncertainty with management and, if appropriate, those charged
with governance.
280.18 A1 The discussion serves a number of purposes, including:
• Explaining the professional accountant’s assessment about how likely the rele-
vant tax authorities are to have a view that supports the tax planning arrangement
where there is a lack of clarity in the interpretation of the relevant tax laws and
regulations.
• Considering any assumptions made when establishing the basis on which the tax
planning advice is provided.
• Obtaining any additional information from management and, if appropriate, those
charged with governance that might reduce the uncertainty.
• Discussing any reputational, commercial or wider economic consequences in
pursuing the tax planning arrangement.
• Discussing potential courses of action to mitigate the possibility of adverse con-
sequences for the employing organisation, including consideration of disclosure
to the relevant tax authorities.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 227

Potential Threats Arising from Performing a Tax Planning Activity

280.19 A1 Performing a tax planning activity for an employing organisation might create a
self-interest, self-review, advocacy or intimidation threat. For example:
• A self-review threat might be created when a professional accountant has recently
performed a valuation activity for the employing organisation for tax purposes,
the output of which is then relied upon or is a key input to a tax planning activity
for the employing organisation.
• A self-interest threat might be created when a professional accountant’s career
advancement prospects depend on developing a creative tax planning arrange-
ment for which the interpretation of the relevant tax laws and regulations is
unclear.
• A self-interest threat might be created when a professional accountant partici-
pates in an incentive compensation scheme impacted by the accountant’s design
of a tax planning arrangement.
• A self-interest threat might be created when a professional accountant is in pos-
session of confidential information obtained from the accountant’s involvement
in formulating or drafting tax policy, laws or regulations for a government agency
and the confidential information would be valuable in advising the accountant’s
employing organisation in its tax planning arrangements.
• Self-interest and advocacy threats might be created when a professional account-
ant advocates an employing organisation’s position in a tax planning arrange-
ment which the accountant previously advised on before a tax authority when
there are indications that the arrangement might not have a credible basis in laws
and regulations.
• Self-interest and intimidation threats might be created when a dominant owner
or leader of the employing organisation exerts significant influence over the
design of a particular tax arrangement, in a way that might influence the account-
ant’s determination that there is a credible basis for the arrangement in laws and
regulations.
• Self-interest and intimidation threats might be created when a professional
accountant faces potential dismissal over the position the employing organisation
is insisting on pursuing regarding a tax planning arrangement.
280.19 A2 Factors that are relevant in evaluating the level of such threats include:
• The degree of transparency regarding the underlying business transaction or
circumstances, including, where applicable, the identity of the ultimate
beneficiaries.
• Whether the tax planning arrangement has a clear economic purpose and sub-
stance based on the underlying business transaction or circumstances.
• The nature and complexity of the underlying business transaction or circum-
stances.
• The complexity or clarity of the relevant tax laws and regulations.
• Whether the professional accountant knows, or has reason to believe, that the tax
planning arrangement would be contrary to the intent of the relevant tax
legislation.
• The number of jurisdictions involved and the nature of their tax regimes.
• The extent of the professional accountant’s expertise and experience in the rele-
vant tax areas.
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• The significance of the potential tax savings.

