Part IV Directives

MEMBERS' HANDBOOK
PART IV
DIRECTIVES AND IMPORTANT DECISIONS OF

THE COUNCIL AND ITS COMMITTEES
THE INSTITUTE OF
CHARTERED ACCOUNTANTS OF PAKISTAN
MEMBERS' HANDBOOK
DIRECTIVES AND IMPORTANT DECISIONS
CONTENTS
Directive
Particular
No.
1. STUDENTS’ TRAINING, EDUCATION AND EXAMINATION
2. FOREIGN QUALIFICATIONS AND TRAINING
3. FEES AND SUBSCRIPTIONS
4. PRACTICES ADMINISTRATION AS CHARTERED ACCOUNTANTS
5. PRACTICE ADMINISTRATION AS MANAGEMENT CONSULTANTS
6. ETHICS
7. MEMBERS' CONDUCT-GENERALLY
8. CONTINUING PROFESSIONAL DEVELOPMENT (CPD)
MEMBERS' HANDBOOK
PART IV
1. STUDENTS’ TRAINING EDUCATION

AND EXAMINATIONS
THE INSTITUTE OF
SECTIONAL INDEX
1. STUDENT’S TRAINING, EDUCATION AND EXAMINATIONS
CONTENTS
1.01 Education and Training Scheme-2021 (Revised-2021)
1.02 Education Delivery System
Training Regulations and Guidelines:

1.03 • Training in Practice 2015
• Training Outside Practice 2016
Specified Degree Awarding Institutes (SDAI) and
1.04
Relevant Degree Awarding Institutes (RDAI)
Withdrawn-Instructions to Principals - Terms and
1.05
Conditions for Trainee Students
1.06 Professional Accounting Affiliates Scheme
Withdrawn-Referral concession – appearance in all papers
1.07
necessary
Minimum period of training to be served vis-à-vis
1.08
appearance at Intermediate Examination
Withdrawn-Condition of enrolling trainee without passing
1.09
Entrance Exanimation deferred
Withdrawn-Acceptance of application for admission to
1.10
examinations with late fee
1.11 Withdrawn-Refund of Examination Fee

Withdrawn-Council member's attendance at meeting
1.12
considering Examination results involving close relatives
Withdrawn-Procedure on Termination of Students’ Training
1.13
Contract (Bye-Law 107 (1) of CA Bye-Laws 1983)
Withdrawn-Notification on exemption to candidates who have
1.14
passed Examinations of ACCA, CIMA and ICMAP
SECTIONAL INDEX
1. STUDENT’S TRAINING, EDUCATION AND EXAMINATIONS
CONTENTS
Notification Regarding Directive 1.15 of the Council
1.15
(Exemption From Pre-Entry Proficiency Test)
1.16 Withdrawn-Period of training
1.17 Withdrawn-Minimum stipend rates
Withdrawn-Exemptions available to graduates of specified
1.18
Degree awarding institutes (SDAIS)
1.19 Declaration of Specified Degree Awarding Institute (SDAI)
1.20 Qualifying Assessment Test and Pre-Requisite Competencies
1.21 Exemptions
1.22 Assessment of Fundamental Competencies (superseded)
1.23 Criteria for Approved Course Providers (ACP) for Hands-on

Courses on MS Office
Criteria for Approved Course Providers (ACP) for Hands-on
1.24
Courses on Presentation and Personal Effectiveness
Criteria for Approved Course Providers (ACP) for Hands-on
1.25
Courses on Data Management and Analytics and Fintech
EDUCATION AND
TRAINING SCHEME 2021
Directive 1.01 (Revised 2021)
Directive 1.01 (Revised 2021) The Institute of Chartered Accountants of Pakistan
TABLE OF CONTENTS
Paragraph Description Page No.
1 Short title and Commencement 3
2 Definitions 3
3 Registration 4
4 Curriculum and Syllabus 5
5 Exemptions 7
6 Fees and Refunds 7
7 Examinations 8
8 Rules of Progression 14
9 Transition to the Scheme 2021 15
10 Training Regulations and Guidelines 18
Relevant Degree Awarding Institute (RDAI) and 18
11
Specified Degree Awarding Institute (SDAI)
12 Removal of Difficulty 18
13 Repeal 18
Annexure A Syllabus 19
Education and Training Scheme 2021 2

The Institute of Chartered Accountants of Pakistan Directive 1.01 (Revised 2021)
EDUCATION AND TRAINING SCHEME 2021
In exercise of the powers conferred by section 15 of the Chartered Accountants Ordinance, 1961
(CA Ordinance) read with bye-laws 113 and 129A of Chartered Accountants Bye-Laws, 1983 (CA
Bye-Laws), to prescribe the courses, syllabus and stages of education to qualify for membership of
the Institute, the Council approves the following scheme:-
1. SHORT TITLE AND COMMENCEMENT

(1) This scheme shall be known as Education and Training Scheme 2021 (the Scheme 2021).
(2) The Scheme 2021 shall become effective from 01 March 2022 subject to the transitional
arrangements specified in this Directive.
*(3) The following paragraphs of this Directive shall be effective after gazette notification of the
corresponding amendments in CA Bye-Laws:
Paragraph
2(1)(xiii)
2(1)(xiv)
3(1)(ii)
3(1)(iii)
3(2)(iii)
8(1)(ii)
9(1)(i)
9(2)(i)
2. DEFINITIONS
(1) In the Scheme 2021, unless there is anything repugnant in the subject context:
(i) Assessee means a person enrolled to any test, assessment and examination required
by the Institute before admission to the CFAP examination;
(ii) AFC means Assessment of Fundamental Competencies;
(ii) CAF means Certificate in Accounting and Finance;
(iii) Chairman means the Chairman of ETCOM;
(iv) CFAP means Certified Finance and Accounting Professional;
(v) Directive means directive issued by the Council or its standing committees under
bye-law 129A;
(vi) ETCOM means the Education and Training Committee;
(vii) Examinee means a person admitted to the examinations of the Institute;
(viii) Full-time student means a person registered for appearing in examination of the
Institute under the Ordinance or the Bye-Laws made thereunder, and who has not
yet started the training prescribed under the bye-laws;
(ix) Institute means The Institute of Chartered Accountants of Pakistan;
*The gazette notification of the corresponding amendments in CA Bye-Laws, dated June 1, 2022, was effective
from May 24, 2022.

(x) Member means a member of the Institute;

(xi) MSA means Multi-Subject Assessment;
(xii) Permitted book means the books an examinee may carry while attempting the
examinations;
(xiii) PRC means Pre-Requisite Competencies specified under Directive 1.20 Qualifying
Assessment Test and Pre-requisite Competencies;
(xiv) QAT means Qualifying Assessment Test specified under Directive 1.20 Qualifying
Assessment Test and Pre-requisite Competencies;
(xv) Relevant Degree Awarding Institute (RDAI) means a degree-awarding university or
institute accredited by the Higher Education Commission of Pakistan, which fulfills
the criteria specified by the Council;
(xvi) Specified Degree Awarding Institute (SDAI) means a degree-awarding university or
institute accredited by the Higher Education Commission of Pakistan, which fulfills
the criteria specified by the Council;
(xvii) Trainee student means a person who has entered into a contract of training with a
member of the Institute, prescribed under the bye-laws, and has been registered as
such by the Institute; and
(xviii) Website means the website of the Institute www.icap.org.pk.
(2) Unless the context otherwise requires, all other terms and expressions used but not
defined in this Directive shall have the same meaning as assigned to them in the Ordinance
and Bye-Laws; and words importing the singular shall include the plural and vice versa.
3. REGISTRATION
(1) Registration as a full-time student
Any of the following persons, upon application, shall be registered as full-time students:
(i) Graduates with 16 years of education from a local or foreign university recognized by
the competent authority of higher education in Pakistan.
(ii) Graduates with 14 years of education with 45% aggregate marks or equivalent grades;
and who have passed Pre-requisite Competencies (PRC) under Directive 1.20 or
obtained exemption from PRC under Directive 1.21.
(iii) Persons who have completed eligibility requirements for registration by completing or
obtaining exemption from Qualifying Assessment Test (QAT) and completing PRC
under Directive 1.20 or obtaining exemption from PRC under Directive 1.21.
(iv) Persons who have passed examinations of such professional accountancy bodies, as
approved by the Council for the purpose, and specified in Directive 1.21.
(v) Persons who have completed eligibility requirements for registration by completing AFC
under Directive 1.22 or obtaining exemption from AFC.
(2) Registration as a trainee student
Any of the following persons who have attained 16 years of age and offered a training
contract by a Training Organization (TO), upon application, shall be registered as trainee
students:

(i) Completed CAF stage or obtained exemption from CAF stage or equivalent
examinations of the Institute; and have completed or exempted from applicable
Hands-on Courses.
(ii) Graduated from bachelor program with 16 years of education from a local or foreign
university recognized by the competent authority of higher education in Pakistan.
(iii) Graduated from bachelor program with a minimum of 14 years of education with 45%
aggregate marks or equivalent grades from a local or foreign university recognized by
the competent authority of higher education in Pakistan; and who have passed PRC
under Directive 1.20 or obtained exemption from PRC under Directive 1.21.
(iv) Graduated from bachelor program with a minimum of 14 years of education with 45%
aggregate marks or equivalent grades from a local or foreign university recognized by
the competent authority of higher education in Pakistan; and who have passed AFC
under directive 1.22 or obtained exemption from AFC.
(3) Provisional registration
A person may be provisionally registered in the following circumstances:
(i) As a trainee student, where certificate or degree of the previous qualification, on which
registration is based, is awaited in the normal course; or
(ii) As an examinee, where 16-year degree program is being undertaken from a recognized
degree awarding institute. Provided that in case of failing to complete 16-year degree
program, such persons shall be required to apply for registration under3(1)(iii);
(iii) any other circumstances deemed appropriate by the Council for any category.
4. CURRICULUM AND SYLLABUS

(1) Any person seeking membership of the Institute under sub-section (1)(ii) of section 4 of
the CA Ordinance shall be required to pass all the subjects of each stage of the Scheme
2021 forming part of the curriculum or obtain exemption therefrom.
(2) Curriculum
The examinations of the Institute shall consist of the following stages and subjects:
(i) Certificate in Accounting and Finance (CAF)
Group A
CAF-1 Financial Accounting and Reporting-I
CAF-2 Tax Practices
CAF-3 Cost and Management Accounting
CAF-4 Business Law
Group B
CAF-5 Financial Accounting and Reporting-II
CAF-6 Managerial and Financial Analysis
CAF-7 Company Law
CAF-8 Audit and Assurance
(ii) Certified Finance and Accounting Professional (CFAP)
CFAP-1 Advanced Accounting and Financial Reporting
CFAP-2 Advanced Corporate Laws and Practices
CFAP-3 Strategy and Performance Measurement

CFAP-4 Business Finance Decisions

CFAP-5 Tax Planning and Practices
CFAP-6 Audit, Assurance and Related Services
(iii) Multi-Subject Assessment (MSA)
MSA-1 Financial Reporting and Assurance Professional Competence
MSA-2 Management Professional Competence
(3) The curriculum shall be implemented in accordance with the transition policy specified in
this Directive read with Directive 1.20.
(4) Syllabus
(i) The contents and learning outcomes of each subject are attached as Annexure –A.
(ii) Where a specific reference to any legislation, guideline, standard and other similar
document is given in the syllabus, it shall be deemed to cover any subsequent
amendments that may be made therein from time to time, subject to the timelines
mentioned in this paragraph.
(iii) Any revision and amendment in legislation, standard, code, guideline and statement
shall not be part of the syllabus before six months period prior to the month of
examinations has elapsed:
(a) in case of legislation, from the date of publication thereof by the issuing authority;
(b) in case of change, revision or issuance of new standard, code, guideline and
statement, from the date of publication of study material by the Institute or date
of application prescribed by the issuing authority of the same, whichever is later.
Provided that Finance Act or Ordinance, and notifications and circulars relating to
Finance Act or Ordinance, issued four months prior to the month of examinations shall
be considered forming part of the syllabus, in case of CFAP and MSA.
(5) Amendments not to be treated as revision/changes in syllabus
The Institute shall have the power to:
(i) make corrections of editorial nature;
(ii) insert new legislation, guideline, standard and other similar document that have
repealed or replaced legislation, guideline, standard and other similar document
already included in the existing syllabus;
(iii) delete the repealed or withdrawn legislation, guideline, standard and other similar
document included in the existing syllabus;
(iv) decide the applicability of ordinances issued by the competent authority and is
pending approval of national assembly and senate, as the case may be.
Provided that all such amendments in Directive shall be ratified by the Council, preferably,
in the next immediate meeting and shall be made part of the minutes of such meeting.
(6) Revision of curriculum and syllabus
(i) Any subsequent revision in curriculum and syllabus, other than changes specified in
paragraph 4(5), shall be approved by the Council.
(ii) All relevant committees and directorates shall engage in formal consultation during
the process of revision in curriculum and syllabus.

(iii) The full scope revision in education and training scheme shall be undertaken by the
Council at least every fifth year from the date of the last revision or earlier if deemed
necessary.
(7) Hands-on Courses (HOC)
(i) There shall be three hands-on courses, unless exempted and subject to transition
under this Directive, to be completed at various stages of qualifications as follows:
(a) Presentation and Personal Effectiveness (PPE)
(b) MS Office
(c) Data Management and Analytics; or Fin-Tech
(ii) Hands-on courses on PPE and MS Office shall be completed:
(a) any time before the commencement of training by the persons joining training
on CAF basis on or after 01 March 2023. Provided that students joining training
from 1 March 2023 to 31 August 2023 shall be required to complete the hands-
on courses on PPE and MS office before 31 August 2023.
(b) any time before attempting CFAP by the persons joining training on graduation
basis on or after 01 March 2022.
(iii) Hands-on courses on Data Management and Analytics or Fin-Tech shall be completed
any time before attempting MSA.
(iv) The Hands-on courses may be conducted by the Institute or any other party as
approved by the Institute.
(v) For Data Management and Analytics or Fin-Tech courses, the Institute shall conduct its
own assessment on completion of the course. The Institute may designate a Test
Center for the conduct of the assessment on completion of the course.
(vi) The learning outcomes of courses are specified in Annexure – A.
(8) Course on Professional Values, Ethics and Attitude (PVEA)
(i) Trainee students shall be required to complete online courses on PVEA:
(a) before issuance of Form-O (Certificate of service and fitness for appearing at the
CFAP Level Examinations) under byelaw 125, effective from Winter 2022 attempt;
and
(b) before issuance of Form-S (Certificate of Completion of Service Under Training
Contract) under bye-law 106 (2).
(ii) The learning outcomes of the Course on PVEA are specified in Annexure – A.
(iii) TO shall only issue Forms-O and S after verifying successful completion of the Course
on PVEA at both stages.
5. EXEMPTIONS
Exemptions are specified in Directive 1.21.
6. FEES AND REFUNDS

(1) Fees
The schedule of the fees shall be specified by the Council from time to time.

(2) Refunds
(i) The fees paid by a person shall not be refunded except for registration as a full-time
or as a trainee student, if the person is found ineligible for registration and applies to
the Institute on the prescribed form.
(ii) Fees for examinations shall be refunded in accordance with the provisions of bye-law
116.
7. EXAMINATIONS
(1) Admission to examinations
Persons shall be admitted to examinations if they:
(i) have been registered either as full-time students or trainee students;
(ii) are eligible to appear in the examination, under the progression rules specified in this
Directive; and
(iii) have submitted the examination form along with the prescribed fee, within the
specified dates.
(2) Time and place of examination
(i) All examinations shall be held at such time and place as the Institute may determine
from time to time.
(ii) The Institute shall notify such information on the website periodically at least once
each year.
(iii) The Institute shall have the power to change the time and place of examinations after
giving prior notice to the examinees through any or all of the mediums, namely,
website, email, short messaging service, Institute’s social networking sites and postal
service.
(3) Open book examinations
(i) Examinees shall be permitted to carry books in certain examinations as specified
below:
Paper Permitted book
CAF-1 Financial Accounting and Handbook of International Financial Reporting
Reporting – I Standards
CAF-5 Financial Accounting and Handbook of International Financial Reporting
Reporting – II Standards
CFAP-1 Advanced Accounting Handbook of International Financial Reporting
and Financial Reporting Standards and ICAP Code of Ethics for Chartered
Accountants (as prescribed from time to time
with current version being Revised 2019).
CFAP-2 Advanced Corporate - Anti-money Laundering Act, 2010
Laws and Practices
- Anti-money Laundering Regulations, 2015
- Companies (Distribution of Dividends)
Regulations, 2017


- Companies (Further Issue of Shares)
Regulations, 2020
- Companies (General provisions and forms)
Regulations, 2018
- Companies (Incorporation) Regulations, 2017
- Companies (Investment in Associated
Companies or Associated Undertakings)
Regulations, 2017
- Companies (Postal Ballot) Regulations, 2018
- Companies (Related Party Transactions &
Maintenance of Related Records)
Regulations, 2018
- Companies (Manner and Selection of
Independent Directors) Regulations, 2018
- Companies Act, 2017
- Companies Ordinance, 1984
- Competition Act, 2010
- Corporate Rehabilitation Act 2018
- Corporate Rehabilitation Regulations, 2019
- Corporate Restructuring Companies Act,
2016
- Corporate Restructuring Companies Rules,
2019
- Employees Contributory Fund (Investment in
Listed Securities) Regulations, 2018
- Foreign Exchange Manual of State Bank of
Pakistan
- ICAP Code of Ethics for Chartered
with current version being Revised 2019)
- Insurance Ordinance, 2000
- Listed Companies (Buy- Back of Shares)
Regulations, 2019
- Listed Companies (Code of Corporate
Governance) Regulations, 2019
- Listed Companies (Substantial Acquisition of
voting shares and Takeovers) Regulations,
2017


- NBFC (Establishment and Regulation) Rules
2003
- Pakistan Stock Exchange Rule Book
- Payment System and Electronic Fund
Transfer Act, 2007
- Private Placement of Securities Rules, 2017
- Public Offering Regulations, 2017
- Public Sector Companies (Corporate
Governance) Rules, 2013
- Securities Act, 2015
- The Banking Companies Ordinance, 1962
- The Non-Banking Finance Companies and
Notified Entities Regulations, 2008
Explanation: "Only the Original Book duly bound,
bound addendum to the books from the same
publisher and Clip version of Bare Laws shall be
permitted
Rules and Regulations made thereunder shall be
permitted
CFAP-4 Business Finance
Decisions Any three books
CFAP-5 Tax Planning and - Income Tax Ordinance, 2001 and related
Practices rules
- Sales Tax Act, 1990 and related rules
- The Provincial Sales Tax Acts
- The Islamabad Capital Territory (Tax on
Services) Ordinance, 2001
- Federal Excise Act, 2005 and related rules
- ICAP Code of Ethics for Chartered
with current version being Revised 2019)
Explanation : "Only the Original Book duly
bound, bound addendum to the books from the
same publisher and Clip version of Bare Laws
shall be permitted.
CFAP-6 Audit, Assurance and Handbook of International Auditing and
Related Services Assurance Pronouncements and ICAP Code of
Ethics for Chartered Accountants (as prescribed


from time to time with current version being
Revised 2019).
MSA-1 Financial Reporting and
Any five books in total from amongst those books
Assurance Professional
specified for subjects comprising this paper.
MSA-2 Management
Any five books in total from amongst those books
Professional Competence
specified for subjects comprising this paper.
(a) Only original books duly bound shall be permitted, except as, permitted for
CFAP 2: Advanced Corporate Laws and Practices and CFAP 5: Tax Planning and
Practices.
(b) Examinees shall be permitted to highlight or underline the text in the permitted
books.
(c) Any decision taken by the Institute regarding permission to carry a book in the
examinations shall be final.
(4) Use of unfair means
(i) An examinee shall be considered guilty of using unfair means if the examinee’s actions
are likely to give an unfair advantage to the examinee or to any other examinee.
(ii) The Examination Committee shall have the power to take appropriate action in the
matter, as below:
Level Offences under unfair means Disciplinary Action
For Online Proctor Exams:
 Whispering/speaking both on and off-camera

including appearance of the same.
 Suspicious moves or actions such as attempt to
move away from the webcam or signaling
1 someone, or appear to reach or hold objects off Warning
camera, writing or scribbling, etc.
 Keeping pen, paper, books or any other prohibited
material within arms’ reach.
 Other offence(s) of similar nature and intensity
 Writing notes on the desk before the start of the
examination.
 Use of electronic communication devices (e.g. Cancellation of

2 mobile phone, Bluetooth or similar devices, paper
earphone, headphone, etc.) for any purpose except
for receiving call of the Proctor or Examination
admin team from specified numbers.


 Copy or transfer any examination material/screen
on computer or mobile phone including but not
limited to using print screen, photographing or any
other function or means.
 Attempt to write on paper, desk, table, etc. during

the examination.
 Repeating offence(s) of Level 1 (both under in-

person policy and remote proctoring policy) of
which cognizance has been taken earlier on the
same day or on any other day of same or
subsequent examination attempt.
 Other offences of similar nature and intensity
 Use of materials of all kind (including paper slips)

containing examination relevant material, except
for those specifically allowed under exam policies.
 Any information written on hands, arms, dress,

admit card, etc.
 Leaving the examination room without the Cancellation of

permission of the Proctor for any purpose paper or
cancellation of
whatsoever.
3 the current
 Non-compliance of given instructions or denial to attempt
(maximum
follow the Proctor’s instructions.
penalty)
 Repeating offence of Level 2 (both under in-person
policy and remote proctoring policy) of which
cognizance has been taken earlier on the same day
or on any other day of same or subsequent
examination attempt.
 Other offences of similar nature and intensity.
 Attempt to threaten or abuse the Proctor to
influence him/her during exam. Debarred from
attempting
 Repeating offence(s) of Level 2 & 3 (both under in- examination for
4 person policy and remote proctoring policy) of
a period not
which cognizance has been taken earlier, in the
exceeding two
same or subsequent attempt.
years.
 Other offences of similar nature and intensity.
The student who
5 Proxy sitting in lieu of authorized student. allows any other
person to sit on
his/her behalf shall


be debarred for life.
The person who
attempts the
examination shall
be debarred for life
if he/she is an ICAP
student. An FIR for
criminal offence
may be lodged
against that person
if he/she is not an
ICAP student.
S. No. Offences under unfair means Disciplinary Action

For In person Exams:
Cancel the result of
the paper in which
Cheating, helping or taking help from others while
1 the examinee is
attempting an examination;
found guilty of
using unfair means.
Cancel results of
any number of
papers attempted
Using electronic gadgets, other than those by the examinee in
2 permitted by the Institute through notification, addition to the
while attending the examination; paper in which the
examinee is found
guilty of using
unfair means.
Suspend admission
Mentioning name/roll number/ any other to examination for
identification mark or signing on answer script a period deemed
3
except on the specified portion which is specifically appropriate, but
provided for this purpose; and not exceeding two
years.
Suspend
registration for a
period deemed
4 Writing unsolicited remarks on the answer script.
appropriate, but
not exceeding two
years.
(5) Examination results
(i) The passing marks shall be 50% in each subject.
(ii) Only the marks obtained by persons in the paper(s) which they fail to pass shall be
disclosed to them.

(6) Review of answer scripts

(i) An examinee who fails to pass an examination may apply to the Institute within 30
days from the declaration of result, on a specified form after paying the specified fee,
for a review of answer script.
(ii) The review shall involve:
(a) Checking that the marking process is free from errors and omissions.
(b) Marks were correctly counted and reflected in the results of the examinee.
(iii) The response of the review application shall be sent to the applicant within 40 days of
the receipt of an application by the Institute.
(iv) Another scheme by the name of Student Feedback Scheme is also available under
Institute notification effective from Summer 2014 examination.
(7) Special arrangements

(i) An examinee may apply to the Institute 20 days prior to the first day of the month in
which examinations are to be held, for special arrangements required due to any
health or physical condition.
(ii) The limit of 20 days’ prior notice may be waived or relaxed by the Institute in case of
emergency or under circumstances beyond the control of the examinee.
(iii) The Institute shall have sole discretion to accept or reject the application to the extent
deemed appropriate by the Institute.
8. RULES OF PROGRESSION
(1) Appearance in the Examination
(i) CAF
(a) Examinees shall be permitted to attempt papers of CAF if they fulfill the
registration requirements under directive 1.20 or pass AFC under directive 1.22.
(b) Examinees shall first attempt papers of Group A.
(c) Examinees will be permitted to appear in Group B on passing at least two papers
from Group A.
(ii) CFAP and MSA
Students who:
(a) have completed twelve months of training prescribed under the bye-laws on or
before the first day of the month in which examination is to be held; and
(b) have passed or obtained exemptions from all papers of CAF shall be eligible to
attempt CFAP.
(iii) Unless a lower number of papers remains, a student shall attempt a minimum of two
papers at the CFAP and MSA level.
(iv) Examinees who have passed the following papers of CFAP shall be eligible to attempt
‘MSA-1 Financial Reporting and Assurance Professional Competence’:
(a) Advanced Accounting and Financial Reporting
(b) Audit, Assurance and Related Services

(v) Examinees who have passed the following papers of CFAP shall be eligible to attempt
‘MSA-2 Management Professional Competence’:
(a) Strategy and Performance Measurement
(b) Business Finance Decisions
(2) Maximum number of attempts / maximum period allowed to pass all exams under this
scheme
(i) Effective from Spring 2022 attempt, examinees appearing in CAF for the first time shall
have a maximum of four years from the date of the first attempt to pass all papers at
this stage. Provided that examinees who have no more than two papers remaining
shall be permitted an additional one year to pass the remaining papers.
(ii) Examinees whose training commence after 01 March 2022, shall not be admitted to
any further examinations of CFAP and MSA unless they have passed four papers of
CFAP level within ten years from the date of commencement of their training period.
Provided that persons who have passed all papers except two papers of CFAP shall
have no limitation as regard the number of attempts.
(iii) Subject to paragraph 8(2)(ii) there shall be no limitation of attempts on examinees
appearing in MSA.
(3) An attempt shall be counted when a person is issued the admit card and signs the
attendance sheet in the examination.
9. TRANSITION TO THE SCHEME 2021

(1) The credit shall be awarded in the following manner irrespective of new composition of
papers in the respective stage:
(i) Stage wise credit for AFC qualified
S. No. Education and Training Scheme 2013 The Scheme 2021

Assessment of Fundamental Pre-Requisite Competencies
1
Competencies (AFC) (PRC)
(ii) Stage wise credit for CAF, CFAP and MSA qualified
Certificate in Accounting and Finance Certificate in Accounting and

2
(CAF) Finance (CAF)
Certified Finance and Accounting Certified Finance and Accounting
3
Professional (CFAP) Professional (CFAP)
4 Multi-subject Assessment (MSA) Multi-subject Assessment (MSA)
(2) Paper-wise credit for an incomplete stage
The following mapping shall apply to only incomplete stages of Education Scheme 2013.
(i) Credit for AFC passed or exempted papers
Subjects before the commencement of the

The Scheme 2021
Scheme 2021
Code Paper Code Paper
AFC-1 Functional English PRC-1

Business Writing and

AFC-2 Business Communication
Comprehension Skills
AFC-3 Quantitative Methods PRC-2 Quantitative Methods
Introduction to Information
AFC-4 PRC-5 Introduction to Business
Technology
(ii) Credit for CAF passed or exempted papers

The Scheme 2021
Scheme 2021
Introduction to
CAF-1 Introduction to Accounting PRC 4
Accounting
Introduction to Economics and
CAF-2 PRC 3 Principles of Economics
Finance
CAF-4 Business Law
CAF-3 Business Law
CAF-7 Company Law
Business Management & Managerial and Financial
CAF-4 CAF-6
Behavioural Studies Analysis
CAF-5 Financial Accounting and CAF-1 Financial Accounting and
Reporting – I Reporting – I
CAF-6 Principles of Taxation CAF-2 Tax Practices
Financial Accounting and Financial Accounting and
CAF-7 CAF-5
Reporting – II Reporting – II
Cost and Management Cost and Management
CAF-8 CAF-3
Accounting Accounting
CAF-9 Audit and Assurance CAF-8 Audit and Assurance
(iii) Credit for CFAP and MSA passed papers

The Scheme 2021
Scheme 2021
Advanced Accounting and Advanced Accounting and
CFAP-1 CFAP-1
Financial Reporting Financial Reporting
Advanced Corporate Laws
CFAP-2 Corporate Laws CFAP-2
and Practices
Business Management and Strategy and Performance
CFAP-3 CFAP-3
Strategy Measurement
Business Finance
CFAP-4 Business Finance Decisions CFAP-4
Decisions
CFAP-5 Advanced Taxation CFAP-5 Tax Planning and Practices

Audit, Assurance and Related Audit, Assurance and

CFAP-6 CFAP-6
Services Related Services
Financial Reporting and Financial Reporting and
MSA-1 Assurance Professional MSA-1 Assurance Professional
Competence Competence
Management Professional Management Professional
MSA-2 MSA-2
Competence Competence
(iv) Credit for Hands-on Courses
Presentation and Communication Presentation and Personal

PCSC PPE
Skills Course Effectiveness
(3) Transitions
CAF
(i) The transition for examinees who have appeared but have not passed all CAF papers
before Spring 2022 attempt, under Education and Training Scheme 2013, shall be as
follows:
(a) They shall be given credit in CAF under the Scheme 2021 according to the mapping
specified in this paragraph.
(b) They shall be required to pass remaining CAF papers under the Scheme 2021
within the period specified in this paragraph.
(c) They shall have a maximum period calculated in the manner specified in this
paragraph to pass all papers of CAF. The period shall be computed in months
worked out as six times of the number of paper they have yet to pass on 01 March
2022. Provided that examinees who have no more than three papers remaining on
01 March 2022 shall have twenty-four months to pass the remaining papers.
(d) Examinees shall be required to pass at least two papers of CAF Group A to appear
in papers of CAF Group B. Provided that this condition shall be applicable after the
Autumn 2022 attempt.
CFAP
(ii) The transition for examinees who have completed their training or are undergoing
training on 01 March 2022 and have not passed CFAP papers before the Summer 2022
attempt, under Education and Training Scheme 2013, shall be as follows:
(a) They shall be given credit in CFAP under the Scheme 2021 according to the
mapping specified in 9(2)(iii) above.
(b) They shall be required to pass at least four papers of CFAP within ten years from
Summer 2022 attempt. Provided that persons who have passed all papers except
two papers of CFAP shall have no limitation as regards the number of attempts.
Hands-on courses
(iii) Persons joining training before 01 March 2022 shall not be required to complete
hands-on courses.

10. TRAINING REGULATIONS AND GUIDELINES

The training regulations and guidelines are specified in Directive 1.03.
11. RELEVANT DEGREE AWARDING INSTITUTE (RDAI) AND SPECIFIED

DEGREE AWARDING INSTITUTE (SDAI)
The procedure to grant the status of Relevant Degree Awarding Institute and Specified Degree
Awarding Institute to a university is specified in Directive 1.04.
12. REMOVAL OF DIFFICULTY

The Council of the Institute shall have the powers to take such decisions as may be necessary
to remove any difficulty arising from this Directive. Further, the Council of the Institute has
delegated powers for the purpose of removing the difficulty of operational nature in
implementation of this Directive to the Chairman ETCOM and the Chairman Examination
Committee.
13. REPEAL
(1) This Directive shall repeal the Directive 1.01 – Education and Training Scheme 2013 on
March 1, 2022.
(2) Paragraph 1(3) shall be deemed as deleted with effect from the date of gazette notification
of corresponding amendments in CA Byelaws 1983.

Annexure – A
SYLLABUS
Proficiency and testing levels are mentioned against each learning outcome within the syllabus and
are explained below:
Proficiency levels
The proficiency level is the description of pitch of the performance expected from the person taking
action. The levels are as follows:
Level of
Description
Proficiency
P1 Typically, learning outcomes in a competence area focus on:
• Defining, explaining, summarizing, and interpreting the underlying principles and
theories of relevant areas of technical competence to complete tasks while
working under appropriate supervision;
• Performing assigned tasks by using the appropriate professional skills;
• Recognizing the importance of professional values, ethics, and attitudes in
performing assigned tasks;
• Solving simple problems, and referring complex tasks or problems to supervisors
or those with specialized expertise; and
• Providing information and explaining ideas in a clear manner, using oral and
written communications.
Learning outcomes at the foundation level relate to work environments that are
characterized by low levels of ambiguity, complexity and uncertainty.
• Independently applying, comparing, and analyzing underlying principles and
theories from relevant areas of technical competence to complete work
assignments and make decisions;
• Combining technical competence and professional skills to complete work
assignments;
• Applying professional values, ethics, and attitudes to work assignments; and
• Presenting information and explaining ideas in a clear manner, using oral and
written communication, to accounting and non-accounting stakeholders.
Learning outcomes at the intermediate level relate to work environments that are
characterized by moderate levels of ambiguity, complexity, and uncertainty.
• Selecting and integrating principles and theories from different areas of technical
competence to manage and lead projects and work assignments, and to make
recommendations appropriate to stakeholder needs;
• Integrating technical competence and professional skills to manage and lead
projects and work assignments;
• Making judgments on appropriate courses of action drawing on professional
values, ethics, and attitudes;

Level of
Description
Proficiency
• Assessing, researching, and resolving complex problems with limited supervision;
• Anticipating, consulting appropriately, and developing solutions to complex
problems and issues; and
• Consistently presenting and explaining relevant information in a persuasive
manner to a wide-range of stakeholders.
Learning outcomes at the advanced level relate to work environments that are
characterized by high levels of ambiguity, complexity, and uncertainty.

Testing Levels
Testing levels are the maximum marks assigned to a topic for examination purposes. The levels are as
follows:
Testing
Description
Levels
T1 The maximum limit per topic and a maximum aggregate limit of testing level-1
topics will be 8 marks and 35 marks respectively in an attempt. Topics covered in
testing level 1 will include the following:
(i) Topics that are specifically identified as testing level 1 for a specified
professional stage.
(ii) All topics assessed at earlier stages of qualification.
(iii) New topics included in the syllabus for the first time.
T2 The maximum limit per topic of this level 2 will be 20 marks.
T3 The maximum limit per topic of this level 3 will be 25 marks.
Any new topic included in the syllabus will be tested in the first attempt at level 1
irrespective of the testing level mentioned in the syllabus. Any amendment or
replacement of existing laws, IFRS, ISAs, Code of Ethics, etc. will not be considered
as the inclusion of a new topic in the syllabus.

CAF-1: FINANCIAL ACCOUNTING AND REPORTING-I

Competency
Apply selected international standards on financial reporting.
Syllabus Teaching Weightage

Grid
Ref. hours
A Preparation of Financial Statements 52-55 35-45
B Conceptual Framework and Interpretation of Financial 20-30 20-30
Statements
C Accounting for Financial Transactions 40-45 30-40
Total 110-130 100
Key Examinable Technical Competencies
Syllabus Proficiency Testing

Learning Outcomes
Ref. levels levels
A Preparation of Financial Statements
1 Prepare the statement of changes in equity. P2 T2
2 Prepare the statement of cash flows. P2 T2
Analyze the impact of errors on the financial statements
3 P2 T1
within a reporting period.
Apply the principles and concepts of selecting and applying
4 accounting policies, accounting for changes in estimates and P2 T1
reflecting corrections of prior period errors.
Compare the usefulness of cash flow information with that of
5 a statement of profit or loss or a statement of profit or loss P2 T1
and other comprehensive income.
6 Prepare financial statements for non-profit organizations. P2 T2
Conceptual Framework and Interpretation of Financial
B
Statements
Apply and discuss the requirements of the conceptual
1 P2 T1
framework for financial reporting.
Calculate and interpret ratios to give an assessment of an
entity’s performance and financial position with different
2 P2 T2
benchmarks and discuss window dressing of financial
statements to produce the desired effect.
Apply the principles and concepts concerning measurement,
3 retrospective adjustments, presentation and disclosure of P2 T2
basic and diluted earnings per share.


Learning Outcomes
Ref. levels levels
C Accounting for Financial Transactions
Apply the principles and concepts of recognition,
measurement at recognition and after recognition and
1 disposal of property plant and equipment, the determination P2 T2
of their carrying amounts, and the depreciation charges and
impairment losses to be recognized in relation to them.
Apply the principles and concepts of accounting and
disclosure of Government grants, other Government
2 P2 T1
assistance and loans granted by the government (subsidized
and forgivable).
3 P2 T1
measurement and disclosure of borrowing costs.
Apply the principles and concepts of carrying assets (other
than cash-generating unit and goodwill) at no more than
4 P2 T1
their recoverable amount and recognition of impairment loss
and reversal thereof.
5 measurement, transfer, disposal and disclosure of P2 T2
Investment Property
Key Examinable Professional Skills
1 Evaluate data and information from a variety of sources and perspectives through
research, integration and analysis.
2 Apply critical thinking skills to solve problems, inform judgements, make decisions and
reach well-reasoned conclusions.
3 Communicate clearly and concisely when presenting, discussing and reporting in formal
and informal situations.
4 Respond effectively to changing circumstances or new information to solve problems,
inform judgements, make decisions, and reach well-reasoned conclusions.
Key Examinable Professional Values, Ethics and Attitude
1 Apply an inquiring mind when collecting and assessing data and information.
2 Apply critical thinking when identifying and evaluating alternatives to determine an
appropriate course of action.

Specific Examinable Knowledge Reference
1 IAS 1: Presentation of Financial Statements

2 IAS 7: Statement of Cash Flows
3 IAS 8: Accounting policies, changes in accounting estimates and errors
4 IAS 16: Property, plant and equipment
5 IAS 20: Accounting for government grants and disclosure of government assistance
6 IAS 23: Borrowing costs
7 IAS 36: Impairment of assets
8 IAS 40: Investment property
9 Conceptual Framework for financial reporting:
- Recognition and measurement of the elements of financial statements
- Concepts of capital and capital maintenance
10 IAS 33: Earnings per share
11 Accounting standards for Not-for-profit organizations

CAF-2: TAX PRACTICES

Competency
Prepare income and sales tax information.
Syllabus Teaching
Grid Weightage
Ref. Hours
A Objective, System and Historical Background, Constitutional 10-15 5-10
Provisions and Ethics
B Income Tax Laws 70-80 60-75
C Sales Tax Laws 30-35 20-30
Total 110-130 100

Learning Outcomes
Ref. levels levels
Objective, System and Historical Background,
A.
Constitutional Provisions and Ethics
a Basic Concepts of taxation and Constitutional Provisions
1 Discuss the implication of direct and indirect taxation. P1 T1
b Federal and Provincial Financial Procedures
1 Describe Federal Consolidated Fund and Public Account. P1 T1
2 Describe Provincial Consolidated Fund and Public Account. P1 T1
Explain the provisions related to the distribution of
3 P1 T1
revenues between the Federation and Provinces.
Discuss taxes that can be raised under the authority of
4 P1 T1
Parliament.
Describe the powers of provincial assemblies in respect of
5 P1 T1
provincial taxes.
c Ethics
Discuss the objectives and rights of the state to tax its
1 P1 T1
citizens.
Discuss morality behind compliance with tax laws by
2 P2 T1
taxpayers and tax practitioners.
Describe the powers vs ethical responsibilities of tax
3 P2 T1
implementation authorities
Discuss pillars of tax administration, namely; fairness,
4 P2 T1
transparency, equity and accountability.


