Question

- Explain the last updates of the Code of Conduct in IFRS “The role of accounting standards & ethics of the profession as controls for accounting practices”.

- Clarify the newest changes in IFRS according to the IAS 37 : Provision, contingent standard.

Answer 1

Code of Ethics and Professional Conduct with examples:

1. Be inclusive: We welcome and support people of all backgrounds and identities. This includes, but is not limited to members of any sexual orientation, gender identity and expression, race, ethnicity, culture, national origin, social and economic class, educational level, color, immigration status, sex, age, size, family status, political belief, religion, and mental and physical ability.

2. Be considerate: We all depend on each other to produce the best work we can as a company. Your decisions will affect clients and colleagues, and you should take those consequences into account when making decisions.
3. Be respectful:We won't all agree all the time, but disagreement is no excuse for disrespectful behavior. We will all experience frustration from time to time, but we cannot allow that frustration become personal attacks. An environment where people feel uncomfortable or threatened is not a productive or creative one.

4.   Choose your words carefully: Always conduct yourself professionally. Be kind to others. Do not insult or put down others. Harassment and exclusionary behavior aren't acceptable. This includes, but is not limited to:

• Threats of violence.
• Insubordination.
• Discriminatory jokes and language.
• Sharing sexually explicit or violent material via electronic devices or other means.
• Personal insults, especially those using racist or sexist terms.
• Unwelcome sexual attention.
• Advocating for, or encouraging, any of the above behavior.

5. Don't harass: In general, if someone asks you to stop something, then stop. When we disagree, try to understand why. Differences of opinion and disagreements are mostly unavoidable. What is important is that we resolve disagreements and differing views constructively.

6. Make differences into strengths: We can find strength in diversity. Different people have different perspectives on issues, and that can be valuable for solving problems or generating new ideas. Being unable to understand why someone holds a viewpoint doesn’t mean that they’re wrong. Don’t forget that we all make mistakes, and blaming each other doesn’t get us anywhere.

Instead, focus on resolving issues and learning from mistakes.

Code of Ethics and Professional Conduct:

A code of ethics and professional conduct consists of four key sections detailed below. You can cover all of them in a short summary Code of Ethics and Professional Conduct as we have above, or expand on them in detail so employees are clear on how to handle many common situations.

1. The work environment:Employees should act with integrity, comply with laws, maintain a professional work environment and comply with company policies. They should treat customers, colleagues, and partners ethically at all times.

2. Conflicts of interest: A company's reputation depends on the actions and integrity of its employees. It is essential that they avoid relationships and activities that hurt, or appears to hurt, their ability to make objective and fair decisions.

Conflict of Interest Code of Conduct Topics:

• Corporate asset contributions
• Running for public office
• Insider trading and financial interests
• Investments in companies employees do business with
• Employee political interests
• Significant financial interests in other companies
• Securities transactions
• Taking out loans

3. Protecting company assets: Employees should always act to protect company assets, including physical, intellectual, and electronic or digital properties.

Company Assets Code of Conduct Topics:

Preparing, maintaining, and disclosing accurate records.

Information security.

Protecting communication and information technology systems.

Protecting external communications.

Use of company property.

Use of property owned by others.

Facility security.

Protecting intellectual property.

4. Anti-bribery and corruption.: A company's integrity is essential for maintaining trustworthiness and reputation. Employees should always do their work fairly, honestly, and legally.

Anti-Bribery and Corruption Code of Conduct Topics:

Doing business with governments.

Choosing and maintaining service providers.

Receiving gifts and entertainment.

Loans, bribes, and kickbacks.

Relationships with former employees.

Obligations of departing and former employees.

Interaction with competitors.

Relationships with affiliates, international entities, and customers.

5. Attendance and punctuality.

Employees are expected to be regular and punctual in attendance. This means being in the office, ready to work, at starting time each day. Absenteeism and tardiness burden other employees and the company.

6. Absence without notice.

Employees who are unable to work due to illness or an accident should notify their supervisor. This allows the company to arrange for coverage of their duties and helps others continue to work in their absence. If an employee does a report for work and the company is not notified of an employee's status for 3 days, it is typically considered a job abandonment.