• The nature and significance of any incentives offered to the professional account-
ant to develop the arrangement.
• The extent to which the professional accountant is aware that the tax planning
arrangement reflects an established practice that has not been challenged by the
relevant tax authorities.
• Whether there is pressure being exerted on the professional accountant.
• The degree of urgency in implementing the tax planning arrangement.
• Whether it is a tax planning arrangement used for multiple clients with little
modification for the employing organisation’s specific circumstances.
• The organisational culture of the employing organisation.
280.19 A3 Examples of actions that might eliminate such threats include:
• Advising the employing organisation to structure the tax planning arrangement
so that it is consistent with an existing interpretation or ruling issued by the rele-
vant tax authorities.
• Obtaining an advance ruling from the relevant tax or other authorities, where
possible.
• Advising management not to pursue the tax planning arrangement.
280.19 A4 Examples of actions that might be safeguards to address such threats include:
• Establishing the identity of the ultimate beneficiaries.
• Advising the employing organisation to structure the tax planning arrangement
so that it better aligns with the underlying economic purpose and substance.
• Advising the employing organisation to structure the tax planning arrangement
based on an established practice that is currently not subject to challenge by the
relevant tax authorities or is known to have been accepted by the relevant tax
authorities.
• Consulting with a legal counsel or other expert within or outside the employing
organisation in the relevant tax areas.
• Obtaining an opinion from an appropriately qualified professional (such as legal
counsel or another professional accountant) regarding the interpretation of the
relevant tax laws and regulations as applied to the particular circumstances.
• Having a tax expert, who is not otherwise involved in the tax planning activity,
review any work performed or conclusions reached by the professional account-
ant with respect to the tax planning arrangement.
• Having the employing organisation provide full transparency about the tax plan-
ning arrangement to the relevant tax authorities, including the goals, business
and legal aspects, and ultimate beneficiaries of the tax planning arrangement.
280.19 A5 Examples of steps a professional accountant might take to establish the identity of
the ultimate beneficiaries include:
• Making inquiries of management and others within or outside the employing
organisation, having regard to the principle of confidentiality.
• Reviewing the employing organisation’s tax records, financial statements and
other relevant corporate records.
• Researching relevant public records.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 229

Communication of Basis of the Tax Planning Recommendation or Advice

R280.20 A professional accountant shall explain to management and, if appropriate, those
charged with governance the basis on which the accountant recommended or other-
wise advised on a tax planning arrangement to the employing organisation.

Disagreement on the Tax Planning Arrangement

R280.21 If the professional accountant disagrees with the accountant’s immediate superior
or other responsible individual within the employing organisation that a tax plan-
ning arrangement that the employing organisation would like to pursue has a cred-
ible basis, the accountant shall:
(a) Inform the immediate superior or other responsible individual within the
employing organisation, and if appropriate, those charged with governance,
of the accountant’s assessment;
(b) Communicate to them the potential consequences of pursuing the arrange-
ment; and
(c) Advise them not to pursue the arrangement.
R280.22 If the immediate superior or other responsible individual within the employing
organisation decides to pursue the tax planning arrangement, despite the professional
accountant’s advice to the contrary, the accountant shall consider:
(a) Taking steps to have the details of the arrangement and the difference of views
communicated with the next higher level of authority within the employing
organisation and, if appropriate, those charged with governance;
(b) Advising the employing organisation to make full disclosure of the arrange-
ment to the relevant tax authorities; and
(c) Communicating the details of the arrangement and the difference of views to
the employing organisation’s external auditor, if any.
280.22 A1 In light of the response of the immediate superior or other responsible individual
within the employing organisation to the professional accountant’s advice, the
accountant might also consider whether there is a need to resign from the employing
organisation.
280.22 A2 Many employing organisations have established protocols and procedures regard-
ing how to raise ethical or other concerns internally. These protocols and procedures
include, for example, an ethics policy or internal whistle-blowing mechanism. Such
protocols and procedures might allow matters to be reported anonymously through
designated channels.

Documentation
280.23 A1 When performing a tax planning activity, a professional accountant is encouraged
to document on a timely basis:
• The purpose, circumstances and substance of the tax planning arrangement.
• The identity of the ultimate beneficiaries.
• The nature of any uncertainties.
• The accountant’s analysis, the courses of action considered, the judgments made,
and the conclusions reached in advising the employing organisation on develop-
ing the tax planning arrangement.
• The results of discussions with the accountant’s immediate superior and appro-
priate levels of management, those charged with governance and other parties.
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• The response of the accountant’s immediate superior, management and, where

applicable, those charged with governance to the accountant’s advice.
• Any disagreement with the accountant’s immediate superior, management and,
where applicable, those charged with governance.
280.23 A2 Preparing such documentation assists the accountant to:
• Consider the reputational, commercial and wider economic consequences that
could arise from the way stakeholders might view the arrangement.
• Develop the accountant’s analysis of the facts, circumstances, relevant tax laws
and regulations and any assumptions made or changed.
• Record the basis of the professional judgments at the time they were made or
changed.
• Support the position if the tax planning arrangement is challenged by the rele-
vant tax authorities.
• Demonstrate that the accountant has complied with the provisions in this section.