Learning Outcomes
Ref. levels levels
Explain the basic difference between evasion and
5 P1 T1
avoidance of tax.
B. Income Tax Laws
a Central Concepts
1 Describe the central concepts and scope of income P2 T2
b Chargeability and Computation of Income and Tax
Compute income, taxable income and tax thereon under
various heads of income for non-corporates i.e. salary,
1 P2 T2
income from property, income from business, capital gains
and income from other sources.
2 Apply the provisions relating to carry forward, deductible
allowances, set-off of losses, tax credit and tax P2 T2
exemptions/concessions.
Procedural Aspects: Returns, Assessments, Appeals and
c
Records
Explain tax compliance requirements and related
1 P2 T2
submissions
Identify persons required to furnish a return of income and
2 P2 T2
wealth statement.
Explain the provisions of law relating to the method of filing,
3 revision, due dates for filing and extension in the date for P2 T2
filing of return/statement.
Prepare return of income and wealth statement along with
4 P2 T2
its reconciliation.
Communicate with Inland Revenue Authorities (filing
5 P2 T2
applications, representations and extensions).
Explain the provisions of law relating to various types of
6 P2 T2
assessment.
Discuss the provisions of law relating to maintenance of
7 P2 T2
records and audit of income tax affairs of a person.
Describe procedure involved in appeals before various
8 appellate authorities i.e. Commissioner (Appeals), Appellate P2 T2
Tribunal, High Court and Supreme Court.
State provisions of law relating to alternative dispute
9 P2 T2
resolution.
C. Sales Tax Laws
a Scope and Payment of Tax
Calculate sales tax (output and input) on taxable supplies
1 P2 T2
(including zero-rated and exempt supplies).


Learning Outcomes
Ref. levels levels
Discuss the time and manner of sales tax liability and its
2 P2 T2
payment.
Calculate apportionment of input tax and carry
3 P2 T2
forward/refund thereof.
b Registration
1 Describe the types, requirements and procedures involved P2 T2
for registration, de-registration and returns.
c Book Keeping and Invoicing Requirements

List the records to be kept by a registered person and
1 explain the related retention requirements and procedures P2 T2
involved in the audit.
State the significance of tax invoice, debit and credit notes
2 P1 T1
and their related requirements.
3 Explain the procedure for the destruction of goods. P2 T2
1 Evaluate data and information from a variety of sources and perspective through
3 Communicate clearly and concisely when presenting, discussing and reporting in
formal and informal situations.
Key Examinable Professional Values, Ethics and Attitudes
1 Apply an inquiring mind when collecting and assessing data and information
3 Identify threats to compliance with the fundamental principles of ethics.
1 Article 78 to 88 of the Constitution of Pakistan

2 Article 118 to 127 of the Constitution of Pakistan
3 Article 160 to 165A of the Constitution of Pakistan
4 Sections 43 to 53 in the Fourth Schedule attached to the Constitution.
5 Code of Ethics for Chartered Accountants (Revised 2019) Sections 604.1 to 604.6A1

Income Tax Ordinance, 2001

6 Clauses of Section 2: (1, 3, 3C, 5, 5A, 8, 9, 10, 10A, 11A, 13AA, 16, 19, 19A, 20, 21, 22,
23, 29, 29A, 29C, 30AC, 30AE, 32, 33, 36, 38A, 41, 44A, 45, 46, 47, 49, 54, 63, 66, 68)
and other definitions covered under relevant sections
7 Chapter II - (excluding Sections 4B, 5A, 5AA, 6, 7, 7A, 7C, 7D)
8 Chapter III - (excluding Sections 23B, 29A, 30, 31, 36, 49, 56A, 57A, 59AA, 59B, 64B,
65B, and 65E)
9 Chapter IV - (excluding Sections 78 and 79)
10 Chapter V - (excluding Part II Division III, Part IV and V)
11 Chapter VII - Part II only
12 Chapter IX – Section 113 only
13 Chapter X – [(Part I, II, III) and (Part VIII - Sections 174 and 177 only)]
14 Schedules: Relevant Parts of First, Second, Third and Sixth Schedules
Income Tax Rules, 2002
15 Income tax rules related to the above provisions of the Income Tax Ordinance, 2001
Sales Tax Act, 1990
16 Clauses of Section 2: 3, 5AA, 5AB, 7, 9, 9A, 11, 12, 13, 14, 16, 17, 19, 20, 21, 22A, 25,
27, 28, 29A, 31, 33, 35, 37, 39, 40, 41, 43, 44, 46, 47, 48
17 Chapters II, III, IV and V
18 Chapter X: Section 73
Sales Tax Rules, 2006
19 Chapter I, II, III and IV

CAF-3: COST AND MANAGEMENT ACCOUNTING

Competency
Prepare, account for, record and report production cost of goods and services for managerial
decision making.
Syllabus Grid Teaching Weightage

Ref Hours
A Costs Associated with Production 45-50 35-45
B Cost Flow 20-30 20-30
C Cost Management Planning and Decisions 45-50 30-40
Total 110-130 100

Learning Outcomes
Ref Level level
A. Costs Associated with Production
a Production Cost
1 Identify elements of cost of product, job or services. P2 T1
Account for elements of cost to accumulate the cost of
2 product, job or services using absorption, marginal and P2 T2
activity-based costing.
3 Account for over or under-absorbed overheads. P2 T1
Apply inventory valuation techniques for finished goods
4 P1 T1
inventory in the absorption costing system.
b Raw Material
Apply inventory valuation and measurement techniques
1 P2 T2
for raw material inventory.
c Manufacturing Overhead
Analyze costs of production and service departments for
1 P2 T2
allocation and apportionment of production costs.
2 Calculate predetermined factory overheads rate. P2 T2
d Labour
Discuss productivity and efficiency measurement in
1 P2 T1
relation to controlling labor costs.
Explain the concept of remuneration systems, incentive
2 P2 T1
wage plans and types therein.


Learning Outcomes
Ref Level level
Compute the impact of a learning curve on the
3 P2 T1
productivity of employees.
B. Cost Flow
a Process Costing
Analyze and account for the flow of cost in the process
1 P2 T2
costing system.
Analyze and account for normal and abnormal loss,
2 P2 T1
abnormal gain and cost of rework in process costing.
Apply inventory valuation techniques on work in process
3 P2 T2
and finished goods in process costing system.
4 Analyze and account for the cost of joint and by-product. P2 T2
b Target Costing
1 Apply the target costing tools to given scenarios. P1 T2
c Variance Analysis
Compute standard rates of material, labour and factory
1 P2 T2
overhead.
2 Analyze different variances. P2 T2
C. Cost Management Planning and Decisions

a Cost-Volume-Profit
1 Analyze cost-volume-profit to support decision making P2 T2
b Special Orders
Analyze incremental cost-benefit and contribution margin
1 P2 T2
for a special order.
c Make or Buy Decisions
Analyze incremental cost-benefit and contribution margin
1 P2 T2
to take product mix, make or buy decision.
d Further Processing Decisions
Analyze incremental cost-benefit for further processing
1 P2 T2
decision.
e Shut Down and Product Discontinuation Decisions
Analyze cost-benefit to take shut down and product
1 P2 T2
continuation or discontinuation decisions.
f Economic Order Quantity (EOQ)
1 Calculate EOQ P2 T2
g Safety Stock and Re-order level
1 Calculate safety stock and re-order levels. P2 T2

reach well-reasoned conclusions
formal and informal situations
1 FIFO, weighted average, lower of cost and net realizable value methods of inventory
valuation
2 Direct and indirect cost
3 Variable, semi-variable and fixed costs
4 Repeated distribution method of apportionment of service department cost
5 Simultaneous equation method of apportionment of service department cost
6 Learning curve theory
7 Opportunity cost
8 Relevant cost
9 Breakeven analysis and charts
10 Profit/volume charts
11 Economic Order Quantity
12 Direct material total cost, price and usage variances
13 Direct labour total cost, rate, efficiency and idle time variances
14 Variable production overhead total cost, expenditure and efficiency variances
15 Fixed production overhead expenditure, efficiency and capacity variances
16 Material mix and yield variances
17 Sales Variance and Operating segments

CAF-4: BUSINESS LAW

Competency
Apply commonly used laws and regulations relevant to businesses.

Grid
Ref. hours
A Introduction to legal system 5-8 5-8
B Contract Act, 1872-Essentials 30-35 20-25
C Contract Act, 1872-Performance 35-40 25-30
D Other Business Laws 40-47 35-52
Total 110-130 100
Syllabus Proficiency Testing Level

Contents
Ref. Level
A. Introduction to legal system
Describe legislation, its forms and the process of
1 P2 T1
legislation in Pakistan.
B. Contract Act, 1872-Essentials
Identify essential elements of offer, acceptance and
1 P2 T2
revocation.
Analyze a relationship to identify valid, voidable or void
2 P2 T2
agreements.
3 Apply provisions governing contingent contracts. P2 T2
C Contract Act, 1872-Performance
Apply provisions governing the performance of
1 P2 T2
contracts.
Apply provision governing relations resembling those
2 P2 T2
created by contract.
3 Discuss consequences of breach of contract. P2 T2
4 Explain contract of agency. P2 T1
D Other Business Laws

Describe partnership, nature of the partnership, its
1 creation, types and modes of determining the existence P2 T1
of a partnership.


Contents
Ref. Level
Apply the provisions governing the relation of partners
2 P2 T2
to one another.
Apply provisions governing the relation of partners to
3 P2 T2
third parties.
Explain fundamental concepts of the promissory note,
4 P2 T1
bill of exchange and cheque.
5 Explain provisions relating to the crossing of the cheque. P2 T1
Explain basic concepts in laws related to Anti-money
6 laundering, Data protection, Electronic funds transfer, P1 T3
Competition act, arbitration.
3 Communicate clearly and concisely when presenting, discussing and reporting in formal
3 Analyze the interrelationship of ethics and law, including the relationship between
laws, regulations, and the public interest.
4 Explain the role and importance of ethics in relation to business and good governance.
1 Contract Act, 1872-Essentials

i Section 1 to 2
ii Section 3 to 9
iii Section 10 to 30C
Iv Section 31 to 36
2 Contract Act, 1872-Performance
i Section 37 to 67
ii Section 68 to 72

iii Section 73 to 75
Iv Section 182 to 189
3 Other Business Laws
3.1 Partnership Act, 1932
i Section 1 to 8
ii Section 9 to 17
iii Section 18 to 30
3.2 Negotiable Instruments Act, 1881
i Section 1 to 15
ii Section 122A to 131C
Anti-money Laundering Act, 2010
3.3
Section 2(xiv), 3, 4
Payment Systems and Electronic Fund Transfers Act, 2007
3.4
Section 2(s, t, za), 4, 5, 11
Overview of Prevention of Electronic Crimes Act, 2016
3.5
Section 2(ii, iii, x, xiv, xxxi), 3, 4, 5, 6, 7, 8, 9
Competition Act, 2010
3.6
Section 2(f, k, l, r), 3, 4, 10
The Arbitration Act, 1940
3.7
Section 2(a, d), 3, 4, 5, 13, 21

CAF-5: FINANCIAL ACCOUNTING AND REPORTING-II

Competency
Apply selected international standards, laws and regulations on financial reporting.

Ref. hours
A Preparation of Financial Statements 35-40 25-35
B Accounting for Non-current Assets 35-40 25-35
C Ethics and Other Areas of IFRS 40-50 35-45
Total 110-130 100

Learning Outcomes
Ref. levels levels
A Preparation of Financial Statements
Apply the principles, laws and concepts with respect to
preparation and presentation of the following:
 Statement of financial position
1 P2 T2
 Statement of comprehensive income
 Statement of changes in equity
 Notes to the financial statements
Calculate goodwill and consideration transferred in case of
2 P2 T2
business combinations.
Calculate the value of Investment in associates as per
3 P2 T1
equity method of accounting.
4 Prepare and present consolidated statements of financial

position and consolidated statement of comprehensive P2 T2
income involving a single subsidiary and associate.
B Accounting for Non-current Assets
Apply the principles and concepts with respect to
recognition, classification and measurement of financial
instruments including preparation of journal entries
1 P2 T1
(excluding impairment, reclassification, derivatives,
embedded derivatives, hedge accounting, de-recognition
and modification).
Apply the principles and concepts for recognition,
measurement, presentation and disclosure of Leases
2 P2 T2
(Excluding modification, sale and lease back and
reassessment).


Learning Outcomes
Ref. levels levels
Apply the principles and concepts for recognition and
measurement of intangible assets and expense; and
3 P2 T2
measurement after recognition and disclosure of
intangible assets (including website costs).
measurement at and after recognition and disclosure of
4 P2 T1
biological assets, agriculture produce and government
grants related to a biological asset.
C Ethics and Other Areas of IFRS
a Ethics
Describe with simple examples the fundamental principles
1 P2 T1
of professional ethics.
Apply the conceptual framework to identify, evaluate and
2 address threats to compliance with fundamental P2 T1
principles.
Explain using simple examples the ethical responsibilities
3 of a Chartered Accountant in the preparation and reporting P2 T1
of financial information.
b Other Areas of IFRS
Apply the principles and concepts with respect to
1 disclosure and measurement of operating and reportable P2 T1
segments.
2 measurement and disclosure of adjusting and non- P2 T2
adjusting events after the reporting period.
3 measurement and disclosure of Provisions, Contingent P2 T2
liabilities and Contingent assets.
4 measurement, presentation and disclosure of Revenue P2 T2
from contracts.
5 measurement and disclosure of current tax and deferred P2 T2
tax asset and liability (excluding Business Combinations)
Apply principles and concepts in respect of effect of
6 changes in foreign exchange rates on foreign currency P2 T1
transactions.

Evaluate data and information from a variety of sources and perspective through
1
Apply critical thinking skills to solve problems, inform judgements, make decisions and
2
reach well-reasoned conclusions
Communicate clearly and concisely when presenting, discussing and reporting in
3
Respond effectively to changing circumstances or new information to solve problems,
4
Apply critical thinking when identifying and evaluating alternatives to determine an
2
Apply the relevant ethical requirements to professional behavior in compliance with
3
standards.
4 Explain the nature of ethics.
Evaluate the significance of threats to compliance with the fundamental principles of
6
ethics and respond appropriately.
Apply ethical principles of ethics when collecting, generating, storing, accessing, using
7
and sharing data and information.
1 IAS 1: Presentation of Financial Statements

2 IAS 10: Events after the reporting period
3 IAS 12: Income Taxes
4 IAS 21: The effect of changes in foreign exchange rates
5 IAS 28: Investments in associates and joint ventures
6 IAS 37 and IFRIC 1: Change in Existing Decommissioning, Restoration and Similar
Liabilities.
7 IAS 38 and SIC 32: Intangible assets – Website costs
8 IAS 41: Agriculture
9 IFRS 3: Business Combinations
10 IFRS 8: Operating Segments
11 IFRS 9: Financial Instruments
12 IFRS 10: Consolidated Financial Statements

13 IFRS 15: Revenue from Contracts with Customers

14 IFRS 16: Leases
15 Companies Act, 2017 Third, Fourth schedule and Fifth schedules
16 Code of Ethics, (Revised) 2019 (sections 100-120, 220)

CAF-6 MANAGERIAL AND FINANCIAL ANALYSIS

Competency
Apply business and financial analysis on business problems.

Ref. Hours
A Managerial Analysis 40-45 35-45
B Financial Analysis and Risk Management 45-55 30-45
C Budgeting and Projections 25-30 20-25
Total 110-130 100
Syllabus Contents Proficiency Testing

Ref. level level
A Managerial Analysis
a External Analysis
1 Analyze impacts of political, legal and social
P2 T2
environment on a business organization.
2 Analyze technological disruption and opportunities for a
P2 T2
business organization.
3 Analyze impacts of economic environment on a
P2 T2
4 Analyze impacts of competitive environment on a
P2 T2
b Internal Analysis
1 Analyze the internal environment of an organization. P2 T2
2 Explain the adequacy of manual and technology-based
systems, processes and controls for collecting,
P2 T2
generating, storing, assessing, using or sharing data and
information.
Apply Information and Communication Technologies to
3 enhance the efficiency and effectiveness of an P2 T2
organization’s systems.
c Ethical Decision making
1 Analyze a business situation using ethical-decision P2 T2
making models.

Syllabus Contents Proficiency Testing

Ref. level level
B Financial Analysis and Risk Management
Application of Statistical Methods on Business
a
Problems
Apply measure of central tendency on business-related
1 P2 T2
data.
Analyze business-related data using linear regression
2 P2 T2
analysis.
Apply probability distributions, inferential statistics and
3 P2 T2
hypotheses testing on business problems.
b Financing and Risk Analysis
Discuss various sources of finance including debt, equity
1 P1 T1
and Islamic finance.
Compute Cost of equity, cost of debt and the weighted
2 P2 T1
average cost of capital.
Analyze capital asset’s sensitivity to systematic risk,
3 P2 T2
expected return of market and risk-free assets.
4 Apply risk management techniques on business entities. P2 T2
Apply financial risk management techniques on
5 P2 T2
business entities.
C Budgeting and Projections
1 Prepare budget, projection and forecast using external P2 T2
and internal analysis and quantitative techniques.
2 Analyze an organization’s cash flow and working capital P2 T2
requirements.
3 Compute NPV, IRR and Payback for a given project P2 T2
1 Evaluate data and information from variety of sources and perspective through
integration and analysis.
2 Apply critical thinking skills to solve problems, inform judgements, make decisions
and reach well-reasoned conclusions
4 Respond effectively to changing circumstances or new information to solve
problems, inform judgements, make decisions, and reach well-reasoned conclusions.

1 SWOT Analysis
2 Porter’s Five Forces Model
3 Product Life Cycle Model
4 Boston Consulting Group Matrix
5 Ethical decision making - Tucker’s 5-question Model (Presented by Graham Tucker)
6 Ethical decision making - American Accounting Association 7-step Model
7 ISO 31000 Risk management — Guidelines issued by International Standardization
Organization
8 Capital Asset Pricing Model
9 Hedging interest rate : Futures, Options and Forward agreement excluding hedge efficiency
10 Hedging Foreign Exchange : Currency futures, Options, Forward and Money Market hedge
excluding hedge efficiency
11 Commodity and security: Forward and future contracts

CAF-7: COMPANY LAW

Competency
Apply laws and regulations that govern limited and unlimited liability companies.

Ref. Hours
A Incorporation and Issuance of Shares 15-20 15-20
B Management and Administration 35-38 20-25
C Meetings and Proceedings, Directors and Chief Executive 35-40 20-30
D Accounts and Dividends 10-12 15-20
E Winding up 15-20 15-20
Total 110-130 100

Learning Outcomes
Ref. level level
A Incorporation and Issuance of Shares
1 Discuss the provisions of law relating to business, P2 T2
objects and incorporation of different kinds of
companies.
2 Discuss the provisions of law relating to the issuance of P2 T1
shares.
B Management and Administration
1 Apply provisions related to registration of mortgages P2 T2
and charges.
2 Apply the provisions of law relating to management, P2 T2
administration, investment and disclosure of interest.
C Meetings and Proceedings, Directors and Chief
Executive
1 Discuss the provisions of law relating to meetings and P2 T2
proceedings.
2 Discuss the provisions of law relating to directors and P2 T2
chief executive.
D Accounts and Dividends
1 Discuss provisions of law relating to accounts and P2 T2
dividends.
E Winding up
1 Discuss provisions of law relating to winding up. P2 T2

1 Analyze information through integration and analysis.

2 Apply critical thinking skills to address problems and reach well-reasoned conclusions
3 Communicate clearly and concisely when presenting and discussing in formal and
informal situations
2 Apply critical thinking when identifying and analyzing alternatives to determine an
4 Explain the role and importance of ethics in relation to business and good
governance.
1 Companies Act 2017

i Sections: 2(4, 5, 8, 9, 10, 11, 14, 15, 16, 19, 17, 18, 20, 21, 25, 33, 34, 37, 38, 42, 45, 46,
49, 52, 54, 57, 63, 65, 66, 68, 71, 73, 74), 4, 7, 9 to 22, 24 to 43, 53 to 55, 57
ii 58 to 62, 85
iii 100, 105 to 109, 110, 112
iv 118, 125, 130, 199, 200, 204 to 208, 211
v 131-168, 170, 171, 174, 176 to 192, 194 to 196
vi 220, 223,226 to 229, 232 to 234, 237, 240-243
vii 293, 301, 302, 304 to 306, 315, 320, 321, 347, 381, 382
viii First Schedule (Table A)
2 Companies (Distribution of Dividends) Regulations, 2017
Regulation 2(vi, viii), 3,4 (1)(2)
3 Companies (Manner and Selection of Independent Directors Regulations, 2018)
Regulation 4
4 Securities Act, 2015
Sections: 2(xii ), 87(2),(4),(5),(6),(7); 88(1-8); 89 to 93

CAF-8: Audit and Assurance

Competency
Apply knowledge of general concepts, principles, skills and techniques of auditing and selected
International Standards on Auditing, Assurance and Ethics.
Syllabus GRID Teaching Weightage

Ref. hours
A Audit Framework, Regulations and professional ethics 25-30 15-25
B Planning and Risk Assessment 20-25 15-20
C Audit Evidence and Internal Controls 50-55 45-55
D Conclusion and Reporting 15-20 10-15
Total 110-130 100

Learning Outcomes
Ref. Level Level
A. Audit Framework, Regulations and professional ethics
a Basic Concepts
1. Describe briefly the history, vision, mission, objectives and
functions of the international auditing and assurance
standards board (IAASB).
2. Discuss the types, scope and inherent limitations of an
External Audit.
3. Discuss the concepts of true and fair view, professional P1 T1
skepticism, professional judgement, accountability and
stewardship.
4. Discuss the responsibility of management, those charged
with governance and external auditors in relation to
financial statements.
b Concept of assurance and non-assurance engagements
1. Discuss the types and levels of the assurance engagement.
2. Discuss briefly the non-assurance engagements related to P1 T1
Preparing Accounting Records and Financial Statements,
Valuation Services and Recruitment Services.
c Agreeing the terms of Audit Engagements
1. Discuss the concept, importance and the contents of
Engagement Letter.
P1 T1
2. Discuss factors to be considered in the case of recurring
audits.


Learning Outcomes
Ref. Level Level
3. Discuss Preconditions for an audit and Course of action in
the case when preconditions are not present.
d Quality Control Procedures
1. Explain the overall objectives and importance of quality
control procedures in conducting an audit.
2. Explain briefly the quality control procedures for acceptance P1 T1
and continuance of client relationship and engagement,
engagement performance and monitoring.
e Appointment, removal and qualification of auditors
1. Discuss the requirements related to appointment, removal, P2 T2

fee, qualification and disqualification of auditors.
2. Discuss the objectives, rights and duties of external auditors P1 T1
in relation to the Financial Statement.
f Code of Ethics
1. Discuss fundamental principles and threats to P2 T2
Independence and Objectivity.
2. Discuss the circumstances that cause threats and explain the
safeguards to offset threats to compliance with the
fundamental principles and threats to independence and
objectivity.
3. Explain the matters to be considered by an audit firm in the
following circumstances:
 Client acceptance
 Engagement acceptance
B Planning and Risk Assessment
a Planning an Audit
1. Discuss the importance of planning an audit and the content
of an audit strategy and detailed audit plan.
2. Discuss preliminary engagement activities.
3. Discuss additional considerations in initial audit
P1 T1
engagements.
4. Discuss briefly the concept of interim and final audit and list
the audit procedures that can be performed by the external
auditor at the interim and final stage of an audit.
b Audit Documentation
1. Discuss the importance of audit documentation including
custody, ownership, confidentiality and retention.
P1 T1
2. Discuss types of working papers (Permanent and current),
including automated and standardized working papers.


Learning Outcomes
Ref. Level Level
3. Discuss factors to be considered in determining the form
and content of audit documentation.
c Risk identification and Assessment
1. Define audit risk and its components.
2. Explain audit risk from the given scenario and the auditor’s
response to the risk identified.
3. Explain why auditors obtain an understanding of the entity
and its environment.
4. Explain the matters about which the auditor will obtain an
P2 T2
understanding of the entity and its environment.
5. Explain how the auditor will obtain an understanding of the
entity and its environment.
6. Explain the purpose of risk assessment procedures at the
planning stage of an audit.
7. Discuss documentation.
d Materiality in planning and performing an Audit
1. Explain the concepts of materiality, qualitative materiality,
revision in materiality, performance materiality.
2. Explain how materiality is calculated. P2 T2
3. Explain the application of materiality on audit.
4. Discuss documentation of materiality.
e Fraud and Error
1. Define fraud and error and discuss their differences.
2. Discuss types of Fraud.
3. Discuss the responsibility of Management, those charged
with governance and external auditor with respect to fraud.
4. Discuss risk assessment procedures with respect to fraud by
P2 T2
the External Auditor.
5. Discuss response to the assessed risk of material
misstatement due to fraud (at the financial statement level).
6. Identify fraud risk factors and circumstances that indicate
the possibility of fraud in simple scenarios.
C Audit evidence and Internal Controls
a Audit Evidence
1. Define audit evidence and discuss methods to obtain audit
evidence.
2. Discuss the concept of Sufficient and appropriate audit
evidence. P1 T1
3. Explain types of audit procedures.
4. Define financial statement assertions.


Learning Outcomes
Ref. Level Level
b External Confirmation
1. Define external confirmation, types, methods and
significance of external confirmation.
2. Discuss planning and design of External Confirmation.
3. Discuss the course of action in the case of reply from third
parties (both in the case of positive and negative
P2 T2
confirmations).
4. Discuss the course of action if management refuses to allow
the auditor to send confirmation.
5. Discuss the concept of exception and procedures to be
performed in the case of an exception.
c Analytical procedures
1. Explain analytical procedures and their various types. P2 T2
2. Discuss factors to be considered when using analytical
procedures as substantive procedures.
3. Discuss the importance of analytical procedures at the
planning stage and when forming an overall conclusion / at
the end of the audit.
4. Interpret accounting ratios along with audit risk.
d Audit Sampling
1. Explain audit sampling and its purpose.
2. Explain the concept of 100% testing and selection technique
including factors to be considered in this regard.
3. Discuss methods of sampling (Statistical and non-
statistical).
4. Explain the concept of sampling risk and non-sampling risk.
5. Explain the concept of Stratification. P1 T1
6. Discuss the concept of misstatement and rate of deviation
including expected and tolerated.
7. State the audit procedures to be performed on the selected
sample.
8. Discuss the concept of projecting misstatement and
evaluating the results of audit sampling.
e Subsequent Events
1. Explain requirements related to subsequent events and the
auditor’s responses.
2. Describe the auditor’s responsibility in respect of the
P2 T2
following situations:
- Events occurring between the date of the financial
statements and the date of the auditor’s report.


Learning Outcomes
Ref. Level Level
- Facts that become known to the auditor after the date of
the auditor’s report but before the date the financial
statements are issued.
- Facts that become known to the auditor after the financial
statements have been issued.
f Going Concern
1. Discuss the concept of going concern assumption.
2. Discuss the responsibility of management and external
auditors with respect to going concern.
3. Explain potential indicators that an entity is not a going
concern.
P2 T2
4. Discuss the procedures to be applied in performing going
concern reviews and additional procedures when events or
conditions are identified.
5. Explain the impact on the audit report in the case of going
concern.
g Written Representation
1. Explain written representation.
2. Discuss the course of action when there is a doubt as to the
reliability of written representation.
3. Discuss the course of action in the event when
management does not provide the requested written P2 T2
representation.
4. Explain the impact on the audit report in the case there is a
doubt about the reliability of written representation and
when such is not provided by the management.
h Substantive Procedures
1. Explain the audit procedures to verify:
- Profit and loss items (Sales, Purchases, payroll expense,
Bad debt expense)
- Balance Sheet Items (Cash in hand, Cash at Bank,
Tangible and Intangible Fixed Assets, Debtors, Trade
Payables, Inventory, Long term loan, Various types of P2 T2
provisions)
- litigation and claims
- segment information
2. Explain the audit procedures for relevant and specific
financial statement assertions.
i Internal Control and Test of Controls
1. Explain internal control and its components. P2 T2


Learning Outcomes
Ref. Level Level
2. Discuss the objectives and limitation of an accounting and
internal control system.
3. Discuss how the internal control system is documented
through various methods.
4. Discuss the concept of Walkthrough Test and the difference
between Walk through Test and Test of Controls.
5. Discuss internal controls of a small company/entity.
6. Explain the risk, controls and test of controls to be
performed on major transition cycles (Sales system,
purchase system, inventory system, bank and cash system,
payroll system and revenue and capital expenditure
system).
j Using the work of others
1. Discuss the concepts and functions of the internal audit
department.
2. Explain the difference b/w the external audit and internal
audit.
3. Explain how the work of internal auditors is evaluated and
direct assistance of internal auditors is used.
4. Explain areas where an auditor’s expert can be used by the
P2 T2
external auditor.
5. Explain factors to evaluate the competence, capability and
objectivity of the auditor’s expert.
6. Explain how the adequacy of the auditor’s expert’s work can
be evaluated.
7. Explain how reference to the Auditor’s expert is made in the
auditors’ report.
k Related Party
1. Describe the term related party using simple examples.
2. Discuss how related party transactions can give rise to the
risk of material misstatement using simple examples.
3. Describe the audit procedures including risk assessment P2 T2
procedures and related activities to obtain information
relevant to identifying the related party relationships and
transactions including responses to the assessed risk of
material misstatement.
l Computer Assisted Audit Techniques and General & Applicable
IT Controls
1 Explain the concept of Computer Assisted Audit
Techniques, Test Data and Audit Software and their
advantages and disadvantages. P2 T2
2 Describe general I.T controls and Application I.T controls.


Learning Outcomes
Ref. Level Level
D Conclusions and Reporting
a External Audit Report
1. Discuss the concept of unmodified and modified opinions.
2. Discuss the contents of an audit report.
3. Discuss additional reporting responsibilities.
4. Discuss the format and content of key audit matters (KAM),
emphasis of matter paragraph (EOMP) and other matter
paragraph (OMP).
P1 T2
5. Discuss the relationship of KAM with other content of audit
report.
6. Discuss circumstances where EOMP and OMP are/may be
necessary.
7. Discuss the relationship of EOMP and OMP with other
content of audit report.
8. Discuss the impact on the audit report via various types of
P2 T2
opinions in scenario-based questions.
b Engagement to Review Financial Statements
1. Discuss the concept and scope of a review engagement.
2. Explain Difference b/w audit and review engagement.
P1 T1
3. Discuss the procedures to be performed by the practitioner
in the case of a review engagement.
laws, regulations and the public interest.


5 Apply ethical principles of ethics when collecting, generating, storing, accessing, using
1 ISA 200: Overall objectives of the Independent Auditor and the conduct of an audit in
accordance with International Standards on Auditing
2 ISA 210: Agreeing the terms of audit engagement
3 ISA 220: Quality Control for an audit of financial statements
4 ISA 230: Audit documentation
5 ISA 240: The auditor’s responsibilities relating to fraud in an audit of financial
statements(including appendix 1 and 3)
6 ISA 300: Planning an audit of financial statements
7 ISA 315(revised): identifying and assessing the risk of material misstatement through
understanding the entity and its environment
8 ISA 320: Materiality in planning and performing an audit
9 ISA 330: The auditor’s response to assessed risks
10 ISA 500: Audit evidence
11 ISA 501: Audit evidence-specific considerations for selected items
12 ISA 505: External confirmations
13 ISA 520: Analytical procedures
14 ISA 530: Audit Sampling
15 ISA 560: Subsequent Events
16 ISA 570: (Revised) Going Concern
17 ISA 580: Written representations
18 ISA 610(revised 2013): Using the work of internal auditors
19 ISA 620: Using the work of an auditor’s expert
20 ISA 700(revised): Forming an opinion and reporting on Financial statements
21 ISA 701: Communicating Key audit matters in the Independent auditor’s report
22 ISA 705 (revised): modifications to the opinion in the independent auditor’s report
23 ISA 706 (revised): emphasis of matter paragraphs and other matter paragraphs in the
independent auditor’s report
24 ISRE 2400: Engagements to review historical financial statements
25 Companies Act 2017 (Sections 246 to 251)
26 ICAP Code of Ethics for Chartered Accountants revised 2019 (Sections 100-120, 320 and
330)

HANDS-ON COURSE ON PRESENTATION

AND PERSONAL EFFECTIVENESS
Competency
Improved presentation and personal effectiveness through critical evaluation of information.
Length of the Course: Minimum 70 hours
Syllabus Proficiency
Contents
Ref Level
A Professional Skepticism and Professional Judgments
Apply a questioning mind when assessing data and information
1 P3
received.
2 Apply curiosity by exploring beyond what is immediately apparent. P3
3 Identify inconsistencies and contradictions in representations. P3
4 Identify personal and organizational biases. P3
Apply critical thinking when identifying and evaluating alternatives to
5 P3
determine an appropriate course of action.
6 Exercise professional judgement. P3
B Interpersonal and Communication Skills
1 Apply self-esteem enhancement techniques while communicating. P3
2 Apply emotional intelligence techniques. P3
3 Apply active listening skills and interviewing techniques. P3
Communicate clearly, concisely and objectively using appropriate non-
4 P3
verbal aspects.
Apply negotiation and consultative skills to present solutions or
5 P3
arguments.
Apply time management skills to evaluate, present and negotiate ideas
6 P3
effectively.
7 Apply collaboration, cooperation and teamwork. P3
8 Identify cultural and language differences in all communication. P3

Specific Examinable Professional Skills
research, integration, and analysis.
3 Apply collaboration, cooperation and teamwork when working towards organizational
goals
5 Identify cultural and language differences in all communication.
6 Apply active listening and effective interviewing techniques.
7 Apply negotiation skills to reach solutions and agreements.
8 Apply consultative skills to minimize or resolve conflict, solve problems, and maximize
opportunities.
9 Present ideas and influence others to provide support and commitment.
Specific Examinable Professional Values and Ethics
2 Apply techniques to reduce bias, when solving problems, informing judgements,
making decisions and reaching well-reasoned conclusions.
1 Mind Maps, Fishbone Diagrams and Affinity Diagrams
Key Examinable Activities
1 Monologue
2 Declamation
3 Role plays
4 Presentations
5 Group discussions
6 Job Interviews
7 Feedback

HANDS-ON COURSE ON MS OFFICE

Competency
Apply fundamental skills of IT and communication.
Grid Minimum Weightage

Coaching hours
Computer Fundamentals and MS Word 20 25-35
MS Excel 30 35-45
MS PowerPoint 20 25-35
Total 70 2100
Contents
Ref Level
1 Explain Computer hardware, Software and operating systems P2
2 Discuss Core Windows Tasks P2
Use file, insert, layout, review and view options in the excel, word and
3 P2
PowerPoint menu bar
Construct formulae using functions, cell references, constants and
4 P2
operators
5 Use appropriate features to create customized data table formats P2
6 Use the conditional formatting using rules manager P2
Perform the steps to protect certain cells, individual worksheets and an
7 P2
entire workbook
Use various Word features to present letters, reports and other
8 P2
documents in a presentable custom style
9 Use Mail Merge feature to create letters, envelopes, directory etc P2
Insert and modify bibliography, endnotes, footnotes, captions, P2
10
comments & cross references
11 Use slideshow, transition and animation option in PowerPoint. P2
Use appropriate features to insert and edit pictures, videos, P2
12
charts/graphs and other objects
13 Use printing Notes Pages, Handouts and Slides for PowerPoint. P2

3 Apply fundamental principles of ethics when collecting, generating, storing, accessing,
using, or sharing data and information.
functions like SUM, SUMIF, SUMIFS, TRUNC, SUBTOTAL, ROUND, FLOOR, CEILING, INT,
MOD, ABS, AVERAGE, COUNT, COUNTA, COUNTIF, MAX, MIN, MEDIAN, STDEV.S,
PERCENTILE, RANK, IRR, RATE, EFFECT, PV, NPV, SLN, YIELD, PMT, ACCRINT, ACCRINTM,
1 COUPDAYS, CUMPRINC, VLOOKUP, HLOOKUP, IF, IFERROR, NOT, AND, OR, ISBLANK,
ISERR, ISERROR, ISLOGICAL, ISNA, ISNUMBER, ISTEXT, ISNONTEXT, ISREF, EXACT, TRIM,
LEFT, RIGHT, LEN, LOWER, UPPER, MID, PROPER, TEXT, TODAY, NOW, WEEKDAY AND
WEEKNUM
2 Sort, filter, find, replace data and its formatting as required
3 Print, save, edit, format
4 Layout, view, table tools

HANDS-ON COURSE ON DATA MANAGEMENT & ANALYTICS

Competency
Apply enhanced skillset of data management, analysis and business intelligence to respond to the
needs of emerging workplace.

Coaching hours
Data and Database Management System 10 15-20
Big Data, Data & Business Analytics 12 10-15
Data Description and Diagnostics 15 20-25
Data Visualization & Classification 18 20-30
Data Prediction and modeling 15 20-25
Total 70 100
Contents Level
Ref
A Data and Database Management systems
Discuss the effectiveness of data and database management systems
1 P1
within business organizations.
Use ERP / SAP / Oracle tools for Financial, GL, Cash Management,
2 P2
Receivables and Sales, Inventory management, procurement etc.
B Big Data, Data & Business Analytics
Prepare for collection, storage, and organization of data using Big Data
1 P1
solutions for business organizations.
2 Discuss Data Integrity and control processes in business and finance. P1
3 Explain key business uses of analytics with examples P1
Apply statistics tools for Diagnostics and Predictive models for business
4 P1
purposes.
C Data Description and Diagnostics
1 Apply data for analysis using preprocessing and integration techniques. P2
Use software tools (R/Python/Oracle or ERP based software) for
2 P2
descriptive and statistical analysis of financial and accounting data.
Use software tools (R/Python/Oracle or ERP based software) in audit,
assurance and related services context for evaluating internal controls,
P2
3 gathering evidence and drawing conclusions in accordance with the
terms of the engagement.