7. General harassment and sexual harassment.

This company is committed to providing a work environment free of discrimination and unlawful harassment. Actions, words, jokes, or comments based on an individual’s sex, race, ethnicity, age, religion, or any other legally protected characteristic are not tolerated.

8. Cell phone use at work.

Personal cell phone usage during work hours is discouraged, except in extreme cases such as an emergency.

9. Dress code.

A professional appearance is important when employees work with customers or potential customers. Employees should be well groomed and dressed appropriately for the business and for their position.

10. Substance abuse.

The manufacture, distribution, possession, sale, or purchase of controlled substances of abuse on company property is prohibited. Being under the influence of illegal drugs, alcohol, or substances of abuse on company property is prohibited. Working while under the influence of prescription drugs that impair performance is prohibited.

11. Tobacco products.

The use of tobacco products on company property, outside of permitted areas, is specifically prohibited.

12. Internet use at work.

Employees may use the Internet when appropriate to access information needed to conduct a business company business. Use of the Internet must not disrupt or injure the company computer network. Use of the Internet must not interfere with an employee's productivity.

How to Write a Code of Ethics and Code of Conduct:

1. Review your mission statement and core values.

The goal of a code of ethics is to help employees make decisions that are in line with what the company or organization values. This should be distilled into your mission statement and core values, so it's a good place to start.

2. Talk to stakeholders.

What do management, employees, and clients think are the most important values of the company to uphold? Get input from everyone involved to be sure your code reflects what the company stands for. You can have them all look at a code of conduct template to get ideas for how their own might look like.

3. Review past ethical issues.

Where has your company faltered with ethics in the past? Where has it shined? Call attention to problem areas and reinforce the strengths you already have.

4. See where other companies have faltered.

Have other companies in your industry had recent ethical failures? Avoid the same pitfalls by covering these issues in your code.

5. Create a draft code for input and discussion.

Give everyone a chance to help decide on the contents of the code of ethics by inviting them to discuss and give input on a draft.

6. Create a final draft and share it.

Once you've got a final draft approved, share it throughout the organization. Also, make sure that a copy of it is added to your employee handbook.

IAS 37 defines and specifies the accounting for and disclosure of provisions, contingent liabilities, and contingent assets.

Provisions

A provision is a liability of uncertain timing or amount. The liability may be a legal obligation or a constructive obligation. A constructive obligation arises from the entity’s actions, through which it has indicated to others that it will accept certain responsibilities, and as a result has created an expectation that it will discharge those responsibilities. Examples of provisions may include: warranty obligations; legal or constructive obligations to clean up contaminated land or restore facilities; and obligations caused by a retailer’s policy to make refunds to customers.

An entity recognises a provision if it is probable that an outflow of cash or other economic resources will be required to settle the provision. If an outflow is not probable, the item is treated as a contingent liability.

A provision is measured at the amount that the entity would rationally pay to settle the obligation at the end of the reporting period or to transfer it to a third party at that time. Risks and uncertainties are taken into account in measuring a provision. A provision is discounted to its present value.

IAS 37 elaborates on the application of the recognition and measurement requirements for three specific cases:

• future operating losses—a provision cannot be recognised because there is no obligation at the end of the reporting period;
• an onerous contract gives rise to a provision; and
• a provision for restructuring costs is recognised only when the entity has a constructive obligation because the main features of the detailed restructuring plan have been announced to those affected by it.

Contingent liabilities

Contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not wholly within the control of the entity. An example is litigation against the entity when it is uncertain whether the entity has committed an act of wrongdoing and when it is not probable that settlement will be needed.

Contingent liabilities also include obligations that are not recognised because their amount cannot be measured reliably or because settlement is not probable. Contingent liabilities do not include provisions for which it is certain that the entity has a present obligation that is more likely than not to lead to an outflow of cash or other economic resources, even though the amount or timing is uncertain.

A contingent liability is not recognised in the statement of financial position. However, unless the possibility of an outflow of economic resources is remote, a contingent liability is disclosed in the notes.

Contingent assets

Contingent assets are possible assets whose existence will be confirmed by the occurrence or non-occurrence of uncertain future events that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed when it is more likely than not that an inflow of benefits will occur. However, when the inflow of benefits is virtually certain an asset is recognised in the statement of financial position, because that asset is no longer considered to be contingent.