PART 3 – PROFESSIONAL ACCOUNTANTS IN PUBLIC

PRACTICE
[Section 380 will be added after paragraph 360.40 A1]

SECTION 380
TAX PLANNING SERVICES
Introduction
380.1 Professional accountants are required to comply with the fundamental principles
and apply the conceptual framework set out in Section 120 to identify, evaluate and
address threats.
380.2 Providing tax planning services might create self-interest, self-review, advocacy, or
intimidation threats to compliance with the fundamental principles.
380.3 This section sets out requirements and application material relevant to applying the
conceptual framework in relation to the provision of tax planning services. This
section also requires a professional accountant to comply with relevant tax laws and
regulations when providing such services.

Requirements and Application Material

General
Professional Accountants’ Public Interest Role in Relation to Tax Planning Services
380.4 A1 Professional accountants play an important role in tax planning by contributing their
expertise and experience to assist clients in meeting their tax planning goals while
complying with tax laws and regulations. In doing so, accountants help to facilitate
a more efficient and effective operation of a jurisdiction’s tax system, which is in
the public interest.
380.4 A2 Clients are entitled to organise their affairs for tax planning purposes. While there
are a variety of ways to achieve such purposes, clients have a responsibility to pay
taxes as determined by the relevant tax laws and regulations. In this regard, pro-
fessional accountants’ role is to use their expertise and experience to assist their
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 231

clients in achieving their tax planning goals and meeting their tax obligations. How-
ever, when accountants provide such assistance, it might involve certain tax minim-
isation arrangements that, although not prohibited by tax laws and regulations, might
create threats to compliance with the fundamental principles.
380.4 A3 It is ultimately for a tribunal, court or other appropriate adjudicative body to deter-
mine whether a tax planning arrangement complies with the relevant tax laws and
regulations.

Description of Tax Planning Services

380.5 A1 Tax planning services are advisory services designed to assist a client, whether an
individual or an entity, in planning or structuring the client’s affairs in a tax-efficient
manner.
380.5 A2 Tax planning services cover a broad range of topics or areas. Examples of such
services include:
• Advising an individual to structure their tax affairs to achieve investment, retire-
ment or estate planning goals.
• Advising an individual business owner on structuring their ownership and
income from the business to minimise their overall taxes.
• Advising an entity on structuring its international operations to minimise its
overall taxes.
• Advising on the structuring of transfer pricing arrangements, taking into account
tax-related transfer pricing guidelines.
• Advising on the utilisation of losses in a tax-efficient manner.
• Advising an entity on the structuring of its capital distribution strategy in a tax-
efficient manner.
• Advising an entity on structuring its compensation strategy for senior executives
to optimise the tax benefits.
380.5 A3 Tax planning services do not include services that are generally referred to as tax
compliance or tax preparation, which are services to assist the client in fulfilling the
client’s filing, reporting, payment and other obligations under tax laws and regu-
lations. However, if a tax service comprises both tax planning and tax compliance,
the portion that relates to tax planning is covered by this section.
380.5 A4 This section applies regardless of the nature of the client, including whether it is a
public interest entity.

Related Services
380.6 A1 There might be circumstances where a professional accountant is engaged to pro-
vide a related service to a client that is based on or linked to a tax planning arrange-
ment developed by the client or a third-party provider. In such circumstances, the
provisions of this section apply to the underlying tax planning arrangement.
380.6 A2 Examples of such related services include:
• Assisting the client in resolving a dispute with the tax authority on the tax plan-
ning arrangement.
• Representing the client in administrative or court proceedings regarding the tax
planning arrangement.
• Implementing the tax planning arrangement for the client.
• Advising the client on an acquisition where the valuation depends on the tax
planning arrangement established by the target.
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• Advising the client on estate planning based on a tax planning arrangement

established for the client’s business.

