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The International Federation of Accountants, (IFAC) has released a revised edition of its Code of Ethics for Professional Accountants, modifying ethical guidance on disclosure of confidential information, the practice of "low-balling," employing services of nonaccountants, and the use of the code by national accountancy bodies. "These revisions reflect IFAC's continuing goal to offer the highest level of ethical standards for the international accountancy profession," said Marilyn Pendergast, chair of IFAC's Ethics Committee and former president of the New York State Society of CPAs. The Ethics Committee is responsible for developing guidance on professional ethics and promoting its understanding and acceptance by member bodies.

Confidentiality. The new code calls for recognition that confidentiality should remain a basic professional duty, which may, however, be overridden when professional, legal, or ethical requirements call for a public disclosure of information.

"Low-Balling." The practice of underbidding a competitor to secure an audit client, commonly called "low-balling," is also addressed in the new revisions. While this practice may represent good value for the company being audited, concern has been expressed that, as a result of the lower fee, accountants may be tempted to reduce the quality of the work they carry out. The revisions to the code make clear that the quality of work must not be impaired, and must not be seen to be impaired, where an accountant has obtained work at fee levels significantly lower than those charged or quoted by other accountants.

Employing Nonaccountants. The increasing trend among accountants to employ the technical expertise of other professionals in complex engagements prompted the Ethics Committee to adopt new guidance in this area. The guideline expresses that the accountant must recognize the need for supporting non-accountants to be aware of, and respect, the ethical requirements to which the accountant is subject.

National Usage. The language used in the code has also been modified to reinforce the understanding that it serves as a model upon which national guidance should be based. "Although there may be the need for local adaptation to accommodate individual cultures and regulatory environments, there are fundamental principles that should always be respected," said Pendergast. "These standards are embodied in the code."

Recognizing that the code's strength lies in accountants' adherence to benchmark ethical guidance, IFAC has also changed Statement of Policy on Implementation and Enforcement of Ethical Requirements. These updates include recommendations that professional accountancy bodies provide support and "help-line" functions for individual accountants on ethics issues. To obtain a copy of the Code of Ethics, contact the IFAC Secretariat at (212) 302-5952 or visit the IFAC Website at http//www.ifac.org. IFAC is the worldwide organization for the accountancy profession. Its mission is to develop and enhance the profession to enable it to provide services of consistently high quality in the public interest. *

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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