Comparison IFAC Other Jurisdictions 070127

IFAC Ethics Committee - Task Force
Independence Rule Comparison: Non-Audit Services

Listed Companies & Public Interest Entities
STANDARDS
SERVICES INTERNATIONAL USA EUROPEAN UNION UK
(IFAC) (SEC/PCAOB) (EC Recommendation) (Auditing Practices Board)
Preparing Prohibited for listed/material (+) Prohibited unless (+) Prohibited for public (+) Prohibited for listed entities
Accounting subsidiaries, except as described reasonable to conclude that interest entities and significant affiliates
Records & Financial below: the results of the services
Statements will not be subject to Permitted in emergencies Accounting services –services
Permitted in emergencies, when it auditing procedures. but with safeguards that involve the maintenance of
is impractical for the client to may provide assistance in accounting records or the
make other arrangements, with preparing non-U.S. Technical or mechanical preparation of f/s that are then
safeguards. statutory financial services or advice of an subject to audit. Advice on the
statements provided such informative nature may implementation of current and
Routine and mechanical services statements are not included be provided in limited proposed accounting standards is
to a division or subsidiary in, or form the basis of, circumstances to not included in the term
permitted provided services do financial statements filed subsidiaries, subject to accounting services.
not involve exercise of judgment, with the SEC. required safeguards.
divisions or subs are collectively Permitted in emergencies with
material or services are safeguards
collectively material and fees to
firm or network firm from such
services are collectively clearly
insignificant and specific
safeguards are applied.
Permitted :Technical assistance

on accounting principles, f/s
disclosure, appropriateness of
controls and methods used to
determine assets and liabilities
1 Comparison to IFAC:
comparison ifac other jurisdictions.doc (+) more restrictive
(-) less restrictive
(=) similar

STANDARDS
permitted. Assisting in resolving
account reconciliation problems,
analyzing and accumulating
information for regulatory
reporting, assisting in preparation
of consolidated f/s (including
translation of local stat f/s to
comply with group policies and
the transition to a different
financial reporting framework
such as IFRS), drafting disclosure
items, proposing adjusting jvs and
providing assistance and advice
in the preparation of local stat
accounts of subs.
Valuation Permitted provided neither (+) Prohibited unless (=) Permitted provided (=) Permitted provided not
separately, not in the aggregate, reasonable to conclude neither separately, nor in material nor involve significant
material nor involve significant results of the services will the aggregate, material subjectivity, and subject to
subjectivity, and subject to not be subject to audit nor involve significant analysis of threats and adequacy
analysis of threats and adequacy procedures; extends to subjectivity, and subject of safeguards.
of safeguards. fairness opinions and to analysis of threats and
contribution-in-kind reports. adequacy of safeguards. Auditors are permitted to perform
Tax related valuations generally valuations which they are
not seen as creating a significant Tax-only valuations Contribution in kind designated by legislation or
threat to independence. permitted. reports, share exchange regulation as eligible to carry out,
ratio reports and due with safeguards.
(=) similar

STANDARDS
diligence assignments
are permitted.
Tax Permitted as in “generally not (+) Generally permitted but (=) Not mentioned. (+) Generally permitted, with the
seen to create threats to new PCAOB rules will exception of:
independence”. prohibit involvement in (a) promoting of tax structures or
“aggressive”/ confidential products or tax advice where
tax transactions and tax audit partner has or ought to
services to FRORs. have reasonable doubt as to
the appropriateness of the
related accounting treatment;
(b) services on a contingent fee
basis where fees are material
to the audit firm/segment or
dependent on uncertain tax
law and future or
contemporary audit judgment
related to a material balance
in the financial statements;
(c) services involving a
management role; and
(d) services involving acting as
an advocate before an
appeals tribunal or court in
resolution of an issue that is
material or dependent on
future or contemporary audit
judgment
(=) similar