Compliance with Laws and Regulations

380.7 A1 This section does not address tax evasion, which is illegal.
Anti-avoidance Laws and Regulations
R380.8 Where there are laws and regulations, including those that might be referred to as
anti-avoidance rules, that limit or prohibit certain tax planning arrangements, a pro-
fessional accountant shall obtain an understanding of those laws and regulations and
advise the client to comply with them when providing tax planning services.

Non-compliance with Tax Laws and Regulations

380.8 A1 If, in the course of providing tax planning services, a professional accountant
becomes aware of tax evasion or suspected tax evasion, or other non-compliance or
suspected non-compliance with tax laws and regulations by a client, management,
those charged with governance or other individuals working for or under the dir-
ection of the client, the requirements and application material set out in Section 360
apply.

Responsibilities of Management and Those Charged with Governance

380.9 A1 In relation to tax planning, management, with the oversight of those charged with
governance, has a number of responsibilities, including:
• Ensuring that the client’s tax affairs are conducted in accordance with the rele-
vant tax laws and regulations.
• Maintaining all the books and records and implementing the systems of internal
control necessary to enable the client to fulfil its tax compliance obligations.
• Making available all the facts and other relevant information needed to enable
the professional accountant to perform the tax planning service.
• Engaging experts to advise on relevant aspects of the tax planning arrangement.
• Deciding whether to accept and implement the professional accountant’s recom-
mendation or advice on a tax planning arrangement.
• Authorising the submission of the client’s tax returns and ensuring that any
matters raised by the relevant tax authorities are addressed in a timely manner.
• Making such disclosures to the relevant tax authorities as might be required by
tax laws and regulations or as might be necessary to support a tax position,
including details of any tax planning arrangements.
• Making appropriate disclosure of tax strategy, policies or other tax-related
matters in the financial statements or other relevant public documents in accord-
ance with applicable reporting requirements.
• Ensuring that the client’s tax planning arrangements are consistent with any pub-
licly disclosed tax strategy or policies.

Responsibilities of All Professional Accountants

R380.10 As part of providing a tax planning service, a professional accountant shall obtain
an understanding of the nature of the engagement, including:
(a) Knowledge and understanding of the client, its owners, management and those
charged with governance, and its business activities;
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 233

(b) The purpose, facts and circumstances of the tax planning arrangement; and
(c) The relevant tax laws and regulations.
380.10 A1 The requirements and application material in Section 320 apply with respect to
client and engagement acceptance.
380.10 A2 A professional accountant might be engaged to provide a second opinion on a tax
planning arrangement. In addition to the provisions in this section, the requirements
and application material in Section 321 also apply in such circumstances.
380.11 A1 A professional accountant is expected to apply professional competence and due
care in accordance with Subsection 113 when providing a tax planning service. The
accountant is also expected to have an inquiring mind and exercise professional
judgment in accordance with Section 120 when considering the specific facts and
circumstances relating to the tax planning service.