Contents Level
Ref
D Data visualization and classification
Explore data visualization techniques using software tools
1 (R/Python/Power BI/ Tableau/oracle or ERP based software) to present P2
financial and accounting data.
Apply data structure and modelling techniques for financial and
2 P2
businesses data.
E Data prediction and modeling
1 Use Regression models for business decision making P2
Discuss implications for AI and robotics in data prediction and
2 P1
validation.
Apply supervised and unsupervised machine learning techniques on
3 P2
business problems.
3 Apply fundamental principles of ethics when collecting, generating, storing,
accessing, using, or sharing data and information.
1 Big Data Infrastructure Plan and Information System Design

2 Data taxonomy for business purposes
3 Conceptual schema, relational database design, normalization
4 Gartner’s Model (Descriptive, diagnostics, predictive and prescriptive analytics)
5 Descriptive analysis using R/Python (mean or average, median, quartile, maximum,
minimum, range, variance, and standard deviation)
6 Plots, graphs, tables,
7 Naïve Bayes & Decision Trees for decision making
8 Hierarchical Clustering, Nonhierarchical Clustering

9 Cluster and Association

10 Correlation, Hypothesis Testing
11 Simple Linear Regression
12 Data integrity (completeness, accuracy, security, consistency/comparability, audibility)
13 Cloud computing
14 Layers of control; input / output; reception/distribute controls.
15 AI and Robotics
16 Oracle /SAP (finance and Supply Chain Modules)
17 Data Analytics Cases on:
 Consumer Demand, Pricing and Revenues
 Customer Value, Segmentation and Share of Wallet
 Product Profitability and Channel Optimisation
 Supply Chain Optimisation
 Predictive Maintenance
 Operational Efficiency
 Fraud and Risk Assessment
 Business Portfolio Assessment
 Business Valuation Metrics

HANDS-ON COURSE ON FIN-TECH

Competency
Apply enhanced skillset to manage and foresee impact of technology on financial decision making
to respond to the needs of the emerging workplace.

Coaching hours
Business Technology 12 15-20
Digital Transactions, Funding and Investments 28 30-40
Financial Trends & Analytics 20 25-35
Security, Risk and Regulations 10 15-20
Total 70 100
Contents
Ref Level
A Business Technology
1 Discuss FinTech infrastructure and startups including the impact of the P1
changing technologies within finance and Banking
2 Discuss major technologies involved in FinTech and the major players P1
in the market, including startups, Banks, consumers and governments.
B Digital Transactions, Funding and Investments
1 Identify elements of block chain, cryptocurrencies, crowdfunding and P2
other alternative finance technologies (design, uses and limitations)
2 Perform payment, lending, remittances and other financial operations P2
using digital technologies.
3 Use accounting for cryptocurrency. P2
4 Discuss data-driven finance using existing case studies P1
C Financial Trends and Analytics
1 Analyze data trends for payments, credit lending, crowdfunding and P1
other retail and business decisions
2 Use Python/R for basic descriptive, diagnostic and predictive analytics P2
on financial data
D Security, Risk and Regulations
1 Discuss regulation and ecosystems for FinTech regulations P1
2 Perform Penetration testing and discuss cyber security framework and P1
risk mitigation solutions for business organizations
3 Discuss threats and vulnerabilities regarding privacy and digital P1
identities

2 Apply critical thinking when identifying and evaluating alternatives to determine

an appropriate course of action.
3 Apply fundamental principles of ethics when collecting, generating, storing,
accessing, using, or sharing data and information.
Key Examinable Knowledge Reference
1 Banking and payments industry

2 Blockchain ecosystems
3 Cybersecurity models (the CIA triad, the star model, the Parkerian hexad)
4 The information security lifecycle
5 The Risk Management Framework (RMF)
6 Contingency Planning
7 Controlling – Cost Center, Internal Order, Profit Center, General
8 COBIT & disaster recovery and business continuity management
9 Crowdfunding, digital payments, Real-Time Gross Settlement
10 AI and Robotics, Robo Advisors
11 Bitcoins & digital signatures
12 FinTech Regulations (National Financial Inclusion Strategy, Government of Pakistan
13 Regulatory Technology
14 Mobile, cryptocurrency wallets
15 Initial Coin Offerings

PROFESSIONAL VALUES, ETHICS AND ATTITUDE (PVEA)
Competency
Apply professional values, ethics and attitude in accordance with the requirements of International
Education Standards issued by IAESB of IFAC.
Syllabus
Contents
Ref
A Part I Understanding Ethics and Human Behaviours
1. Explain the nature of ethics
2. Explain the advantages and disadvantages of rules-based and principles-based

approaches to ethics
3. Explain the role of ethics in relation to business and good governance
4. Explain the role of ethics within the profession and in relation to the concept of social
responsibility
5. Explain the different models of ethical decision making
B Part II Understanding Models of Ethical Decision making
1. Apply the fundamental ethical principles of integrity, objectivity, professional
competence and due care, confidentiality, and professional behavior to ethical
dilemmas and determine an appropriate resolution
2. Apply the relevant ethical requirements to professional behavior and compliance with
standards
3. Analyze the interrelationship of ethics and law, including the relationship between
laws, regulations, and the public interest
4. Analyze the consequences of unethical behavior to the individual, to the profession,
and to society at large
C Part III Reflective Activities
1. Exercise professional judgment
2. Act in an ethical manner that is in the public interest

CFAP-1: ADVANCED ACCOUNTING AND FINANCIAL REPORTING

Competency
Prepare, analyze, and report relevant and faithfully represented financial information.
Syllabus Learning Weightage

Grid
Ref hours
A Consolidated Financial statements 45-50 20-30
B Financial Reporting-Financial instruments 50-55 30-35
C Financial Reporting-Others 35-40 25-30
D Specialized Financial Statements and Areas 15-20 5-10
E Ethics 10-15 5-10
Total 155-180 100

Learning Outcomes
Ref Level Level
A Consolidated Financial Statements
Apply the principles, laws and concepts with respect to the
1 preparation and presentation of Consolidated Financial P3 T3
Statements.
B Financial Reporting-Financial instruments
Apply International Financial Reporting Standards (IFRSs)
including appropriateness of accounting policies used to
prepare financial statements to:
1 a. Financial instruments P3 T2
b. Fair Value Measurement
c. Impairment of Assets
d. The Effects of Changes in Foreign Exchange Rates
C Financial Reporting-Others
Apply International Financial Reporting Standards (IFRSs)
including appropriateness of accounting policies used to
prepare financial statements to:
a. Employees benefits
b. Share-based Payment
1 P2 T2
c. Non-current Assets Held for Sale and Discontinued
Operations
d. Revenue from Contracts with Customers
e. Leases
f. Income Taxes


Learning Outcomes
Ref Level Level
g. Related Party Disclosures
h. Interim Financial Reporting
D Specialized Financial statements and Areas
Apply the principles, laws and concepts with respect to
preparation and presentation of disclosures of the
following:
1 a. Small and medium-sized entities P1 T1
b. Banks
c. Mutual funds
d. Insurance companies
2 Account for and report retirement benefit plans. P1 T1
Apply the IFRSs on:
a. First-time Adoption of International Financial
Reporting Standards
b. Insurance Contracts
3 c. Exploration for and evaluation of Mineral P2 T1
Resources
d. Regulatory Deferral Accounts
e. Financial Reporting in Hyperinflationary
Economies
4 State overview of Islamic Accounting Standard issued by P1 T1
ICAP.
5 State overview of IPSASs and The Conceptual Framework P1 T1
for General Purpose Financial Reporting by Public Sector,
Presentation of Financial Statements and Financial
Reporting Under the Cash Basis of Accounting.
E Ethics
1 Apply the requirements of code of ethics for professional P3 T2

accountants working in business.
2 Identify when it is appropriate to consult with specialists..

4 Evaluate the significance of threats to compliance with the fundamental principles of
ethics and respond appropriately
5 Analyze the consequences of unethical behavior to the individual, the profession, and
the public.
A Consolidated Financial statements

1 IFRS 3 Business Combinations
2 IFRS 10 Consolidated Financial Statements
3 IFRS 11 Joint Arrangements
4 IFRS 12 Disclosure of Interests in Other Entities
5 IAS 7 Preparation of statement of cash flows (only Consolidated)
6 IAS 27 Separate Financial Statements
7 IAS 28 Investments in Associates and Joint Ventures
B Financial reporting-Financial instruments
1 IFRS 7 Financial Instruments: Disclosures
2 IFRS 9 Financial Instruments (including IFRIC 16 & 19)
3 IFRS 13 Fair Value Measurement
4 IAS 21 The Effects of Changes in Foreign Exchange Rates (including IFRIC 22)
5 IAS 32 Financial Instruments: Presentation
6 IAS 36 Impairment of Assets
C Financial reporting-Others
1 IFRS 2 Share-based Payment
2 IAS 19 Employee Benefits (including IFRIC 14)
3 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
4 IFRS 15 Revenue From Contracts with Customers
5 IFRS 16 Leases
6 IAS 12 Income Taxes (including SIC 25)
7 IAS 24 Related Party Disclosures
8 IAS 34 Interim Financial Reporting (including IFRIC 10)

D Specialized financial statements and areas

1 IAS 26 Accounting and Reporting by Retirement Benefit Plans
2  IFRS 1 First-time Adoption of International Financial Reporting Standards
 IFRS 17 Insurance Contracts
 IFRS 6 Exploration for and evaluation of Mineral Resources
 IFRS 14 Regulatory Deferral Accounts
 IAS 29 Financial Reporting in Hyperinflationary Economies (including IFRIC 7)
3 Islamic Accounting Standard issued by ICAP
4  IPSAS 1 Presentation of Financial Statements
 IPSAS Financial Reporting under the Cash Basis of Accounting
E Ethics
1 Code of Ethics for Chartered Accountants (Revised 2019) (Part 1 and Part 2)

CFAP-2: ADVANCED CORPORATE LAWS AND PRACTICES

Competency
Advise on matters relating to compliance with corporate laws.
Syllabus Learning Weightage

Grid
Ref hours
A Secretarial Practices 80-85 35-45
B Mediation, Arbitration, Mismanagement, Restructuring 25-35 10-15
and Rehabilitation
C Specialized Corporate Laws 15-20 10-15
D Other Relevant Laws 35-40 30-40
Total 155-180 100

Contents
Ref Level Level
A Secretarial Practices
Advise on compliance with general law governing
1 P3 T3
companies.
Advise on compliance with general law governing the
2 P2 T2
issuance of securities by companies.
3 Apply specific laws governing listed companies. P3 T2
Explain laws relating to the selection of independent
4 P3 T2
directors.
Prepare a notice of the meetings, ordinary resolutions,
5 P2 T2
special resolutions and minutes.
Mediation, Arbitration, Mismanagement, Restructuring
B
and Rehabilitation
Explain laws relating to mediation, arbitration and
1 P2 T2
prevention of oppression & mismanagement.
Apply specific laws governing the restructuring and
2 P2 T2
rehabilitation of companies.
C Specialized Corporate Laws
Advise specific laws governing non-banking finance
1 P3 T2
companies.
2 Apply specific laws governing insurance companies. P2 T2
3 Apply specific laws governing banking companies. P2 T2


Contents
Ref Level Level
D Other Relevant Laws
1 Explain laws governing foreign exchange transactions. P2 T2
2 Explain laws relating to free competition. P2 T2
Explain laws relating to anti-money laundering and
3 P2 T2
terror financing.
Advise on the laws relating to corporate governance of
4 P3 T3
companies and ethics.
5 Explain laws relating to payment systems & electronic
P2 T2
fund transfers.
6 Explain the requirements of the Code of Ethics for
P2 T2
Chartered Accountants.
3 Identify when it is appropriate to consult with specialists.
the public.
6 Apply the relevant ethical requirements to professional behavior in compliance with
standards.

A Secretarial Practices
1.1 Companies Act, 2017
Sections: 1 to 275, 293 to 302, 304 to 306, 312 to 396, 406 to 468,471 to 473, 498, 500,
505
1.2 First and Second Schedules of the Companies Act, 2017
1.3 Companies (Postal Ballot) Regulations, 2018
1.4 Companies (General Provisions & Forms) Regulations, 2018 - Regulations: 8 to 30
1.5 Companies (Investment in Associated Companies or Associated Undertakings)
Regulations, 2017
1.6 Employees Contributory Fund (Investment in Listed Securities) Regulations 2018
1.7 Companies (Related Party Transactions & Maintenance of Related Records)
Regulations, 2018 - Regulations: 3 to 6
1.8 Companies (Distribution of Dividends) Regulations, 2017
1.9 Companies (Incorporation) Regulations, 2017
Regulations: 2 to 10 & 15
2.1 Private Placement of Securities Rules, 2017 - Rules 4 to 6
2.2 Companies (Further Issue of Shares), Regulation 2020
3.1 Securities Act 2015
Sections: 2, 63 to 65, and 87 to 131) and Relevant Rules and Regulations made
thereunder
3.2 Pakistan Stock Exchange Rule Book (Chapter 5)
3.3 Listed Companies (Buy- Back of Shares) Regulations, 2019
3.4 Listed Companies (Substantial Acquisition of voting shares and Takeovers) Regulations,
2017
3.5 Public Offering Regulations 2017
3.6 Companies (Manner and Selection of Independent Directors Regulations, 2018)
B Mediation, Arbitration, Mismanagement, Restructuring and Rehabilitation
1.1 Companies Act, 2017
Sections: 276 to 292
2.1 Corporate Restructuring Companies Act, 2016 (Sections: 1 to 6)
2.2 Corporate Rehabilitation Act, 2018 (Chapter: I and II)
2.3 Corporate Restructuring Companies Rules, 2019
2.4 Corporate Rehabilitation Regulations, 2019
C Specialized Corporate Laws
1.1 Companies Ordinance , 1984 (Section 282A to 282N)
1.2 NBFC (Establishment and Regulation) Rules, 2003- Rules 1 to 7

1.3 The Non-banking Finance Companies and Notified Entities Regulations, 2008
(Regulation 2, 3, 9, 10, 15B, 16-18, and 25)
2.1 Insurance Ordinance, 2000
 Part I (Sections 1 to 4)
 Part II (Sections 5 to 13)
 Part III (Section 14)
 Part IV (Section 28)
 Part V (Sections 35, 36)
 Part VII (Sections 45 to 48)
3.1 The Banking Companies Ordinance, 1962
 Part I (Sections 1, 2, 5 & 6)
 Part II (Sections 9, 11, 13 to 19, 21, 22, 24, 29, 34 to 38)
D Other Relevant Laws
1.1 Foreign Exchange Manual of State Bank of Pakistan (Chapter 19 and 20)
2.1 Competition Act, 2010 (Chapter I and II)
3.1 Anti-money Laundering Act, 2010 and Anti-money Laundering Regulations, 2015
(Regulations 4, 5, 7 and Appendix I and II)
4.1 Listed Companies (Code of Corporate Governance) Regulations, 2019 and Public Sector
Companies (Corporate Governance) Rules, 2013
5.1 Payment Systems and Electronic Fund Transfers Act, 2007
Sections 2, 4, 5, 8, 14, 18
6.1 ICAP Code of Ethics for Chartered Accountants (Revised 2019) (Part I and II)
Note: All Annexures, Appendix, Forms, Schedule, Table etc. given in any act, manual, rule, regulation,
rule book etc. are excluded from syllabus unless otherwise specifically included.

CFAP-3: STRATEGY AND PERFORMANCE MEASUREMENT

Competency
Apply technical knowledge and skills in strategic management decision-making and formulating
and implementing organizational strategies.
Teaching
Grid Weightage
hours
A Formulation and Implementation of Strategy 45-50 25-30
B Strategy and Management of Information Technology 25-30 10-15
Strategic Marketing, Supply Chain and Human Resource 35-40 25-30
C
Management
D Performance Measurement 35-40 15-25
E Ethics 15-20 10-15
Total 155-180 100

Learning Outcomes
Ref Level Level
A Formulation and Implementation of Strategy
Formulate corporate strategy including venture capital firms
1 and startups strategies using internal and external factors P3 T2
and identifying and evaluating strategic choices.
Recommend policies, resource allocation, controls, change
2 P3 T2
management for implementing the corporate strategy.
B Strategy and Management of Information Technology
Recommend business process automation to enhance the
1 P2 T2
efficiency and effectiveness of business operations
Explain how Information and Communication Technology
2 P2 T2
(ICT) supports data analysis and decision making.
Explain how ICT supports the identification, reporting, and
3 management of risk in an organization, including cyber P2 T2
security issues.
Recommend on adequacy and improvements in ICT
4 P2 T2
processes and controls.
Strategic Marketing, Supply Chain and Human Resource
C
Management
Formulate marketing strategies using qualitative and
1 P3 T2
quantitative marketing techniques.


Learning Outcomes
Ref Level Level
Advise on development, promotion and management of
2 P3 T2
brand.
Apply supply chain management to create value for
3 P3 T2
organization.
Advise on talent acquisition, development and retention
4 P3 T2
policies and processes.
Explain the role of human resource in the implementation
5 P2 T2
of corporate strategies.
Explain how organizational behavior enhances the
6 P2 T2
performance of the individual, team, and organization.
D Performance Measurement
Interpret financial and non-financial information, including
1 P3 T2
big data.
2 Interpret sustainability and integrated reporting. P2 T2
Analyze the historical financial performance of an
3 P3 T2
organization.
Apply performance management tools to measure the
4 performance of an organization, project or activity P2 T2
including the use of data analytics.
E Ethics
Apply ethical considerations in relation to business, good
1 P2 T2
governance and social responsibilities.
Apply critical thinking skills to solve problems, inform judgements, make decisions and
1
2 Recommend solutions to unstructured, multi-faceted problems.
3
2
Apply ethical principles of ethics when collecting, generating, storing, accessing, using
3
4

A Formulation and Implementation of Strategy

1 Objectives, Goals, Vision and Mission
2 Importance of operational, tactical and strategic planning
3 Generation and evaluation and assessment of strategies
4 Strategy implementation (KPIs, Balanced scorecard, resource allocation, Business
process reengineering, change management and project management)
5 Tools to assess internal and external environment (Porter’s Five Forces Model, PESTEL,
SWOT, TOWS, BCG Matrix, etc)
6 Competitor Analysis and pricing (cost leadership and differentiation)
7 Business process outsourcing and Value Chain Analysis
8 Benchmarking and gap analysis
9 Business continuity planning and future scenarios
10 Venture capital firms and start-ups
B Strategy and Management of Information Technology
1 Risk management and planning (types of risks, analysis and documentation, risk
management strategies)
2 Role of IT in the collection of information, planning and decision making
3 Formulation of IT strategy
4 IT Control framework COBIT
5 IT Control and monitoring activities
6 Artificial intelligence, Cloud computing, Big Data and the role of data analytics
7 ICT in the context of e-commerce
C Strategic Marketing, Supply Chain and Human Resource Management
1 Management Models and Theories (Classical Approach, Human Relations and Neo-
Human Relations Approach, Systems Approach and Contingency Approach)
2 Recruitment and hiring (Need analysis, competency requirements, personnel
specifications)
3 Organizational development (Motivation, Motivation theories, job satisfaction, stress
management, Management by Objective)
4 Organizational development (Compensation & Benefits, Training and development,
Appraisals and incentives, Health and safety, Conflict resolution and working
environment)
5 Organizational development (leadership, theories of leadership, leadership styles, roles
and principles, group dynamics and negotiation)
6 Marketing strategies, planning and implementing (including Service Oriented Business
7 Assessing the nature and size of the market using internal records, market intelligence,
market research

8 Product life cycle, Product positioning and branding strategies

9 Market segmentation strategies
10 Advertising and promotion strategies and the influence of social media and related
channels
11 Global marketing, opportunities and threats
12 Franchising, licensing, joint venture and alliances, E-commerce sales and marketing
13 World Trade Organization
14 Concept and process of procurement
16 Vendor development and management
17 Inventory and production management, ware housing and logistics
D Performance Measurement
1 ESG, Sustainability and Integrated reporting
2 Ratios
3 IFAC Sustainability framework 2.0(Business strategy perspective, operational
perspective and reporting perspective).
4 The International Integrated Reporting Framework issued by IIRC
E Ethics
1 Corporate Social Responsibility and Ethical Behavior

CFAP-4: BUSINESS FINANCE DECISIONS

Competency
Apply technical knowledge and skills in strategic financial decision making, and formulating and
implementing organizational financial strategies.
Syllabus Teaching
Grid Weightage
Ref hours
1 Business Appraisals and Securities 50-55 40-60
2 Capital and its Sources 35-40 25-30
3 Financial Risk Management 25-35 20-25
Total 110-130 100

Learning Outcomes
Ref Level Level
A Business Appraisals and Securities
1 Prepare financial appraisals on business valuation. P3 T3
Prepare financial appraisals on acquisitions, mergers,
2 P3 T3
demergers, spin off and spin out.
Prepare financial appraisals on new projects and
3 P3 T3
strategies.
Analyze shareholder value considering dividend and
4 P2 T2
investment decisions.
5 Determine debt value using different techniques. P3 T2
B Capital and its Sources
Advise on raising capital from various sources of financing
1 available to an organization based on the qualitative and P3 T3
quantitative evaluation.
Apply capital budgeting and rationing techniques in the
2 P2 T2
evaluation of capital investment decisions.
3 Prepare appraisals for optimal portfolio selection. P3 T2
C Financial Risk Management
1 Assess and manage price, currency , interest, liquidity and
P3 T3
credit risks
2 Evaluate the implications of price, currency , interest,
P3 T3
liquidity and credit risks on business

Evaluate data and information from a variety of sources and perspectives through
1
Communicate clearly and concisely when presenting, discussing and reporting in formal
2
Respond effectively to changing circumstances or new information to solve problems,
3
inform judgements, make decisions, and reach well-reasoned conclusions
1 Capital Investment Appraisal Techniques - NPV, APV, IRR, MIRR, EIRR, payback, capital
rationing, profitability index, scenario planning and replacement and sensitivity analysis
2 Valuation techniques - Dividend yield, Price earning, discounted cash flows, asset based
valuation techniques
3 Arbitrage Pricing Theory (APT)
4 Weighted average cost of capital (WACC)
4.1 Cost and market value of the equity-dividend discount model, CAPM model, Free
cashflows model
4.2 Cost and market value of debt - Effective interest cost discounting model, spot and
yield to maturity or yield to call.
4.3 Shareholder value - Dividend payout, dividend irrelevant theory, the impact of right
issue including yield adjusted theoretical ex-right price, effect on effective holding and
maintenance of wealth
4.4 Capital Structure theory
4.4(a) Tradition theory of capital structure
4.4(b) Modigliani and Miller theory - valuation, capital structure, profit distribution, cost of
capital and arbitrage gains in case of mispriced securities, optimal capital structure
5 Portfolio selection – Diversifiable and non-diversifiable risks, the concept of correlation
and covariance and two, three and multiple asset portfolio
6 Capital Asset Pricing Model – Cost of equity, ungearing and re-gearing beta, under and
overvalued securities based on security market line (SML)
7 Hedging interest rate : Futures, Options, Swaps, Swaptions and Forward agreement

8 Hedging Foreign Exchange : Currency futures, Swaps, Options, Forward, Swaptions and
Money Market hedge
9 Commodity and security: Forward and future contracts
10 Liquidity risk management through liquidity indicators, stress testing, forecasting,
contingency planning.
11 Credit risk management through financial and non-financial analysis, factoring and
insurance

CFAP-5: TAX PLANNING AND PRACTICES

Competency
Prepare and analyze relevant tax information.

Grid
Ref hours
A Income Tax 75-80 50-60
B Sales Tax and Federal Excise Duty 55-60 30-45
C Ethics 10-15 5-10
Total 140-155 100

Learning Outcomes
Ref Level Level
A Income Tax
1 Compute income under various heads of income and tax
thereon and apply provisions of law relating to losses,
P2 T3
deductible allowances, tax credits and other tax
concessions.
2 Advise on returns, assessments, appeals, records, audit,
collection/recovery/refund of tax, advance tax, withholding P3 T2
tax, minimum tax and final tax.
3 Advise on international taxation aspects. P3 T2
4 Advise on organizational strategies with respect to direct
P3 T2
taxation.
B Sales Tax and Federal Excise Duty
a Sales Tax
1 Calculate sales tax (output and input) on taxable supplies
P3 T3
including zero rated and exempt supplies.
2 Calculate apportionment of input tax and carry forward /
P3 T2
refund thereof.
3 Advise on registration, de-registration, returns, records,
P3 T2
audit and appeals.
4 Apply provisions of provincial / capital territory sales tax
P3 T2
laws applicable on services.
5 Advise on organizational strategies with respect to indirect P3 T2
taxation.


Learning Outcomes
Ref Level Level
b Federal Excise Duty
1 Apply provisions of laws on Federal Excise Duty. P2 T1
C Ethics
1 Describe principles of fair tax legislation and equitable tax
P2 T1
administration.
2 Explain ethics for tax legislators, tax administrators, tax
P3 T1
payers and tax practitioners.
and reach well-reasoned conclusions.
Key Examinable Professional Values, Ethics and Attitudes
the public.

A Income Tax
1 Income Tax Ordinance, 2001

Introduction and central concepts
Sections 1 to 3, 4 to 8, 9 to 11, 74, 80 to 84
Computation of income of under normal tax regime, final tax regime, minimum tax
regime and related tax liability
Sections 12 to 40, 113, 113C, 168 to 169
Exemptions, tax concessions, losses, deductible allowances and tax credits
Section 41 to 55, 56 to 59B, 60 to 60D, 61 to 65B, 65E to 65G
Common rules, assets, principles of taxation and geographical source of income
Section 66 to 73, 75 to 79, 86 to 100D, 101 to 101A
Foreign source income of residents, taxation of permanent establishment, thin
capitalization, avoidance of double taxation and anti-avoidance
Sections 102 to 104, 105 to 106A, 107, 108 to 112
Returns, assessment, appeals, audit, penalties and offences
Sections 114 to 119, 120 to 126, 127 to 136, 174 to 180, 182 to 204
Collection & recovery of tax, advance tax and final tax, refund of tax and withholding
tax
137 to 146C, 147, 148 to 169, 170 to 171A, 231B to 236Q
Others
Sections 85, 172 to 173, 181 to 181D, 205 to 206A, 207 to 230I, 237 to 242, Schedules
to the Income Tax Ordinance 2001
2 Income Tax Rules, 2002

Income tax rules relating to sections specified in Income Tax Ordinance.
3 Relevant notifications, circulars issued under the Income Tax Ordinance, 2001 and rules
made under therein and model double tax treaty (country specific treaty not
examinable).
B Sales Tax and Federal Excise Duty
1 Sales Tax Act, 1990

Introduction, scope and payment of tax
Sections 1 to 13, 73
Registration & de-registration, bookkeeping, Invoicing, records, returns and audit
Sections 14 to 21A, 22 to 25AA, 26 to 29, 32A, 72B
Administration, penalties, offences, appeals and recovery of arrears
Sections 30 to 32, 33 to 40D, 45A to 47A, 48
Miscellaneous
Sections 49 to 76, Schedules to the Sales Tax Act, 1990

2 Sales Tax Rules, 2006

Sales tax rules relating to sections specified in Sales Tax Act
3 Common provisions of provincial / capital territory sales tax laws on services
4 Relevant notifications, circulars and general orders issued under the Sales Tax Act, 1990
and rules made under therein
Federal Excise Act, 2005 and Federal Excise Rules 2005
5 Introduction and definitions

Section 1 to 2
Levy, Collection and Payment of Fed
Section 3 to 18
6 Notifications, circulars and general orders under the Federal Excise Act, 2005 relevant
to chapters I and II
Ethics
7 Code of Ethics for Chartered Accountants (revised 2019): Section 600.1 to 600.10,
Section 600(Subsection 604)

CFAP-6: AUDIT, ASSURANCE AND RELATED SERVICES

Competency
Perform audit of financial and non-financial information, and provide other assurance and
related services.
Teaching
Grid Weightage
hours
Audit of Historical Financial Information-Planning and Others 30-35 25-30
Audit of Historical Financial Information – Risks 15-20 15-20
Audit Conclusion and Reporting 30-35 20-30
Specialized Areas, Other Assurance Engagement and Related Services 20-25 15-20
Ethical, Quality Control and Professional Requirements 10-15 10-15
Total 105-130 100

Learning Outcomes
Ref Level Level
Audit of Historical Financial Information-Planning and
A
Others
Describe the general principles and responsibilities
1 involved in performing an audit of historical financial P2 T3
information including group financial statements.
Identify relevant audit evidence, including contradictory
2 evidence, to inform judgments, make decisions, and reach P3 T3
well-reasoned conclusions.
Analyze the adequacy of ICT processes and controls and
3 P3 T3
identify improvements including using data analytics.
Conclude whether sufficient and appropriate audit
4 P3 T3
evidence has been obtained.
5 Apply requirement of International Standards of Auditing P3 T3
to group audit, using work of internal audit and work of
auditor’s expert.
6 Apply requirement of International Standards of Auditing P3 T3
relating to consideration of laws and regulations in an
audit of financial statements
7 Apply the requirements of International Standards of P3 T3
Auditing relating to going concern.
Auditing relating to related parties.


Learning Outcomes
Ref Level Level
Auditing relating to written representation.
Auditing relating to subsequent events.
11 Apply audit considerations relating to an entity using a P3 T2
service organization.
B Audit of Historical Financial Information-Risks
Assess the risks of material misstatement in the financial
1 P3 T3
statements and consider the impact on the audit strategy.
Identify significant audit risks including different types of
2 P3 T3
cyber risks.
Explain how an auditor can use Information and
3 Communication Technology (ICT) to identify audit risk and P3 T3
its mitigating controls in an organization.
Conclude how specified internal controls mitigate risks
4 P3 T3
including cyber risks and improve cyber security.
C Audit Conclusion and Reporting
1 Conclude and report audit opinion on financial statements. P3 T2
Communicate key audit matters, modifications to the
2 opinion, the emphasis of matter paragraphs and other P3 T2
matter paragraphs in independent auditor’s report.
Apply requirement of International Standards of Auditing
3 relevant to comparative information and the auditor’s P2 T2
responsibilities relating to other information.
Specialized Areas, Other Assurance Engagement and
D
Related Services
Explain special consideration regarding audit of financial
1 statements prepared in accordance with special purpose P2 T2
frameworks.
Explain special consideration regarding audit of single
2 financial statements and specific elements, accounts or P2 T2
items of financial statements.
Apply requirement of International Standards of Auditing
3 to engagement to report on summary financial P3 T2
statements.
Plan, perform, conclude on and report on review
4 P3 T2
engagements of historical financial statements.
Plan, perform, conclude on and report on assurance
5 engagements other than audits or review of historical P3 T2
financial information.


Learning Outcomes
Ref Level Level
Plan, perform, conclude on and report on prospective
6 P3 T2
Plan, perform, conclude on and report on controls at a
7 P3 T2
service organization.
Plan, perform, conclude on and report on greenhouse gas
8 P3 T2
statement.
Perform assurance engagements to report on the
9 compilation of Pro Forma Financial Information included P3 T2
in Prospectus.
Plan, perform, conclude on and report on engagement to
10 P3 T2
perform agreed-upon procedures.
Plan, perform, conclude on and report on compilation
11 P3 T2
engagements.
Perform the services under the provisions of corporate
12 P3 T2
laws.
13 Perform the services under the provisions of tax laws. P3 T2
E Ethical, Quality Control and Professional Requirements
Apply the requirements of the Code of Ethics on complex
1 scenarios to advise on appropriate ways of addressing an P3 T2
ethical threat.
Apply the requirements of quality control for audits of
financial statements and for firms that performs audits
2 P3 T2
and reviews of financial statements and other assurance
and related services engagements.
Apply the requirements of applicable laws for
3 P3 T2
professional misconduct on given scenarios.
3 Identify when it is appropriate to consult with specialists.

5 Apply ethical principles when collecting, generating, storing, accessing, using and
sharing data and information.
6 Apply the relevant ethical requirements to professional behavior.
the public
A Audit of Historical Financial Information-Planning

1 ISA 210: Agreeing the terms of audit engagement
2 ISA 230: audit documentation
3 ISA 250(revised): Consideration of Laws and regulations in an audit of financial
statements
4 ISA 260(revised): Communication with those charged with governance
5 ISA 265: Communicating deficiencies in internal control to those charged with
governance and management
6 ISA 300: Planning an audit of financial statements
7 ISA 402: Audit considerations relating to an entity using a service organization
8 ISA 450: Evaluation of misstatements identified during the audit
9 ISA 500: Audit evidence
10 ISA 501: Audit evidence – specific considerations for selected items
11 ISA 505: External confirmations
12 ISA 510: Initial audit engagements – opening balances
13 ISA 520: Analytical procedures
14 ISA 530: Audit Sampling
15 ISA 540(revised): Auditing accounting estimates and related disclosures
16 ISA 550: related parties
17 ISA 560: subsequent events

18 ISA 570(revised): Going concern

19 ISA 580: Written representations
20 ISA 600: Special considerations –Audit of Group Financial Statements (including the
work of component auditors)
21 ISA 610(revised 2013): Using the work of internal auditors
22 ISA 620: Using the work of an expert
B Audit of Historical Financial Information – Risks
1 ISA 240: The auditor’s responsibilities relating to fraud in an audit of financial
statements
2 ISA 315(revised): identifying and assessing the risk of material misstatement through
understanding the entity and its environment
3 ISA 320: Materiality in planning and performing an audit
4 ISA 330: The auditor’s response to assessed risk
C Audit Conclusion and Reporting
1 ISA 700(revised): Forming an opinion and reporting on Financial statements
2 ISA 701: Communicating Key audit matters in the Independent auditor’s report
3 ISA 705 (revised): modifications to the opinion in the independent auditor’s report
4 ISA 706 (revised): emphasis of matter paragraphs and other matter paragraphs in the
independent auditor’s report
5 ISA 710: Comparative information – Corresponding figures and comparative financial
statements
6 ISA 720(Revised): The auditor’s responsibilities relating to other information
D Specialized Areas, Other Assurance Engagement and Related Services
1 ISA 800 (revised): Special considerations-Audits of Financial Statements prepared in
accordance with special purpose frameworks
2 ISA 805 (revised): Special considerations-Audit of Single statements and specific
elements, accounts or items of a financial statements
3 ISA 810 (revised): Engagement to report on summary financial statements
4 ISRE 2400: Engagements to review historical financial statements
5 ISRE 2410: Review of interim financial information performed by the independent
auditor of the entity
6 ISAE 3000: Assurance engagements other than audits or reviews of historical financial
information
7 ISAE 3400: The examination of prospective financial information
8 ISAE 3402: Assurance reports on controls at a service organization
9 ISAE 3410: Assurance engagements
10 ISAE 3420: Assurance engagements on Greenhouse Gas Statements

11 ISRS 4400: Engagements to perform agreed upon procedures regarding financial

information
12 ISRS 4410: Compilation engagement
13 Amended international framework for assurance engagement
E Ethical, Quality Control and Professional Requirements
1 Code of Ethics(revised) 2019 issued by ICAP
2 Quality control – ISQC 1, ISA 220, quality control framework of ICAP, Quality Assurance
Board of ICAP, Audit Oversight Board
3 Chartered Accountant Ordinance, 1961
Chapter V A
Schedules I, II and III

MSA-1
MULTI-SUBJECT ASSESSMENT
FINANCIAL REPORTING AND ASSURANCE PROFESSIONAL COMPETENCE
Competency
Evaluate and advise, as preparer, auditor and consultant on matters relevant to financial and non-
financial information upholding the principles of ethics, transparency and accountability.
Syllabus
Grid Teaching Hour Weightage
Ref.
A Financial Accounting and Reporting 75-85 55-65
B Audit, Assurance and Related Services 40-45 25-35
C Company Law and Ethics (provisions relating to 10-15 05-15
accounts and audit)
Total 125-145 100
Key Examinable Technical competencies
Learning Outcome Testing Level
Ref. Level
A Financial Accounting and Reporting
Evaluate and advise on relevant and faithfully represented
1 P3 T3
financial and non-financial information.
B Audit, Assurance and Related Services
Evaluate and advise on audit of financial and non-financial
1 P3 T3
information
Evaluate and advise on other assurance and advisory
2 P2 T3
services
Company Law and Ethics (provisions relating to accounts
C
and audit)
1 Advise on compliance with corporate laws P2 T3


Apply techniques to reduce bias, when solving problems, informing judgements,
2
3
4
Analyze the consequences of unethical behavior to the individual, the profession,
5
and the public.
Apply ethical principles of ethics when collecting, generating, storing, accessing,
6
using and sharing data and information.
A Financial Accounting and Reporting

Presentation of Financial Statements (IAS-1, IAS-7 and Companies Act, 2017, including
1
3rd, 4th and 5th schedules)
2 Interpretation of financial and non-financial information
3 IAS 27 Separate Financial Statements
Preparation and Presentation of consolidated financial statements
 IFRS 3 Business combinations
4  IFRS 10 Consolidated financial statements
 IAS 28 Investment in Associates and Joint Ventures
 IFRS 11 Joint Arrangements
5 IFRS 12 Disclosure of Interests in Other Entities
6 IFRS 2 Share-based Payment
7 IFRS 13 Fair Value Measurement
8 IFRS 8 Operating Segments
Classification, recognition, measurement and presentation of financial assets and
liabilities
9  IAS 32 Financial Instruments: Presentation
 IFRS 7 Financial Instruments: Disclosures
 IFRS 9 Financial Instruments

10 IAS 34 Interim Financial Reporting

11 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
12 IAS 10 Events after the Reporting Date
13 IAS 12 Income Taxes
14 IAS 16 Property, Plant and Equipment
15 IFRS 16 Leases
16 IAS 40 Investment Property
17 IFRS 15 Revenue From Contracts with Customers
18 IAS 19 Employee Benefits
19 IAS 21 The Effects of Changes in Foreign Exchange Rates
20 IAS 24 Related Party Disclosures
21 IAS 36 Impairment of Assets
22 IAS 37 Provisions, Contingent Liabilities and Contingent Assets
23 IAS 38 Intangible Assets
24 IFRS for Small and Medium-Sized Entities
25 Current developments and updates relating to IFRS
B Audit, Assurance and Related Services
Quality control – ISQC 1, ISA 220, quality control framework of ICAP, Quality
1
Assurance Board of ICAP
Legal, professional and ethical consideration relating to appointment and removal of
2
auditor
ISA 315(revised) Identifying and assessing the risks of material misstatements through
3 understanding the entity and its environment
ISA 330 The Auditor’s Responses to Assessed Risks
ISA 230 Audit documentation
ISA 300 Planning an Audit of Financial Statements,
ISA 320 Materiality in Planning and Performing an Audit
ISA 500 Audit Evidence
4 ISA 501 Audit Evidence – Specific Considerations for Selected Items
ISA 505 External Confirmations
ISA 510 Initial Audit Engagements – Opening Balances
ISA 520 Analytical Procedures
ISA 530 Audit Sampling
ISA 250(revised) Consideration of Laws and Regulations in an Audit of Financial
5
Statements
6 Acceptance and continuance of client
7 ISA 560 Subsequent events

8 ISA 570(revised) Going concern

9 ISA 540(revised) Auditing Accounting Estimates and Related Disclosures
10 ISA 600 Special considerations –Audit of Group Financial Statements (Including the
Work of Component Auditors)
ISA 610(revised 2013) Using the Work of Internal Auditors

11
ISA 620 Using the Work of an Auditor’s Expert
12 Identification of audit issues and advising on relevant audit procedures
13 ISA 705 (revised) Modifications to the Opinion in the Independent Auditor’s Report
ISA 701: Communicating Key audit matters in the Independent auditor’s report
14 ISA 706 (revised): Emphasis of Matter Paragraphs and Other Matter Paragraphs in the
Independent Auditor’s Report
ISA 710: Comparative Information – Corresponding Figures and Comparative Financial

15
Statements
17 ISA 720(Revised): The Auditor’s Responsibilities Relating to Other Information
18 Audit report under the Companies Act, 2017
Assurance Engagements Other Than Audits or Reviews of Historical Financial

Information
ISA 800 (Revised): Special Considerations – Audit of Financial Statements Prepared in
accordance with Special Purpose Frameworks
ISA 805 (Revised): Special Considerations – Audits of Single Financial Statements and
Specific Elements, Accounts or Items of a Financial Statement
ISA 810 (Revised): Engagements to Report on Summary Financial Statement
19
ISAE 3000 (Revised): Assurance Engagements other than Audits and reviews of
historical financial information
ISAE 3400: The Examination of Prospective Financial Information
ISAE 3402: Assurance Reports on Controls at a Service Organization
ISAE 3410: Assurance Engagements on Greenhouse Gas Statements
ISAE 3420: Assurance Engagements to Report on the Compilation of Pro forma
Financial Information Included in a Prospectus
Engagements for Related Services

ISRS 4400: Engagements to Perform Agreed-Upon Procedures Regarding Financial
20
Information
ISRS 4410 (Revised): Compilation Engagements
Current development and updates relating to audit, assurance and related services,
21 including relevant developments in the use of technology (eg, big data, data analytics
and artificial intelligence).

