Perpetual changes to APES 110 ‘creating unnecessary complexity’, says IPA
Frequent and constant changes to APES 110 are diluting its original principles-based design, says the Institute of Public Accountants.
The Institute of Public Accountants (IPA) has outlined concerns about the frequency of changes being made to the APES 110 code in a recent submission on proposed technology-related revisions to the code.
The IPA said while it broadly supports the new technology-related amendments to APES 110 to incorporate changes made by IESBA to the International Code of Ethics for Professional Accountants, it has concerns about the frequency and scope of changes being made to the code.
“With each change, further rules-based requirements are added to the Code, which adds unnecessary complexity and dilutes its original principles-based design. The Code presently stands at 253 pages in volume,” the submission said.
The IPA said the APESB should work with the IESBA to redesign the Code to restore it to a short principles-based document that is updated no more than once a year, and preferably less frequently than that.
“To assist in applying the Code’s principles, the rules-based requirements reflecting modern accepted standards of practice should be relocated to separate standards to address themes or relevant areas of practice for accountants,” the accounting body said.
“Given the increased focus on the application of ethical standards by accountants globally, this is an opportune time for the APESB and IESBA to sharpen its focus and assist accounting bodies and the accounting profession to improve the clarity of the fundamental principles of the Code.”
The submission said that the constant changes to the Code in recent times may have the unintended perception that the foundation of the Code of Ethics is deficient and not fit for purpose.
“This contrasts with other accounting frameworks that see much less frequent changes and are written based on considered and sound principles that are more enduring,” it said.
“The current IESBA-APESB approach of frequently changing the Code is costly for all stakeholders to allocate resources to monitor developments, adjust systems for changes in requirements with different application dates and simply to understand the myriad of complex requirements.”
The constant changes are particularly problematic for SME practitioners who often don’t have the technical or financial resources to keep up.
“In recent times, IPA has had an increased focus on increasing awareness of the Code. Feedback from our members indicates that they continue to be surprised with the perpetual changes made to the Code each year,” the submission said.
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