Basis for Recommending or otherwise Advising on a Tax Planning Arrangement

R380.12 A professional accountant shall recommend or otherwise advise on a tax planning
arrangement to a client only if the accountant has determined that there is a credible
basis in laws and regulations for the arrangement.
380.12 A1 The determination of whether there is a credible basis involves the exercise of pro-
fessional judgment by the professional accountant. This determination will vary from
jurisdiction to jurisdiction based on the relevant laws and regulations at the time.
380.12 A2 If the professional accountant determines that the tax planning arrangement does
not have a credible basis in laws and regulations, paragraph R380.12 does not pre-
clude the accountant from explaining to the client the accountant’s rationale for the
determination or advising on an alternative arrangement that has a credible basis.
380.12 A3 Paragraph R380.12 also does not preclude the professional accountant from being
engaged by the client, or otherwise assisting the client, to remediate or rectify a tax
planning arrangement which lacks a credible basis. Such type of service is a related
service as described in paragraphs 380.6 A1 and A2. This includes, for example:
• Assisting the client to restructure a tax planning arrangement to achieve a cred-
ible basis as part of a tax dispute resolution service.
• Agreeing with the client appropriate changes to the tax planning arrangement to
achieve a credible basis as part of representing the client in administrative or
court proceedings.
380.12 A4 Examples of actions that a professional accountant might take to determine that
there is a credible basis in relation to a particular tax planning arrangement include:
• Reviewing the relevant facts and circumstances, including the economic pur-
pose and substance of the arrangement.
• Assessing the reasonableness of any assumptions.
• Reviewing the relevant tax legislation.
• Reviewing legislative proceedings that discuss the intent of the relevant tax
legislation.
• Reviewing relevant literature such as court decisions, professional or industry
journals, and tax authority rulings or guidance.
• Considering whether the basis used for the proposed arrangement is an estab-
lished practice that has not been challenged by the relevant tax authorities.
• Considering how likely the proposed arrangement would be accepted by the
relevant tax authorities if all the relevant facts and circumstances were disclosed.
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• Consulting with legal counsel or other experts within or outside the professional
accountant’s firm regarding what a reasonable interpretation of the relevant laws
and regulations might be.
• Consulting with the relevant tax authorities, where applicable.
R380.13 If, during the course of the engagement, the professional accountant becomes aware
of circumstances that might impact the previous determination of the credible basis,
the accountant shall re-assess the validity of that basis.

Consideration of the Overall Tax Planning Recommendation or Advice

R380.14 In addition to determining that there is a credible basis for the tax planning arrange-
ment, the professional accountant shall exercise professional judgment and consider
the reputational, commercial and wider economic consequences that could arise
from the way stakeholders might view the arrangement.
380.14 A1 The reputational and commercial consequences might relate to personal or business
implications to the client or implications to the reputation of the client and the pro-
fession from a prolonged dispute with the relevant tax or other authorities. The
implications to the client might involve adverse publicity, costs, fines or penalties,
loss of management time over a significant period, and potential adverse conse-
quences for the client’s business.
380.14 A2 An awareness of the wider economic consequences might take into account the pro-
fessional accountant’s general understanding of the current economic environment
and the impact of the tax planning arrangement on the tax base of the jurisdiction,
or the relative impacts of the arrangement on the tax bases of multiple jurisdictions,
where the client operates.
R380.15 If, having considered the matters set out in paragraph R380.14, the professional
accountant decides not to recommend or otherwise advise on a tax planning arrange-
ment that the client would like to pursue, the accountant shall inform the client of
this and explain the basis for the accountant’s conclusion.

Tax Planning Arrangements Involving Multiple Jurisdictions

380.16 A1 There might be circumstances where a professional accountant becomes aware that
a client is obtaining a tax benefit from accounting for the same transaction in more
than one jurisdiction, especially if there is no tax treaty between the jurisdictions.
In such circumstances, while the client might be in compliance with the tax laws
and regulations of each jurisdiction, the accountant might advise the client to dis-
close to the relevant tax authorities the particular facts and circumstances and the
tax benefits derived from the transaction in the different jurisdictions.
380.16 A2 Relevant factors the professional accountant might consider in determining whether
to advise the client to make such disclosure include:
• The significance of the tax benefits in the relevant jurisdictions.
• Stakeholders’ perceptions of the client if the facts and circumstances were known
to the stakeholders.
• Whether there are globally or nationally accepted principles or practices regard-
ing disclosure of similar situations to the tax authorities in the relevant juris-
dictions.