C Company Law and Ethics (provisions relating to accounts and audit)

1 Accounts of Companies (Section 220 to 239)
2 Audit (Section 246 to 253)
Listed Companies (Code of Corporate Governance) regulations 2019 (Codes relating to
3
audit and accounts)
4 Professional misconduct under the Chartered Accountants Ordinance 1961
Code of Ethics(Revised 2019) issued by the Institute of Chartered Accountants of
5
Pakistan
MSA stage papers are primarily the integrated assessments of subjects examined at the CFAP stage.
MSA 1 is an integration of CFAP 1 Advanced Accounting and Financial Reporting and CFAP 6 Audit,
Assurance and Related Services. However, under prior learning policy, the concepts examinable at the
CAF stage may be examined as a component of any question at the MSA stage to assess the conceptual
understanding of the concerned topic.

MSA-2
MULTI-SUBJECT ASSESSMENT
MANAGEMENT PROFESSIONAL COMPETENCE
Competency
Evaluate and advise on all aspects of business strategies and management upholding the principles
of ethics, transparency and accountability.
Syllabus
Grid Teaching Hours Weightage
Ref.
A Strategic Management 50-55 40-50
B Financial and Performance Management 45-50 35-40
C Tax Planning 10-15 05-15
D Codes of Corporate Governance and Ethics 05-10 05-10
Total 110-130 100
Key Examinable Technical competencies

Learning Outcomes
Ref. Level
A Strategic Management
Evaluate and advise on formulating and
1 implementing organizational strategies relevant to P3 T3
non-financial aspects.
B Financial and Performance Management
1 Evaluate and advise on formulating and
P3 T3
implementing organizational financial strategies
C Tax Planning
Evaluate and advise on organizational strategies
1 P2 T2
relevant to direct and indirect taxation.
D Codes of Corporate Governance and Ethics
Evaluate and advise on Codes of corporate
1 P2 T2
governance
2 Evaluate and advise on strategies and safeguards for
P2 T2
ethical dilemmas.

Evaluate data and information from a variety of sources and perspectives through
1
Apply critical thinking skills to solve problems, inform judgements, make decisions
2
3 Apply intellectual agility.
Respond effectively to changing circumstances or new information to solve
5
problems, inform judgements, make decisions, and reach well-reasoned conclusions.
6
5 Analyze the consequences of unethical behavior to the individual, the profession,
and the public.
6 Apply ethical principles of ethics when collecting, generating, storing, accessing,
using and sharing data and information.
7 Explain the role and importance of ethics in relation to the concept of social
responsibility.
A Strategic management
Strategic Analysis:
1 Strategic management, organizational goals and objectives, the external business
environment, internal factors and strategic capability, analyzing strategic position and
performance, levels of strategy in an organization.
Strategic Choice
2 Strategic choices, generating strategic options, strategic decision-making, evaluating
strategic options, international strategies.

Strategic Implementation:
3 Acquisitions and strategic alliances, aligning organizational structure and strategy,
managing change, cost reduction methodologies, evaluating functional strategies,
business plans.
Business Risk Management
4 Business risks, enterprise risk management, risk management responsibilities,
stakeholders and risk, risk assessment, risk response.
5 Strategic Marketing and Brand Management
Understanding market position, developing a marketing strategy, positioning
strategies, the marketing mix, databases and e-marketing, brand management,
branding and marketing strategy, valuing brands and intangible assets.
Information Strategy
Information technology and strategy, information for strategic planning and control,
6 management information systems, the value of information, evaluating management
information and performance data, using information to develop competitive
advantage
Human Resource Management
7 Strategic human resource management (HRM), the impact of HRM on business
strategy, appraisal and performance management, the impact of remuneration and
reward packages, HRM and change management.
Performance Measurement
8 Financial and non-financial information, ESG, sustainability and integrated reporting,
performance measurement tools.
B Financial and Performance Management
Strategic Performance Management
1 Performance management, information for strategic decision making, performance
measurement, rewards, behaviour and performance, corporate social responsibility
and performance
Business and Securities Valuation
2 Valuation methods, acquisitions and mergers, unquoted companies and start-ups,
valuation of debt.
Financial Instruments and Financial Markets
Equity instruments, equity markets, fixed interest securities, bonds and leasing, bond
3 markets, bond valuation and yields, credit risks, derivatives, derivative markets.
Prudential Regulations for Corporate /Commercial Banking of SBP (PART – A
Definitions, Regulations R-1-R-10, PART B Regulations G1 – G4)
Financial Structures and Reconstruction
4 Capital structure, Dividend policy, Financial reconstruction, Demergers and disposals,
Small and medium company financing.
5 Financial Risk Management
Financial risks, Interest rate risks, Foreign exchange rate risks, Hedge accounting.

Treasury and Working Capital Management

6 Treasury management function, Global treasury management, Working capital
management.
C Tax Planning
Income Tax for Businesses; Group Relief and Taxation; International Expansion of
Businesses restricted to permanent establishment (foreigners investing into Pakistan);
1
Choice of Business Structure, transformation and reorganization; Sales Tax; and
Taxation of Employees Remuneration
D Codes of Corporate Governance and Ethics
- Listed Companies (Code of Corporate Governance) Regulations, 2019
1
- Public Sector Companies (Corporate Governance) Rules, 2013
Ethics and ethical issues, Resolving ethical dilemmas, Ethical safeguards, Ethics and
2
strategy.
Note: MSA stage papers are primarily the integrated assessments of subjects examined at the CFAP
stage. MSA 2 is an integration of CFAP 3 Strategy and Performance Measurement and CFAP 4 Business
Finance Decisions. However, under prior learning policy, the concepts examinable at the CAF stage
may be examined as a component of any question at the MSA stage to assess the conceptual
understanding of the concerned topic.”


Directive 1.02
EDUCATION DELIVERY
SYSTEM
CONTENTS Page #
REGISTERED ACCOUNTING
A 01 – 15
EDUCATION TUTORS SCHEME – 2014
B 16 – 35
SCHOOL SYSTEMS SCHEME – 2016

Table of Contents Page
1. Registration of Tutors 1
2. Ranking of RAETs 1
3. Application for Registration 1
4. Subsequent Ranking 1
5. Branch of RAETs and change of location* 2
6. Downgrading/Delisting of RAETs 2
7. Key Performance Indicators 3
8. ICAP’s Engagement with RAETs 3
9. Fee and Other Dues 4
10. Effective Date 4
Annexures 5
Application for Registration as Registered Accounting Education Tutors 5
Certificate 7
Benchmark for Self-Evaluation for Registered Accounting Education Tutors 8
Key Performance Indicators 11
Self-Evaluation Report 15
Statement of Key Performance Indicators 15

A – Directive 1.02
In exercise of the powers conferred by Section 15 of the Chartered Accountants Ordinance, 1961 read with Bye
Law 110 of the Chartered Accountants Bye Laws 1983, the Council of the Institute has approved the following
scheme to register and rank the Registered Accounting Education Tutors:
1. REGISTRATION OF TUTORS
The Institute shall enroll those tutors as Registered Accounting Education Tutors who fulfill the
conditions specified in this directive.
2. RANKING OF RAETs
a. RAETs shall be ranked in the following manner:
(i) Each RAET shall be ranked as ‘Fellow’, ‘Affiliate’ or ‘Registered’ on the basis of its performance.
(ii) A new RAET shall initially be ranked as ‘Registered’.

(iii) All existing RAETs shall be ranked for the first time as “Affiliate” till November 30, 2015.
Thereafter, any time on or before February 28, 2016 a subsequent ranking may be awarded on
the basis of their performance during a period of twelve months.
(iv) All existing RAETs shall completely fulfill all the prequalification requirements by May 31, 2015.
b. In case an RAET has more than one campus, each campus shall be ranked separately.
3. APPLICATION FOR REGISTRATION

a. Tutors who intend to be registered shall submit an application along with the prescribed induction
fee. The application shall be accompanied by a ‘self-evaluation report’ along with working papers
prepared on the basis of benchmarks set forth in this directive.
b. The applicant tutors shall be required to obtain (i) 175 points in aggregate and (ii) minimum points in
certain pre-requisite areas as specified in this directive, to be eligible for registration.
c. The ‘self-evaluation report’ shall be accompanied by a Reasonable Assurance Report issued under the
‘International Standards on Assurance Engagement’ by a practicing chartered accountant firm that
carries satisfactory QCR rating.
d. In case the assurance report contains a modification, the Institute shall take decision after taking into
consideration the impact of such modification.
e. Upon successful completion of all the requirements for registration, a certificate to the effect that
the tutor is a Registered Accounting Education Tutor shall be issued by the Institute.
4. SUBSEQUENT RANKING
a. **RAETs shall prepare a ‘Statement of KPIs’*, covering a period of last twenty four* months, on the
specified format and shall submit the same to the Institute by February 28 of the following year.
b. The ‘Statement of KPIs’* shall be prepared on the basis of Key Performance Indicators specified in
this directive.
*Amended in 264th meeting of the Council held on May 8th and 9th, 2015.
**Amended in 300 th meeting of the Council held on July 28, 2018
REGISTERED ACCOUNTING EDUCATION TUTORS SCHEME – 2014 1

c. The ‘Statement of KPIs’* shall be accompanied by a Reasonable Assurance Report issued under the
‘International Standards on Assurance Engagement’ by a practicing chartered accountant firm that
carries satisfactory QCR rating.
d. In case the assurance report contains a modification, the Institute shall take decision after taking into
consideration the impact of such modification.
e. On the basis of the ‘Statement of KPIs’* subject to any adjustment considered appropriate by the
Institute in case of modified assurance report, the RAETs shall be ranked as follows:
Status KPI Achievement
Fellow 70% and above points
Affiliate 50% to 69% points
Registered Below 50%
f. A certificate to the effect that the tutor is a Fellow or Affiliate or Registered Accounting Education
Tutor shall be issued by the Institute.
g. In order to get better status, an RAET may opt to submit the above mentioned statement earlier than
the due date, covering at least period of last twelve months, accompanied by a Reasonable Assurance
Report issued by a practicing chartered accountant firm.*
5. BRANCH OF RAETs AND CHANGE OF LOCATION*

a. For establishing a branch of RAET, the clause 3 of this Directive shall be followed as is the case for
registering a new RAET.
b. For change in location of the existing RAET, application shall be submitted accompanied by a ‘self-
evaluation report’ relating to location and facility along with working papers prepared on the basis of
benchmarks set forth in this directive.
c. The ‘self-evaluation report’ for change in location shall be accompanied by a Reasonable Assurance
Report issued under the ‘International Standards on Assurance Engagement’ by a practicing chartered
accountant firm.
6. DOWNGRADING/DELISTING OF RAET**
a. RAET shall be given notice of downgrading to ‘Registered’ status if it fails to submit ‘Statement of
KPIs’ by June 30 of the calendar year following the reported twenty four months.
b. RAET shall be given notice of delisting if it fails to meet the pre-requisites under this directive at any
time or fails to pay the prescribed annual renewal fee by June 30 of the calendar year following the
due date.
c. If RAET prefers not to exercise its right to appeal under this regulation, the RAET shall be downgraded
or delisted after the expiry of appeal period. Once delisted or downgraded the RAET may apply for
up-gradation or re-registration after December 31 of the calendar year in which the RAET has been
delisted or downgraded.
d. RAET which has been served notice of downgrading or delisting shall have a right to appeal to ETCOM
for review of decision of downgrading or delisting within 30 days from the date said notice is
communicated to the concerned RAET.
e. The appellant RAET shall not be downgraded or delisted, as the case may be, till the decision of
ETCOM on the appeal of the RAET.
**Amended in 277th meeting of the Council held on July 29th and 30th, 2016.

7. KEY PERFORMANCE INDICATORS
a. The following may be the broader parameters for the development of Key Performance Indicators:
(i) Performance of students in CA examinations
(ii) Quality of faculty
(iii) Infrastructure and facilities
(iv) Teaching environment
(v) Focus of RAET on promotion of CA qualification and allocation of exclusive resources for CA stream
(vi) Payment of fee and dues on time
b. IT Support/Infrastructure*
For RAETs engaged in online teaching/learning, following are the best-practices to be used as
guidelines:
(i) IT support is well established for installation and maintenance of online learning/teaching.
(ii) IT staff members are appropriately qualified in their field and have relevant experience.
(iii) Desktop/Laptop and other hardware infrastructure are available as per the appropriate class
strength.
(iv) Learning access to students and teachers are maintained at its maximum (via LMS or other
software applications)
(v) Backup plans for lost internet connection, power supply and faculty members are available.
(vi) Appropriate policy for privacy and data protection is developed and documented.
(vii) There is a well secured website and LMS accessibility for students and faculty members.
8. ICAP’S ENGAGEMENT WITH RAETs

There shall be a closer coordination and working relationship between ICAP and RAETs. The level of
engagement may vary according to the rank of individual RAET as described hereunder:
a. With Fellows
(i) Prominent exposure on website, at front offices and in ICAP’s events
(ii) Mention of names of RAETs in advertisements and exhibitions
(iii) Closer relationship and feedback facility in respect of examinations and results including sharing
of statistics regarding performance of unsuccessful students
(iv) Participation in Exam Review Committee meetings, which may be formed by the Council
(v) Consultation on policies regarding education, delivery of education and examinations
(vi) Participation in annual coordination meeting
(vii) Priority in attending ‘Train the trainers program’
b. With affiliates
(i) Moderate level exposure on website, at front offices and in ICAP’s events
(ii) Closer relationship and feedback facility in respect of examinations and results including sharing
of statistics regarding performance of unsuccessful students
(iii) Consultation on policies regarding education, delivery of education and examinations
(iv) Participation in annual coordination meeting
(v) Participation in Exam Review Committee meetings as observer, which may be formed by the Council
(vi) Limited involvement in ‘Train the trainers program’
*Amended in 343rd meeting of the Council held on Aug 27th and 28th, 2021.
c. With Registered
(i) Listing on website and mention of names at front offices
(ii) Feedback facility in respect of examinations and results including sharing of statistics regarding
performance of unsuccessful students
(iii) Participation in annual coordination meeting
9. FEE AND OTHER DUES

a. The fee and other dues including registration and annual renewal shall be as may be specified
by the Council.
b. The annual renewal fee in respect of each calendar year shall be payable in advance by January
31 of that calendar year.
c. The sponsor(s) of an RAET shall be jointly and severally responsible for the payment of fee and other
dues within the time specified under this scheme.
d. An undertaking in this respect shall be filed by the sponsor(s) at the time of applying for
registration of RAET or in case of existing RAETs, within six months from the effective date of this
scheme.
10. EFFECTIVE DATE

This directive shall become effective on December 1, 2014.

Annexures
APPLICATION
FOR REGISTRATION AS REGISTERED ACCOUNTING EDUCATION TUTORS
SPONSOR(s)
Name
Membership (if any) Membership No
Present Occupation
Address (Office)
Tel No. Fax No. E-mail
Address (Residence)
PROPOSED RAET
Proposed Name
Address
Website address:
(Proposed name of RAET should not contain the words “Chartered Accountant” and “Professional Accountant”).

PRINCIPAL
Name
Membership (if any) Membership No
ASSURANCE REPORT
Firm of Chartered Accountants engaged for assurance
INDUCTION FEE
Cross Cheque / Pay Order / Bank Draft for Rs. Dated
UNDERTAKING
a. We apply for registration of the above named education facility for the conduct of classes as per
ICAP prescribed syllabi, rules, regulations and instructions which have been read and understood
by me and the management and administrative staff of my institution.
b. We undertake to demonstrate to the satisfaction of ICAP that the operation/activities of my/ our
education institution shall be pursued with total commitment to the highest standards of teaching
directed towards success of students in ICAP examinations and the highest professional and ethical
standards of the CA profession will be maintained.
c. We undertake that all fees and dues payable to ICAP will be paid timely and we, jointly and severely,
hold ourselves responsible for the payment of fee and other dues.
d. We shall abide by the scheme and policies governing the RAETs issued by the ICAP from time to
time.
Date:
(Signature of the Sponsor)
Place:
FOR INSTITUTE USE ONLY
File No.
Checked by Date
Approved by Date
Certificate issued No. Date

No. 0000
The Institute of Chartered Accountants of Pakistan

Established under the Chartered Accountants Ordinance, 1961 (X of 1961)
This is hereby certified that
ABC Karachi
is a
FELLOW
Registered Accounting Education Tutor
of The Institute of Chartered Accountants of Pakistan
Director Education, Training and CPD

September XX, 2014

BENCHMARK FOR SELF-EVALUATION
FOR REGISTERED ACCOUNTING EDUCATION TUTORS
S. Particulars Maximum Scale for achievable points Mandatory

No. Points minimum points
1 Sponsor/Principal
1.1 Qualification of sponsor or 10 FCA/PhD (10 points) 4
Principal
ACA (6points)
(Select any one for evaluation)
FCMA (5 points)
ACMA (4 points)
M Phil/MS (4 points)
2 Facilities
2.1 Classroom furnished with 80 Each class room (10 marks) 40
minimum seating capacity of 20
students (on the basis of area of
10 sq feet per student)
Planned Maximum class size is 60
2.2 students (additional 10% in 80 80
special circumstances)
2.3 Library/ Reading Room 10 Accommodates 10% of planned 4
students’ population (5 points)
Quality of relevant books
(5 points)
(Proportional evaluation)
Evaluated through students’
feedback
2.4 Computer facilities 20 Accommodates 10% of planned 10
Quality of systems available for
use (10 points)
feedback
2.5 Building 15 Constructed and utilized in 0
accordance with the applicable
rules/regulations/byelaws
2.6 Overall outlook and facilities 30 Approach to RAET (5), overall 20
cleanliness (5) reception (5),
Air-conditioning (5), sufficient
washrooms (5), sufficient
common rooms (5), play area (5),
security (5)
feedback

3 Faculty
3.1 Faculty qualification 50 Category (a) 10 points per 20
person
a. PhDs/ Fellow Chartered
Accountants Category (b) 8 points per
person*
b. Associate Chartered
Accountants and Category (c) 6 points per person
members of professional * one person is compulsory
bodies recognized by ICAP
The points are only for faculty
c. Faculty having M Phil or
members employed on full time
16 + years of Education,
CAF or equivalent basis, in addition to principal.
qualification with 3 year 50% points will be awarded for
post training experience part time faculty members.**
3.2 Faculty profile – Chartered 50 5 points per person who is CPD 10
Accountants or members of compliant
professional bodies recognized
by ICAP
3.3 Student Teacher Ratio 40 20:1 25
(This benchmark would not (A part time teacher will have
be considered for evaluation if 60% weightage)**
there are less than 20 students
enrolled)
3.4 Trainings received by teachers 20 1 point for each training of 5
during last 12 months minimum 4 hours per person
4 Quality Control Policies and
Procedures
4.1 Faculty evaluation – peers and 20 Documented policy/Evaluation 5
students form
(Two evaluations in a subject for
each teacher)
4.2 System to assess students’ 30 Documented policy/copies of 10
progress and provide them tests performed
feedback
4.3 Academic planning/Course 40 Documented policy/ course 12
Completion Plans planners (4 points per subject)
TOTAL 495
Explanatory Notes:
1. Guidance on terms used:
a. “Quality of relevant books”, “Quality of systems” and “Overall outlook and facilities” shall be
determined by students’ feedback on the following scale:
Quality judged Bad Below Average Average Above average Good Excellent
Points 0 1 2 3 4 5

b. “Professional bodies recognized by ICAP” means the professional bodies whose members are
recognized under the bye-laws for full or part exemptions from examinations.
c. “Planned students’ population” means seating capacity of furnished class rooms.

d. “Students” means students enrolled for chartered accountancy qualification.
2. Points will be prorated where the actual level/standing against a benchmark is less than the
maximum.
Example:
Benchmark: Student Teacher Ratio
Maximum points 40
Scale 20:1
Achieved 400 enrolled students
16 teachers
Ratio 25:1
Points (20/25 * 40) 32
3. Qualitative evaluations must be supported by a brief description on the subject matter.
*****

KEY PERFORMANCE INDICATORS
Max.
S. No. Indicators KPI Measure
Points
1 Infrastructure and facilities
1.1 Qualification of sponsor or principal FCA/PhD (10 points) 10
ACA (6 points)
FCMA (5 points)
ACMA (4 points)
1.2 Library/ Reading Room Accommodates 10% of planned 10
Quality of books (5 points)
Evaluated through students’ feedback to
be incorporated in Evaluation given at
para 3.1
1.3 Computer facilities Accommodates 10% of planned 20
Quality of systems available for use
(10 points)
para 3.1
1.4 Classroom furnished with minimum seating Each class room (10 marks) 80
capacity of 20 students
(the area on the basis of 10 sq feet per student
basis)
1.5 Maximum class size is 60 students 80
(additional 10% is in special circumstances)
1.6 Building Constructed and utilized in accordance 15
with the applicable rules/regulations/
bye-laws
1.7 Overall outlook and facilities Approach to RAET (5), overall cleanliness 30
(5), reception (5), Air-conditioning (5),
sufficient washrooms (5), sufficient
common rooms (5), play area (5), security
(5)
para 3.1 (Proportional evaluation)
1.8 Faculty qualification Category (a) 10 points per person 100
a. PhDs/ Fellow Chartered Accountants Category (b) 8 points per person*
b. Associate Chartered Accountants Category (c) 6 points per person
and members of professional bodies * one person is compulsory
recognized by ICAP,

c. Faculty having M Phil or 16 + years of The points are for faculty members
Education, CAF or equivalent qualification employed on full time basis in addition
with 3 year post training experience to principal. 50% points will be awarded
to part time faculty members.**
1.9 Faculty profile – Chartered Accountants or 5 points per person who is CPD 50
members of professional bodies recognized compliant
by ICAP
1.10 Student Teacher Ratio 20:1 40
(This benchmark would not be considered for (A part time teacher will have 60%
evaluation if there are less than 20 students weightage)**
enrolled)
1.11 Trainings received by teachers during last 12 1 point for each training of minimum 4 20
months hours per person
1.12 Faculty evaluation policy – peers and students Standard of documented policy or 20
evaluation forms
(Two Evaluations in a subject for each
teacher, 2 points for each teacher)
1.13 System to assess students’ progress and Standard of documented policy/copies 30
provide them feedback of tests performed
(2 points per teacher per subject)
1.14 Academic planning/Course Completion Plans Standard of documented policy/course 40
planners
(4 points per subject)
2 Promotion of CA Program
2.1 Career Counselor desk well managed. 1 desk in a year (10 points) 20
Prominent, suitable for one-to-one discussion,
attractive design, trained, experienced staff
and promotional material available.
2.2 Visits to school and colleges where at least Each school/college (5 points) 40
25 students are counseled exclusively for CA
qualification.
2.3 Participation in education expo where 1 expo (10 points) 20
minimum one desk is dedicated for CA
qualification
2.4 Scholarship for bright and needy students 100% fee waiver for 1% of the total 60
students (6 points)
(Proportional Evaluation)
3 Faculty
3.1 Faculty performance evaluated by principal or More than 90% faculty rated “Good” (40 40
academic committee of RAET. points)
(There can be different grading system in More than 90% faculty rated
RAETs. The rating which corresponds to “Satisfactory” (20 points)
above-normal performance would be treated The evaluation must be based on
as “Good” and normal performance would be students and peer evaluation arranged
treated as “Satisfactory”) for each faculty member twice in the
course

3.2 Faculty’s contribution in “Pakistan Accountant” 4 points for one contribution 40
or any other reputable journal.
(The journals other than Pakistan Accountant
should be acceptable to principal or academic
committee of RAET. The contribution may not
necessarily be of technical nature)
3.3 Faculty contribution in ICAP’s syllabus 10 points for each subject 40
review assignments. Each RAET is expected
to provide a syllabus review report on
the subjects selected by RAET before the
commencement of classes of the selected
subjects.
3.4 Faculty contribution in study packs review 20 points for each subject 40
assignments. Each RAET is expected to provide
study material review report on the subjects
selected by RAET before the commencement
of classes of the selected subjects.
4 Teaching
4.1 Periodic Tests given to students. 4 tests per subject in a session (6 points) 60
(The test should be documented and verified (Proportional Evaluation)
by the principal or academic committee of
RAET)
4.2 Test feedback provided to students by way of 4 tests per subject in a session (6 points) 60
marking, evaluator’s comment and model (Proportional evaluation)
answers.
5 Performance of students
*5.1 PRC (Five subjects) For each subject 400
Performance of enrolled students in ICAP exams First 50 points - Percentage of passed
(Enrolled Students are those who are other students over enrolled students is equal
than those who dropped out after completing to overall result of the Institute
less than 40% classes and were duly reported to (Proportionate Evaluation).
the Institute) Remaining 50 points – Percentage of
passed students over enrolled students
exceeding the overall result of the
Institute (Proportionate Evaluation). This
additional 50 points will be computed
proportionally to the results exceeding
the Institute’s overall result.
In case of 100% result of the Institute the
proportionate evaluation would be done
for full 100 points.**
*5.2 CAF (Eight subjects) For each subject 900
Performance of enrolled students in ICAP exams First 50 points - Percentage of passed
(Enrolled Students are those who are other students over enrolled students is equal
than those who dropped out after completing to overall result of the Institute
less than 40% classes and were duly reported to (Proportionate Evaluation).
the Institute) Remaining 50 points – Percentage of
passed students over enrolled students
exceeding the overall result of the
*Amended in 322nd meeting of the Council held on December 13-14, 2019.

Institute (Proportionate Evaluation). This
additional 50 points will be computed
proportionally to the results exceeding
the Institute’s overall result.
proportionate evaluation would be done
for full 100 points.**
6 Fee payment
6.1 Annual renewal fee payable in advance On time 30
(Reduce 2 point per day of delayed
payment)
Total 2295
Explanatory Notes:
determined by students feedback on the following scale:
Quality judged Bad Below Average Average Above average Good Excellent
Points 0 1 2 3 4 5
c. “Planned students’ population” means seating capacity of furnished class rooms.
2. Points will be prorated where the performance achieved against a benchmark is less
than the maximum.
**Example:
KPI: Performance of students in PRC- Business Writing and Comprehension
Skills
Maximum points 100
KPI measure Percentage of pass students
ICAP overall result 6,000 students passed out of 12,500 (48%)
67 student pass out of 120 in Business Writing
Achieved by RAET and Comprehension Skills
67/120 =55.83% overall pass result
Pass result is 55.83%-48%=7.83% greater than overall ICAP result
Points gained
First 50 points Result equal to or more than 48% 50
Remaining 50 points Results in excess of 48%
(7.83/100-48)X50 7.52
Total points 58
*****

SELF-EVALUATION REPORT
AS AT_____________________________
NAME OF APPLICANT TUTOR
Mandatory Working
Evaluation based on scale Maximum Points
S. No. Particulars minimum paper
for achievable points Points obtained
points reference
Submitted by
(Signature and name of authorized person)
Date and place
*****
STATEMENT OF KEY PERFORMANCE INDICATORS*
FOR THE PERIOD* _____________________________

NAME OF RAET
Working
Maximum Points
S. No. Indicators KPI Measure paper
Points obtained
reference
Submitted by
Date and place
*****
(244th Council meeting held on April 22-23, 2013)
** Amended in 273rd meeting of the Council held on March 17th and 18th, 2016


Table of contents Page
1. Preamble 19
2. Registration of School Systems 19
3. Conditions for Registration 19
4. The Process of Registration 20
5. Periodic Reporting 21
6. Branch of RASSs and change of location 21
7. Change in ownership of RASS 21
8. Delisting of RASS 21
9. Key Performance Indicators 21
10. ICAP’s Engagement with RASSs 22
11. Fee and Other Dues 22
12. Oversight by the Institute 22
Annexures
Application for Registration as Registered Accounting School System 23
Certificate 25
Benchmark for Self-Evaluation for Registered Accounting School Systems 26
Key Performance Indicators 30
Self-Evaluation Report 35
Statement of Key Performance Indicators 35
REGISTERED ACCOUNTING SCHOOL SYSTEMS SCHEME – 2016 18

B – Directive 1.02
In exercise of the powers conferred by Section 15 of the Chartered Accountants Ordinance, 1961 read with
Bye Law 110 of the Chartered Accountants Bye Laws 1983, the Council of the Institute has approved the
following scheme to register the Accounting School Systems:
1. PREAMBLE
The CA qualification comprises of both the theoretical knowledge and the practical experience. The
academic support is extended to the students through different channels.
These regulations provide for the registration of the Higher Secondary Schools offering HSC qualification
/ A Levels education/any qualification equivalent to twelve years of education and will be called
“Registered Accounting School Systems Scheme 2016” hereinafter called (the scheme). The School
Systems registered under these regulations will be called “Registered Accounting School Systems
(RASSs) and will function as CA education providers.
This scheme targets the potential aspirants through the broader geographical presence of these school
systems.
2. REGISTRATION OF SCHOOL SYSTEMS

The Institute shall enroll those School Systems as Registered Accounting School Systems that fulfill the
conditions specified in this directive.
3. CONDITIONS FOR REGISTRATION

a. The school system must have its presence in at least ten (10) cities out of which at least five (5)
cities must be those where ICAP has no Registered Accounting Education Tutor (RAET).
b. The school systems will provide tuition for at least PRC and CAF level examinations.
c. The Registered Accounting School Systems will preferably follow normal morning timings.
d. Every campus offering CA courses of the same School System will be required to get approval of
the Institute on individual basis.
e. The RASS campuses offering CA courses will be purpose built. In areas where no RAET is
present, the Institute may, after evaluating the campus, allow tuition of students in the existing
RASS campus.
f. The Institute may make a commitment not to allow any other RASS to have its campus in the
selected area for a period of three (3) years. In consideration of such exclusivity, the Institute
will require compulsory offering of CA courses in particular cities or regions, identified by the
Institute, where there is no RAET currently.
g. The RASS shall make a commitment that it will not offer any other accountancy qualification in
its campuses dedicated to CA qualification.
h. A school system once declared RASS shall not be registered as RAET by the Institute.
i. The policy directives issued by the Institute are binding on all RASSs and every RASS must
comply with and operate in accordance with the policy directive.

4. THE PROCESS OF REGISTRATION
a. The School Systems shall, at the time of registration, submit a comprehensive proposal inclusive
of the following particulars:
I. Operational Feasibility
(i) Executive Summary of the project
▪ Goals of implementing CA Pakistan’s curriculum and the challenges therein
▪ Justification of the proposal in the context of market needs and social
benefits
(ii) Background of the School System/Network and the Management structure
(iii) Anticipated financial health of the proposal supported by an analytical-descriptive
plan for source(s) of income and expenditure.
(iv) Location(s) and reason of selection of area/campus
(v) Program of studies
(vi) General policy towards admissions, drop out and re-enrolment
(viii) Performance measurement policy for students and faculty
(ix) Marketing and communication initiatives for the promotion of CA Pakistan
(x) Additional information if any.
II. Self-Evaluation Report
(i) Qualification and Experience of the Sponsor/Principal/Head of the Campus
(ii) Assessment of Campus’s resources and facilities against Institute’s requirements,
the resources and facilities being the infrastructure, administration, teaching
staff, spacious class rooms, furniture and fixtures, computer labs and library
equipped with curriculum supporting resources
(iii) Details of faculty i.e. qualifications and selection criteria
(iv) A well-designed approach for teachers’ professional development
(v) Embedded quality assurance processes i.e. academic supervision and level of
administrative and technical support for quality assurance.
b. School Systems that intend to be registered shall submit an application along with the
prescribed induction fee. The application shall be accompanied by the proposal along with
working papers prepared on the basis of benchmarks set forth in this directive.
c. The applicant School Systems shall be required to obtain (i)275 points in aggregate and (ii)
minimum points in certain pre-requisite areas as specified in this directive, to be eligible
for registration.
d. The ‘self-evaluation report’ of campuses offering CA education shall be accompanied by a
Reasonable Assurance Report issued under the ‘International Standards on Assurance
Engagement’ by a practicing chartered accountant firm that carries satisfactory QCR
rating.
e. In case the assurance report contains a modification, the Institute shall take decision after
taking into consideration the impact of such modification.
f. Upon successful completion of all the requirements for registration, the Institute shall
consider the application as it may deem fit and proper for issuing a certificate to the
effect that the School System is a Registered Accounting School System
g. The Institute, upon satisfying itself on the applicant, shall issue a certificate to the effect
that the School System is a Registered Accounting School System.

5. PERIODIC REPORTING
a. RASSs shall prepare a ‘Statement of KPIs’, covering a period of last two calendar years, on the
specified format and shall submit the same to the Institute by February 28 of the year following
the reported calendar years. The first such statement would cover the period of the calendar
year in which RASS is given the said status. The same shall be submitted to the Institute by
February 28 of the following year.
b. The ‘Statement of KPIs’ shall be prepared on the basis of Key Performance Indicators specified
in this directive. The ‘Statement of KPIs’ shall be accompanied by a Reasonable Assurance
Report issued under the ‘International Standards on Assurance Engagement’ by a practicing
chartered accountant firm that carries satisfactory QCR rating.
c. In case the assurance report contains a modification, the Institute shall take decision after
6. BRANCH OF RASSs AND CHANGE OF LOCATION

For establishing a new campus dedicated to CA courses or change of location of any approved
campus, the RASS will be required to submit the Self Evaluation Report for such new campus or
such new location of approved campus, accompanied by a Reasonable Assurance Report issued
under the ‘International Standards on Assurance Engagement’ by a practicing chartered
accountant firm that carries satisfactory QCR rating.
7. CHANGE IN OWNERSHIP OF RASS

a. The Principal or Sponsor having intention to change the ownership or partnership pattern of
RASS shall apply in writing to the Institute, at least 45 days before such change
b. The Institute, after satisfying itself to the person involved in the new arrangement, may grant
approval of such change.
8. DELISTING OF RASS
(i) RASS shall be given a direction to comply with or remove the deficiency within a given period,
which will not be more than four months, if it fails to:
a. submit ‘Statement of KPIs’ by due date;
b. meet the pre-requisites under this directive at any time; or
c. pay the prescribed annual renewal fee by due date .
(ii) If RASS fails to comply with the direction within a given period, it will be given a notice of its
delisting.
(ii) If said RASS prefers not to exercise its right to appeal under this regulation, the RASS shall be
delisted after expiry of appeal period. Once delisted, the RASS may apply for re-registration
after December 31 of the calendar year in which the RASS has been delisted.
(iii) The RASS which has been served notice of its delisting shall have a right to appeal to ETCOM for
review of decision of delisting within 30 days from the date the said notice is communicated to
the concerned RASS.
(iv) The appellant RASS shall not be delisted till the decision of ETCOM on the appeal of the RASS.
9. KEY PERFORMANCE INDICATORS

The following may be the broader parameters for the development of Key Performance Indicators:
(i) Performance of students in CA examinations
(ii) Quality of faculty

(iii) Infrastructure and facilities
(iv) Teaching environment
(v) Focus of RASS on promotion of CA qualification and allocation of exclusive resources for CA
stream
(vi) Payment of fee and dues on time
(vii) Code of conduct for students in the premises
10. ICAP’S ENGAGEMENT WITH RASSs

There shall be close coordination and working relationship between ICAP and RASSs. The level of
engagement may be as follows:
(i) Prominent exposure on website, at front offices and in ICAP’s events
(ii) Mention of names of RASSs in advertisements and exhibitions
(iii) Feedback facility in respect of examinations and results including sharing of statistics regarding
performance of unsuccessful students
(iv) Participation in Exam Review Committee meetings, which may be formed by the Council
(v) Consultation on policies regarding education, delivery of education and examinations
(vi) Participation in annual coordination meeting
(vii) Priority in attending ‘Train the trainers program’

(i) The fee and other dues including registration and annual renewal shall be equivalent to the
same applicable on RAET.
(ii) The annual renewal fee in respect of each calendar year shall be payable in advance by January
31 of that calendar year.
(iii) The sponsor(s) of an RASS shall be jointly and severally responsible for the payment of fee and
other dues within the time specified under this scheme.
(vi) An undertaking in this respect shall be filed by the sponsor(s) at the time of applying for
registration of RASS or in case of existing RASSs, within six months from the effective date of
this scheme.
12. OVERSIGHT BY THE INSTITUTE

a. The representative(s) of ICAP may carry out surprise or planned visit(s) to the CA-dedicated
campus(es) of Registered Accounting School System at own discretion or on the complaint about
significant non-compliance with the requirements of the registration.
b. The visit(s), if any, will be for the purpose of assuring whether RASS is in compliance with the
requirements of this directive or any other such regulation issued by the Institute from time to time.
The representatives will be allowed to meet the students attending the courses and to attend any part
of the course, if needed.
c. After each visit a draft Visit Report will be shared with the RASS which will have 15 days to comment
and respond. A final report will be submitted to ETCOM after considering the comments and response
of RASS.
13. EFFECTIVE DATE

This directive shall become effective on November 1, 2016.

