Ethical help is at hand for those grappling with client confidentiality

Finding true north

Help is at hand for those grappling with client confidentiality, thanks to the International Ethics Standards Board for Accountants.

The competing obligations to maintain client confidentiality and also act in the public interest are something that many accountants have grappled with over the years. Assistance is now at hand. In July, the International Ethics Standards Board for Accountants (IESBA), which develops the Code of Ethics for Professional Accountants, issued an addition: Responding to Non-Compliance with Laws and Regulations (NOCLAR). 

APES 110 Code of Ethics for Professional Accountants, issued by the Accounting Professional and Ethical Standards Board (APESB), incorporates IESBA’s Code of Ethics for Professional Accountants. Additional sections unique to APES 110 have the prefix AUST.

CPA Australia members practising within or outside Australia must comply with APES 110 unless they are prevented from doing so by applicable laws or regulations.

NOCLAR sets out how accountants should respond when they become aware that a client or employer has committed a potentially illegal act or non-compliance with laws and regulations. These guidelines ensure that accountants can fulfil their requirements for integrity and professional behaviour, and act in the public interest.

"NOCLAR sets out how accountants should respond when they become aware that a client or employer has committed a potentially illegal act..."
Fundamentally, NOCLAR addresses that potential dilemma for accountants between client confidentiality and the overarching responsibility to act in the public interest. It allows for specific circumstances where disclosing actual or suspected illegal acts to an appropriate authority would not be considered a breach of the duty of confidentiality, and provides the framework for such disclosures. However, it does qualify that disclosing an actual or suspected illegal act is precluded if it is contrary to law or regulation. This is in line with the Code’s requirement: “If a professional accountant is prohibited from complying with certain parts of this Code by law or regulation, the professional accountant shall comply with all other parts of this Code.”

Professional Development: Professional ethics: a practical guide

The laws and regulations covered are:

  • Laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements 
  • Other laws and regulations, compliance with which may be fundamental to the business, its ability to continue its operations, or to avoid material penalties.
Different requirements and considerations are provided for:
  • Auditors
  • Other members in public practice
  • Members in business who hold senior positions
  • Other members in business.

APESB will, in due course, consult on the NOCLAR requirements issued by IESBA, along with any other changes to the Code, such as Non-Assurance Services (NAS) provisions for audit clients, and seek comments on any issues that arise specifically in the Australian legal and regulatory context.

While IESBA has made NOCLAR effective from 15 July 2017, it is not clear when it will become part of APES 110 and its effective date for members of CPA Australia. 

CPA Australia has made submissions to the IESBA consultations and will also comment on the APESB exposure draft when required. If you would like more information, the NOCLAR pronoucement is at

NOCLAR at a glance is at

Dr Eva Tsahuridu is CPA Australia’s policy adviser, professional standards and ethics

Restructuring the Code of Ethics for Professional Accountants

In 2012, IESBA began a project to make its Code of Ethics for Professional Accountants easier to understand and use. The project does not intend to change the Code’s content, but to clarify and reorganise it. For example, while the structure of the current Code is:

  • Part A – General Application of the Code
  • Part B – Members in Public Practice
    • Independence – Audit and Review Engagements
    • Independence – Other Assurance Engagements
  • Part C – Members in Business 
The restructured Code is expected to be:
  • Guide to the Code
  • Part A – Introduction and Fundamental Principles
  • Part B – Members in Business
  • Part C – Members in Public Practice
  • C1 Independence – Audit and Review Engagements
  • C2 Independence – Other Assurance Engagements
The significant matters being considered include:
  • Clarifying the importance of the conceptual framework 
  • Distinguishing requirements from application material and providing examples and guidance in application material
  • Clarifying firm and individual member responsibilities
  • Using simpler language and grammar
  • Providing a guide to assist navigation
  • Reordering the Code in sections and subsections.

Related: Crossing the non-compliance line

Guidance Note Apes Gn 21 Valuation Services for Financial Reporting

As of July 2016, new guidance is available and applicable for members providing valuation services for financial reporting. The Australian Professional Ethics Standards Board’s new guidance note, APES GN 21 Valuation Services for Financial Reporting provides guidance on the application of APES 225 Valuation Services in relation to a member’s professional and ethical obligations for:

  • the provision of a Valuation Service for Financial Reporting to a Client or Employer 
  • the scope of work to be performed 
  • matters to be disclosed in a Valuation Report.
APES GN 21 contains specific guidance on valuation report disclosures relating to areas such as business combinations, impairment of goodwill and intangible assets, share-based payments, financial instruments and superannuation entities.

A valuation service for financial reporting is performed to estimate the value of an asset, liability and/or equity for financial reporting purposes in accordance with Australian Accounting Standards.

Members providing valuation services must comply with relevant professional and ethical standards, including APES 110 Code of Ethics for Professional Accountants and APES 225 Valuation Services, which specify mandatory requirements.

APES GN 20 Scope and Extent of ?Work for Valuation Services offers guidance on applying APES 225 in determining the scope and extent of work that may be appropriate for Valuation Engagements, Limited Scope Valuation Engagements and Calculation Engagements as defined in APES 225.

APES Guidance Notes do not prescribe or create any mandatory requirements or consider the requirements of applicable Australian Accounting Standards.

The Accounting Professional and Ethical Standards and Guidance Notes, along with an overview of APES 110 Code of Ethics for Professional Accountants, are all available at

Read next: What accountants should do where there’s a conflict of interest

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