STANDARDS
Internal Audit Permitted subject to analysis of (+) Internal audit services (+) Permitted provided (+) Permitted with safeguards
threats and all following related to internal that company is except where it is reasonably
safeguards: accounting controls, continuously responsible foreseeable that:
- client is responsible and financial systems, or for: (a) the auditors would place
acknowledges responsibility for financial statements, unless (a) overall system of significant reliance on the
establishing, maintaining and reasonable to conclude that internal control internal audit work; or
monitoring system of IC; results of those services will (b) determining scope, (b) the audit firm would be
- client designates competent not be subject to audit risk and frequency of undertaking part of the role of
employee, preferably senior mgt, procedures during an audit procedures; and management.
to be responsible of IA activities; of the f/s. (c) considering and
- client approves scope, risk and acting on findings Specific safeguard is requirement
frequency of work; Permitted to perform and for “informed management” to be
- client responsible for evaluating nonrecurring evaluations of recommendations designated by the audit client. A
and determining which discrete items or other Cannot accept outcomes member of management has the
recommendations of firm should programs that are not in of internal auditing capability to make independent
be implemented; substances outsourcing of procedures for audit management judgments and
- client evaluates adequacy of IA IA purposes without decisions on the basis of
procedures performed and adequate review – which information provided.
findings; and Operational internal audits includes specific
- findings and recommendations unrelated to the internal safeguard for
are reported appropriately to AC. accounting controls, independent partner to
financial systems or reassess scope of the
financial statements statutory audit work to
permitted. ensure that it is adequate.
(=) similar

STANDARDS
IT Systems Design and implementation (+) Design or (=) Permitted subject to (+) Design or implementation
permitted provided implementation prohibited analysis of threats and prohibited if the systems
- client acknowledges unless reasonable to under required concerned would be important to
responsibility for establishing and conclude results of safeguards. any significant part of the
monitoring system of control procedures will not be accounting system or to the
- client designate competent subject to audit procedures production of the financial
employee, preferably senior mgt statements and the auditors
to be responsible for mgt would place significant reliance
decisions regarding design & upon them or the firm would
implementation undertake part of the role of
- client makes all mgt decisions management.
- client evaluates adequacy and
results of design and Otherwise permitted with
implementation safeguards.
- client responsible for operation
of system and data used or
generated by system
Design or implementation –
threats and safeguards
Temporary Staff Permitted subject to analysis of (=) Service not specifically (-) Not specifically (=) Same as IFAC
Assignments threats and safeguards but no identified (but see addressed
managerial authority. Management Function /
Activities.
(=) similar

STANDARDS
Litigation Support Permitted subject to analysis of (+) Expert services, for the (+) Prohibited to act for (+) Prohibited if this would involve
threats and under required purpose of advocating a the client in the resolution the estimation of the likely
safeguards. client’s interests in litigation, of litigation when the outcome of a pending legal
regulatory or administrative, amounts are material to matter that could be material to
Prohibited if involves making are prohibited. the financial statements the amounts or disclosures in the
managerial decisions. and there is a significant financial statements and there is
Permitted to provide factual degree of subjectivity. significant subjectivity.
accounts of work
performed, explain Otherwise permitted with Otherwise permitted with
positions or conclusions safeguards safeguards.
reached in connection with
any service provided.
Legal Services Prohibited to act in an advocacy (+) Prohibited if the service (=) Acting for client in (=) Prohibited to act as appointed
role in the resolution of a dispute/ requires a licensed, resolution of litigation solicitor on a matter which is
litigation if the amounts are admitted or otherwise considered under material to the amounts or
material to the financial qualified law practitioner in litigation support services disclosures in the financial
statements. the jurisdiction where the (above) statements
service is provided.
Otherwise permitted with
safeguards.
NB legal services for this purpose

are defined essentially to cover
services reserved for lawyers or
for those trained in law.
(=) similar