Annexures
APPLICATION FOR REGISTRATION AS
REGISTERED ACCOUNTING SCHOOL SYSTEM
SPONSOR(s)
Name ___________________________________________________________________________
Membership (if any) _________________ Membership No _____________________________________
Present Occupation ________________________________________________________________
Address (Office) ___________________________________________________________________
_________________________________________________________________________________
Tel No. ______________ Fax No. ______________ E-mail __________________________________
Address (Residence) ________________________________________________________________
_________________________________________________________________________________
PROPOSED RASS
Proposed Name ___________________________________________________________________
Address __________________________________________________________________________
_________________________________________________________________________________
Website Address ___________________________________________________________________
(Proposed name of RASS should not contain the words “Chartered Accountant” and “Professional Accountant”)

PRINCIPAL
Name ___________________________________________________________________________
Membership (if any) _________________ Membership No _____________________________________
ASSURANCE REPORT
Firm of Chartered Accountants engaged for assurance ____________________________________
INDUCTION FEE
Cross Cheque / Pay Order / Bank Draft for Rs. _____________ Dated _________________________
UNDERTAKING
a. We apply for registration of the above named education facility for the conduct of classes as
per ICAP prescribed syllabi, rules, regulations and instructions which have been read and
understood by me and the management and administrative staff of my institution.
b. We undertake to demonstrate to the satisfaction of ICAP that the operation/activities of my/
our education institution shall be pursued with total commitment to the highest standards of
teaching directed towards success of students in ICAP examinations and the highest
professional and ethical standards of the CA profession will be maintained.
c. We undertake that all fees and dues payable to ICAP will be paid timely and we, jointly and
severely, hold ourselves responsible for the payment of fee and other dues.
d. We shall abide by the scheme and policies governing the RASSs issued by the ICAP from time to
time.
Date _____________________ _________________________

(Signature of the Supervisor)
Place ____________________
File No.
Checked by ___________________________________ Date _______________________________
Approved by ___________________________________ Date ______________________________
Certificate issued _______________ No. ____________ Date ______________________________

No. 0000

ABC Karachi
is a
Registered Accounting School System

September XX, 2016

BENCHMARK FOR SELF-EVALUATION
FOR REGISTERED ACCOUNTING SCHOOL SYSTEMS
Maximum Mandatory
S.No. Particulars Scale for achievable points
Points minimum points
1. Sponsor/Principal
1.1 Qualification of Sponsor or 10 FCA/PhD (10 points) 4
Principal ACA (6points)
(Select any one for evaluation) FCMA (5 points)
ACMA (4 points)
1.2 Profile of the Sponsor or Principal 10 Proof of minimum 10 years of 5
teaching and/or professional
experience
1.3 Engagement of Sponsor or 05 Whether engaged full time or 5
Principal with RASS part time.
In case of part timer, consent
from the employer to act as
such, incase employed
elsewhere.
2. Physical Facilities
2.1 Building 15 Constructed and utilized in 0
accordance with the applicable
rules/regulations/byelaws
2.2 Classroom furnished with 80 Each class room (10 marks) 40

students (on the basis of area of
10 sq. feet per student)
2.3 Planned Maximum class size is 60 80 80
students (additional 10% allowed
in special circumstances)
2.4 Library/ Reading Room 30 Accommodates 10% of planned 15
• At least 500 books in the
library (5 points)
• Quality of relevant books (5
points)
Feedback
• Subscription to at least 5
journals of international
repute and at least two
newspapers (one Urdu and
one English) is mandatory.
Access to online journals
and newspapers also to be
provided (7 points)
• Presence of librarian (3
points)
Maximum Mandatory
2.5 Computer facilities 30 Accommodates 10% of planned 15
students’ population (10
points)
• Quality of systems available
for use (10 points)
feedback
• Sufficient number of
computer systems available
and does every student use
it on individual basis. (10
points)
2.6 Overall outlook and facilities 30 Approach to RASS (5), overall 20
cleanliness (5) reception (5),
Air-conditioning (5), sufficient
washrooms (5), sufficient
common rooms (5), play area
(5), security (5) (Proportional
evaluation)
feedback
3 Faculty
3.1 Faculty qualification 50 20
a. PhDs/ Fellow Chartered Category (a) 10 points per
Accountants person
b. Associate Chartered Category (b) 8 points per
Accountants and members person*
of professional bodies
recognized by ICAP
c. Faculty having M Phil or 16+ Category (c) 6 points per
years of Education, CAF or person
equivalent qualification * one person is compulsory
with 3 year post training
Experience
The points are only for faculty
members employed on full
time basis, in addition to
Principal. 50% points will be
awarded for part time faculty
members.
CAF or equivalent qualification
with 3 years post training
experience is the minimum
qualification for faculty.

Maximum Mandatory
3.2 Faculty profile – Chartered 50 5 points per person who is CPD 10
Accountants or members of compliant
professional bodies recognized
by ICAP
3.3 Engagement of Faculty 10 Consent from the employers to 10
act as such, if Part-time faculty
members employed elsewhere
3.4 Other Staff 10 Total number of non-teaching, 5
administrative and supporting
staff, their designations and
qualifications. Copies of service
rules to be provided.
Evaluation through observation
of sufficiency)
4. Teachers’ professional
development
4.1 Trainings received by teachers 20 1 point for each training of 5
during last 12 months minimum 4 hours per person
5. Quality Control Policies and
Procedures
5.1 Faculty evaluation – peers and 20 Documented policy/Evaluation 5
students form
(Two evaluations in a subject
for each teacher)
5.2 System to assess students’ 30 • Documented policy/ 10
progress and provide them regulations of examinations
feedback • copies of tests performed
5.3 Academic planning/Course 40 Documented policy/ course 12
Completion Plans planners (4 points per subject)
5.4 Code of conduct for students and 15 Documented code of conduct 08

ethical requirements for students including ethical
requirements and its
orientation and dissemination
TOTAL 535

Explanatory Notes:
determined by students’ feedback on the following scale:
Quality Bad Below Average Above Average Good Excellent
judged Average
Points 0 1 2 3 4 5
recognized under the bye-laws for full or part exemptions from examinations
c. “Planned students’ population” means seating capacity of furnished class rooms
*****************************************************************************************
*********************

KEY PERFORMANCE INDICATORS
S. No. Indicators KPI Measure Max Points
1 Infrastructure and facilities
1.1 Qualification of sponsor or FCA/PhD (10 points) 10
principal ACA (6 points)
FCMA (5 points)
ACMA (4 points)
1.2 Library/ Reading Room Accommodates 10% of planned students’ 30
population (5 points)
• At least 500 books in the library (5
points)
• Quality of relevant books (5 points)
Evaluated through students’ Feedback
• Subscription to at least 5 journals of
international repute and at least two
newspapers (one Urdu and one English)
is mandatory. Access to online journals
and newspapers also to be provided (7
points)
• Presence of librarian (3 points)
1.3 Computer facilities Accommodates 10% of planned students’ 30
population (10 points)
• Quality of systems available for use (10
points)
Evaluated through students’ feedback
• Sufficient number of computer systems
available and does every student use it
on individual basis. (10 points)
1.4 Classroom furnished with Each class room (10 marks) 80
students (the area on the basis of
10 sq feet per student basis)
1.5 Maximum class size is 60 80
students(additional 10% in special
circumstances)
1.6 Building Constructed and utilized in accordance with 15
the applicable rules/regulations/bye-laws
1.7 Overall outlook and facilities Approach to RASS (5), overall cleanliness (5), 30
reception (5), Air-conditioning (5), sufficient
washrooms (5), sufficient common rooms
(5), play area (5), security (5)
Evaluated through students’ feedback to be
incorporated in Evaluation given at para 3.1

1.8 Faculty qualification
a. PhDs/ Fellow Chartered Category (a) 10 points per person 100
Accountants
b. Associate Chartered Category (b) 8 points per person*
Accountants and members of
professional bodies
recognized by ICAP
c. Faculty having M Phil or 16 + Category (C) 6 points per person* one person
years of Education, CAF or is compulsory
equivalent qualification with 3 The points are for faculty members
year post training experience employed on full time basis in addition to
principal. 50%points will be awarded to part
time faculty members
1.9 Faculty profile – Chartered 5 points per person who is CPD compliant 50
Accountants or members of
professional bodies recognized by
ICAP
1.10 Student Teacher Ratio 20:1 40
(This benchmark would not be (A part time teacher will have 60%
considered for evaluation if there weightage)
are less than 20 students
enrolled)
1.11 Trainings received by teachers 1 point for each training of minimum 4 hours 20
during reporting period per person
1.12 Faculty evaluation policy – peers Standard of documented policy or evaluation 20
and students forms
(Two Evaluations in a subject for each
teacher, 2 points for each teacher)
1.13 System to assess students’ Standard of documented policy/copies of 30
progress and provide them tests performed
feedback (2 points per teacher per subject)
1.14 Academic planning/Course Standard of documented policy/course 40
Completion Plans planners
(4 points per subject)
1.15 Code of conduct for students and Documented code of conduct for students 15
ethical requirements including ethical requirements and its
orientation and dissemination.
2 Promotion of CA Program
2.1 Career Counselor desk well 1 desk in a year (10 points) 20
managed. Prominent, suitable for
one-to-one discussion, attractive
design, trained, experienced staff
and promotional material
available.
2.2 Visits to school and colleges Each school/college (5 points) 40
where at least 25 students are
counseled exclusively for CA
qualification.

2.3 Participation in education expo 1 expo (10 points) 20
where minimum one desk is
dedicated for CA qualification
2.4 Scholarship for bright and needy 100% fee waiver for 1% of the total students 60
students (6 points)
3 Faculty
3.1 Faculty performance evaluated by More than 90% faculty rated “Good” (40 40
principal or academic committee points)
of RASS. (There can be different More than 90% faculty rated “Satisfactory”
grading system in RASSs. The (20 points)
rating which corresponds to The evaluation must be based on students
above-normal performance and peer evaluation arranged for each
would be treated as “Good” and faculty member twice in the course
normal performance would be (Proportional Evaluation)
treated as “Satisfactory”)
3.2 Faculty’s contribution in “Pakistan 4 points for one contribution 40
Accountant” or any other
reputable journal.
(The journals other than Pakistan
Accountant should be acceptable
to principal or academic
committee of RASS. The
contribution may not necessarily
be of technical nature)
3.3 Faculty contribution in ICAP’s 10 points for each subject 40
syllabus review assignments. Each
RASS is expected to provide a
syllabus review report on the
subjects selected by RASS before
the commencement of classes of
the selected subjects.
3.4 Faculty contribution in study 20 points for each subject 40
packs review assignments. Each
RASS is expected to provide study
material review report on the
subjects selected by RASS before
the commencement of classes of
the selected subjects.
4 Teaching
4.1 Periodic Tests given to students. 4 tests per subject in a session (6 points) 60
(The test should be documented (Proportional Evaluation)
and verified by the principal or
academic committee of RASS)
4.2 Test feedback provided to 4 tests per subject in a session (6 points) 60
students by way of marking, (Proportional evaluation)
evaluator’s comment and model
answers.

5 Performance of students
*5.1 PRC (Four subjects)
Performance of enrolled students For each subject 400
in ICAP exams First 50 points - Percentage of passed
(Enrolled students are those who students over enrolled students is equal to
are other than those who were or more than overall result of the Institute
dropped out after completing less (Proportionate Evaluation).
than 40% classes and were duly Remaining 50 points – Percentage of passed
reported to the Institute) students over enrolled students exceeding
the overall result of the Institute
(Proportionate Evaluation)
proportionate evaluation would be done for
full 100 points.
*5.2 CAF (Eight subjects)
Performance of enrolled students For each subject 900
in ICAP exams First 50 points - Percentage of passed
(Enrolled students are those who students over enrolled students is equal to
are other than those who were or more than overall result of the Institute
dropped out after completing less (Proportionate Evaluation).
than 40% classes and were duly Remaining 50 points – Percentage of passed
reported to the Institute) students over enrolled students exceeding
the overall result of the Institute
(Proportionate Evaluation)
proportionate evaluation would be done for
full 100 points.
6 Fee payment
6.1 Annual renewal fee payable in On time 30
advance (Reduce 2 point per day of delayed payment)
*Amended in 322nd meeting of the Council held on December 13-14, 2019.

Explanatory Notes:
determined by students feedback on the following scale:
Quality Bad Below Average Above average Good Excellent

judged Average
Points 0 1 2 3 4 5
c “Planned students’ population” means seating capacity of furnished class rooms.
2. Points will be prorated where the performance achieved against a benchmark is less than the
maximum.
**Example:
KPI: Performance of students in PRC- Business Writing and Comprehension Skills
Maximum points 100
KPI measure Percentage of pass students
ICAP overall result 6,000 students passed out of 12,500 (48%)
67 student pass out of 120 in Business Writing
Achieved by RASS and Comprehension Skills
67/120 =55.83% overall pass result
Pass result is 55.83%-48%=7.83% greater than overall ICAP result
Points gained
First 50 points Result equal to or more than 48% 50
Remaining 50 points Results in excess of 48%
(7.83/100-48)X50 7.52
Total points 58

AS AT ________________________
NAME OF APPLICANT SCHOOL

Evaluation based Mandatory
Maximum Points Working paper
S. No. Particulars on scale for minimum
points obtained reference
achievable points points
Submitted by ___________________________
Date and Place ___________________________________
*****
STATEMENT OF KEY PERFORMANCE INDICATORS
FOR THE PERIOD ________________________
NAME OF RASS
Working paper
S. No. Indicators KPI measure Maximum points Points obtained
reference
Submitted by ___________________________
Date and Place ___________________________________
*****

Directive 1.03
Directive 1.03
TRAINING REGULATIONS AND
GUIDELINES
Directive 1.03
CONTENTS Page #
TRAINING REGULATIONS AND GUIDELINES 2015

IP-1 to IP-47
TRAINING IN PRACTICE

OP-1 to OP-45
TRAINING OUTSIDE PRACTICE
Directive 1.03
Directive 1.03
Directive 1.03
Directive 1.03


1. Preamble 1
2. Definitions 1
3. Registration of training organizations 1
4. Member Responsible for Student Affairs (MRS) 2
5. Technical Supervisor and Mentor 3
6. Contract, training period and stipend 4
7. Entitlement 5
8. Leaves, service break, working hours, overtime etc. 5
9. Transfer of training contract 6
10. Termination of training contract 6
11. Career progression, training area, assessment etc. 7
12. Statement of terms and conditions of engagement 11
13. Grievance mechanism 11
14. Transition for existing TOs 11
15. Compliance and counselling review 11
16. Non-compliance 12
Annexures 13
Directive 1.03
1. PREAMBLE
In exercise of the powers conferred by Section 15 of the Chartered Accountants Ordinance, 1961 read with
the Chartered Accountants Bye-Laws 1983, the Council of the Institute has approved the following
regulations and guideline to govern the training of a student of chartered accountancy in a firm of
Chartered Accountants as prescribed under the bye-laws:
2. DEFINITIONS
(1) In these Regulations, unless there is anything repugnant in the subject context:
a) Bye-laws means Chartered Accountants Bye-laws 1983;
b) Firm means a sole practitioner or a partnership of members of the Institute engaged in
professional practice;
c) Institute means the Institute of Chartered Accountants of Pakistan;
d) Member means a member of the Institute;
e) Mentor means a sole proprietor/partner or a fulltime employee of a TO responsible for guiding
the Trainee Students on the matters other than technical issues;
f) Member in charge means a member in charge of an office of a firm of chartered accountants as
mentioned in the Form C filed with the Institute;
g) Ordinance means Chartered Accountants Ordinance 1961;
h) Prescribed means as prescribed under the bye-laws;
i) Student means a person registered with the Institute as examinee;
j) Technical Supervisor means a CPD compliant sole proprietor/partner or member being fulltime
employee responsible for development of technical competencies of Trainee Students;
k) TO means Training Organization as defined in the bye-laws;
l) Trainee-on-probation means a person who is registered with the Institute as Student and has
commenced probationary period of training with a TO; and
m) Trainee Student means a Student whose contract of training has been registered with the
Institute and whose period of training is not completed.
(2) Unless the context otherwise requires, all other terms and expressions used but not defined in these
regulations shall have the same meaning as assigned to them in the Ordinance and Bye-Laws; and
words importing the singular shall include the plural and vice versa.
3. REGISTRATION OF TRAINING ORGANIZATION

(1) Application for authorization
The application for authorization as TO shall be submitted in the following manner:
(i) It shall be applied on prescribed application form along with the fee for authorization as
prescribed by the Council from time to time.
(ii) It shall be submitted by the authorized partner of the firm.
Training Regulations and Guidelines 2015 - TRAINING IN PRACTICE IP - 1

Directive 1.03
(2) Prerequisites for authorization as TO

A firm shall be authorized as a TO if it complies with the following criteria:
(i) It has the following minimum number of audits to gain corresponding entitlement to train
Trainee Students.
Initial entitlement of 5 Trainee Full entitlement

Students per sole as per bye-laws
proprietor/partner and member
employee
Minimum audits 10 25
Including audit of limited companies 5 15
Minimum paid up capital of limited
Not applicable Rs.15 million
companies being audited (aggregate)
(ii) It has nominated a CPD compliant Member, being sole proprietor/partner/full time employee, as
Member Responsible for Student affairs (MRS);
(iii) For full entitlement, it has nominated MRS who has minimum three year post qualification
experience; and
(iv) Any other condition specified by the Council from time to time.
(3) Authorization Process

Authorization of a TO shall be processed as follows:
(i) The Institute shall conduct an evaluation of application for authorization through visits and
review of documents and information obtained;
(ii) Upon completion of the formalities for authorization as TO, the Institute shall authorize the firm
to act as TO and train Students.
(iii) A certificate to the effect that the firm is an authorized TO shall be issued by the Institute.
(iv) Cases of firms not complying with the prescribed criteria shall be deferred and deficiencies shall
be conveyed to the entity for removal of such deficiencies.
(v) If the deficiencies are removed after a period of six months the firm shall be required to re-apply,
otherwise a statement confirming that the deficiencies have been removed would suffice.
(4) Subsequent failure to meet the pre-requisites for authorization
(i) In case a TO falls short of pre-requisites for authorization subsequently, the TO shall inform the
Institute within 30 days for appropriate direction.
(ii) The Institute shall have the power to grant waiver or relaxation from any condition for a period
not exceeding one year. The reasons for granting waiver or relaxation shall be recorded in writing
and communicated to the concerned TO.
(iii) TO shall continue imparting training till further decision.
4. MEMBER RESPONSIBLE FOR STUDENT AFFAIRS (MRS)

(1) TO shall nominate in each office one MRS who shall be the focal person in the office of the TO and
shall assume the responsibility of:
(i) signing training contract and timely submission thereof to the Institute;
(ii) intimating nomination of Technical Supervisors and Mentors to the Institute;

Directive 1.03
(iii) intimating allocation of Trainee Students among the Technical Supervisors and Mentors, to the
Institute;
(iv) maintenance of training records specified in these regulations and as may be specified by the
Institute from time to time;
(v) coordinating with the Technical Supervisors, Mentors, Students, Trainee Students and the
Institute; and
(vi) ensuring compliance with these regulations.
(2) In case a TO has other office where an employee is working as member in charge, the TO shall
appoint sole proprietor/any partner as MRS of the said office. Except for signing training contract the
nominated MRS may delegate all the assignments to the member in charge of the said office.
5. TECHNICAL SUPERVISOR AND MENTOR

(1) Duties of Technical Supervisor
A TO shall be required to appoint a Technical Supervisor for each Trainee Student who shall:
(i) at the time of induction, arrange orientation and communicate the attributes on which a Trainee
Student would be assessed under these regulations;
(ii) ensure proper on-the-job training and practical experience as mentioned in these regulations;
(iii) monitor the career progression plan and assess the progress annually . The outcome of
assessment should be in recorded form;
(iv) provide necessary guidance to the Trainee Student for improvement in the areas identified
during annual assessments; and
(v) as far as practical, avoid overtime work by Trainee Students to allow them adequate time for
studies. Provided that where overtime is unavoidable, the Trainee Students shall be
compensated in the manner specified in these regulations.
(2) Duties of Mentor
A TO may appoint Mentor for the Trainee Students who may:
(i) act as a trusted, caring and responsible guide who establishes a positive and personal
relationship with Trainee Students and maintains regular interaction and consistent
support;
(ii) provide career guidance and help the Trainee Students to develop broader life management
skills; and
(iii) guide the Trainee Students in accessing solutions and resources, which the Trainee Students may
need rather than to provide those solutions and resources.
Explanation: Wherever reference to mentor is given in these regulations, it is clarified that these are
only applicable when the TO has appointed the mentor.
(3) Allocation of Trainee Students
The allocation of Trainee Students to Technical Supervisors and Mentors shall be in the following
manner:
(i) TO shall allocate its Trainee Students among the Technical Supervisors for a period preferably not
less than six months.
(ii) The number of Trainee Students allocated to a Technical Supervisor shall not be more than his
entitlement to Trainee Students prescribed under these regulations.
(iii) Preferably, allocation of Trainee Students shall be to such Technical Supervisors who are sole
proprietor/ partners or employees to whom the Trainee Students are functionally reporting.

Directive 1.03
(iv) Allocation of Trainee Students to Mentors should be in accordance with the policy of the TO. A
Mentor shall not be a person to whom the Trainee Student reports functionally.
6. CONTRACT, TRAINING PERIOD AND STIPEND

(1) Contract
(i) There shall be a written contract, on the prescribed format, between the Trainee Students and
their Training Organization.
(ii) The contract shall be executed after completion of the probationary period of training and shall
be sent to the Institute for registration within the prescribed period and in the manner
prescribed under the Bye-Laws.
(iii) In suitable circumstances the Institute shall have the power to condone delay in registration of
training contract for maximum of thirty days.
(iv) Delay in submission of contract for more than thirty days shall be treated as non-compliance
with these regulations.
(2) Period of training
The training period shall vary according to the qualification of the Students at the time of
commencement of training, as follows:
Qualification Period of Training
(i) CAF passed or equivalent thereto 3.5 years
(ii) Four year Graduate / Post Graduate from Specified Degree 3 years
Awarding Institutes (SDAI)
(iii) *Four year Graduate / Post Graduate from any recognized 3 years
degree awarding Institute with major in accounting or finance
(iv) *All other Graduates including 14 years associate degree 4 years

holders
(3) Probationary period
(i) The Students shall be required to complete a probationary period as prescribed under the Bye-
Laws.
(ii) The engagement of a Student as a Trainee-on-probation shall be properly documented.
(iii) The Student shall intimate his joining to the Institute within two weeks from the date of joining.
A registration as Trainee-on-probation shall be effected upon such application and payment of
prescribed fee. The Institute shall send a list of such Trainee-on-probation to the TO on monthly
basis.
(iv) TOs shall keep record of satisfactory performance during probationary period.
(v) During the probationary period, the Trainee-on-probation shall be eligible for minimum stipend
applicable for Trainee Students as may be specified by the Council.
(4) Stipend
The stipend shall be paid through banking channels and shall not be less than the minimum stipend
specified by the Council.
(5) Reimbursement of out of pocket expenses
TOs shall prepare and implement a policy of reimbursement of out-of-pocket expenses incurred by
the Trainee Students on assignments of TOs. Such policy shall be shared with the Trainee Students. A
copy of the policy shall be filed with the Institute.
* 285th meeting of the council held on April 7 and 8, 2017.

Directive 1.03
7. ENTITLEMENT
Each TO shall engage Trainee Students as per its entitlement prescribed under the bye-laws, subject to the
restriction imposed under Regulation 3.
8. LEAVES, SERVICE BREAK, WORKING HOURS, OVERTIME ETC.

(1) Leave
(i) TOs shall allow leave of absence for examination and other purposes in accordance with bye-law
106(1)(i) during the training period in lieu of which no further training shall be required.
(ii) TOs may also allow leaves during the training period against overtime as specified in these
regulations in lieu of which no further training shall be required.
(iii) TOs may also allow additional leave of absence of up to sixty days due to sickness, examinations
or any other suitable reason in lieu of which Trainee Students shall be required to undergo
further training for an equivalent period. TO shall intimate such cases to the Institute upon
completion of training contract.
(iv) All further leaves shall be subject to prior approval of the Institute and in lieu thereof Trainee
Students shall be required to undergo further training for an equivalent period.
(v) In calculating the number of leaves availed, weekends and public holidays falling at the start and
the end of leave period shall not be counted.
(2) Service breaks
(i) The training period shall be completed without any service break except in the following
circumstances, under intimation to the Institute:
(a) For any reason deemed appropriate by TO the service break of up to six months shall be
allowed during the full tenure of training.
(b) Female Trainee Students shall be eligible for a break in their training period of up to one
year on account of marriage and/or maternity during the full tenure of training.
(ii) Service break for a period more than specified in this regulation shall be permitted with the prior
approval of the Institute.
(iii) TO may not pay any stipend during such period(s) of absence.
(3) Working hours and overtime

(i) During the training period a Trainee Students shall be required to accumulate working hours
computed on the basis of 1,800 hours per year of training. For computing working hours
standard recess time as per policy of TO shall be excluded.
(ii) The timing and working days shall be specified by the TO. Provided it ensures that the Trainee
Students completes 1800 hours per year of training.
(iii) In case working hours exceed the number of hours specified in (i) above, the TO shall allow one
day leave in lieu of each eight hours.
(iv) Any unadjusted excess hours shall be compensated by way of overtime payment. The rate of
overtime payment shall not be less than the rate computed on the basis of latest monthly
stipend of the individual Trainee Student.

Directive 1.03
9. TRANSFER OF TRAINING CONTRACT

(1) The training contract may be transferred:
(i) by mutual agreement between the TO and the Trainee Student,
(ii) in case TO ceases to exist or ceases to be a TO, or
(iii) when the number of Trainee Students engaged with the TO exceeds the entitlement of TO under
these regulations.
(2) Transfers by mutual agreement
(i) In the event of transfer of training contract by mutual agreement between the TO and the
Trainee Student, the TO transferring the Trainee Student shall send to the Institute a copy of no
objection certificate issued to the Trainee Student within thirty days of the issuance thereof.
(ii) The Trainee Student may apply to the TO for transfer of training contract and issuance of no
objection certificate.
(iii) TO shall not require more than three month notice period for issuance of no objection
certificate.
(3) Transfers in case TO ceases to exist or ceases to be a TO
Trainee Students of a TO, which ceases to exist or ceases to be a TO due to any reason, shall enter into
fresh contract for the residual period, with another TO within three months from the date of such
cessation. Such fresh contracts shall be sent to the Institute for registration and shall be registered by
the Institute without any registration fee.
(4) Transfers when the number of Trainee Students exceeds the entitlement
If entitlement of a TO falls short of number of its Trainee Students, due to any reason including death,
resignation, retirement and suspension of membership of partner(s) or fulltime employee of a TO, it
shall immediately inform the Institute of the fact. The Institute may direct the excess Trainee
Students, most recent in order of their registration:
(i) to enter into fresh contract for residual period with any other TO within a given time period for
which no registration fee shall be charged by the Institute; or
(ii) to continue with the same TO for the residual period.
10. TERMINATION OF TRAINING CONTRACT

(1) TO may terminate the training contract if a Trainee Student:
(i) is guilty of:
(a) misconduct;
(b) misbehavior; or
(c) breach of any of the provisions of the Training Contract; or
(ii) fails to progress satisfactorily as per criteria established by the TO.
(2) The following procedures shall be followed, if TO is satisfied that a Trainee Student has prima facie
committed any act(s) as mentioned in (1) above:
(i) TO shall issue a show-cause notice to the Trainee Student under a registered cover or through
recorded mode of delivery, on the Trainee Student’s address registered with the TO.
(ii) If on receipt of response of the Trainee Student, the TO is not satisfied, it shall grant the Trainee
Student an opportunity of hearing.
(iii) In case the Trainee Student does not respond or does not attend the hearing, he shall be
informed about the exparte proceedings in the matter.

Directive 1.03
(iv) If the TO is satisfied, that the Trainee Student has committed any act(s) as mentioned in (1)
above, it may terminate, the training contract of the Trainee Student under intimation to the
Institute along with a ‘report on termination’ specified under these regulations.
(v) All correspondence made in this regard by the TO or the Trainee Student shall be through
recorded mode of delivery with proof of delivery.
(vi) In the event of professional misconduct by a Trainee Student, falling under schedule III of the
Ordinance, the TO shall report the matter to the Institute.
(vii) A Trainee Student aggrieved by the termination of his training may prefer an appeal to the
Council as prescribed under bye-law 107.
11. CAREER PROGRESSION, TRAINING AREA, ASSESSMENT ETC.

(1) Career Progression Plan
(i) The progression of a Trainee Student shall be through the following roles or through any suitable
alternate designations with prior intimation to the institute:
(a) Assistant trainee
(b) Associate trainee
(c) Senior associate trainee
(ii) There shall be a Career Progression Plan (CPP) for Trainee Students which may contain the
following:
(a) Qualification or achievement in examinations of the Institute required by TO for each role,
subject to the minimum conditions applicable under the bye-laws and under these
regulations;
(b) Minimum period of training required for each role;
(c) Minimum achievement required for each role in the periodic assessment of professional
skills and professional values ethics and attitude
(iii) Policy on CPP shall be submitted to the Institute within three months from the date of
authorization as TO.
(iv) TO may amend the policy on CPP any time it deems necessary under intimation to the Institute.
(2) Training areas – Technical Competencies

TOs should have a formal mechanism to support the development of technical competencies through
on-the-job training. It is expected that the TO shall provide the Trainee Students practical exposure in
the technical areas given in this regulation. The allocation of training period to various training areas
shall be as follows:
Training area Period allocation
(i) Audit, assurance and related services

Not less than 1/3rd
(ii) Accounting and Financial Reporting

Directive 1.03
Training area Period allocation
(iii) Taxation and corporate law
(iv) Financial Management, management advisory and

Remaining period
information technology
(v) Any area deemed appropriate by TO
(3) Training areas – Professional skills

The training outcome relating to each type of professional skills shall be as follows:
(i) Intellectual
(a) Research and evaluate information from a variety of sources and perspectives and draw
appropriate conclusions.
(b) Identify, evaluate, and recommend solutions to unstructured, multifaceted problems.
(c) Apply innovative and critical thinking to solving problems.
Minimum proficiency under this head shall be of intermediate level.
(ii) Personal
(a) Apply the principles of lifelong learning.
(b) Set high personal standards of delivery and monitor personal performance, through
feedback from others and through reflection.
(c) Evaluate professional commitments and manage time and resources for their achievement.
(d) Proactively anticipate challenges and plan potential solutions.

(e) Display openness to new ideas and opportunities.
(iii) Interpersonal and communication

(a) Promote cooperation and teamwork, working towards organizational goals.
(b) Communicate clearly and concisely when presenting, discussing and reporting in formal and
informal situations, both in writing and orally.
(c) Use active listening and effective interviewing techniques.
(d) Use negotiation skills to reach appropriate solutions and agreements.
(e) Use consultative skills to minimize and resolve conflict in a work environment
(f) Display sensitivity to cultural and language differences in all communication.
(g) Present ideas and persuade others to provide support and commitment.

Directive 1.03
(iv) Organizational
(a) Undertake work assignments in accordance with established methodologies and within the
prescribed deadlines.
(b) Review work to determine whether it complies with the organization’s quality standards.
(c) Use effective people management skills to motivate and develop others.
(d) Use effective delegation skills to deliver work assignments.
(e) Demonstrate effective leadership skills.
(4) Training areas – Professional values, ethics and attitude

There shall be the following training outcome relating to professional values, ethics and attitude:
(i) Professional skepticism and professional judgment

(a) Apply a skeptical mindset to critically assess financial information and other data relevant to
the role of a professional accountant.
(b) Identify and evaluate reasonable alternatives to reach well-reasoned conclusions based on
all relevant facts and circumstances.
(ii) Ethical principles

(a) Explain the nature of ethics.
(b) Explain the advantages and disadvantages of rules-based and principles-based approaches
to ethics.
(c) Apply the fundamental ethical principles of integrity, objectivity, professional competence
and due care, confidentiality, and professional behavior to ethical dilemmas and determine
an appropriate resolution.
(d) Apply the relevant ethical requirements to professional behavior and compliance with
standards.
(iii) Commitment to the public interest

(a) Explain the role of ethics within the profession and in relation to the concept of social
responsibility.
(b) Explain the role of ethics in relation to business and good governance.
(c) Analyze the interrelationship of ethics and law, including the relationship between laws,
regulations, and the public interest.
(d) Compare the consequences of unethical behavior to the individual, to the profession, and
to society at large.
Explanation: Learning outcomes at the intermediate level relate to work situations that are characterized by
moderate levels of ambiguity, complexity, and uncertainty.

Directive 1.03
(5) Assessment of professional development by TO

(a) The assessment of professional skills, values, ethics and attitude shall be carried out by TOs as
nearly as practical on the format attached with these regulations.
(b) The assessments shall be done within three months before or after completion of each year of
training and finally after the completion of training.
(c) The Institute may also assess professional skills, values, ethics and attitude through prescribed
examinations.
(d) Copy of the assessment carried out by TO shall be provided to the Trainee Student and the same
shall be shared with the Institute along with completion certificate.
(6) Record keeping of training by Trainee Student

(i) Trainee Students shall prepare the record of their training. The same shall be submitted to TO
periodically as per policy of the TO.
(ii) The TO shall specify the records to be maintained by its Trainee Students and the TO itself. The
following minimum record shall be prepared by the Trainee Students:
(a) Monthly time sheet duly authenticated as per TO’s policy

(i) Date
(ii) Nature of assignment based on the major category of technical competency required
to perform the assignment
(iii) Name of client of TO
(b) Annual/Completion record duly discussed and seen by Technical Supervisor

(i) Major category of technical competency covered during the year
(ii) Value of experience gained
(iii) New exposure or advancement in previous exposure
(iv) The level of management with whom communicated and dealt
(v) Any ethical issue or dilemma faced
(vi) Comments of Technical Supervisor
(iii) TOs shall be responsible for custody of original record submitted by the Trainee Students.
(iv) TOs shall be responsible for keeping record of annual assessments as specified in these
regulations.
(v) The annual record shall be submitted to the Institute within three months from the date of
completion of respective year of training.
(7) The Institute shall perform a periodic review of the training record kept by the training organization
and Trainee Students.
(8) Course on Professional Values, Ethics and Attitude

The Institute may offer an online compulsory course on professional values, ethics and attitude. The
Institute may consider similar in-house courses offered by TOs as equivalent to the Institute’s course.
(9) Certificate of Completion

On completion of the training every TO shall send a certificate of completion to the Institute within 15
days.

Directive 1.03
12. STATEMENT OF TERMS AND CONDITIONS OF ENGAGEMENT

(1) TO shall apprise the Trainee Students in respect of policies and procedures set forth by TO.
(2) Such policies and procedures shall be in documented form duly acknowledged by the Trainee Student
and to include the following:
(i) Mentor and allocation of Trainee Students among the Mentors
(ii) Re-imbursement of out-of-pocket expense
(iii) Leaves and service breaks
(iv) Office timing and overtime compensations
(v) Transfers and procedure for issuance of no objection certificate
to enable students to join other TO
(vi) Career Progression
(vii) Trainee Students rotation in different areas
(viii) Record to be prepared by Trainee Students
(ix) Grievance mechanism
13. GRIEVANCE MECHANISM

(1) TOs shall prepare and implement a policy that deals with grievances of Trainee Students and nominate a
person with whom Trainee Students should contact in this regard. Such policy shall be shared with the
Trainee Students.
(2) A copy of the policy shall be filed with the Institute.
14. TRANSITION FOR EXISTING TOs

(1) All firms which are authorized TOs at the commencement of these regulations shall comply with the
requirements of these regulations. Provided that TO shall within three months intimate to the
Institute any requirement which is practically not possible to be complied with or which requires some
transition time.
(2) Institute shall have the power to grant waiver or relaxation from any requirement. Decision of such
waiver or relaxation shall be made after recording reasons thereof.
15. COMPLIANCE AND COUNSELING REVIEW

(1) The Institute shall have the right to visit the premises of the TO.
(2) The objectives of the visits shall include:
(i) To give and take feedback on training program of the TO;
(ii) To assist TO in performing its responsibilities towards training of Trainee Students; and
(iii) To review documents necessary to ensure compliance with the Training Regulations.
(3) The visits of representatives of the Institute shall be undertaken on the date mutually agreed between
the Institute and TO.
(4) A report of the visit shall be made and shared with TO.

Directive 1.03
16. NON-COMPLIANCE
(1) If default is made in complying with the requirement of these regulations, the Institute may;
(i) direct the TO in default to comply with the requirement within a specified period;
(ii) suspend authorization of TO in default for a specified period; or
(iii) cancel the authorization of TO in default.
(2) A TO aggrieved by the decision of the Institute may prefer an appeal to the Council.
17. EFFECTIVE DATE

This Directive shall be effective from September 1, 2015.

