Introduction (250.1 to 250.3)
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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.

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250.2

Offering or accepting inducements might create a self-interest, familiarity or intimidation threat to compliance with the fundamental principles, particularly the principles of integrity, objectivity and professional behavior.

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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 undertaking professional activities 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)
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250.4 A1

An inducement is an object, situation, or action that is used as a means to influence another individual's behavior, but not necessarily with the intent to improperly influence that individual's behavior. 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.

Inducements Prohibited by Laws and Regulations (R250.5)
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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 relevant laws and regulations and comply with them when the accountant encounters such circumstances.

Inducements Not Prohibited by Laws and Regulations (250.6 A1 to 250.11 A6)
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250.6 A1

The offering or accepting of inducements that is not prohibited by laws and regulations might still create threats to compliance with the fundamental principles.

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R250.7

A professional accountant shall not offer , or encourage others to offer, any inducement that is made, or which the accountant considers a reasonable and informed third party would be likely to conclude is made, with the intent to improperly influence the behavior of the recipient or of another individual.

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R250.8

A professional accountant shall not accept, or encourage others to accept, any inducement that the 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 behavior of the recipient or of another individual.

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250.9 A1

An inducement is considered as improperly influencing an individual's behavior 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 behavior on the part of the accountant and, if necessary by analogy, other individuals.

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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 behavior of the recipient or of another individual.

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250.9 A3

The determination of whether there is actual or perceived intent to improperly influence behavior requires the exercise of professional judgment. 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 activity, 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 available to a broader group. The broader group might be internal or external to the employing organization, such as other customers or vendors.

  • The roles and positions of the individuals 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 counterparty's employing organization.

  • The degree of transparency with which the inducement is offered.

  • Whether the inducement was required or requested by the recipient.

  • The known previous behavior or reputation of the offeror.

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250.10 A1

If the professional accountant becomes aware of an inducement offered with actual or perceived intent to improperly influence behavior, threats to compliance with the fundamental principles might still be created even if the requirements in paragraphs R250.7 and R250.8 are met.

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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 employing organization of the professional accountant or the offeror regarding the offer.

  • Amending or terminating the business relationship with the offeror.

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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 behavior of the recipient or of another individual.

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250.11 A2

If such an inducement is trivial and inconsequential, any threats created will be at an acceptable level.

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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 behavior include:

  • Self-interest threats

    • A professional accountant is offered part-time employment by a vendor.

  • Familiarity threats

    • A professional accountant regularly takes a customer or supplier to sporting events.

  • Intimidation threats

    • A professional accountant accepts hospitality, the nature of which could be perceived to be inappropriate were it to be publicly disclosed.

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250.11 A4

Relevant factors in evaluating the level of such threats created by offering or accepting such an inducement include the same factors set out in paragraph 250.9 A3 for determining intent.

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250.11 A5

Example s 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.

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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 organization of the professional accountant or of the counterparty about offering or accepting an inducement.

  • Registering the inducement in a log maintained by the employing organization of the accountant or the counterparty.

  • Having an appropriate reviewer, who is not otherwise involved in undertaking the professional activity, review any work performed or decisions made by the accountant with respect to the individual or organization from which the 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 to 250.14 A2)
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R250.12

A professional accountant shall remain alert to potential threats to the accountant's compliance with the fundamental principles created by the offering of an inducement:

  • By an immediate or close family member of the accountant to a counterparty with whom the accountant has a professional relationship; or

  • To an immediate or close family member of the accountant by a counterparty with whom the accountant has a professional relationship.

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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 behavior of the accountant or of the counterparty, or considers a reasonable and informed third party would be likely to conclude such intent exists, the accountant shall advise the immediate or close family member not to offer or accept the inducement.

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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 behavior of the professional accountant or of the counterparty. Another factor that is relevant is the nature or closeness of the relationship, between:

  • The accountant and the immediate or close family member;

  • The immediate or close family member and the counterparty; and

  • The accountant and the counterparty.

For example, the offer of employment, outside of the normal recruitment process, to the spouse of the accountant by a counterparty with whom the accountant is negotiating a significant contract might indicate such intent.

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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 influence the behavior of the professional accountant or of the counterparty even if the immediate or close family member has followed the advice given pursuant to paragraph R250.13.

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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 fundamental principles might be created where:

  • The immediate or close family member offers or accepts the inducement contrary to the advice of the accountant pursuant to paragraph R250.13; or

  • The accountant does not have reason to believe an actual or perceived intent to improperly influence the behavior of the accountant or of the counterparty exists.

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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 to 250.15 A3)
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250.15 A1

If a professional accountant is offered an inducement by the employing organization relating to financial interests, compensation and incentives linked to performance, the requirements and application material set out in Section 240 apply.

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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 organization, the requirements and application material set out in Section 260 apply.

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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 requirements and application material set out in Section 270 apply.