STANDARDS
Recruiting Senior Permitted subject to analysis of (+) Prohibited but can (+) Generally permitted, (+) Listed clients: Prohibited to
Management threats and safeguards but no advise on financial except for taking financial provide recruitment services in
management decisions. accounting role decision to recruit. For relation to a key management
key financial and position or a significant affiliate of
administrative staff, such an entity.
drawing up of a short list
may cause an General: Prohibited to provide
unacceptable level of risk. recruitment services that would
involve the firm taking
responsibility for the appointment
of any director or employee of the
audit client.
Also prohibited to provide advice

on the quantum of the
remuneration package or
measurement criteria for a
director or key management
position.
Corporate Finance Permitted to act in advisory role (+) Prohibited where acting (-) Not specifically (+) Prohibited to provide
only, subject to analysis of threats as a broker-dealer, addressed other than corporate finance services where
and implementation of adequate promoter, or underwriter; reference to advocacy (a) would involve taking
safeguards. making investment threat involved in the responsibility for dealing in,
decisions, or otherwise promotion of shares. underwriting or promoting shares;
Promoting, dealing in, or having discretionary or (b) audit partner has or ought
(=) similar

STANDARDS
underwriting a client’s shares authority over an audit to have reasonable doubt as to
prohibited. Prohibited from client’s investments. the appropriateness of accounting
committing a client to a treatment or (c) services are
transaction or consummating a provided on contingent fee basis
transaction on behalf of a client. and fees are material to the
firm/segment or outcome of
services is dependent on a future
or contemporary audit judgment
relating to a material balance in
the financial statements or (d)
would involve undertaking a
management role.
Other Services:
Management Prohibited [three specified (+) Prohibited to act, (-) Not specifically (+) Management threat identified
Function/Activities prohibited activities] Handling temporarily or permanently, mentioned, other than as a specific type of threat.
client’s assets; supervising client as a director, officer, or prohibited to take any Prohibition on undertaking part of
employees; prepare source employee, or performing decision or take any part role of management in certain
documents may create threats any decision-making, in any decision-making specific services as above.
and may be performed only if supervisory, or ongoing on behalf of the client or
suggested safeguards reduce monitoring function. its management.
threat to insignificant level.
Prohibited to design/
implement internal
accounting/risk
management controls.
(=) similar

STANDARDS
Actuarial Service not specifically identified (+) Prohibited unless (=) Not specifically (+) Prohibited to provide actuarial
(but see Valuations) reasonable to conclude the addressed. valuation unless the firm is
results of the services will satisfied that either all significant
not be subject to auditing judgments, including the
procedures assumptions, are made by
“informed management” or the
Permitted to explain valuation is not material.
methods, assumptions and
inputs used in computing
an amount.
Transaction related Service not specifically identified Service not specifically (=) Service not (+) Prohibited to provide
services identified specifically identified, transaction related services
other than reference to where (a) audit partner has or
due diligence under ought to have reasonable doubt
valuations (above) as to the appropriateness of
accounting treatment or (b)
services are provided on
contingent fee basis and fees are
material to the firm/segment or
outcome of services is dependent
on a future or contemporary audit
judgment relating to a material
balance in the financial
statements or (c) would involve
undertaking a management role.
(=) similar

STANDARDS
SERVICES
1
INTERNATIONAL FRANCE HONG KONG JAPAN
(IFAC) ( ) (HKICPA) ( )
Preparing Prohibited for listed/material (+) Prohibited. (=) Same as IFAC
Accounting subsidiaries, except as described
Records & Financial below:
Statements
Permitted in emergencies, when it
is impractical for the client to
make other arrangements, with
safeguards.
Routine and mechanical services

to a division or subsidiary
permitted provided services do
not involve exercise of judgment,
divisions or subs are collectively
material or services are
1
According to the draft code of ethics, this prohibition will apply to the audit client, its parent company and the subsidiaries of the audit client.
(=) similar

STANDARDS
SERVICES
1
accounts of subs.
Valuation Permitted provided neither (=) Same as IFAC

(+) Prohibited.
separately, not in the aggregate,
material nor involve significant
subjectivity, and subject to
analysis of threats and adequacy
of safeguards.
(=) similar