Directive 1.03
ANNEXURES
Particulars Form
Forms
Application for registration as Training Organization U

- Details of management personnel U/A
- Details of other training offices U/B
- Details of audit U/C
- Declaration U/D
- Undertaking U/E
- Certificate of Approval as Training Organization
Statement of particulars for registration as Trainee Students Q
Training Contract R
Deed of amendment of training contract R/A
Certificate of completion of training S
No Objection Certificate T
Report on termination of training contract ZB
Sample documents for guidance purposes
Sample daily record -
Sample Annual record -
Sample assessments of Trainee Students -
Sample record of satisfactory performance during the probationary period -
Sample Career Progression Plan -
Others
Minimum Stipend -

Directive 1.03
FORM - U
APPLICATION FOR REGISTRATION AS TRAINING ORGANIZATION

To:
The Directorate of Education and Training
Chartered Accountants Avenue
Karachi – 75600.
DETAILS OF PROPOSED TRAINING ORGANIZATION (TO)
Name _________________________________________________________________________________________________________
Registered Address _____________________________________________________________________________________________
______________________________________________________________________________________________________________
City / Town _________________________________ Country____________________________________________________________
Phone ______________________________________ Fax No ___________________________________________________________
E-mail_______________________________________ Website __________________________________________________________
Number of other Office(s)___________________ Number of Partner(s) ____________________________________________________
Number of Qualified Employee(s)___________
□ Sole Proprietorship □ Partnership
DETAILS OF MEMBER RESPONSIBLE FOR STUDENT AFFAIRS (MRS)
Name:________________________________________________________________________________________________________
Membership No. _____________________________________ Membership Date: ___________________________________________
Phone _________________________________ Fax ________________________________ E-mail:_____________________________
DETAIL OF AUDITS
Total number of Audit: __________________________________________________________________________________________
Public Listed Companies: ______________________________________ Others: ________________________________________
Paid up Capital in aggregate: ______________________________________ ______________________________________ _______

Directive 1.03
___________________________________________________ Name:_________________________________________________
Signature
On behalf of _____________________________________ Designation: Partner In charge

(Please mention the name of Training Organization)
Place: _________________________________________________
Office Seal:________________________________________ Date: __________________________________________________
Note: Please also fill in the annexures A to E
File No.
Checked By ________________________________________________________________ Date ________________________________
Application endorsed by Appraisal consultant (if required) ________________ Date _______________________________
Put up to Executives of the Institute ______________________________________ Date ________________________________
Registered / NOT Registered________________________________________________ Date ___________________________________

Directive 1.03
ANNEX A to FORM - U
DETAILS OF MANAGEMENT PERSONNEL
Details of Partners / Sole Proprietor

Years of Post Qualification
Name of Partner Member- Member- experience as Member Location Individual
S# ship of Training student’s
(ACA/FCA) Number ship Date In other Office entitlements
In Practice Discipline
Please give following information if any of the partner(s) of the Training Organization is also a partner/sole
practitioner in any other Training Organization
Name of Partner Partnership / Entitlements

S# Name of CA Firm / TO
(ACA / FCA) Sole Proprietor Availed
Details of MRSs
Years of Post
Member- Qualification experience Location CPD
Name of MRS Member- as Member of Training compliance
S# ship
(ACA/FCA) ship date
Number Outside Office Status
In Practice practice
Continued on Reverse

Directive 1.03
Details of Qualified Employee(s)

Membership Membership Years of Post Location of
S# Name Number Qualification
date Training Office
experience
Details of Technical Supervisors (partners)

Years of Post Location CPD
S# Name Membership Membership Qualification of Training compliance
Number date experience Office Status
Details of Technical Supervisors (employees)

Membership Membership Years of Post Location CPD
S# Name Qualification of Training compliance
Number date
experience Office Status

Directive 1.03
Details of Mentors (partners)

Years of Post Location CPD
S# Name Membership Membership Qualification of Training compliance
Number date experience Office Status
Details of Mentors (employees)

Membership Membership Years of Post Location CPD
S# Name Qualification of Training compliance
Number date
experience Office Status

Directive 1.03
ANNEX B to FORM - U
DETAILS OF OTHER TRAINING OFFICES
Name of Training Organization: _________________________________________________________________________________
Address of Training Office: _____________________________________________________________________________________
City / Town: ________________________________________________ Country: ___________________________________________
Phone _________________________________ Fax ________________________________ E-mail:_____________________________
Name of Nominated MRS:_______________________________________________________________________________________
Membership No: ____________________________________Membership Date:________________________________________
Phone _________________________________ Fax ________________________________ E-mail:_____________________________
Number of Partner(s) in training office __________________________________________________________________________
Number of Qualified Employee(s) in training office_______________________________________________________________
Number of Technical Supervisors(partners) in training office_____________________________________________________
Number of Technical Supervisors(employees)in training office___________________________________________________
Note: Please fill in separate Form for each training office.

Directive 1.03
ANNEX C to FORM - U
DETAIL OF AUDITS
Public/Private Limited Paid up

S# Name of Client audited Nature of / Sole Proprietor / Capital Remarks
with address Business
Other (Rs. in million)
Total paid up capital:

Directive 1.03
Annex – D to Form U
D E C L A R AT I O N
It is hereby declared that _______________________________________ will abide by all terms and conditions
(name of Training Organization)
given in approved Training Regulations and Guidelines and other provisions of CA Bye-Laws / Directives /
Instructions made by or on behalf of the Council of the Institute from time to time in respect of Trainee
Students and Training Organization.
It is further undertaken that ________________________________________ agrees to monitoring visits by the

Institute’s consultant / representative and will implement recommendations resulting from such visits and the
Member Responsible for Student Affairs shall inform immediately to Institute of Chartered Accountants of
Pakistan if the Training Organization falls short of prescribed authorisation criteria.
Place: _____________________________________ Signature: ___________________________________

Name:
Date: _____________________________________ ____________________________________________
Designation: ________________________________
Office Seal On behalf of ________________________________

Note: This declaration is to be on the letterhead of the Training Organization without typing Annex D on it.

Directive 1.03
Annex – E to Form U
U N D E R TA K I N G
I ______________________________Membership No________________ designated as___________________
Member Responsible for Student Affairs (MRS) by _________________________________________________
_________________________________ for its Training Office at _____________________________________
under bye-law 102 of the CA Bye-laws 1983 do hereby undertake that I have thoroughly read and have the
knowledge of the relevant Sections of the Ordinance, Bye-Laws, Training Regulations and Guidelines, Institute’s
schemes of education and Directives of the Council. I have the ability to advise, counsel, evaluate, motivate and
provide direction to Trainee Students; I have the ability to assume the responsibility of ensuring that annual
evaluations are made and also assume the responsibility of maintenance of the records strictly as prescribed in
the Training Regulations and/or the Guidelines, or otherwise as may be directed by the Committee from time
to time. I shall comply with all the future directives and requirements to this effect and have full awareness of
the ethics governing the meaning, purview and obligations of an MRS under bye-laws and Training Regulations.
Signature: ___________________________________
Place: _______________________________________ Office Seal
Date: _______________________________________
Note: This undertaking will be given on the letterhead of the Training Organization without typing Annex E on it.

Directive 1.03
TO-Number.

TO name and Office
is an approved
Training Organization In Practice


Date:__________________________

Directive 1.03
Form ‘Q’
STATEMENT OF PARTICULARS FOR REGISTRATION
AS TRAINEE STUDENT BYE-LAW 98 (1) & (2)
Affix a recent
Photograph of
1. Name of Trainee Student: (1”x1”) which
should not be
2. Father’s Name: more than 3
months old
3. Date of Birth Nationality:
4. NIC No: - -
5. Qualifications:
Examinations Month & Year of Board / University/

Grade/Div
Educational Passed Exam Institute
Qualification
(Academic)
Professional
Qualification
(eg CA PIPFA, ACCA,
CIMA, ACMA, MBA
etc)
6. CRN and date of issuance _______________________________________________________________________
7. Addresses (Communication Address) ______________________________________________________________
_____________________________________________________________________________________________________________
(Permanent Address) ___________________________________________________________________________
_____________________________________________________________________________________________________________
8. Name of MRS_________________________________________________________________________________
Name of Training Organization __________________________________________________________________
Address _____________________________________________________________________________________
____________________________________________________________________________________________
9. Present Status with CRN ________________________________________________________________________
Continued on reverse

Directive 1.03
IN CASE OF RE-REGISTRATION UPON TRANSFER TO

ANOTHER TRAINING ORGANIZATION UNDER BYE-LAW 103 (I)
a. CRN:
b. Name of Previous MRS:
c. Name of Previous Training Organization:
d. Period Served From: to
e. Details of leave availed Study Sick Others Total
f. No objection certificate: Yes No
I declare that the particulars given above are true and correct to the best of my knowledge and belief
Date:
Place:
Signature of Trainee Student
Endorsement by the MRS
“I certify that the above particulars furnished by the Trainee Student are correct. He/She has completed the
probationary period from__________________________to__________________________successfully”.
Date:
Place:
Signature of the MRS
(Seal of Office)
ATTACHMENTS
1. Birth certificate and Matriculation Certificate duly attested by MRS/ Partner of Training Organization
(not required in case of transfer).
2. Attested copy of certificate in respect of educational and professional qualifications with photocopies
3. Copy of NIC
4. Photograph size 1”x1” to be pasted on this form and one attested (by MRS / Partner) copy to be attached.

Directive 1.03
FORM ‘R’
TRAINING CONTRACT
(Bye-Law 99) Stamp values
applicable in each
province of Pakistan
at time of execution
of contract
1. The parties to this Training Contract are:
Name of Student __________________________________, referred to herein as the ‘Trainee Student’
Address ____________________________________________________________________________
_________________________________________________________________________________________________
Name of MRS_______________________________________________, referred to herein as the ‘MRS’
Name of Training Organization__________________________________________________________
Address_____________________________________________________________________________
_________________________________________________________________________________________________
2. The person named below shall be responsible for the Trainee Student’s personal and professional
development:
(i) Name of Technical Supervisor_____________________________________________________
(ii) Name of Mentor, if any _________________________________________________________
3. This Training Contract governs the Approved Training to be provided to the Trainee Student by an
Authorized Training Organization under the Chartered Accountants Bye-Laws, 1983 (as amended from
time to time) for the purpose of equipping the Trainee Student with the technical competencies,
professional skills and professional values, ethics and attitude necessary for membership of the
Institute of Chartered Accountants of Pakistan (referred to hereafter as “the Institute”).
4. *a This Training Contract begins on __________ the ____day of __________ in the year _________and
shall continue until the Trainee Student has completed ___years of Approved Training.
*b In case of transfer of Trainee Student from one Training Organization to another, the residue
training period begins on __________ the ______day of __________ in the year ____________ and
shall continue until Trainee Student has completed _________ year(s) _________ month(s) _______
day(s) of remaining Approved Training.
* (In (a) or (b) write NA whichever not applicable.)

Directive 1.03
5. This Training Contract shall be subject to the provisions of the CA Ordinance, Bye-Laws and the Training
Regulations and Guidelines made by the Council of the Institute from time to time, whether or not such
provisions and or regulations came into force before or after the commencement of this Training
Contract and the parties agree to comply with such provisions in all respects. The parties hereby
acknowledge their mutual commitment to provide an effective training on the one hand and a proper
contribution to the work of the MRS’s Office on the other.
6. The Trainee Student is required to, under this Training Contract, carry out work at his Training
Organization and at other locations and other organizations as specified by or under the authority of
the MRS or his Training Organization, provided that such service will count as Approved Training within
the regulations.
7. The Trainee Student agrees that, during the existence of this Training Contract and for any period
following its expiry or termination during which eligibility to qualify for admission or to be admitted as
an Associate of the Institute continues, the Trainee Student will:
a. use every effort to further the objects of the Institute;
b. observe and uphold the ethical and professional standards of the Institute;
c. provide promptly and willingly all possible information and assistance if asked to do so by
the Institute in the pursuance of its duties;
d. properly carry out the duties lawfully assigned by his Training Organization and diligently
pursue the studies required of Trainee Students of the Institute;
e. maintain the confidential nature of the affairs of the Training Organization and its clients
including the names and the nature of the business of such clients;
f. not practice as a public accountant;
g. not engage in any other business or occupation; and
h. regularly maintain records of Approved Training in such form as may be required by the
Institute.
8. The Training Organization agrees that:

a. it will provide the Trainee Student with Approved Training to the best of his ability for the
purposes set out in clause 3 of this training contract;
b. it will ensure compliance of all Bye-Laws, Training Regulations, Council Directives and other
provisions / instructions issued from time to time by the Institute, in respect of Trainee Student
training and administration;
c. it shall pay the monthly stipend and provides other compensation to its Trainee Students as
may be specified by the Institute from time to time during the period of training;
d. it will monitor the career progression plan and assess the progress annual in recorded form.
e. provide the name of any person nominated as Technical Supervisor to replace the person
named in clause 2 of this Training Contract.
9. This Training contract may be terminated:

a. by mutual agreement between the parties; or
b. As prescribed in Bye-Law 107 of CA Bye-Laws 1983
10. This Training Contract may not be altered or amended except as provided for in Bye-Law 100 of
CA Bye-Laws 1983.
In witness whereof this Training Contract has been duly executed this __________ the ____day of __________
in the year _________.

Directive 1.03
Trainee Student’s Signature_____________________________________
In the presence of:
Signature of Witness: __________________________________________
Name _______________________________________ CNIC No. - -
Place______________________________________________
MRS’s Signature________________________________________________
Seal of Office___________________________________________________
In the presence of:
Name _______________________________________ CNIC No. - -
Place______________________________________________
FOR OFFICE USE ONLY
CRN_______________________________________________ Date___________________________________________
Entered in the Register of Trainee Students
___________________________________________________ Office Seal

Signature
INSTRUCTIONS FOR COMPLETION AND FORWARDING OF THIS FORM

a. Three copies of this contract are to be completed and forwarded to the Institute within 30 days of
completion of the probation period (2 months from the date of Trainee Student’s joining the Training
Organization).
b. Special Adhesive Stamps are to be affixed to original and duplicate copies only of the Training Contract.
c. Form ‘Q’, duly completed in all respect is to accompany this Training Contract along with all
attachments mentioned therein.
d. The correcting fluid shall not be used.
e. Bank Credit Voucher/Pay Order/Demand Draft for Registration Fee is to be forwarded with this
Training Contract.
f. All Registration documents are to be forwarded under a covering letter of the Training Organization.
g. Witness to Trainee Student and MRS’s Signature should be of male adults.
Note:
Specified Training Period:
(1) CAF Passed or equivalent thereto 3.5 years
(2) Four year Graduate / Post Graduate from Specified Degree Awarding Institute (SDAI) 3 years
(3) *Four year Graduate / Post Graduate from any recognized Degree Awarding Institute with major in accounting or finance 3 years
(4) *All other Graduates including 14 years associate degree holders 4 years

Directive 1.03
ANNEX A to FORM - R
ON RS. 50/- STAMP PAPER
DEED OF AMENDMENT OF TRAINNG CONTRACT

(For Service breaks)
This deed of amendment of training contract made and executed this________________________________________________

(Execution date)
BETWEEN:
M/s. ___________________________________________ and _________________________________ CRN. _____________________

(Training Organization) (Trainee Student)
WHEREAS the above parties have signed the training contract dated__________________________________________________
Registered with the Institute on ____________________________________________________ for ________________________ years.
from________________________________________________________to____________________________________________under
Bye-law 99 of Chartered Accountants Bye‑Laws, 1983.
AND WHEREAS the both parties decided to amend the training contract to the extent that the com pletion date has been
changed to____________________________________________________________________due to service break to be availed
from________________________________________to________________________________________ ( __________ days) by
________________________ ( Trainee Student) in accordance with the directives of the Institute.
NOW THEREFORE this deed of amendment of training contract witnessed to read this as under:-
“The Completion date of the training contract has been revised from _______________________ to ______________________ .
(Original date) (New date)
“That as amended as aforesaid the other terms and conditions in training contract dated ____________________ shall remain in
full force and effect.”
Witnesses:
1.___________________________ ________________________________________
Signature of the Trainee Student
2.___________________________ ________________________________________
Signature and Name of MRS
Name of Training Organization

Directive 1.03
ON TRAINING ORGANIZATION’S LETTERHEAD

(FORM ‘S’)
The Director Education and Training

CERTIFICATE OF COMPLETION OF TRAINING

I certify that the Trainee Student named below served as Trainee Student under registered training contract
with me for the period stated in accordance with the bye-laws, of the Institute of Chartered Accountants of
Pakistan and that his/her progress was satisfactory.
MRS NAME AND ADDRESS OF TRAINING ORGANIZATION
TRAINEE STUDENT
Name: _______________________________________
Father’s Name : ________________________________

ICAP CRN
PERIOD OF TRAINING SERVED

(Including approved excess leave period)
IN FIGURES From To
D M Y D M Y
IN WORDS From _________________________________To ________________________________________
LEAVE AVAILED
Normal Excess * Total leave availed
* Excess leave approved by ICAP’s letter No. __________________________ dated __________________________
IN CASE OF RE-REGISTRATION UPON TRANSFER FROM ANOTHER

TRAINING ORGANIZATON OR MRS
Previous MRS:_________________________________ Previous MRS: _________________________________
TO: _________________________________________ TO: _________________________________________
CRN No. _____________________________________ CRN. _________________________________________
Period served From: ___________ To: _____________ Period served From: ___________ To: _____________
Leave availed: Days Leave availed: Days
Date: __________________________________________
Place: _________________________________________ Seal
c.c Mr./Ms. ________________________________
Signature of MRS
* This Certificate must not be issued until the excess leave has been approved by the Institute, if required, and the Trainee
Students has served the period in lieu of excess leave in the training organization.

Directive 1.03
FORM ‘T’
NO OBJECTION CERTIFICATE
[Bye-Law 103(1) & (2)]
I______________________________________________of__________________________________________
_________hereby certify that Mr/Ms____________________________________________served as a Trainee
Student under me in accordance with the Chartered Accountants Bye-Laws, 1983 for a period of________
years(s)________ month(s) and________ days(s) from _____________________ to_____________________
under CRN________________ and that I have no objection in transferring his/her Training Contract to another
registered training organization.
I hereby certify that during the above mentioned period the trainee student was given leave for________ days.
I further certify that during the above mentioned period his / her work was satisfactory.
The trainee student has also served with:
Name of Training Organization_____________________________________________________________________________________
Name of MRS___________________________________________________________________________________________________
From___________________________________ to______________________________________ CRN___________________________
Date___________________________________ and availed ____________________days leave.
Place___________________________________ Date___________________________________
Office Seal
_____________________________________________
Signature of MRS

Directive 1.03
FORM ‘ZB’
REPORT ON TERMINATION OF TRAINING CONTRACT

UNDER BYE-LAW 107(I) OF THE CA BYE-LAWS, 1983
Name of Trainee Student__________________________________________________________________________________________
CRN___________________________________________________________________________________________________________
Period ___________________________________________________ Date of________________________________________________
Commenced on________________________________________Termination________________________________________________
Name of MRS____________________________________________________________________________________________________
Name of Training_________________________________________________________________________________________________
Organization____________________________________________________________________________________________________
Address of TO___________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
MRS’s Report
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
Certified Copies of Following Documents Enclosed:

1. Show Cause Notice
2. Trainee Student’s Reply to Show Cause Notice
3. Hearing Proceedings
4. Any other relevant correspondence /papers in respect of the matter
Date______________________________________________ _____________________________________________
Signature & Seal of Office

Directive 1.03
For THE INSTITUTE Use Only
Actions Date
1. Documents Checked ____________________________________________________
2. Termination Recorded ____________________________________________________
Letter of acknowledgement to MRS and copy to Trainee Student

3. issued ____________________________________________________
4. Receipt of Appeal from Trainee Student (if any) ____________________________________________________
5. Reference of Appeal to the Council ____________________________________________________
6. Decision of the Council ____________________________________________________
_____________________________________________________________________________________________________________________________ ___________________
_____________________________________________________________________________________________________________ ___________________________________
_____________________________________________________________________________________________________________________________ ___________________
Date _____________________________________ ____________________________________________________
Signature

Directive 1.03
Daily Record
Trainee Students Name__________________________________________CRN______________________________________________
Trainee Students Role_______________________________________ (Assistant trainee)____________________________________
Technical Supervisor Name_________________________________________________________________________________________
Major category of Technical Competencies

(Mark the relevant)
S.No Date Name of the Audit, assurance Accounting Taxation & Financial Any other
client & related services & financial Corporate Management, appropriate
Reporting law management Area
advisory & IT
1 01/07/13 XYZ Ltd.
2 02/07/13 XYZ Ltd.
3 03/07/13 XYZ Ltd.
4 04/07/13 ABC welfare
____________________________________________________ ____________________________________________________
Trainee Students Sign off Technical Supervisor sign off

Directive 1.03
Annual Record
Trainee Students Name______________________________________________CRN__________________________________________
Trainee Students Role____________________________________________________________________________________________
From__________________________________ to __________________________________
(Mark the
S. No Major category of Technical Competencies
relevant)
1 Audit, assurance & related services
2 Accounting & financial Reporting
3 Taxation & Corporate law
4 Financial Management, management advisory & IT
5 Any other appropriate area
Value of the Experience Gained

The intention of this section is to have you reflect on where you are today in terms of competency
development and what value it has on your professional standing.
Example: I gained assurance experience of a large sized textile industry involved in

yarn manufacturing.
New Exposure or Advancement or advancement to previous exposure

The intention of this section is to reflect on specific exposure.
Specific areas I was exposed to was computation of Income Tax along with deferred tax. This is the
first time I computed tax of this level of complexity that required good understanding of normal
and final tax regime
The level of management with whom communicated and dealt

The intention of this section is to reflect your interaction with higher management.
CFO level frequently and CEO once at planning stage.
Any ethical issue or dilemma faced

The intention of this section is to have you reflect on where you are today in terms of competency
development and what value it has on your professional standing.
At the client in accounts department, I met one of my old friends. I consulted my job in charge
and found that it does not create noticeable familiarity threat.

Directive 1.03
Comments of Technical Supervisor

The intention of this section is to have a feedback on your progress and development.
I reviewed the form and found correct. It would have been better if he had mentioned at least
two major jobs he was assigned.
Trainee Student Sign off:

I confirm that the above information accurately reflects the exposure and level to which I have demonstrated
over this annual period of my practical experience and my reflective thought from my work assignments for the
said period.
Date ____________________________________________________ ____________________________________________________
Signature
Technical Supervisor sign off.

I have met with the CA Student noted above and discussed his/her competency and professional
development and progression according to our CA Training Program.
Date ____________________________________________________ ____________________________________________________
Signature

Directive 1.03
CAREER PROGRESSION PLAN
Training Organization___________________________ ________________________________________
Trainee Student Name__________________________________________CRN_____________________
Minimum
Technical required Professional Skills Professional Values, ethics & Attitude Required
Competency Training score
Professional
Interpersonal skepticism Ethical Commitment
Intellectual personal and Organizational and to the public
Communication professional Principles interest
judgment
(Total score from detailed assessment sheets)
Assistant - -
trainee
Associate Cleared 6 12 >60%

trainee papers of months
CAF
Senior Cleared 3 24 >70%

Associate papers of months
trainee CFAP

Directive 1.03
RECORD OF SATISFACTORY PERFORMANCE DURING THE PROBATIONARY PERIOD
Name of the Trainee-on-probation ___________________________________________CRN____________________________________
Father’s Name___________________________________________________________________________________________________
Name of MRS___________________________________________________________________________________________________
Probationary period start Date__________________________________________________________________________________
Probationary period end Date___________________________________________________________________________________
Particulars Total Marks Marks obtained
Aptitude for CA qualification 35

Awareness of personal performance 25
Follows the Instructions 25
Awareness of ethical principles( Integrity, objectivity and
15
Confidentiality)
Overall rating
□Unsatisfactory □Satisfactory □Good □Excellent
Trainee-on-probation Sign off________________ MRS sign off______________________________
Date_________________________________________ Date______________________________________
(Note: TO shall establish its own benchmark for rating a Trainee-on-probation)

Directive 1.03
ASSESSMENT OF TRAINEE STUDENT
ASSISTANT TRAINEE ASSESSMENT
S. No. Particulars Reviewer’s Conclusion

Total
1 Intellectual
• Is able to gather and assimilate information from various sources 10
and perspectives.
• Is able to identify unstructured problems. 5
• Demonstrates creativity in approaches to work. 5
20
2 Personal
• shows awareness of personal performance and demonstrates
willingness to improve. 5
• Meets the deadlines of given task and appreciates time
management. 5
• Is able to identify possible challenges in the tasks given. 5
• Shows flexibility and does not hesitate to try new approaches. 5
20
3 Interpersonal and Communication
• Demonstrates understanding of organizational goals and
working together. 5
• Presents information in written and numeric form clearly.
Depicts awareness of clear communication. 5
• Demonstrates listening skills and understands given instructions. 5
• Is sensitive to cultural differences while communicating. 5
20
4 Organizational
• Performs the given tasks in accordance with the established
procedure within the deadline. 5
• Understands and follows the quality standards of the 5
organizations.
10
5 Professional skepticism and professional judgment

• Is able to draw questions on financial information and data. 5

Directive 1.03

• Is able to analyze the responses on the questions raised. 5
10
6 Ethical Principles
• Comprehends importance of fundamental ethical principles. 5
• Shows sensitivity on ethical issues. 5
10
7 Commitment to the public interest

• Is aware of social responsibilities of accountants. 5
• Comprehends consequences of unethical behavior to the
individual, to the profession and to the society at large. 5
10
Advice to improve areas where points are less than 50%.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Signature of technical supervisor Signed by Trainee Student
Name ___________________________________ Name _________________________________
Membership No.___________________________ CRN___________________________________

Directive 1.03
ASSOCIATE TRAINEE ASSESSMENT

Total
1 Intellectual
• Analyzes information gathered from various sources and 5
perspectives.
• Analyzes the unstructured problems. 5
• Considers alternative approaches to getting the job done. 5
15
2 Personal
• Is eager to develop professional knowledge. 3
• Understands importance of high personal standards and accepts 3
feedback.
• Identifies professional commitments and apply skills of 3
effective time and resource management.
• Is able to identify possible challenges and solutions in the tasks 3
given.
• Displays openness to new ideas and opportunities. 3
15
• Works effectively in a team. 3
• Presents information in written and numeric form clearly. 2
Communicate ideas clear through oral communication.
• Communicates effectively using listening and questioning skills. 2
• Expresses logic and rational clearly while communicating. 3
• Communicates effectively in teams across all levels and produce 2
results.
• Takes difference of opinion positively. 2
• Displays sensitivity to cultural and language differences while 2
communicating.
• Actively participates in team by presenting ideas. 4
20
4 Organizational
• Performs the given tasks in accordance with the established 2
procedure within the deadline.
• Follows the organizational quality standards and pays attention 2
to details.
• Gels well in teams, displays sensitivity to shortcomings of others 2
and understands importance of encouragement.
• Understands importance and ways of delegation of work. 2
• Understands the leadership traits. 2
10

Directive 1.03

• Applies skeptical mindset to critically assess financial 10
information and data presented.
• Identifies reasonable alternatives based on all relevant facts and 10
circumstances.
20
• Comprehends nature of ethics. 2
• Recognizes rules-based and principles-based approaches to 2
ethics.
• Applies fundamental principles of ethics. 3
• Adopts professional behavior in accordance with standards and 3
ethical best practice.
10
• Comprehends ethics within the profession and in relation to 2
social responsibility.
• Comprehends the role of ethics in relation to business and good 2
governance.
• Understands the relationship of ethics, law and regulations and 3
relationship with public interest.
• Comprehends consequences of unethical behavior to the 3
individual, to the profession and to the society at large.
10

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
SENIOR ASSOCIATE TRAINEE ASSESSMENT

Total
1 Intellectual
• Researches information from a variety of sources and perspectives. 3
• Identifies solutions to unstructured, multifaceted problems. 3
• Applies reasoning, critical analysis, and innovative thinking to 4
solve problems.
10
2 Personal
• Demonstrates a commitment to learning. 2
• Sets high personal standards of delivery and monitor personal 2
performance, through feedback from others and through
reflection.
• Evaluates professional commitments and manages time and 2
resources to achieve professional commitments.
• Anticipates challenges and plan potential solutions. 2
10
• Displays cooperation and teamwork when working towards 2
organizational goals.
• Communicates clearly and concisely when presenting, discussing 2
and reporting in formal and informal situations, both in writing
and orally.
• Uses active listening and effective interviewing techniques. 2
• Uses negotiation skills to reach appropriate solutions and 2
agreements.
• Uses consultative skills to minimize or resolve conflict in a work 2
environment.
• Displays sensitivity to cultural and language differences in all 2
communication.
• Presents ideas and persuade others to provide support and 3
commitment.
15
4 Organizational
• Undertakes work assignments in accordance with established 2
methodologies and within prescribed deadlines.
• Reviews work to determine whether it complies with the 2
organization’s quality standards.
• Uses effective people management skills to motivate others. 2
• Uses effective delegation skills to deliver work assignments. 2
• Applies leadership skills to influence others to work towards 2
10

Directive 1.03

• Applies a skeptical mindset to critically assess financial 10
information and other relevant data.
• Identifies reasonable alternatives to help reaching well-reasoned 10
conclusions based on all relevant facts and circumstances.
20
• Comprehends the nature of ethics. 5

• Comprehends the advantages and disadvantages of rules-based 5
and principles-based approaches to ethics.
• Applies fundamental ethical principles to ethical dilemmas. 5
• Applies the relevant ethical requirements to professional 5
behavior in compliance with standards.
20
• Explains the role of ethics within the profession and in relation 3
to the concept of social responsibility.
• Explains the role of ethics in relation to business and good 4
governance.
• Analyzes the interrelationship of ethics and law, including the 4
relationship between laws, regulations, and the public interest.
• Compares the consequences of unethical behavior to the 4
individual, the profession, and to society at large.
15

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
SENIOR ASSOCIATE TRAINEE STUDENT ASSESSMENT UPON

COMPLETION OF TRAINING

Total
1 Intellectual
• Researches and evaluates information from a variety of sources 3
and perspectives and draw appropriate conclusions.
• Identifies, evaluates and recommends solutions to unstructured, 3
multifaceted problems.
• Applies innovative and critical thinking to solving problems. 4
10
2 Personal
• Applies the principles of lifelong learning. 2
reflection.
• Evaluates professional commitments and manage time and 2
• Proactively anticipates challenges and plan potential solutions. 2
10
• Promotes cooperation and teamwork when working towards 2
and orally.
agreements.
environment.
communication.
commitment.
15
4 Organizational
• Uses effective people management skills to motivate and 2
develop others.
• Demonstrates effective leadership skills. 2
10

Directive 1.03

• Identifies reasonable alternatives to reach well-reasoned 10
20

• Applies fundamental ethical principles to ethical dilemmas and 5
determines an appropriate resolution.
20
governance.
15

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ____________________________________ Name _________________________________

Directive 1.03
MINIMUM STIPEND RATES EFFECTIVE FROM JULY 1, 2019
1. CAF Passed or equivalent thereto (Training period 3.5 years)

Criteria Rupees per month
On Commencement of Training 12,700
On Passing any three papers of CFAP 17,300
On Passing all papers of CFAP/any three papers of CFAP and one MSA or equivalent 23,900
On Passing all the prescribed examinations required to become member of the Institute 47,700
2. Four years Graduate degree holders from Specified Degree Awarding Institutes/ Four years degree holders
from any recognized Degree Awarding Institute with major in accounting or finance (Training period 3 years)
On Commencement of Training 15, 800
47,700
On Passing all the prescribed examinations required to become member of the Institute
3. Other Qualifications (Training period 4 years)


Directive 1.03

Directive 1.03
Directive 1.03


1. Preamble 1
2. Definitions 1
3. Registration of training organizations 1
4. Member responsible for student affairs(MRS) 2
5. Technical Supervisor and Mentor 3
6. Contract, training period and stipend 4
7. Entitlement 5
8. Leaves, service break, working hours, overtime etc. 5
9. Transfer of training contract 6
10. Termination of training contract 7
11. Career progression, training area, assessment etc. 7
12. Statement of terms and conditions of engagement 11
13. Grievance mechanism 11
14. Compliance and counselling review 11
15. Non-compliance 12
16. Effective date 12
Annexures 13
Directive 1.03
1. PREAMBLE
In exercise of the powers conferred by Section 15 of the Chartered Accountants Ordinance,
1961 read with the Chartered Accountants Bye-Laws 1983, the Council of the Institute has
approved the following regulations and guidance to govern the training of a student of
chartered accountancy in entities other than professional firms authorized by the Institute as
prescribed under the bye-laws.
2. DEFINITIONS
(1) In these Regulations, unless there is anything repugnant in the subject context:
(a) Bye-laws means Chartered Accountants Bye-laws 1983;
(b) Institute means the Institute of Chartered Accountants of Pakistan;
(c) Member means a member of the Institute;
(d) Mentor means a fulltime employee of a TO responsible for guiding the Trainee
Students on the matters other than technical issues;
(e) Ordinance means Chartered Accountants Ordinance 1961;
(f) Prescribed means as prescribed under the bye-laws;
(g) Student means a person registered with the Institute as examinee;
(h) Technical Supervisor means a CPD compliant fulltime member employee responsible
for development of technical competencies of Trainee Students;
(i) TO means Training Organization as defined in the bye-laws;
(j) Trainee-on-probation means a person who is registered with the Institute as student
and has commenced probationary period of training with a TO; and
(k) Trainee Student means a Student whose contract of training has been registered
with the Institute and whose period of training is not completed.
(2) Unless the context otherwise requires, all other terms and expressions used but not
defined in these regulations shall have the same meaning as assigned to them in the
Ordinance and Bye-Laws; and words importing the singular shall include the plural and vice
versa.
3. REGISTRATION OF TRAINING ORGANIZATION

(1) Submission of proposal
The Institute on application by an entity may initiate the process for declaring an entity as
TO. The document for processing a case for approval of an entity as a TO shall include:
(i) An expression of interest of the entity;
(ii) Necessary details with required documentation and explanation to demonstrate that
pre-requisites for acting as a TO as per the Regulations are in existence; and
(iii) The application shall be submitted by a person authorized by the management of
entity.
TRAINING REGULATIONS AND GUIDELINES FOR TRAINING OUTSIDE PRACTICE 2016 OP - 1

Directive 1.03
(2) Pre-requisites for authorization as TO

An industrial, commercial or other entity shall be authorized as a TO if it complies with the
following criteria:
(i) Business and operation of the organization is considered appropriate by the Institute
for the purposes of professional development of trainees;
(ii) At least five members of the Institute are employed by the entity, and at least two
members must have post qualification experience of five years or more;
(iii) It has nominated a CPD compliant Member, being full time employee, as Member
Responsible for Student affairs (MRS); and
(iv) Any other condition as may be specified by the Council from time to time.
(3) Authorization Process

Authorization of a TO shall be processed as follows:
(i) The Institute shall conduct an evaluation of the proposal through visits and/or review
of documents and information obtained;
(ii) Upon completion of the formalities for authorization as training organization, the
Institute shall authorize the entity to act as TO and train students;
(iii) A certificate to the effect that the organization is an Authorized TO shall be issued by
the Institute;
(iv) Cases of entities not complying with the prescribed criteria shall be deferred and
deficiencies shall be conveyed to the entity for removal of such deficiencies;
(v) If the deficiencies are removed after a period of six months the entity shall be
required to re-apply, otherwise a statement confirming that the deficiencies have
been removed would suffice.
(4) Subsequent failure to meet the pre-requisites for authorization

(i) In case a TO falls short of the pre-requisites for authorization subsequently, the TO
shall inform the Institute within 30 days for appropriate direction.
(ii) The Institute shall have the power to grant waiver or relaxation from any condition
for a period not exceeding one year. The reasons for granting waiver or relaxation
shall be recorded in writing and communicated to the concerned TO.
(iii) TO shall continue imparting training till further decision.
4. MEMBER RESPONSIBLE FOR STUDENT AFFAIRS(MRS)

TO shall nominate in each office one MRS who shall be the focal person in the office of the TO
and shall assume the responsibility of:
(i) signing training contracts and timely submission thereof to the Institute;
(ii) intimating nomination of Technical Supervisors and Mentors to the Institute;
(iii) intimating allocation of Trainee Students among the Technical Supervisors and
Mentors to the Institute;

Directive 1.03
(iv) maintenance of training records specified in these regulations and as may be specified by
the Institute from time to time;
(v) coordinating with the Technical Supervisors, Mentors, Students, Trainee Students and the
Institute; and
(vi) ensuring compliance with the regulations.
5. TECHNICAL SUPERVISOR AND MENTOR

(1) Duties of Technical Supervisor
A TO shall be required to appoint a Technical Supervisor for each Trainee Student who
shall:
(i) at the time of induction, arrange orientation and communicate the attributes on
which a Trainee Student would be assessed under these regulations;
(ii) ensure proper on-the-job training and practical experience as mentioned in these
regulations;
(iii) monitor the career progression plan and assess the progress annually. The outcome
of assessment should be in recorded form;
(iv) provide necessary guidance to the Trainee Students for improvement in the areas
identified during annual assessments; and
(v) as far as practical, avoid overtime work by Trainee Students, to allow them adequate
time for studies. Provided that where overtime is unavoidable, the Trainee Student
shall be suitably compensated in the manner specified in these regulations.
(2) Duties of Mentor

A TO may appoint mentors for the Trainee Students who may:
(i) act as a trusted, caring and responsible guide who establishes a positive and personal
relationship with the Trainee Students and maintains regular interaction and
consistent support;
(ii) provide career guidance and help the Trainee Students to develop broader life
management skills; and
(iii) guide the Trainee Students in accessing solutions and resources which the Trainee
Students may need, rather than to provide those solutions and resources.
Explanation: Wherever reference to mentor is given in these regulations, it is clarified that
these are only applicable when the TO has appointed the mentor.
(3) Allocation of Trainee Students

The allocation of Trainee Students to Technical Supervisors and Mentors shall be in the
following manner:
(i) TO shall allocate its Trainee Students among the Technical Supervisors for a period
preferably not less than six months.
(ii) Preferably, allocation of Trainee Students shall be to such Technical Supervisors to
whom the Trainee Students are functionally reporting.
(iii) Allocation of Trainee Students to mentors should be in accordance with the policy of
the TO. A mentor shall not be a person to whom the Trainee Student reports
functionally.

Directive 1.03
6. CONTRACT, TRAINING PERIOD AND STIPEND

(1) Contract
(i) There shall be a written contract, on the prescribed format, between the Trainee
Students and their Training Organization.
(ii) The contract shall be executed after completion of the probationary period of
training and shall be sent to the Institute for registration within the prescribed period
and in the manner prescribed under the Bye-Laws.
(iii) In suitable circumstances the Institute shall have the power to condone delay in
registration of training contract for maximum of thirty days.
(iv) Delay in submission of contract for more than thirty days shall be treated as non-
compliance with these regulations.
(2) Period of training

The training period shall vary according to the qualification of the Trainee Student at the
time of commencement of training, as follows:
Qualification Period of Training
(i) CAF passed or equivalent thereto 3.5 years
(ii) Four year Graduate / Post Graduate from Specified Degree 3 years
Awarding Institutes (SDAI)
(iii) *Four year Graduate / Post Graduate from any recognized 3 years
degree awarding Institute with major in accounting or finance
(iv) *All other Graduates including 14 years associate degree 4 years

holders
(3) Probationary period

(i) Trainee Student shall be required to complete a probationary period as prescribed
under the Bye-Laws.
(ii) The engagement of a student as a Trainee-on-probation shall be properly
documented.
(iii) The Student shall intimate his joining to the Institute within two weeks from the date
of joining. A registration as Trainee-on-probation shall be effected upon such
application and payment of prescribed fee. The Institute shall send a list of such
Trainee-on-probation to the TO on monthly basis.
(iv) TOs shall keep record of satisfactory performance during probationary period.
(v) During the probationary period, the trainee shall be eligible for minimum stipend
applicable for Trainee Students as may be specified by the Council.
Provided that this clause shall not apply to an employee under employment for more than
three months in TO outside practice.

Directive 1.03
(4) Stipend/Salary
The stipend/salary shall be paid through banking channels and shall not be less than the
minimum stipend specified by the Institute.
7. ENTITLEMENT
A TO outside practice shall be entitled to train five Trainee Students per member employed
fulltime by the TO.
8. LEAVES, SERVICE BREAK, WORKING HOURS, OVERTIME ETC.

