Introduction (240.1 to 240.2)
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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.

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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 to 240.3 A4)
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A professional accountant shall not manipulate information or use confidential information for personal gain or for the financial gain of others.

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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 financial reporting and decision making.

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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 organization and the value of that financial interest might be directly affected by decisions made by the accountant.

  • Is eligible for a profit-related bonus and the value of that bonus might be directly affected by decisions made by the accountant.

  • Holds, directly or indirectly, deferred bonus share rights or share options in the employing organization, the value of which might be affected by decisions made by the accountant.

  • Participates in compensation arrangements which provide incentives to achieve targets or to support efforts to maximize the value of the employing organization'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 financial interest to the individual.

  • Policies and procedures for a committee independent of management to determine the level or form of senior management remuneration.

  • In accordance with any internal policies, disclosure to those charged with governance of:

    • All relevant interests.

    • 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.

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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, Pressure to Breach the Fundamental Principles.

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December 2021

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This version of the eCode incorporates revisions to the Code to promote the role and mindset expected of professional accountants.

Revisions to the Code to promote the role and mindset expected of professional accountants will be effective as of December 31, 2021. Early adoption will be permitted


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