STANDARDS
SERVICES
1
Tax related valuations generally
not seen as creating a significant
threat to independence.
Tax Permitted as in “generally not (=) Same as IFAC

(+) Prohibited.
seen to create threats to
independence”.
Internal Audit Permitted subject to analysis of (=) Same as IFAC

(+) Prohibited.
threats and all following
safeguards:
- client is responsible and
acknowledges responsibility for
establishing, maintaining and
monitoring system of IC;
- client designates competent
employee, pref snr mgt, to be
responsible of IA activities;
- client approves scope, risk and
frequency of work;
- client responsible for evaluating
and determining which
recommendations of firm should
be implemented;
- client evaluates adequacy of IA
procedures performed and
findings; and
(=) similar

STANDARDS
SERVICES
1
- findings and recommendations
are reported appropriately to AC.
IT Systems Design and implementation (=) Same as IFAC

(+) Prohibited.
permitted provided
- client acknowledges
responsibility for establishing and
monitoring system of control
- client designate competent
employee, preferably senior mgt
to be responsible for mgt
decisions regarding design &
implementation
- client makes all mgt decisions
- client evaluates adequacy and
results of design and
implementation
- client responsible for operation
of system and data used or
generated by system
Design or implementation –
threats and safeguards
Temporary Staff Permitted subject to analysis of (=) Same as IFAC
(+) Currently, not
Assignments threats and safeguards but no
addressed.
managerial authority.
Prohibited by the draft code
(=) similar

STANDARDS
SERVICES
1
of ethics.
Litigation Support Permitted subject to analysis of (+) Prohibited. (=) Same as IFAC
threats and under required
safeguards.
Prohibited if involves making

managerial decisions.
Legal Services Prohibited to act in an advocacy (+) Prohibited. (=) Same as IFAC
role in the resolution of a dispute/
litigation if the amounts are
material to the financial
statements.
Otherwise permitted with

safeguards.
NB legal services for this purpose

are defined essentially to cover
services reserved for lawyers or
Recruiting Senior Permitted subject to analysis of (+) Prohibited. (=) Same as IFAC
Management threats and safeguards but no
management decisions
(=) similar

STANDARDS
SERVICES
1
Corporate Finance Permitted to act in advisory role (+) Prohibited. (=) Same as IFAC
only, subject to analysis of threats
and implementation of adequate
safeguards.
Promoting, dealing in, or

underwriting a client’s shares
prohibited. Prohibited from
committing a client to a
transaction or consummating a
transaction on behalf of a client.
Other Services:
Management Prohibited [three specified (=) Same as IFAC
(=) Substantially same as
Function/Activities prohibited activities] Handling
IFAC.
client’s assets; supervising client
employees; prepare source
documents may create threats
and may be performed only if
suggested safeguards reduce
threat to insignificant level.
Actuarial Service not specifically identified (=) Service not specifically (=) Same as IFAC
(but see Valuations) identified.
(=) similar

STANDARDS
SERVICES INTERNATIONAL CANADA** AUSTRALIA GERMANY
(IFAC) (Provincial Institutes) (Professional Statement (HGB)
F1)
Preparing Prohibited for listed/material (+) Prohibited for listed (=) Prohibited for (+)
Accounting subsidiaries, except as described entities unless it is listed./material subsidiaries, In general, any such service
Records & Financial below: considered reasonable to except as described below: that is not immaterial is
Statements conclude that the service prohibited for any audit client
Permitted in emergencies, when it will not be subject to audit Permitted in emergency (listed or not) and material
is impractical for the client to procedures during the audit situation and when the subsidiaries.
make other arrangements, with of the financial statements. services fall within statutory
safeguards. The rebuttable presumption mandate.
is that such services will be
Routine and mechanical services subject to audit.
to a division or subsidiary
permitted provided services do
not involve exercise of judgment,
divisions or subs are collectively
material or services are