(1) Leave
(i) TOs shall allow leave of absence for examination and other purposes in accordance
with bye-law 106(1)(i) during the training period in lieu of which no further training
shall be required.
(ii) TOs may also allow leaves during the training period against overtime as specified in
these regulations in lieu of which no further training shall be required.
(iii) TOs may also allow additional leave of absence of up to sixty days due to sickness,
examinations or any other suitable reason in lieu of which Trainee Student shall be
required to undergo further training for an equivalent period. TO shall intimate such
cases to the Institute upon completion of training contract.
(iv) All further leaves shall be subject to prior approval of the Institute and in lieu thereof
the Trainee Student shall be required to undergo further training for an equivalent
period.
(v) In calculating the number of leaves availed weekends and public holidays falling at
the start and the end of leave period shall not be counted.
(2) Service breaks

(i) The training period shall be completed without any service break except in the
following circumstances, under intimation to the Institute:
(a) For any reason deemed appropriate by TO, the service break of up to six months
shall be allowed; during the full tenure of the training.
(b) Female Trainee Students shall be eligible for a break in their training period of up
to one year on account of marriage and/or maternity during the full tenure of
training.
(ii) Service break for a period more than specified in this regulation shall be permitted
with the prior approval of the Institute.
(iii) TO may not pay any stipend during such period(s) of absence.

Directive 1.03
(3) Working hours and overtime

(i) During the training period a Trainee Student shall be required to accumulate working
hours computed on the basis of 1,800 hours per year of training. For computing
working hours standard recess time as per policy of TO shall be excluded.
(ii) The timing and working days shall be specified by the TO. Provided that it ensures
that Trainee Student completes 1800 hours per year of training.
(iii) In case working hours exceed the number of hours specified in (i) above the TO shall
allow one day leave in lieu of each eight hours.
(iv) Any unadjusted excess hours shall be compensated by way of overtime payment. The
rate of overtime payment shall not be less than the rate computed on the basis of
latest monthly stipend/salary of the individual Trainee Student.
9. TRANSFER OF TRAINING CONTRACT

(1) The training contract may be transferred:
(i) by mutual agreement between the TO and the Trainee Student;
(ii) in case TO ceases to exist or ceases to be a TO; or
(iii) when the number of Trainee Students with the TO exceeds the entitlement of TO
under these regulations.
(2) Transfers by mutual agreement

(i) In the event of transfer of training contract by mutual agreement between the TO
and the Trainee Student, the TO transferring the Trainee Student shall send to the
Institute a copy of no objection certificate issued to the Trainee Student within thirty
days of the issuance thereof.
(ii) The Trainee Student may apply to the TO for transfer of training contract and
issuance of no objection certificate.
(iii) TO shall not require more than three month notice period for issuance of no
objection Certificate.
(3) Transfers in case TO ceases to exist or ceases to be a TO

Trainee Students of a TO, which ceases to exist or ceases to be a TO due to any reason,
shall enter into fresh contract for the residual period, with another TO within three months
from the date of such cessation. Such fresh contracts shall be sent to the Institute for
registration and shall be registered by the Institute without any registration fee.
(4) Transfers when the number of Trainee Students exceeds the entitlement
If entitlement of a TO falls short of number of its Trainee Students, due to any reason
including death, resignation, retirement and suspension of membership of member
employee of a TO, it shall immediately inform the Institute of the fact. The Institute may
direct the excess Trainee Students, most recent in order of their registration:
(i) to enter into fresh contract for residual period with any other TO within a given time
period for which no registration fee shall be charged by the Institute; or
(ii) To continue with the same TO for the residual period.

Directive 1.03
10. TERMINATION OF TRAINING CONTRACT

(1) TO may terminate the training contract if a Trainee Student:
(i) is guilty of:
(a) misconduct;
(b) misbehavior; or
(c) breach of any of the provisions of the Training Contract; or
(ii) fails to progress satisfactorily as per the criteria established by TO.
(2) The following procedures shall be followed, if TO is satisfied that a Trainee Student has
prima facie committed any act(s) as mentioned in (1) above:
(i) TO shall issue a show-cause notice to the Trainee Student under a registered cover or
through recorded mode of delivery, on the Trainee Student’s address registered with
the TO.
(ii) If on receipt of response of the Trainee Student, the TO is not satisfied, it shall grant
the Trainee Student an opportunity of hearing.
(iii) In case the Trainee Student does not respond or does not attend the hearing, he shall
be informed about the ex parte proceedings in the matter.
(iv) If the TO is satisfied, that the Trainee Student has committed any act(s) as mentioned
in (1) above, it may terminate, the training contract of the Trainee Student under
intimation to the Institute along with a ‘report on termination’ specified under these
regulations.
(v) All correspondence made in this regard by the TO or the Trainee Student shall be
through recorded mode of delivery with proof of delivery.
(vi) In the event of professional misconduct by a Trainee Student, falling under schedule
III of the Ordinance, the TO shall report the matter to the Institute.
(vii) A Trainee Student aggrieved by the termination of his training may prefer an appeal
to the Council as prescribed under bye-law 107.
11. CAREER PROGRESSION, TRAINING AREA, ASSESSMENT ETC

(1) Career Progression Plan
(i) The progression of a Trainee Student shall be through the following roles or through
any suitable alternate designations with prior intimation to the Institute.
(a) Assistant trainee
(b) Associate trainee
(c) Senior associate trainee
(ii) There shall be a Career Progression Plan (CPP) for Trainee Students which may contain
the following:
(a) Qualification or achievement in examinations of the Institute required by TO for
each role, subject to the minimum conditions applicable under the bye-laws and
under these regulations;

Directive 1.03
(b) Minimum period of training required for each role; and

(c) Minimum achievement required for each role in the periodic assessment of
professional skills and professional values ethics and attitude.
(iii) Policy on CPP shall be submitted to the Institute within three months from the date
of authorization as TO.
(iv) TO may amend the policy on CPP any time it deems necessary under intimation to
the Institute.
(2) Training areas – Technical Competencies

TOs should have a formal mechanism to support the development of technical competencies
through on-the-job training. It is expected that the TO shall provide the Trainee Students
practical exposure in the technical areas given in this regulation. The recommended training
areas and allocation of training period to various training areas are as follows:
Recommendatory
Training area
Period allocation
Accounting, financial reporting, internal audit and risk
(i) Not less than 50%
management
(ii) Taxation and corporate law Remaining
Treasury, financial management, supply chain
(iii)
management and information technology
Any other area deemed appropriate by TO (such as
(iv) Not more than 20%
marketing, human resource etc.)
(3) Training areas – Professional skills

The training outcomes relating to each type of professional skill shall be as follows:
(i) Intellectual
(a) Research and evaluate information from a variety of sources and perspectives and
draw appropriate conclusions.
(b) Identify, evaluate, and recommend solutions to unstructured, multifaceted problems.
(c) Apply innovative and critical thinking to solving problems.
(ii) Personal
(a) Apply the principles of lifelong learning.
(b) Set high personal standards of delivery and monitor personal performance, through
feedback from others and through reflection.
(c) Evaluate professional commitments and manage time and resources for their
achievement.
(d) Proactively anticipate challenges and plan potential solutions.
(e) Display openness to new ideas and opportunities.

Directive 1.03
(iii) Interpersonal and communication

(a) Promote cooperation and teamwork, working towards organizational goals.
(b) Communicate clearly and concisely when presenting, discussing and reporting formal
and informal situations, both in writing and orally.
(c) Use active listening and effective interviewing techniques.
(d) Use negotiation skills to reach appropriate solutions and agreements.
(e) Use consultative skills to minimize and resolve conflict in a work environment
(f) Display sensitivity to cultural and language differences in all communication.
(g) Present ideas and persuade others to provide support and commitment.
(iv) Organizational
(a) Undertake work assignments in accordance with established methodologies and within
the prescribed deadlines.
(b) Review work to determine whether it complies with the organization’s quality
standards.
(c) Use effective people management skills to motivate and develop others.
(d) Use effective delegation skills to deliver work assignments.
(e) Demonstrate effective leadership skills.
(4) Training areas – Professional values, ethics and attitude

Training outcomes relating to professional values, ethics and attitude shall be as follows:
(i) Professional skepticism and professional judgment

(a) Apply a skeptical mindset to critically assess financial information and other data
relevant to the role of a professional accountant.
(b) Identify and evaluate reasonable alternatives to reach well-reasoned conclusions based
on all relevant facts and circumstances.
(ii) Ethical principles

(a) Explain the nature of ethics.
(b) Explain the advantages and disadvantages of rules-based and principles-based
approaches to ethics.
(c) Apply the fundamental ethical principles of integrity, objectivity, professional
competence and due care, confidentiality, and professional behavior to ethical
dilemmas and determine an appropriate resolution.
(d) Apply the relevant ethical requirements to professional behavior and compliance with
standards

Directive 1.03
(iii) Commitment to the public interest

(a) Explain the role of ethics within the profession and in relation to the concept of social
responsibility
(b) Explain the role of ethics in relation to business and good governance
(c) Analyze the interrelationship of ethics and law, including the relationship between
laws, regulations, and the public interest;
(d) Compare the consequences of unethical behavior to the individual, to the profession,
and to society at large.
Explanation: Learning outcomes at the intermediate level relate to work situations that are
characterized by moderate levels of ambiguity, complexity and uncertainty.
(5) Assessment of professional development by TO

(i) The assessment of professional skills, values, ethics and attitude shall be carried out by TOs
as nearly as practical on the format attached with these regulations.
(ii) The assessments shall be done within three months before or after completion of each year
of training and finally after the completion of training.
(iii) The Institute may also assess professional skills, values, ethics and attitude through
prescribed examinations.
(iv) Copy of the assessment carried out by TO shall be provided to the student and the same
shall be shared with the Institute along with completion certificate.
(6) Record keeping of training by the Trainee Students

(i) Trainee Students shall prepare the record of their training. The same shall be submitted to
TO periodically as per policy of the TO.
(ii) The TO shall specify the records to be maintained by its Trainee Students and the TO itself.
The following minimum record shall be prepared by the Trainee Student:
(a) Monthly time sheet duly authenticated as per TO’s policy
(i) Date
(ii) Nature of assignment based on the major category of technical
competency required to perform the assignment
(b) Annual/completion record duly discussed and seen by Technical Supervisors

(i) Major category of technical competency covered during the year/period
(ii) Value of experience gained
(iii) New exposure or advancement in previous exposure
(iv) The level of management with whom communicated and dealt
(v) Any ethical issue or dilemma faced
(vi) Comments of Technical Supervisor
(iii) TOs shall be responsible for custody of original record submitted by the Trainee Students.
(iv) TOs shall be responsible for keeping record of annual assessments as specified in these
regulations.
(v) The annual record shall be submitted to the Institute within three months from the date of
completion of respective year of training.

Directive 1.03
(7) The Institute shall perform a periodic review of the training record kept by the training
organization and Trainee Students.
(8) Course on Professional Values, Ethics and Attitude

The Institute may offer an online compulsory course on professional values, ethics and
attitude. The Institute may consider similar in-house courses offered by TOs as equivalent
to the Institute’s course.
(9) Certificate of Completion

On completion of the training every TO shall send a certificate of completion to the
Institute within 15 days.
12. STATEMENT OF TERMS AND CONDITIONS OF ENGAGEMENT

(1) TO shall apprise the Trainee Students in respect of policies and procedures set forth by TO.
(2) Such policies and procedures shall be in documented form duly acknowledged by the
Trainee Student and to include the following: :
(i) Mentor and allocation of trainee students among the mentors
(ii) Leaves and service breaks
(iii) Office timing and overtime compensations
(iv) Transfers and procedure for issuance of no objection certificate to enable students to
join other TO
(v) Career Progression
(vi) Trainee Student rotation in different areas
(vii) Record to be prepared by trainee students
(viii) Grievance mechanism
13. GRIEVANCE MECHANISM

(1) TOs shall prepare and implement a policy that deals with grievances of Trainee Students
and nominate a person with whom Trainee Students should contact in this regard. Such
policy shall be shared with the Trainee Students.
(2) A copy of the policy shall be filed with the Institute.
14. COMPLIANCE AND COUNSELING REVIEW

(1) The Institute shall have the right to visit the premises of the TO.
(2) The objectives of the visits shall include:
(i) To give and take feedback on training program of the TO;
(ii) To assist TO in performing its responsibilities towards training of Trainee Students;
and
(iii) To review documents necessary to ensure compliance with the Training Regulations.
(3) The visits of representatives of the Institute shall be undertaken on the date mutually
agreed between the Institute and TO.
(4) A report of the visit shall be made and shared with TO.

Directive 1.03
15. NON-COMPLIANCE
(1) If default is made in complying with the requirement of these regulations, the Institute
may;
(i) direct the TO in default to comply with the requirement within a specified period;
(ii) suspend authorization of TO in default for a specified period; or
(iii) cancel the authorization of TO in default.
(2) A TO aggrieved by the decision of the Institute may prefer an appeal to the Council.
16. EFFECTIVE DATE

This directive shall be effective from May 09, 2016 .

Directive 1.03
ANNEXURES
Particulars Form
Forms
Application for registration as Training Organization U

- Details of key management personnel U/A
- Details of other training offices U/B
- Declaration U/C
- Undertaking U/D
- Certificate of Approval as Training Organization
Statement of particulars for registration as trainee student Q
Training Contract R
Deed of amendment of training contract R/A
Certificate of completion of training S
No Objection Certificate T
Report on termination of training contract ZB
Sample documents for guidance purposes
Sample daily record -
Sample annual record -
Sample assessments of trainee -
Sample record of satisfactory performance during the probationary period -
Sample career progression plan -
Others
Minimum Stipend -

Directive 1.03
FORM – U
APPLICATION FOR REGISTRATION AS TRAINING ORGANIZATION

To:
The Directorate of Education and Training
Chartered Accountants Avenue
Karachi – 75600.
DETAILS OF PROPOSED TRAINING ORGANIZATION (TO)
Name __________________________________________________________________________________________________________
Registered Address ______________________________________________________________________________________________
_______________________________________________________________________________________________________________
City / Town ____________________________________ Country__________________________________________________________
Phone _______________________________________ Fax No ___________________________________________________________
E-mail_______________________________________ Website __________________________________________________________
Number of Employees who are members of ICAP___________
DETAILS OF MEMBER RESPONSIBLE FOR STUDENT AFFAIRS (MRS)
Name: _________________________________________________________________________________________________________
Membership No. ______________________________________ Membership Date: __________________________________________
Phone _________________________________ Fax ________________________________ E-mail:_____________________________
PROFILE AND BRIEF ON BUSINESS AND OPERATION OF THE ENTITY
_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________
(Please attach Memorandum and Articles of Association and use separate sheets to explain business and operations)

Directive 1.03
___________________________________________________ Name: _________________________________________________

Signature
On behalf of _____________________________________ Designation:

Place: _________________________________________________
Office Seal:________________________________________ Date: __________________________________________________
Note: Please also fill in the annexures A to D
File No.
Checked By ________________________________________________________________ Date ________________________________
Application endorsed by Appraisal consultant (if required) ________________ Date _______________________________
Put up to Executives of the Institute ______________________________________ Date ________________________________
Registered / NOT Registered________________________________________________ Date ___________________________________

Directive 1.03
ANNEX A to FORM - U
DETAILS OF KEY MANAGEMENT PERSONNEL
Details of Head of key departments

Years of Post Qualification
Member-
experience as Member Location of Individual
ship Member-
S# Name Training student’s
Number ship Date
In other Office entitlements
(If any) In Practice
Discipline
Details of MRSs
Years of Post
Qualification experience
Member- Location of CPD
Name of MRS Member- as Member
S# ship Training compliance
(ACA/FCA) ship date
Number Office status
Outside
In Practice
practice

Directive 1.03
Details of Employees who are ICAP members

Membership Years of Post
Membership Location of
S# Name Number Qualification
date Training Office
experience
Details of Technical Supervisors who are ICAP members

Years of Post Location of CPD
Membership Membership
S# Name Qualification Training compliance
Number date
experience Office status

Directive 1.03
ANNEX B to FORM - U
DETAILS OF OTHER TRAINING OFFICES
Name of Training Organization: _____________________________________________________________________________________
Address of Training Office: _________________________________________________________________________________________
City / Town: ________________________________________________ Country: _____________________________________________
Phone _________________________________ Fax ________________________________ E-mail:______________________________
Name of Nominated MRS: _________________________________________________________________________________________
Membership No: ____________________________________Membership Date:_____________________________________________
Phone _________________________________ Fax ________________________________ E-mail:______________________________
_______________________________________________________________________________________________________________
Number of member of ICAP in training office____________________________________________________________________
Number of Technical Supervisors in training office________________________________________________________________
Note: Please fill in separate Form for each training office.

Directive 1.03
Annex – C to Form U
D E C L A R AT I O N
It is hereby declared that _______________________________________ will abide by all terms and conditions
given in approved Training Regulations and Guidelines and other provisions of CA Bye-Laws / Directives /
Instructions made by or on behalf of the Council of the Institute from time to time in respect of Students and
Training Organization.
It is further undertaken that ________________________________________ agrees to monitoring visits by the

Institute’s consultant / representative and will implement recommendations resulting from such visits and the
Member Responsible for Student Affairs shall inform immediately to Institute of Chartered Accountants of
Pakistan if the Training Organization falls short of prescribed authorization criteria.
Place: Signature:
__________________________________________ ____________________________________________
Date: Name:
__________________________________________ ____________________________________________
Designation:
____________________________________________
On behalf of
Office Seal ____________________________________________
Note: This declaration is to be on the letterhead of the Training Organization without typing Annex C on it.

Directive 1.03
Annex – D to Form U
U N D E R TA K I N G
I _______________________________________Membership No________________ designated as______________________________
Member Responsible for Student Affairs (MRS) by _____________________________________________________________________
________________________________________ for its Training Office at __________________________________________________
Under bye-law 102 of the CA Bye-laws 1983 do hereby undertake that I have thoroughly read and have the
knowledge of the relevant Sections of the Ordinance, Bye-Laws, Training Regulations and Guidelines, Institute’s
schemes of education and Directives of the Council. I have the ability to advise, counsel, evaluate, motivate and
provide direction to Students; I have the ability to assume the responsibility of ensuring that annual evaluations
are made and also assume the responsibility of maintenance of the records strictly as prescribed in the Training
Regulations and/or the Guidelines, or otherwise as may be directed by the Committee from time to time. I shall
comply with all the future directives and requirements to this effect and have full awareness of the ethics
governing the meaning, purview and obligations of an MRS under bye-laws and Training Regulations.
Signature: ____________________________________________
Place: _________________________________________________ Office Seal

Date: _________________________________________________
Note:
This undertaking will be given on the letterhead of the Training Organization without typing Annex D on it.

Directive 1.03
TO-Number.

TO name and Office
is an approved
Training Organization Outside Practice

Date: _________________________

Directive 1.03
Form ‘Q’
STATEMENT OF PARTICULARS FOR REGISTRATION
AS TRAINEE STUDENT BYE-LAW 98 (1) & (2)
Affix a recent
Photograph of
1. Name of Trainee Student: (1”x1”) which
should not be
2. Father’s Name: more than 3
months old
3. Date of Birth Nationality:
4. NIC No: - -
5. Qualifications:
Examinations Month & Year of Board / University/

Grade/Div
Educational Passed Exam Institute
Qualification
(Academic)
Professional
Qualification
(eg CA PIPFA, ACCA,
CIMA, ACMA, MBA
etc)
6. CRN and date of issuance _______________________________________________________________________
7. Addresses (Communication Address) ______________________________________________________________
_____________________________________________________________________________________________________________
(Permanent Address) ___________________________________________________________________________
_____________________________________________________________________________________________________________
8. Name of MRS_________________________________________________________________________________
Name of Training Organization __________________________________________________________________
Address _____________________________________________________________________________________
____________________________________________________________________________________________
9. Present Status with CRN ________________________________________________________________________
Continued on reverse
IN CASE OF RE-REGISTRATION UPON TRANSFER TO

Directive 1.03
ANOTHER TRAINING ORGANIZATION UNDER BYE-LAW 103 (I)
a. CRN:
b. Name of Previous MRS:
c. Name of Previous Training Organization:
d. Period Served From: to
e. Details of leave availed Study Sick Others Total
f. No objection certificate: Yes No
I declare that the particulars given above are true and correct to the best of my knowledge and belief
Date:
Place:
Signature of Trainee Student
Endorsement by the MRS
“I certify that the above particulars furnished by the Trainee Student are correct. He/She has completed the
probationary period from__________________________to__________________________successfully”.
Date:
Place:
Signature of the MRS
(Seal of Office)
ATTACHMENTS
1. Birth certificate and Matriculation Certificate duly attested by MRS/ Member of Training Organization
2. Attested copy of certificate in respect of educational and professional qualifications with photocopies
3. Copy of NIC
4. Photograph size 1”x1” to be pasted on this form and one attested (by MRS / Member) copy to be attached.

Directive 1.03
FORM ‘R’
TRAINING CONTRACT
(Bye-Law 99) Stamp values
applicable in each
province of Pakistan
at time of execution
of contract
1. The parties to this Training Contract are:
Name of Student __________________________________, referred to herein as the ‘Trainee Student’
Address ____________________________________________________________________________
_________________________________________________________________________________________________
Name of MRS_______________________________________________, referred to herein as the ‘MRS’
Name of Training Organization__________________________________________________________
Address_____________________________________________________________________________
_________________________________________________________________________________________________
2. The person named below shall be responsible for the Trainee Student’s personal and professional
development:
(iii) Name of Technical Supervisor_____________________________________________________
(iv) Name of Mentor, if any _________________________________________________________
3. This Training Contract governs the Approved Training to be provided to the Trainee Student by an
Authorized Training Organization under the Chartered Accountants Bye-Laws, 1983 (as amended from
time to time) for the purpose of equipping the Trainee Student with the technical competencies,
professional skills and professional values, ethics and attitude necessary for membership of the
Institute of Chartered Accountants of Pakistan (referred to hereafter as “the Institute”).
4. *a 4 This Training Contract begins on __________ the ____day of __________ in the year _________and
. shall continue until the Trainee Student has completed ___years of Approved Training.
*b In case of transfer of Trainee Student from one Training Organization to another, the residue
training period begins on __________ the ______day of __________ in the year ____________ and
shall continue until Trainee Student has completed _________ year(s) _________ month(s) _______
day(s) of remaining Approved Training.
* (In (a) or (b) write NA whichever not applicable.)

Directive 1.03
5. This Training Contract shall be subject to the provisions of the CA Ordinance, Bye-Laws and the Training
Regulations and Guidelines made by the Council of the Institute from time to time, whether or not such
provisions and or regulations came into force before or after the commencement of this Training
Contract and the parties agree to comply with such provisions in all respects. The parties hereby
acknowledge their mutual commitment to provide an effective training on the one hand and a proper
contribution to the work of the MRS’s Office on the other.
6. The Trainee Student is required to, under this Training Contract, carry out work at his Training
Organization and at other locations and other organizations as specified by or under the authority of
the MRS or his Training Organization, provided that such service will count as Approved Training within
the regulations.
7. The Trainee Student agrees that, during the existence of this Training Contract and for any period
following its expiry or termination during which eligibility to qualify for admission or to be admitted as
an Associate of the Institute continues, the Trainee Student will:
a. use every effort to further the objects of the Institute;
b. observe and uphold the ethical and professional standards of the Institute;
c. provide promptly and willingly all possible information and assistance if asked to do so by
the Institute in the pursuance of its duties;
d. properly carry out the duties lawfully assigned by his Training Organization and diligently
pursue the studies required of Trainee Students of the Institute;
e. maintain the confidential nature of the affairs of the Training Organization and its clients
including the names and the nature of the business of such clients;
f. not practice as a public accountant;
g. not engage in any other business or occupation; and
h. regularly maintain records of Approved Training in such form as may be required by the
Institute.
8. The Training Organization agrees that:

a. it will provide the Trainee Student with Approved Training to the best of his ability for the
purposes set out in clause 3 of this training contract;
b. it will ensure compliance of all Bye-Laws, Training Regulations, Council Directives and other
provisions / instructions issued from time to time by the Institute, in respect of Trainee Student
training and administration;
c. it shall pay the monthly stipend and provides other compensation to its Trainee Students as
may be specified by the Institute from time to time during the period of training;
d. it will monitor the career progression plan and assess the progress annual in recorded form.
e. provide the name of any person nominated as Technical Supervisor to replace the person
named in clause 2 of this Training Contract.
9. This Training contract may be terminated:

a. by mutual agreement between the parties; or
b. As prescribed in Bye-Law 107 of CA Bye-Laws 1983
10. This Training Contract may not be altered or amended except as provided for in Bye-Law 100 of CA Bye-
Laws 1983.
In witness whereof this Training Contract has been duly executed this __________ the ____day of __________
in the year _________.

Directive 1.03
Trainee Student’s Signature_____________________________________
In the presence of:
Name _______________________________________ CNIC No. - -
Place______________________________________________
MRS’s Signature________________________________________________
Seal of Office___________________________________________________
In the presence of:
Name _______________________________________ CNIC No. - -
Place______________________________________________
FOR OFFICE USE ONLY
CRN_______________________________________________ Date___________________________________________
Entered in the Register of Trainee Students
___________________________________________________ Office Seal

Signature
INSTRUCTIONS FOR COMPLETION AND FORWARDING OF THIS FORM

a. Three copies of this contract are to be completed and forwarded to the Institute within 30 days of
completion of the probation period (2 months from the date of Trainee Student’s joining the Training
Organization).
b. Special Adhesive Stamps are to be affixed to original and duplicate copies only of the Training Contract.
c. Form ‘Q’, duly completed in all respect is to accompany this Training Contract along with all attachments
mentioned therein.
d. The correcting fluid shall not be used.
e. Bank Credit Voucher/Pay Order/Demand Draft for Registration Fee is to be forwarded with this Training
Contract.
f. All Registration documents are to be forwarded under a covering letter of the Training Organization.
g. Witness to Trainee Student and MRS’s Signature should be of male adults.
Note:
Specified Training Period:
(1) CAF Passed or equivalent thereto 3.5 years
(2) Four year Graduate / Post Graduate from Specified Degree Awarding Institute (SDAI) 3 years
(3) *Four year Graduate / Post Graduate from any recognized Degree Awarding Institute with major in accounting or finance 3 years
(4) *All other Graduates including 14 years associate degree holders 4 years

Directive 1.03
ANNEX A to FORM - R
ON RS. 50/- STAMP PAPER
DEED OF AMENDMENT OF TRAINNG CONTRACT

(For Service breaks)
This deed of amendment of training contract made and executed this________________________________________________

(Execution date)
BETWEEN:
M/s. ___________________________________________ and _________________________________ CRN. _____________________

(Training Organization) (Trainee Student)
WHEREAS the above parties have signed the training contract dated__________________________________________________
Registered with the Institute on ____________________________________________________ for ________________________ years.
from________________________________________________________to____________________________________________under
Bye-law 99 of Chartered Accountants Bye‑Laws, 1983.
AND WHEREAS the both parties decided to amend the training contract to the extent that the completion date has been
changed to____________________________________________________________________due to service break to be availed
from________________________________________to________________________________________ ( __________ days) by
________________________ (Trainee Student) in accordance with the directives of the Institute.
NOW THEREFORE this deed of amendment of training contract witnessed to read this as under:-
“The Completion date of the training contract has been revised from _______________________ to ______________________ .
(Original date) (New date)
“That as amended as aforesaid the other terms and conditions in training contract dated ____________________ shall remain in
full force and effect.”
Witnesses:
1.___________________________ ________________________________________
Signature of the Trainee Student
2.___________________________ ________________________________________
Signature and Name of MRS
Name of Training Organization

Directive 1.03
ON TRAINING ORGANIZATION’S LETTERHEAD

(FORM ‘S’)
The Director Education and Training

CERTIFICATE OF COMPLETION OF TRAINING

I certify that the Trainee Student named below served as Trainee Student under registered training contract
with me for the period stated in accordance with the bye-laws, of the Institute of Chartered Accountants of
Pakistan and that his/her progress was satisfactory.
MRS NAME AND ADDRESS OF TRAINING ORGANIZATION
TRAINEE STUDENT
Name: _______________________________________
Father’s Name : ________________________________

ICAP CRN
PERIOD OF TRAINING SERVED

(Including approved excess leave period)
IN FIGURES From To
D M Y D M Y
IN WORDS From _________________________________To ________________________________________
LEAVE AVAILED
Normal Excess * Total leave availed
* Excess leave approved by ICAP’s letter No. __________________________ dated __________________________
IN CASE OF RE-REGISTRATION UPON TRANSFER FROM ANOTHER

TRAINING ORGANIZATON OR MRS
Previous MRS:_________________________________ Previous MRS: _________________________________
TO: _________________________________________ TO: _________________________________________
CRN No. _____________________________________ CRN. _________________________________________
Period served From: ___________ To: _____________ Period served From: ___________ To: _____________
Leave availed: Days Leave availed: Days
Date: __________________________________________
Place: _________________________________________ Seal
c.c Mr./Ms. ________________________________
Signature of MRS
* This Certificate must not be issued until the excess leave has been approved by the Institute, if required, and the Trainee
Students has served the period in lieu of excess leave in the training organization.

Directive 1.03
FORM ‘T’
NO OBJECTION CERTIFICATE
[Bye-Law 103(1) & (2)]
I______________________________________________of__________________________________________
_________hereby certify that Mr/Ms____________________________________________served as a Trainee
Student under me in accordance with the Chartered Accountants Bye-Laws, 1983 for a period of________
years(s)________ month(s) and________ days(s) from _____________________ to_____________________
under CRN________________ and that I have no objection in transferring his/her Training Contract to another
registered training organization.
I hereby certify that during the above mentioned period the trainee student was given leave for________ days.
I further certify that during the above mentioned period his / her work was satisfactory.
The trainee student has also served with:
Name of Training Organization_____________________________________________________________________________________
Name of MRS___________________________________________________________________________________________________
From___________________________________ to______________________________________ CRN___________________________
Date___________________________________ and availed ____________________days leave.
Place___________________________________ Date___________________________________
Office Seal
_____________________________________________
Signature of MRS

Directive 1.03
FORM ‘ZB’
REPORT ON TERMINATION OF TRAINING CONTRACT

UNDER BYE-LAW 107(I) OF THE CA BYE-LAWS, 1983
Name of Trainee Student__________________________________________________________________________________________
CRN___________________________________________________________________________________________________________
Period ___________________________________________________ Date of________________________________________________
Commenced on________________________________________Termination________________________________________________
Name of MRS____________________________________________________________________________________________________
Name of Training_________________________________________________________________________________________________
Organization____________________________________________________________________________________________________
Address of TO___________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
MRS’s Report
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
Certified Copies of Following Documents Enclosed:

1. Show Cause Notice
2. Trainee Student’s Reply to Show Cause Notice
3. Hearing Proceedings
4. Any other relevant correspondence /papers in respect of the matter
Date______________________________________________ _____________________________________________
Signature & Seal of Office

Directive 1.03
For THE INSTITUTE Use Only
Actions Date
1. Documents Checked ____________________________________________________
2. Termination Recorded ____________________________________________________
Letter of acknowledgement to MRS and copy to Trainee Student

3. issued ____________________________________________________
4. Receipt of Appeal from Trainee Student (if any) ____________________________________________________
5. Reference of Appeal to the Council ____________________________________________________
6. Decision of the Council ____________________________________________________
_____________________________________________________________________________________________________________________________ ___________________
_____________________________________________________________________________________________________________ ___________________________________
_____________________________________________________________________________________________________________________________ ___________________
Date _____________________________________ ____________________________________________________
Signature

Directive 1.03
Daily Record
Trainee Student Name_______________________________________________CRN_________________________________________
Trainee Student Role________________________________________________ (Assistant trainee) ______________________________
Major category of Technical Competencies

(Mark the relevant)
Accounting, Taxation and Treasury, Any other

Any other
financial corporate law financial appropriate
Name of the area deemed
S.No Date reporting, management, area
Department appropriate
internal audit supply chain
by TO (such as
and risk management
marketing,
management and
human
information
resource etc.)
technology
____________________________________________________ _______________________________________
Trainee Student Sign off Technical Supervisor sign off

Directive 1.03
Annual Record
Trainee Students Name______________________________________________CRN__________________________________________
Trainee Students Role____________________________________________________________________________________________
From__________________________________ to __________________________________
(Mark the
S. No Major category of Technical Competencies
relevant)
1 Accounting, financial reporting, internal audit and risk management
2 Taxation and corporate law
3 Treasury, financial management, supply chain management and information

technology
4 Any other area deemed appropriate by TO (such as marketing, human

resource etc.)
Value of the Experience Gained

The intention of this section is to have you reflect on where you are today in terms of competency development
and what value it has on your professional standing.
Example: I gained experience in finance department of a large sized textile industry involved in yarn
manufacturing.
New Exposure or Advancement or advancement to previous expos ure

The intention of this section is to reflect on specific exposure.
Specific area I was exposed to was accounts payable section, where I learned to deal with the
creditors. This role required understanding of managing the credit terms of suppliers with that of
the cash flows of the company. I also gained experience of the control procedures in place with
regards to payment to creditors.
The level of management with whom communicated and dealt

The intention of this section is to reflect your interaction with higher management.
Manager Finance level frequently and CFO occasionally.
Any ethical issue or dilemma faced

The intention of this section is to have you reflect on where you are today in terms of competency development
and what value it has on your professional standing.

Directive 1.03
While meeting with creditors, I met one of my old friends working for one of the creditors. I
consulted my senior and found that it does not create noticeable familiarity threat.
Comments of Technical Supervisor
The intention of this section is to have a feedback on your progress and development.
I reviewed the form and found correct.
Trainee Student Sign off:

I confirm that the above information accurately reflects the exposure and level to which I have demonstrated
over this annual period of my practical experience and my reflective thought from my work assignments for
the said period.
Date ____________________________________________________ ____________________________________________________
Signature
Technical Supervisor sign off.

I have met with the CA Student noted above and discussed his/her competency and professional
development and progression according to our CA Training Program.
Date ____________________________________________________ ____________________________________________________
Signature

Directive 1.03
CAREER PROGRESSION PLAN
Training Organization_________________________________________________________________________
Trainee Student Name_____________________________________________CRN________________________
Minimum
Technical Professional Values, ethics Required
required Professional Skills
Competency & Attitude score
Training
Professional
Interpersonal skepticism Commitment
Ethical
Intellectual personal and Organizational and to the public
Principles
Communication professional interest
judgment
(Total score from detailed assessment sheets)
Assistant - -
trainee
Associate Cleared 6 12 >60%

trainee papers of months
CAF
Senior Cleared 3 24 >70%

Associate papers of months
trainee CFAP

Directive 1.03
RECORD OF SATISFACTORY PERFORMANCE DURING THE PROBATIONARY PERIOD
Name of the Trainee-on-probation ___________________________________________CRN____________________________________
Father’s Name___________________________________________________________________________________________________
Name of MRS___________________________________________________________________________________________________
Probationary period start Date_____________________________________________________________________________________
Probationary period end Date_____________________________________________________________________________________
Particulars Total Marks Marks obtained
Aptitude for CA qualification 35

Awareness of personal performance 25
Follows the Instructions 25
Awareness of ethical principles( Integrity, objectivity and
15
Confidentiality)
Overall rating
□Unsatisfactory □Satisfactory □Good □Excellent
Trainee on probation Sign off______________ MRS sign off______________________
Date__________________________________ Date_____________________________
(Note: TO shall establish its own benchmark for rating a trainee on probation)

Directive 1.03
ASSESSMENT OF TRAINEE STUDENT
ASSISTANT TRAINEE ASSESSMENT

Total
1 Intellectual
• Is able to gather and assimilate information from various sources 10
and perspectives.
• Is able to identify unstructured problems. 5
• Demonstrates creativity in approaches to work. 5
20
2 Personal
• shows awareness of personal performance and demonstrates
willingness to improve. 5
• Meets the deadlines of given task and appreciates time
management. 5
• Is able to identify possible challenges in the tasks given. 5
• Shows flexibility and does not hesitate to try new approaches. 5
20
• Demonstrates understanding of organizational goals and
working together. 5
• Presents information in written and numeric form clearly.
Depicts awareness of clear communication. 5
• Demonstrates listening skills and understands given instructions. 5
• Is sensitive to cultural differences while communicating. 5
20
4 Organizational
• Performs the given tasks in accordance with the established
procedure within the deadline. 5
• Understands and follows the quality standards of the 5
organizations.
10

• Is able to draw questions on financial information and data. 5

Directive 1.03

• Is able to analyze the responses on the questions raised. 5
10
• Comprehends importance of fundamental ethical principles. 5
• Shows sensitivity on ethical issues. 5
10

• Is aware of social responsibilities of accountants. 5
• Comprehends consequences of unethical behavior to the
individual, to the profession and to the society at large. 5
10

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
ASSOCIATE TRAINEE ASSESSMENT

Total
1 Intellectual
• Analyzes information gathered from various sources and 5
perspectives.
• Analyzes the unstructured problems. 5
• Considers alternative approaches to getting the job done. 5
15
2 Personal
• Is eager to develop professional knowledge. 3
• Understands importance of high personal standards and accepts 3
feedback.
• Identifies professional commitments and apply skills of 3
effective time and resource management.
• Is able to identify possible challenges and solutions in the tasks 3
given.
15
• Works effectively in a team. 3
• Presents information in written and numeric form clearly. 2
Communicate ideas clear through oral communication.
• Communicates effectively using listening and questioning skills. 2
• Expresses logic and rational clearly while communicating. 3
• Communicates effectively in teams across all levels and produce 2
results.
• Takes difference of opinion positively. 2
• Displays sensitivity to cultural and language differences while 2
communicating.
• Actively participates in team by presenting ideas. 4
20
4 Organizational
• Performs the given tasks in accordance with the established 2
procedure within the deadline.
• Follows the organizational quality standards and pays attention 2
to details.
• Gels well in teams, displays sensitivity to shortcomings of others 2
and understands importance of encouragement.
• Understands importance and ways of delegation of work. 2
• Understands the leadership traits. 2
10

Directive 1.03

• Applies skeptical mindset to critically assess financial 10
information and data presented.
• Identifies reasonable alternatives based on all relevant facts and 10
circumstances.
20
• Comprehends nature of ethics. 2
• Recognizes rules-based and principles-based approaches to 2
ethics.
• Applies fundamental principles of ethics. 3
• Adopts professional behavior in accordance with standards and 3
ethical best practice.
10
• Comprehends ethics within the profession and in relation to 2
social responsibility.
• Comprehends the role of ethics in relation to business and good 2
governance.
• Understands the relationship of ethics, law and regulations and 3
relationship with public interest.
• Comprehends consequences of unethical behavior to the 3
individual, to the profession and to the society at large.
10

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
SENIOR ASSOCIATE TRAINEE ASSESSMENT

Total
1 Intellectual
• Researches information from a variety of sources and perspectives. 3
• Identifies solutions to unstructured, multifaceted problems. 3
• Applies reasoning, critical analysis, and innovative thinking to 4
solve problems.
10
2 Personal
• Demonstrates a commitment to learning. 2
reflection.
• Evaluates professional commitments and manages time and 2
• Anticipates challenges and plan potential solutions. 2
10
• Displays cooperation and teamwork when working towards 2
and orally.
agreements.
environment.
communication.
commitment.
15
4 Organizational
• Uses effective people management skills to motivate others. 2
• Applies leadership skills to influence others to work towards 2
10

Directive 1.03

• Identifies reasonable alternatives to help reaching well-reasoned 10
20

• Applies fundamental ethical principles to ethical dilemmas. 5
20
governance.
15

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
SENIOR ASSOCIATE TRAINEE ASSESSMENT UPON COMPLETION OF TRAINING

Total
1 Intellectual
• Researches and evaluates information from a variety of sources 3
and perspectives and draw appropriate conclusions.
• Identifies, evaluates and recommends solutions to unstructured, 3
multifaceted problems.
• Applies innovative and critical thinking to solving problems. 4
10
2 Personal
• Applies the principles of lifelong learning. 2
reflection.
• Evaluates professional commitments and manage time and 2
• Proactively anticipates challenges and plan potential solutions. 2
10
• Promotes cooperation and teamwork when working towards 2
and orally.
agreements.
environment.
communication.
commitment.
15
4 Organizational
• Uses effective people management skills to motivate and 2
develop others.
• Demonstrates effective leadership skills. 2
10

Directive 1.03

• Identifies reasonable alternatives to reach well-reasoned 10
20

• Applies fundamental ethical principles to ethical dilemmas and 5
determines an appropriate resolution.
20
governance.
15

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
Any other advice.