Circumstances of Uncertainty
380.17 A1 In determining whether there is a credible basis for the tax planning arrangement, a
professional accountant might encounter circumstances giving rise to uncertainty as
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 235

to whether a proposed tax planning arrangement will be in compliance with the rele-
vant tax laws and regulations. Such uncertainty makes it more challenging for the
accountant to determine that there is a credible basis in laws and regulations for the
tax planning arrangement and might, therefore, create threats to compliance with the
fundamental principles.
380.17 A2 Circumstances that might give rise to uncertainty include:
• Difficulty in establishing an adequate factual basis.
• Difficulty in establishing an adequate basis of assumptions.
• Lack of clarity in the tax laws and regulations and their interpretation, including:
o Gaps in the tax laws and regulations.
o Challenges to previous court rulings.
o Conflicting tax laws and regulations in different jurisdictions in circum-
stances involving cross-border transactions.
o Innovative business models not addressed by the current tax laws and
regulations.
o Recent court or tax authority rulings or positions that cast doubt on similar
tax planning arrangements.
o Complexity in interpreting or applying the tax laws and regulations from a
technical or legal point of view.
o Lack of a legal precedent, ruling or position.
• Lack of clarity regarding the economic purpose and substance of the tax planning
arrangement.
• Lack of clarity about the ultimate beneficiaries of the tax planning arrangement.
R380.18 Where there is uncertainty as to whether a tax planning arrangement is or will be in
compliance with the relevant tax laws and regulations, a professional accountant
shall discuss the uncertainty with the client.
380.18 A1 The discussion serves a number of purposes, including:
• Explaining the professional accountant’s assessment about how likely the rele-
vant tax authorities are to have a view that supports the tax planning arrangement
where there is a lack of clarity in the interpretation of the relevant tax laws and
regulations.
• Considering any assumptions made when establishing the basis on which the tax
planning advice is provided.
• Obtaining any additional information from the client that might reduce the
uncertainty.
• Discussing any reputational, commercial or wider economic consequences in
pursuing the tax planning arrangement.
• Discussing potential courses of action to mitigate the possibility of adverse con-
sequences for the client, including consideration of disclosure to the relevant tax
authorities.

Potential Threats Arising from Providing a Tax Planning Service

380.19 A1 Providing a tax planning service to a client might create a self-interest, self-review,
advocacy or intimidation threat. For example:
• A self-review threat might be created when a professional accountant has recently
provided a valuation service to a client for tax purposes, the output of which is
then relied upon or is a key input to a tax planning service for the client.
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• A self-interest threat might be created when a professional accountant has a direct

financial interest in a client and the accountant is involved in designing a tax
planning arrangement that has an impact on the client’s financial situation.
• Self-interest and advocacy threats might be created when a professional account-
ant actively promotes a particular tax position a client should adopt.
• A self-interest threat might be created when a professional accountant is in pos-
session of confidential information obtained from the accountant’s involvement
in formulating or drafting tax policy, laws or regulations for a government agency
and the confidential information would be valuable to the accountant in advising
other clients on their tax planning arrangements.
• A self-interest threat might be created when a professional accountant accepts a
fee that might be perceived to be excessive for an engagement to develop a tax
planning arrangement for which the interpretation of the relevant tax laws and
regulations is uncertain or unclear.
• Self-interest and advocacy threats might be created when a professional account-
ant advocates a client’s position in a tax planning arrangement which the account-
ant previously advised on before a tax authority when there are indications that
the arrangement might not have a credible basis in laws and regulations.
• Self-interest and intimidation threats might be created when a professional
accountant provides services to a client who exerts significant influence over the
design of a particular tax arrangement, in a way that might influence the account-
ant’s determination that there is a credible basis for the arrangement in laws and
regulations.
• Self-interest and intimidation threats might be created when a professional
accountant is threatened with dismissal from the engagement or the accountant’s
firm concerning the position a client is insisting on pursuing regarding a tax
planning arrangement.
380.19 A2 Factors that are relevant in evaluating the level of such threats include:
• The degree of transparency of the client, including, where applicable, the iden-
tity of the ultimate beneficiaries.
• Whether the tax planning arrangement has a clear economic purpose and sub-
stance based on the underlying business transaction or circumstances.
• The nature and complexity of the underlying business transaction or circum-
stances.
• The complexity or clarity of the relevant tax laws and regulations.
• Whether the professional accountant knows, or has reason to believe, that the
tax planning arrangement would be contrary to the intent of the relevant tax
legislation.
• The number of jurisdictions involved and the nature of their tax regimes.
• The extent of the professional accountant’s expertise and experience in the
relevant tax areas.
• The significance of the potential tax savings.
• The nature and amount of the fee for the tax planning service.
• The extent to which the professional accountant is aware that the tax planning
arrangement reflects an established practice that has not been challenged by the
relevant tax authorities.
• Whether there is pressure being exerted by the client or another party on the
professional accountant.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 237