(=) similar

STANDARDS
F1)
accounts of subs.
Valuation Permitted provided neither (+) Not permitted for listed (=) Same as IFAC (+)
separately, not in the aggregate, entities unless it is Prohibited, unless the service is
material nor involve significant considered reasonable to immaterial
subjectivity, and subject to conclude that the service
analysis of threats and adequacy will not be subject to audit
of safeguards. procedures during the audit Tax related valuations are
of the financial statements. prohibited as well, unless there
Tax related valuations generally The rebuttable presumption is no impact on the financial
(=) similar

STANDARDS
F1)
not seen as creating a significant is that such services will be statements
threat to independence. subject to audit.
Tax-only valuations
permitted.
Tax Permitted as in “generally not (=) Generally permitted - no (=) Same as IFAC (=/+) The same in Germany,
seen to create threats to current intent to incorporate however, prohibited to the
independence”. provisions similar to new extent that the services go
PCAOB rules on beyond the pure presentation of
aggressive / confidential tax structural alternatives AND the
transactions and tax services have the constructive
services to FRORs. and more than immaterial
impact on the presentation of
the assets, the financial position
and the operating results in the
financial statements.
Internal Audit Permitted subject to analysis of (+) Not permitted unless it (=) Same as IFAC (=) Prohibited as far as the
threats and all following is considered reasonable to auditor is actively and in a
safeguards: conclude that the service relevant position involved in
- client is responsible and will not be subject to audit internal audit activities
acknowledges responsibility for procedures during the audit
establishing, maintaining and of the financial statements.
monitoring system of IC; The rebuttable presumption
- client designates competent is that such services will be
employee, pref snr mgt, to be subject to audit.
(=) similar

STANDARDS
F1)
responsible of IA activities;
- client approves scope, risk and Permitted to provide a
frequency of work; nonrecurring service to
- client responsible for evaluating evaluate a discrete item or
and determining which program, if the service is
recommendations of firm should not in substance the
be implemented; outsourcing of the internal
- client evaluates adequacy of IA audit function.
procedures performed and
findings; and
- findings and recommendations
are reported appropriately to AC.
IT Systems Design and implementation (+) Not permitted - (=) Same as IFAC (+) Design and implementation
permitted provided [specifically prohibits of IT-Systems are prohibited,
- client acknowledges services that involve (i) unless the service is immaterial
responsibility for establishing and directly or indirectly
monitoring system of control operating, or supervising
- client designate competent the operation of, the entity’s
employee, preferably senior mgt or a related entity’s
to be responsible for mgt information system or
decisions regarding design & managing a LAN; and (ii)
implementation designing or implementing
- client makes all mgt decisions a hardware or software
- client evaluates adequacy and system that aggregates
results of design and source data underlying the
(=) similar

STANDARDS
F1)
implementation financial statements or
- client responsible for operation generates information that
of system and data used or is significant to the entity’s
generated by system or a related entity’s financial
statements or other
Design or implementation – financial information
threats and safeguards systems.] unless it is
considered reasonable to
conclude that the service
will not be subject to audit
procedures during the audit
of the financial statements.
The rebuttable presumption
subject to audit.
Temporary Staff Permitted subject to analysis of (=) Not specifically (=) Same as IFAC (+)
Assignments threats and safeguards but no addressed in the rules but A clear staff loan is prohibited,
managerial authority. explanatory comments but not due to independence
indicate permitted subject concerns but due to additional
to analysis of threats and legal provisions.
safeguards but no
managerial authority is
permitted. Cannot be used
to provide a service not
permitted otherwise.
(=) similar

