Code of Ethics relating to Fees - Relative Size and tax services to Audit Clients will be applicable from 1st Oct

S.

No.

Existing provision

Revised provision

Fees - Relative Size [Paragraphs 410.3 to R410.6]

1.

Disclosure is required where for two consecutive years, the gross annual professional fees from audit client

represent more than 15% of the total fees of the firm.

Differentiated disclosure requirements:-

For non Public Interest Entities (PIE)-

Disclosure is required where for two consecutive years, the gross annual professional fees from an audit client represent more than 40% of the total fees of the firm.

For public interest entities- Disclosure is required where for two consecutive years, the gross annual professional fees from an audit client represent more than 20% of the total fees of the firm.

2.

Exemption from applicability of the provision where total Fees received by Firm does not exceed 5 lacs of

rupees.

Exemption from applicability of the provision where total Fees received by Firm does not exceed 20 lacs of rupees.

3.

Exemption from the applicability of the provision in the case of audit of government Companies, public undertakings, nationalised banks, public financial institutions or where

appointments of auditors are made by the Government.

In addition to these categories, ‘Regulators’ has been added.

4.

Disclosure to Those Charge with Governance of audit client

Disclosure to the Institute

5.

Pre-Issuance review or Post issuance Review: Action to be taken to address the threat created due to

fees dependency as aforesaid.

Repealed

Tax Services to Audit Clients [Subsection 604]

6.

In case of Assistance in the resolution of Tax disputes, the term "Court" is explained as under: -

"What constitutes a "Court" depends on how tax proceedings are heard in India"

In case of Assistance in the resolution of Tax disputes, the term "Court" is explained as under: -

"For the purpose of this subsection, "Court" does not include a Tribunal".

Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in service

(Section 260)

7.

Applicable to all employees of listed entities

Applicable to Senior Professional

Accountants in service, being employees of listed entities.

8.

Senior professional accountants in service ("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 organization’s human, financial, technological, physical and intangible resources.

No Change.

It is further explained that the senior professional accountants refer to key managerial personnel.

Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in public practice

(Section 360)

9.

Applicable to Audit engagement of all listed entitie 

Applicable to Audit engagements of entities the shares of which are listed on recognized stock exchange(s) in India and have net worth of 250 crores of rupees or more.

The applicability of Section 360 will subsequently be extended to all listed entities, at the date to be notified later.

10.

The term "Audit Engagement" defined in Glossary as applicable to entire Code: -

"A reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects), in accordance with an applicable financial reporting framework, such as an engagement conducted in accordance with Standards on Auditing. This includes a Statutory Audit, which is an audit required by legislation or other regulation"

No change in definition with respect to rest of the Volume-I of Code of Ethics.

"For the purpose of Section-360 "Audit" or "Audit engagement" shall mean a reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements give a true and fair view in accordance with an applicable financial reporting framework".

11.

Measures to be taken in case of imminent breach.

Repealed