• The degree of urgency in implementing the tax planning arrangement.

• Whether it is a tax planning arrangement used for multiple clients with little
modification for the client’s specific circumstances.
• The known previous behaviour or reputation of the client, including its organ-
isational culture.
380.19 A3 Examples of actions that might eliminate such threats include:
• Referring the client to an expert outside the professional accountant’s firm who
has the necessary expertise and experience to advise the client on the tax plan-
ning arrangement.
• Advising the client to structure the tax planning arrangement so that it is con-
sistent with an existing interpretation or ruling issued by the relevant tax author-
ities.
• Obtaining an advance ruling from the relevant tax or other authorities, where
possible.
• Advising the client not to pursue the tax planning arrangement.
380.19 A4 Examples of actions that might be safeguards to address such threats include:
• Establishing the identity of the ultimate beneficiaries.
• Advising the client to structure the tax planning arrangement so that it better
aligns with the underlying economic purpose and substance.
• Advising the client to structure the tax planning arrangement based on an estab-
lished practice that is currently not subject to challenge by the relevant tax
authorities or is known to have been accepted by the relevant tax authorities.
• Consulting with a legal counsel or other expert within or outside the professional
accountant’s firm in the relevant tax areas.
• Obtaining an opinion from an appropriately qualified professional (such as legal
counsel or another professional accountant) regarding the interpretation of the
relevant tax laws and regulations as applied to the particular circumstances.
• Having an appropriate reviewer, who is not otherwise involved in providing the
tax planning service, review any work performed or conclusions reached by the
professional accountant with respect to the tax planning arrangement.
• Having the client provide full transparency about the tax planning arrangement
to the relevant tax authorities, including the goals, business and legal aspects,
and ultimate beneficiaries of the tax planning arrangement.
380.19 A5 Examples of steps a professional accountant might take to establish the identity of
the ultimate beneficiaries include:
• Making inquiries of management and others within the client.
• Making inquiries of others within or outside the firm who have dealt with the
client, having regard to the principle of confidentiality.
• Reviewing the client’s tax records, financial statements and other relevant cor-
porate records.
• Making inquiries of registrars where the client or entities within its legal struc-
ture are incorporated concerning the relevant shareholders.
• Researching relevant public records.

Communication of Basis of the Tax Planning Recommendation or Advice

R380.20 A professional accountant shall explain the basis on which the accountant recom-
mended or otherwise advised on a tax planning arrangement to the client.
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Disagreement with the Client

R380.21 If the professional accountant disagrees that a tax planning arrangement that a client
would like to pursue has a credible basis, the accountant shall:
(a) Inform the client of the basis of the accountant’s assessment;
(b) Communicate to the client the potential consequences of pursuing the arrange-
ment; and
(c) Advise the client not to pursue the arrangement.
R380.22 If the client decides to pursue the tax planning arrangement despite the professional
accountant’s advice to the contrary, the accountant shall advise the client to:
(a) Communicate internally to the appropriate level of management the details of
the arrangement and the difference of views;
(b) Consider making full disclosure of the arrangement to the relevant tax author-
ities; and
(c) Consider communicating the details of the arrangement and the difference of
views to the external auditor, if any.
380.22 A1 As part of communicating the matters set out in paragraphs R380.21 and R380.22,
a professional accountant might consider it appropriate to raise the relevant matters
with those charged with governance of the client.
R380.23 In light of the client’s response to the professional accountant’s advice, the account-
ant shall consider whether there is a need to withdraw from the engagement and the
professional relationship.