STANDARDS
F1)
Litigation Support Permitted subject to analysis of (+) Essentially the same as (=) Same as IFAC (-) not prohibited
threats and under required the SEC rule - services
safeguards. prohibited if it is for
advocating entity’s or
Prohibited if involves making related entity’s interests in a
managerial decisions. civil, criminal, regulatory,
administrative or legislative
proceeding or investigation.
Legal Services Prohibited to act in an advocacy (+) Essentially the same as (=) Same as IFAC (-) In general, there is no
role in the resolution of a dispute/ the SEC rule - service is explicit prohibition, however,
litigation if the amounts are prohibited if it may only be legal services are prohibited to
material to the financial provided by a person the extent that the services go
statements. licensed, admitted or beyond the pure presentation of
otherwise qualified to structural alternatives AND the
Otherwise permitted with practice law in the services have the constructive
safeguards. jurisdiction where the and more than immaterial
service is provided. impact on the presentation of
NB legal services for this purpose the assets, the financial position
are defined essentially to cover and the operating results in the
services reserved for lawyers or financial statements.
(=) similar

STANDARDS
F1)
Recruiting Senior Permitted subject to analysis of (+) Essentially the same as (=) Same as IFAC (-) This is not a service to be
Management threats and safeguards but no the SEC rule - can advise provided by accountants in
management decisions. on a candidate’s suitability Germany. However, limited
for a financial accounting, assistance/advice is permitted
administrative or control
positions.
Corporate Finance Permitted to act in advisory role (+) Essentially the same as (=) Same as IFAC (=) Same as IFAC
only, subject to analysis of threats the SEC rule.
and implementation of adequate
safeguards.
Promoting, dealing in, or

underwriting a client’s shares
prohibited. Prohibited from
committing a client to a
transaction or consummating a
transaction on behalf of a client.
Other Services:
Management Prohibited [three specified (=) Prohibited from taking (=) Same as IFAC (=) Management Services in
Function/Activities prohibited activities] Handling management decisions or Germany are prohibited as well.
client’s assets; supervising client performing management However, there are no specified
employees; prepare source functions [Specifically: (1) activities
documents may create threats authorising, approving,
and may be performed only if executing or consummating
(=) similar

STANDARDS
F1)
suggested safeguards reduce a transaction; (ii) having /
threat to insignificant level. executing authority for the
entity; (iii) selecting
appropriate recommend-
ations for entity; (iv)
management reporting.
Actuarial Service not specifically identified (+) Not permitted unless it (=) Same as IFAC (+) Service explicitly prohibited,
(but see Valuations) is considered reasonable to unless the service is immaterial
conclude that the service
will not be subject to audit
procedures during the audit
of the financial statements.
The rebuttable presumption
subject to audit.
** Prima-facie, the rules in Canada for listed entities are very similar to those of the SEC but there is more scope for a threats and safeguards approach to
provide some “safe harbour” relief for inadvertent situations rather than the blanket prohibitions provided by the SEC rules. As noted above certain services
are permitted where it may be concluded that they will not be subject to audit.
The strict SEC staff interpretations on certain situations would not necessarily bind the interpretation in a Canadian-only situation.
Also, the Canadian restrictions apply to “reporting issuers”, which are essentially public companies and mutual funds. There is not a broader application to
“public interest entities”.
(=) similar

Comparison IFAC Other Jurisdictions 070127

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IFAC Ethics Committee - Task Force

Independence Rule Comparison: Non-Audit Services

Permitted :Technical assistance

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

NB legal services for this purpose

Independence Rule Comparison: Non-Audit Services

Also prohibited to provide advice

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Routine and mechanical services

Permitted :Technical assistance

Independence Rule Comparison: Non-Audit Services

Valuation Permitted provided neither (=) Same as IFAC

Independence Rule Comparison: Non-Audit Services

Tax Permitted as in “generally not (=) Same as IFAC

Internal Audit Permitted subject to analysis of (=) Same as IFAC

Independence Rule Comparison: Non-Audit Services

IT Systems Design and implementation (=) Same as IFAC

Independence Rule Comparison: Non-Audit Services

Prohibited if involves making

Otherwise permitted with

NB legal services for this purpose

Independence Rule Comparison: Non-Audit Services

Promoting, dealing in, or

Independence Rule Comparison: Non-Audit Services

Permitted :Technical assistance

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Independence Rule Comparison: Non-Audit Services

Promoting, dealing in, or

Independence Rule Comparison: Non-Audit Services

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