Tax Planning Products or Arrangements Developed by a Third Party

R380.24 If a client engages a professional accountant to advise on a tax planning product or
arrangement developed by a third party, the accountant shall:
(a) Inform the client of any professional or business relationship the accountant
has with the third-party provider; and
(b) Apply the provisions in this section with respect to the tax planning product
or arrangement.
R380.25 If a professional accountant recommends or refers a client to a third-party provider
of tax planning services, the accountant shall inform the client of any professional
or business relationship the accountant has with the third-party provider.
380.25 A1 Where the professional accountant only recommends or refers a client to a third-
party provider of tax planning services, the provisions of this section do not apply.
380.25 A2 If a professional accountant receives a referral fee or commission from the third-
party provider, the provisions in Section 330 apply.

Documentation
380.26 A1 When providing a tax planning service, a professional accountant is encouraged to
document on a timely basis:
• The purpose, circumstances and substance of the tax planning arrangement.
• The identity of the ultimate beneficiaries.
• The nature of any uncertainties.
• The accountant’s analysis, the courses of action considered, the judgments
made, and the conclusions reached in advising the client on the tax planning
arrangement.
Code of Professional Conduct of the South African Institute of Chartered Accountants, 2024 Edition ET – 239

• The results of discussions with the client and other parties.

• The client’s response to the accountant’s advice.
• Any disagreement with the client.
380.26 A2 Preparing such documentation assists the accountant to:
• Consider the reputational, commercial and wider economic consequences that
could arise from the way stakeholders might view the arrangement.
• Develop the accountant’s analysis of the facts, circumstances, relevant tax laws
and regulations and any assumptions made or changed.
• Record the basis of the professional judgments at the time they were made or
changed.
• Support the position if the tax planning arrangement is challenged by the relevant
tax authorities.
• Demonstrate that the accountant has complied with the provisions in this section.

CONSEQUENTIAL AMENDMENTS TO THE CODE

PART 3 – PROFESSIONAL ACCOUNTANTS IN PUBLIC

PRACTICE
SECTION 321
SECOND OPINIONS
…
Requirements and Application Material
General
…
[Extant paragraph 321.3 A1 will be replaced by paragraph 321.3 A1 below]
321.3 A1 A professional accountant might be asked to provide a second opinion on the appli-
cation of tax laws and regulations, and accounting, auditing, reporting or other
standards or principles to (a) specific circumstances, or (b) transactions by or on
behalf of a company or an entity that is not an existing client. A threat, for example,
a self-interest threat to compliance with the principle of professional competence
and due care, might be created if the second opinion is not based on the same facts
that the existing or predecessor accountant or other service provider had, or is based
on inadequate evidence.
…
[Extant paragraph 321.3 A3 to R321.4 will be replaced by paragraph 321.3 A3 to R321.4 below]
321.3 A3 Examples of actions that might be safeguards to address such a self-interest threat
include:
• With the client’s permission, obtaining information from the existing or pre-
decessor accountant or other service provider.
• Describing the limitations surrounding any opinion in communications with the
client.
• Providing the existing or predecessor accountant or other service provider with
a copy of the opinion.
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When Permission to Communicate is Not Provided

R321.4 If an entity seeking a second opinion from a professional accountant will not permit
the accountant to communicate with the existing or predecessor accountant or other
service provider, the accountant shall determine whether the accountant may pro-
vide the second opinion sought.
…

EFFECTIVE DATE OF THE TAX PLANNING AND RELATED SERVICES

PROVISIONS
• Section 280 will be effective for tax planning activities beginning after June 30, 2025.
• Section 380 and the consequential amendments to Section 321 will be effective for tax plan-
ning services beginning after June 30, 2025.

Transitional Provision
For tax planning services or activities commenced before the above effective date, such services
or activities may be continued and be completed under the extant provisions of the Code.
Early adoption is permitted.