_______________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________________________________
_____________________________________________________________ ________________________________________________________
Name ___________________________________ Name _________________________________

Directive 1.03
MINIMUM STIPEND RATES EFFECTIVE FROM JULY 1, 2019
1. CAF Passed or equivalent thereto (Training period 3.5 years)

2. Four years Graduate degree holders from Specified Degree Awarding Institutes/ Four years degree holders
from any recognized Degree Awarding Institute with major in accounting or finance (Training period 3 years)
On Commencement of Training 15, 800
47,700
On Passing all the prescribed examinations required to become member of the Institute
3. Other Qualifications (Training period 4 years)


TABLE OF CONTENTS
1. Recognition of degree awarding institutes 1
2. Declaration of RDAI status 1
3. Pre-requisite to become RDAI 1
4. Eligibility criteria 2
5. Relevant degree program 2
6. Specified degree program 3
7. Self-evaluation 3
8. Progression 3
9. Renewal of SDAI status 4
Benchmark for self-evaluation of relevant degree awarding institute 5
Self-evaluation report 7
Students’ Performance Benchmark-Relevant Degree Awarding Institution 7
Students’ Performance Benchmark-Specified Degree Awarding Institution 8
Students’ Registration Benchmark-Specified Degree Awarding Institution 9

Directive 1.04
SPECIFIED DEGREE AWARDING INSTITUTES (SDAI)

AND RELEVANT DEGREE AWARDING INSTITUTES (RDAI)
In exercise of the powers conferred by Section 27(2)(c) of the Chartered Accountants Ordinance, 1961
read with bye-laws 2(1)(ma), 123 and 129A of the Chartered Accountants Bye-Laws 1983, the Council
of the Institute has introduced the following scheme that lays down the process of recognition of
universities or degree awarding institutes (both hereinafter be called DAI) for the purposes of
exemptions from ICAP examinations.
1. RECOGNITION OF DEGREE AWARDING INSTITUTES
1.1. There shall be two tiers of DAIs, namely:
Tier 1 Specified Degree Awarding Institute (SDAI)
Tier 2 Relevant Degree Awarding Institute (RDAI)
1.2. An SDAI offers Specified Degree that facilitates the candidate who holds such degree to
qualify for exemption from all papers of Pre-requisite Competencies (PRC) and Certificate
in Accountancy and Finance(CAF) levels subject to the criteria prescribed under Chartered
Accountants Bye-laws 1983.
1.3. An RDAI offers Relevant Degree that facilitates the candidate who holds such degree to
qualify for exemption from all papers of Pre-requisite Competencies (PRC) and Financial
Accounting and Reporting-I, Business Law, Managerial and Financial Analysis and Company Law
papers of Certificate in Accountancy and Finance(CAF) level subject to the criteria
prescribed under Chartered Accountants Bye-laws 1983.
1.4. Criteria referred to in paragraph 1.2 and 1.3 provides minimum matching of the contents
of syllabus and minimum marks or grades that a student is required to obtain in aggregate
and in relevant subjects in order to be eligible for exemptions.
1.5. Any DAI desiring to become SDAI shall first be required to gain status of RDAI under this
Directive and then achieve prescribed performance level in order to progress to SDAI status.
2. DECLARATION OF RDAI STATUS

2.1. Interested DAI shall prepare a proposal for RDAI status. The proposal shall include:
a. An expression of interest by the DAI on a prescribed format;
b. Detailed profile of the DAI; and
c. Necessary details along with required documentation to demonstrate that all the pre-
requisites for becoming an RDAI as per this Directive have been complied with.
2.2. The proposal shall be submitted by a person authorized by the management of DAI.
2.3. *Upon successful completion of all requirements for recognition a certificate to the effect
that the DAI is a Relevant Degree Awarding Institute shall be approved by a forum consisting
of the President, Chairman ETCOM and Chairman ExCOM. The certificate will be valid for a
period of three years after which a fresh evaluation of eligibility will be conducted.
2.4. If an RDAI fails to seek renewal of its status the students registered with RDAI at the time of
withdrawal of its status shall on completion of their degree programs be deemed to have
gained their degree from RDAI if they opt to pursue CA Pakistan; provided their names and
details are forwarded by the RDAI to ICAP within 30 days of withdrawal of it status.
3. PRE-REQUISITE TO BECOME RDAI

Any DAI recognized by the Higher Education Commission may become an RDAI if it:
a. fulfills the eligibility criteria given in this directive; and
b. offers Relevant Degree Program (a program mapped with ICAP syllabus of required number
of papers).
*336th meeting of the council held on December 18-19, 2020.
SPECIFIED DEGREE AWARDING INSTITUTES (SDAI) AND RELEVANT DEGREE AWARDING INSTITUTES (RDAI) 1
4. ELIGIBILITY CRITERIA
4.1. Degree awarding institutes of Pakistan
The following are the eligibility criteria for a DAI for becoming RDAI:
a. The DAI should be in W 3 or above category specified by Higher Education
Commission (HEC) or equivalent category and successfully perform a self-evaluation
as specified in this Directive.
b. At least two faculty members, fulltime or adjunct, are members of the Institute.
c. At least one batch of graduates of relevant degree is available in job market and for
further studies. In case of a high ranked DAI which intends to introduce relevant
degree program, ETCOM may allow issuance of letter of comfort on the basis of a
clear expression of interest by the said DAI. However, RDAI status to such DAI may be
granted after two years of successful offering of Relevant Degree Program subject to
compliance with all pre-requisites specified in this directive.
d. It can be reasonably demonstrated that the relationship will bring meaningful benefits
to the students.
e. The number of students enrolled in relevant courses or who are reasonably expected
to be enrolled is sufficient to justify the resources to be applied in the exercise of
evaluation and recognition. It is expected that on average more than 10% of the
graduates of relevant degree program will pursue CA Pakistan qualification.
f. DAI agrees to award credit to students and members of ICAP in its degree programs
for the subjects against which syllabus of the Institute matches at least 70% with that
of DAI.
4.2. Foreign degree awarding institutes including those operating in Pakistan
Top 400 institutions on the basis of ranking of Times Higher Education shall be eligible for
RDAI status. A foreign DAI shall not be progressed to SDAI status.
5. RELEVANT DEGREE PROGRAM

Relevant Degree program shall be required to fulfill the following conditions:
a. The program should be a four year degree program or equivalent to 16 year education;
b. The syllabus contents and learning outcomes of the relevant subjects should match at least
70% with that of the prescribed syllabus and learning outcomes of all papers of Pre-
requisite Competencies and Certificate in Accountancy and Finance of the Institute.
c. The examination papers of relevant subjects of RDAI broadly cover the whole syllabus with
appropriate balance.
d. The degree program collectively should qualify for exemption from the following
examinations of Pre-requisite Competencies and Certificate in Accountancy and Finance
stages:
PRC-1 Business Writing and Comprehension Skills
PRC-2 Quantitative Methods
PRC-3 Principles of Economics
PRC-4 Introduction to Accounting
PRC-5 Introduction to Business
CAF-4 Business Law
CAF-7 Company Law
6. SPECIFIED DEGREE PROGRAM
Specified Degree program shall be required to fulfill the following conditions:
a. The program should be a four year degree program or equivalent to 16 year education;
b. The syllabus contents and learning outcomes of the relevant subjects should match at least
70% with that of the prescribed syllabus and learning outcomes of the PRC and CAF level
papers of Institute and preferably should be of more advanced level.
c. The degree program collectively should qualify for exemption from the all examinations of
Pre-requisite Competencies and Certificate in Accountancy and Finance stages.
7. SELF-EVALUATION
7.1. The DAI shall prepare a ‘self-evaluation report’ along with working papers prepared on the
basis of benchmarks set forth in this directive.
7.2. The DAI shall be required to obtain (i) 700 points in aggregate and (ii) minimum points in
certain pre-requisite areas as specified in the benchmark attached with this directive, to be
eligible for recognition as RDAI.
7.3. The ‘self-evaluation report’ shall be accompanied by a Reasonable Assurance Report issued
under the ‘International Standards on Assurance Engagement’ by a practicing chartered
accountant firm that carries satisfactory QCR rating.
7.4. In case the assurance report contains a modification, the Institute shall take decision after
8. PROGRESSION
8.1. There shall be the following progression process for national RDAI to advance to SDAI
status:
a. RDAI is either already in or progresses to W 4 category specified by the Higher
Education Commission of Pakistan and it continues to meet the self-evaluation
criteria specified in this directive.
b. From the date of declaration as RDAI, the performance of students holding Relevant
Degree of RDAI shall be monitored by the Institute on the basis of students passing
percentage in the remaining subjects of Certificate in Accountancy and Finance
examinations of the Institute or appropriate gateway tests of these subjects. The
same shall also be shared with RDAI after each attempt.
c. The syllabus of RDAI matches more than 70% of all subjects of PRC and CAF levels and
preferably most of subjects of CFAP level.
d. The RDAI shall submit an annual declaration that it continues to meet the self-
evaluation criteria and there is no significant change in the syllabus over the year
except for the changes already informed to and agreed by the Institute.
e. The examination papers of relevant subjects of RDAI broadly cover the whole syllabus
with appropriate balance.
f. On average more than 10% of the annual graduates of relevant degree program are
pursuing chartered accountancy CA Pakistan qualification.
g. The RDAI shall advance from RDAI to SDAI status if the performance of students
holding Relevant Degree of RDAI in three consecutive attempts of the above
mentioned examinations is ranked 20% above the average result of ICAP specified
under the ‘Students’ Performance Benchmark’ set forth in this directive.
h. A certificate to the effect that the RDAI has been upgraded to Specified Degree
Awarding Institute shall be issued by the Institute.
8.2. The certificate of declaration of SDAI shall be for a period of three years.
9. RENEWAL OF SDAI STATUS
9.1. At the expiry of certificate of declaration of SDAI, the renewal shall be made in the following
manner:
a. From the date of declaration as SDAI, the performance of students holding Specified
Degree of SDAI shall be monitored by the Institute on the basis of students passing
percentage in Certified Finance and Accounting Professional examinations of the
Institute. The same shall also be shared with SDAI after each attempt.
b. The Institute shall also monitor the registration of the students in chartered
accountancy program, which is expected to exceed on average 10% of the total
graduates of relevant programs over the last three years.
c. SDAI is W 4 category specified by the Higher Education Commission of Pakistan and it
continues to meet the self-evaluation criteria specified in this directive.
d. The syllabus of SDAI matches more than 70% of all subjects of PRC and CAF levels and
preferably most of subjects of CFAP level.
e. The examination papers of relevant subjects of SDAI broadly cover the whole syllabus
with appropriate balance.
f. The performance of students holding Specified Degree of SDAI in any three consecutive
attempts during three years of SDAI status is ranked 10% above average result specified
under the ‘Students’ Performance Benchmark’ set forth in this directive.
g. The certificate of declaration of SDAI shall be renewed for another three years if the
SDAI satisfies the above criteria.
h. If SDAI fails to satisfy the above criteria then the SDAI shall be downgraded to RDAI
status.
9.2. The students registered with SDAI at the time of declaration of downgraded status shall be
deemed to have gained their degree from SDAI if they opt to pursue career as chartered
accountants after completion of their degree program; provided their names and details
are forwarded to ICAP within 30 days of downgrading.
Benchmark for Self-Evaluation of
Relevant Degree Awarding Institute
Mandatory
Maximum
S. No. Particulars Benchmark Minimum
Points
Points
1 Students – institution wide
1.1 Number of student passed having 16 100 500 students per year 50
years of education during last two years. passing out
1.2 Number of student passing per year 100 250 students per year 50
having M.Phil./16 + years of education passing out
during last two years.
1.3 Number of Ph.D. Produced 50 5 per year 20
2 Facilities – institution wide
2.1 Library 50 100,000 books on 20
various subjects
2.2 Computer facilities 50 200 systems of good 25
Configuration
2.3 Classroom furnished with minimum 50 Each class room 1 25
seating capacity of 40 students Point
(the area on the basis of 10 sq feet per
student basis)
2.4 Hostel(s) 50 400 students capacity 0
2.5 Auditorium(s) 50 400 students capacity 25
2.6 Sports facility 50 For 500 students 25
2.7 Cafeteria(s)/Mosque(s) 30 Each with 250 persons 25
Capacity
3 Faculty – Accounting or Business
School, (Accounting, Commerce
and Business Administration)
3.1 Faculty qualification 200 Category (a) 10 points 100
a. PhDs/ Fellow Chartered per person
Accountants Category (b) 8 points
b. M Phil/Associate Chartered per person
Accountants and members of Category (c) 6 points
professional accountancy bodies
per person
recognized by ICAP,
c. Faculty having 16 + years of Category (d) 4 points
Education per person
d. Faculty having 16 years of
Education The points are for
e. Faculty of Accounting, Auditing faculty members
and related subjects must be of employed on full time
chartered accountant basis.
f. Faculty of Cost Accounting must For part time teachers
be of member of recognized the points will be
professional accountancy body 25%only.
3.2 Student Teacher Ratio 80 25:1 40
3.3 Involvement of external examiners 100 Per relevant subject 50
(10 points)
4 Students – Accounting and Business

School, (Accounting, Commerce and
Business Administration)
Total number of student enrolled 100 400 students 50
5 Research – Institution wide

5.1 Number of Research Papers Published 90 10 points for each 10
or presented by the Faculty Members paper and publication
& Students and Number of Journals/ per year
books Published by the DAI
5.2 Institution Organized Conferences, 50 10 points for each 20
Symposium, Seminars/Workshops at event per year
National and International Level.
TOTAL 1200
Explanatory Notes:
1. Professional bodies recognized by ICAP (Ref. 3.1) are those whose qualified members are
offered membership of ICAP without further examinations.
2. Points will be prorated where the points achieved against a benchmark are less than the
maximum.
Example:
Benchmark: Student Teacher Ratio
Maximum points 80
Scale 25:1
Achieved 4000 enrolled students
100 teachers
Ratio 40:1
Points (25/40 * 80) 50
*****
AS AT ________________________
NAME OF DAI
Mandatory Working
Evaluation based on scale Maximum Points
S. No. Particulars minimum paper
for achievable points Points obtained
points reference
Submitted by ________________________________
Date and place _______________________________
Students’ Performance Benchmark

Relevant Degree Awarding Institution
Data Analysis
Subjects Attempt 1 Attempt 2 Attempt 3 Total

Total Pass Total Pass Total Pass Total Pass
Performance of Students holding
Relevant Degree of RDAI
CAF 2CAF-2 Tax Practices
CAF 3Cost and Management Accounting
CAF 5CAF-7 Financial Accounting and Reporting – II
CAF 8Audit and Assurance
Total A B
All students of ICAP who attempted

the above papers
CAF-2 Tax Practices
CAF-5 Financial Accounting and Reporting – II
Total X Y
Ranking of Performance of Students
holding Relevant Degree of RDAI
Below average
Performance is below the average performance of all ICAP students in aggregate
term. i.e. B/A <Y/X
Average
Performance is equal to the average performance of all ICAP students in aggregate
term. i.e. B/A = Y/X
20% Above Average

Performance is 20% greater than the average performance of all ICAP students in aggregate
term. i.e. (B/A) ÷ (Y/X) = 1.20
Students’ Performance Benchmark

Specified Degree Awarding Institution
Data Analysis
Subjects Attempt 1 Attempt 2 Attempt 3 Total

Total Pass Total Pass Total Pass Total Pass
Performance of Students holding
Specified Degree of SDAI
CFAP-1 Advanced Accounting and Financial
Reporting
Advanced Corporate
CFAP -2 Laws and Practices
CFAP -3 Strategy and Performance Measurement
CFAP -4 Business Finance Decisions
Tax Planning and
CFAP -5 Practices
CFAP -6 Audit, Assurance and Related Services
Total A B
All students of ICAP who attempted

the above papers
CFAP-1 Advanced Accounting and Financial
Reporting
Advanced Corporate
CFAP -2 Laws and Practices
CFAP -3 Strategy and Performance Measurement
CFAP -4 Business Finance Decisions
Tax Planning and
CFAP -5 Practices
CFAP -6 Audit, Assurance and Related Services
Total X Y
Ranking of Performance of Students
holding Specified Degree of SDAI
Below average
Performance is below the average performance of the students in aggregate
term. i.e. B/A < Y/X
Average
Performance is equal to the average performance of the students in aggregate
term. i.e. B/A = Y/X
10% Above Average

Performance is 20% greater than the average performance of all ICAP students in aggregate
term. i.e. (B/A) ÷ (Y/X) = 1.10
Students’ Registration Benchmark

Specified Degree Awarding Institution
Data Analysis
Registered with
Total Enrolled Passed out
ICAP
Year 1
Year 2
Year 3
Total
Average per year A B C
Required Registration of Students

holding Specified Degree of SDAI
C >10% of B
*****
(260th Council meeting held on 8 January, 2015)
Shoaib Ahmed
Acting Secretary/COO
Use of designation by
students
Directive 1.06
(Reformatted and Consolidated)
Directive 1.06 (Reformatted and Consolidated)
USE OF DESIGNATION BY STUDENTS
In exercise of the powers conferred by section 15 of the Chartered Accountants Ordinance,

1961 (CA Ordinance) read with bye-law 108A, 119 and 129A of Chartered Accountants Bye-
Laws, 1983 (CA Bye-Laws), to regulate the use of designation by students, upon completing
certain stages, the Council directs as follows.
1 PROHIBITION ON USE OF DESIGNATIONS
No person other than registered students of the Institute of Chartered Accountants
of Pakistan (ICAP/the Institute) who fulfill the criteria specified herein shall use
designations prescribed in this Directive.
2 CERTIFICATE IN ACCOUNTING AND FINANCE (CAF)
Persons who have completed Certificate in Accounting and Finance (CAF) stage of the
Institute under Directive 1.01 (revised 2021) Education and Training Scheme 2021 may
use the designation “Certified in Accounting and Finance” or its abbreviation “CAF”.
3 CERTIFIED FINANCE AND ACCOUNTING PROFESSIONAL (CFAP)
Persons who have completed Certified Finance and Accounting Professional (CFAP)
stage of the Institute under Directive 1.01 (revised 2021) Education and Training
Scheme 2021 may use the designation of “Certified Finance and Accounting
Professional” or its abbreviation “CFAP”.
4 PROFESSIONAL ACCOUNTING AFFILIATES (AFFILIATE)
(1) Persons who have passed either of the following sets of papers according to the
timeline given against each or equivalent examinations and have completed the
training under the bye-laws shall be eligible for certification as “Professional
Accounting Affiliate” or its short form “Affiliate”:
(i) Advanced Accounting and Financial Reporting along with any two other
papers of Modules E and F by August 01, 2016.
(ii) Advanced Accounting and Financial Reporting, Advanced Taxation and
Business Management and Strategy papers of Certified Finance and
Accounting Professional examinations effective from August 02, 2016.
(iii) Advanced Accounting and Financial Reporting, Tax Planning and
Practices; and Strategy and Performance Measurement papers of
Certified Finance and Accounting Professional examinations effective
from March 1, 2022.
(2) Persons who have been allowed to use the designation “Professional
Accounting Affiliate” or its short form “Affiliate” shall not be deemed to be or
represent themselves as members of ICAP.
(3) Terms and Conditions for Professional Accounting Affiliates
(i) “Affiliate” shall be required to complete at least 20 CPD hours of relevant
professional development activity in each year. The CPD hours shall be
determined in accordance with the CPD measurement policy specified by the
Council for the members of the Institute.
The Institute of Chartered Accountants of Pakistan Page | 1

Directive 1.06 (Reformatted and Consolidated)
(ii) Explanation:
(a) The professional development activities shall include prescribed PPE
and PVEA Courses and attending classes for preparation of the
examinations of the Institute duly confirmed by Registered Accounting
Education Tutors.
(b) Excess balance of CPD hours at the close of a year shall be carried
forward to the next year. However, any excess CPD hours earned during
a year can only be carried forward for one year.
(c) Any shortfall in CPD hours at the close of a year shall have to be made
up within the next year.
(4) A person who fulfills the criteria for affiliation may apply to the Institute on
prescribed form along with one-time certification fee of Rs. 2,400.
(5) An annual fee of Rs. 5,900 shall be payable before July 1 of each year.
(6) Any person whose Affiliate status is discontinued, may apply for recertification
after paying re-certification fee, which shall be equal to one-time certification fee
as per clause (4) above and any previously outstanding dues.
5 REMOVAL OF DIFFICULTY
In the event of any difficulty in implementing any requirement of this directive, a
committee formed by the Council shall have the power to take decision on the matter.
(264th Council Meeting held on May 8-9 2015)

(281st Council Meeting held on December 16-17 2016)
(352nd Council Meeting held on January 14, 2022)
The Institute of Chartered Accountants of Pakistan Page | 2

1.08
MINIMUM PERIOD OF TRAINING

TO BE SERVED VIS A VIS APPEARANCE
AT INTERMEDIATE EXAMINATION
"The Council approved a decision of the Examination Committee that the

registered students who had served the minimum period for qualifying to sit in the
Intermediate Examination and were allowed to appear in an examination should
be allowed to repeat the examination in case of failure even if they discontinue their
training without completing the period specified under the bye-laws. This means that a
candidate having attained his eligibility once should not be debarred from
reappearing in case of discontinued training.''
(77th meeting of Council - August 10, 1985)

1.15
NOTIFICATION REGARDING DIRECTIVE 1.15 OF THE COUNCIL

(EXEMPTION FROM PRE-ENTRY PROFICIENCY TEST)
This is to notify that the Council of the Institute of Chartered Accountants of

Pakistan in its meeting held on September 17, 2011 has reviewed the
exemption policy for Pre-entry Proficiency Test notified through Directive
1.15 dated March 5, 2011 and has decided to keep the application of the
Directive in abeyance till further notice. Therefore, the exemption policy as
applicable before the issuance of Directive 1.15 now stands restored.
th
(228 meeting of the Council held on September 17, 2011)
DIRECTIVE FOR MODIFICATION IN THE EXEMPTION POLICY FOR PASSING
THE PRE-ENTRY PROFICIENCY TEST
In exercise of the powers conferred under bye-law 123 of the Chartered Accountants Bye
Laws, 1983, the council in its 224 t h meeting held on March 5, 2011 has approved the
following policy in respect of exemption from the Pre-entry Proficiency Test (PPT).
A. Criteria for Exemption
i. Academic Examination
Students who have passed the following academic qualifications with the
specified minimum number of marks/grades given against each of the same.
Examinations Marks/Grades
Masters 55% and above
Bachelors 65% and above
HSSC 70% and above
A Levels One B & One C
ii. Examination held by others Professional bodies.
Passing full examination of any of the following accountancy institutions
leading to their membership:
ACCA, AICPA, CIMA, ICMAP and PIPFA.
B. Effective date
This directive will become effective from July 1, 2011 .
C. Withdrawal
Effective July I, 2011 all previous directives on the matters of exemption from
passing the Pre-entry Proficiency Test ( P P T ) would stand withdrawn.
(224 th meeting of the Council held on March 5, 2011)
Directive 1.19
DECLARATION OF SPECIFIED DEGREE AWARDING INSTITUTE (SDAI) AND

RELEVANT DEGREE AWARDING INSTITUTE (RDAI)
In exercise of the powers conferred by Section 27(2)(c) of the Chartered Accountants Ordinance, 1961
read with bye-laws 2(1) (ma), 123 and 129A of the Chartered Accountants Bye-Laws 1983, the Council of
the Institute declares the following as its Specified Degree Awarding Institute (SDAI) and Relevant Degree
Awarding Institute (RDAI):
S. No Name Status
1. Institute of Business Administration, Karachi SDAI
2. Lahore University of Management Sciences, Lahore SDAI
3. Institute of Business Management, Karachi RDAI
4. National University of Sciences and Technology, Islamabad RDAI
(241st Council meeting held on December 7 and 8, 2012)

(243rd Council meeting held on March 8 and 9, 2013)
(333rd Council Meeting held on October 9 and 10, 2020)
The Institute of Chartered Accountants of Pakistan Directive 1.20
QUALIFYING ASSESSMENT TEST

AND PRE-REQUISITE COMPETENCIES
Directive 1.20
Qualifying Assessment Test and Pre-Requisite Competencies 1

Directive 1.20 The Institute of Chartered Accountants of Pakistan
TABLE OF CONTENTS
1 Pre-Requisite Competencies (PRC) 3
2 Qualifying Assessment Test (QAT) 4
3 Fees and refunds 5
4 Examinations 5
5 Transition policy 5
6 Removal of difficulty 5
7 Effective Date 5
Annexure A Syllabus 6

QUALIFYING ASSESSMENT TEST AND

PRE-REQUISITE COMPETENCIES
In exercise of the powers conferred by section 15 of the Chartered Accountants Ordinance, 1961 (CA
Ordinance) read with bye-laws 113 and 129A of Chartered Accountants Bye-Laws, 1983 (CA Bye-Laws)
and Directive 1.01, to regulate the education and training of the Institute, the Council approves the
following pre-registration tests and assessments for candidates applying for registration as full-time
and trainee students.
1. PRE-REQUISITE COMPETENCIES (PRC)

(1) Enrolment as candidate
(i) A candidate shall be required to pass PRC, to be eligible for registration as full-time CA student
or CA trainee student.
(ii) A candidate shall be enrolled in PRC, if meets the following conditions:
(a) Passed Higher Secondary School Certificate (HSSC) examination with minimum 60%
aggregate marks, or passed Qualifying Assessment Test (QAT) if aggregate marks are
less than 60% but not less than 50%; or
(b) Passed A-Level, three subjects with aggregate minimum 60% equivalence or passed
QAT if equivalence is less than 60% but not less than 50%; and
(c)Passed any HSSC or A-Level exams in last 36 months from the date of enrolment
application or passed QAT if HSSC or A-Level examination is passed earlier than 36
months at the time of enrolment.
(d) Completed graduation with 14 years of education with 45% aggregate marks or
equivalent grades from a local or foreign university recognized by the competent
authority of higher education in Pakistan.
(e) Obtained any other equivalent qualification recognized by the Council with minimum
aggregate marks or grades as may be specified by the Council.
(iii) A person whose result for pre-requisite qualification is awaited may be enrolled as assessee
but shall not be entitled to appear in assessments without fulfilling the enrolment
conditions.
(2) Syllabus, mode and standard-setting
(i) The assessment of PRC shall consist of the following competence areas:
(ii) The contents and learning outcomes of each area are given in Annexure –A.
(iii) The changes and revision in the syllabus of PRC shall be done in accordance with the
policies specified by the Council in Directive 1.01.
(iv) PRC assessments shall be computer-based unless circumstances require a different mode,

which shall be specified by the Institute.

(v) PRC assessments shall be based on a common online testing system to ensure
standardization of test outcomes.
(3) Maximum attempts and validity
(i) Persons enrolled for PRC assessments shall be required to clear assessment of a minimum
of three areas in a maximum of twelve months from the date of the first attempt of PRC.
(ii) Those who have passed three areas in such twelve months shall have three additional
months for clearing assessment of the remaining two areas.
(iii) The first attempt of assessment shall not be earlier than three months from the date of
enrolment for PRC assessments. Provided that this condition shall not be applicable on the
first attempt of PRC assessments conducted under this Directive.
(4) Conduct of assessment
(i) The Institute shall conduct PRC and may also devolve the conduct of PRC to Approved
Testing Centres.
(ii) PRC assessments shall be offered monthly.
(iii) The conduct of assessment by Approved Testing Centres shall be under the supervision of
the Institute and through tools and systems provided or approved by the Institute.
(5) Result
The result of PRC shall be announced by the Institute.

(6) All enrolments under this Directive shall be subject to submission of specified
application, payment of specified fees and such other conditions as prescribed by the
Institute.
2. QUALIFYING ASSESSMENT TEST (QAT)

(1) Syllabus, mode and standard-setting
(i) The learning outcomes of QAT are attached as Annexure –A.

(ii) The changes and revisions in the syllabus of QAT shall be done in accordance with the
policies specified by the Council in Directive 1.01.
(iii) QAT shall be a computer-based test unless circumstances require a different mode, which
shall be specified by the Institute.
(iv) The Institute shall have a common online testing system to ensure standardization of test
outcome.
(2) Maximum attempts and validity
(i) The candidates shall have a maximum of three attempts to pass QAT.
(ii) The candidates passing QAT shall enroll for PRC within twelve months from the date of
passing QAT.
(3) Conduct of test
(i) The Institute shall conduct QAT and may also devolve the conduct of QAT to Approved
Testing Centres.

(ii) QAT shall be offered every quarter.

(iii) The conduct of test by Approved Testing Centres shall be under the supervision of the
Institute and through tools and systems provided or approved by the Institute.
(4) Result
The results of QAT shall be announced by the Institute.
3. FEES AND REFUNDS

(1) Fees
The schedule of the fees shall be specified by the Council from time to time.
(2) Refunds
The policies of refund applicable under Directive 1.01 shall be the guiding principles for refund
decision.
4. ASSESSMENT AND TEST

(1) Time and Place of assessment and test
(i) All assessments and tests shall be held at such time and place and in such manner as the
Institute may determine from time to time.
(ii) The time and places shall be notified on the website.
(2) Other Policies
The following matters shall be dealt with in accordance with the policies specified in Directive
1.01:
(i) Use of unfair means
(ii) The passing marks
(iii) Disclosure of marks
(iv) Special arrangements
5. TRANSITION POLICY
The transition for assessees who have not completed the AFC stage before Spring 2022 attempt
shall be as follows:
(i) They shall be given credit in PRC as per the equivalencies specified under Directive 1.01;
(ii) They shall have a maximum period of fifteen months to pass papers of PRC, computed from three
months after the effective date of this scheme.
6. REMOVAL OF DIFFICULTY
As per policies specified in Directive 1.01.
7. EFFECTIVE DATE
This Directive shall become effective from March 1, 2022 subject to gazette notification of the
amendments in the corresponding CA Bye-Laws.

Annexure – A
SYLLABUS FOR QUALIFYING ASSESSMENT TEST
Objective
The objective of the QAT is to evaluate basic proficiency in language and numerical reasoning
among students aspiring for the CA qualification. It will assist in identifying the propensity for
success or failure of students in the CA education.
S. No. Learning Outcomes
1 To have familiarity with a range of vocabulary for higher learning

2 To be able to construct sentences using correct grammar and identify common errors
3 To demonstrate the ability of speed reading and comprehension.
To demonstrate the ability to solve simple and complex numerical problems using
4
basic mathematical knowledge
5 To be able to infer, conclude and decode problems using analytical and logical
reasoning that use numbers, patterns, statements or written paragraphs.
Syllabus
Grid Weightage
Ref.
A English 30-35
B Mathematics 30-35
C Analytical Reasoning 30-35
Total 100
Syllabus
Learning Outcome
Ref.
A English
1 Vocabulary
1.1 Identify the correct meaning of the word and use synonyms or antonyms for the given
words in a sentence using “The Oxford 3000- Seventh Edition” or any other list as the
Institute may provide at any time before the conduct of Examination.
1.2 Construct meaningful sentences using the prescribed word list.
2 Practical use of grammar
2.1 Use of verb, adverb, noun, pronoun, adjective, preposition, conjunction and
interjection in constructing sentences.
2.2 Construct meaningful sentences using commonly used phrases and idioms.
2.3 Use tenses in sentences.
2.4 Use direct speech with the correct punctuations and various reporting verbs.

Syllabus
Learning Outcome
Ref.
2.5 Identify the changes incidental to the transformation of direct speech to indirect
speech and vice versa.
2.6 Change the active voice to passive voice and passive voice to active voice.
2.7 Use capital letter, question mark, exclamation mark, full stop, semi-colon, comma,
colon, apostrophe, quotation marks, brackets, dash, hyphen and ellipsis, where
appropriate.
3 Comprehension
3.1 Comprehend a brief write-up and answer questions based on that write-up.
B Mathematics
1 Numbers
1.1 Use natural numbers, integers, prime numbers, common factors and common
multiples, rational and irrational numbers, real numbers; continue given number
sequences, recognize patterns within and across different sequences and generalize
to simple algebraic statements.
2 Squares
2.1 Calculate squares, square roots, cubes and cube roots of numbers.
3 Decimal fractions and percentages
3.1 Convert decimal fractions into percentages or vice versa.
4 Estimation
4.1 Make estimates of numbers, quantities and lengths.
4.2 Perform approximations to specific numbers of significant figures and decimal places
and round off answers to reasonable accuracy in the context of a given problem.
5 Four Operations
5.1 Use the four operations for calculations with whole numbers, decimal fractions
including correct ordering of operations and use of brackets.
6 Ratio and Proportion
6.1 Use direct or inverse proportion between two variables to determine a ratio or rate.
6.2 Use a given ratio or rate to solve a problem.
7 Percentages
7.1 Solve a problem to determine the percentage.
7.2 Calculate the percentage for the given data.
7.3 Use of percentage to solve a given problem.
8 Graphs
8.1 Identify correct graphs for the given data.
8.2 Identify correct explanation of the graphical presentation of data.

Syllabus
Learning Outcome
Ref.
9 Straight line graphs
9.1 Calculate the gradient of a straight line from the coordinates of two points on it.
9.2 Interpret and obtain the equation of a straight line graph.
9.3 Calculate the length and the coordinates of the midpoint of a line segment from the
coordinates of its end points.
10 Solutions of equations and inequalities
10.1 Solve simple linear equations in one unknown.
10.2 Solve fractional equations with numerical and linear algebraic denominators.
10.3 Solve simultaneous linear equations in two unknowns.
10.4 Solve quadratic equations by factorization.
10.5 Solve simple linear inequalities.
11 Graphical representation of inequalities
11.1 Identify correct graphs to represent linear inequalities in one or two variables.
C Analytical Reasoning
1 Drive conclusions from the given statements.
2 Identify missing numbers from the series.
3 Identify the odd one out from the given problem.
4 Predict the next diagram in a series from the given choices.
5 Use analogies containing numbers or words for the given examples.

SYLLABUS FOR PRE-REQUISITE COMPETENCIES

Proficiency and testing levels are mentioned against each learning outcome within the syllabus and
are explained below:
Proficiency levels
The proficiency level is the description of the pitch of the performance expected from the person
taking action. The levels are as follows:
Level of
Description
Proficiency
Typically, learning outcomes in a competence area focus on:

• Defining, explaining, summarizing, and interpreting the underlying principles and
theories of relevant areas of technical competence to complete tasks while working
under appropriate supervision;
• Performing assigned tasks by using the appropriate professional skills;
• Recognizing the importance of professional values, ethics, and attitudes in
P1 performing assigned tasks;
• Solving simple problems, and referring complex tasks or problems to supervisors or
those with specialized expertise; and
• Providing information and explaining ideas in a clear manner, using oral and written
communications.
Learning outcomes at the foundation level relate to work environments that are
characterized by low levels of ambiguity, complexity and uncertainty.

• Independently applying, comparing, and analysing underlying principles and
theories from relevant areas of technical competence to complete work assignments
and make decisions;
• Combining technical competence and professional skills to complete work
P2 assignments;
• Applying professional values, ethics, and attitudes to work assignments; and
• Presenting information and explaining ideas in a clear manner, using oral and written
communication, to accounting and non-accounting stakeholders.
Learning outcomes at the intermediate level relate to work environments that are
characterized by moderate levels of ambiguity, complexity, and uncertainty.

• Selecting and integrating principles and theories from different areas of technical
competence to manage and lead projects and work assignments, and to make
P3
recommendations appropriate to stakeholder needs;
• Integrating technical competence and professional skills to manage and lead
projects and work assignments;

Level of
Description
Proficiency
• Making judgments on appropriate courses of action drawing on professional

values, ethics, and attitudes;
• Assessing, researching, and resolving complex problems with limited supervision;
• Anticipating, consulting appropriately, and developing solutions to complex
problems and issues; and
• Consistently presenting and explaining relevant information in a persuasive
manner to a wide-range of stakeholders.
Learning outcomes at the advanced level relate to work environments that are
characterized by high levels of ambiguity, complexity, and uncertainty.

Testing Levels
Testing levels are the maximum marks assigned to a topic for examination purposes. The levels are as
follows:
Testing Levels Description

T1 The maximum limit per topic of this level is 8 marks

PRC-1: BUSINESS WRITING AND COMPREHENSION SKILLS

Competency
Draft simple business communications and information.
Syllabus
Grid Hours Weightage
Ref.
A Comprehension 15-20 20-30
B Idea Generation and Arguments 15-20 20-30
C Business Correspondence 30-35 40-60
Total 60-75 100

Learning Outcome
Ref. Level Level
A. Comprehension
1 Apply skimming and scanning reading techniques. P1 T1
2 Summarize a given text. P2 T2
3 List down essential points briefly. P1 T1
B. Idea Generation and Arguments
1 Apply brainstorming and thinking techniques. P1 T1
2 Identify facts, assumptions, and opinions. P1 T2
3 Prepare argument for and against a subject matter. P2 T2
C. Business Correspondence
1 Apply specified vocabulary and phrases. P1 T3
2 Draft business reports, letters, memo and email messages. P2 T3
1 Collect and summarize data and information from a variety of sources and perspectives
2 Apply critical thinking skills to generate ideas
3 Apply intellectual agility
4 Communicate clearly and concisely when reporting in formal and informal situations
1 Use critical thinking in determining appropriate course of action.

1 Mind Maps, Fishbone Diagrams and Affinity Diagrams
2 Vocabulary and phrases specified by the Institute

PRC-2: QUANTITATIVE METHODS

Competency
Apply quantitative methods relevant to the managerial analysis.
Syllabus
Ref.
A Basic Mathematics 12-15 10-20
B Financial Mathematics 15-18 15-25
C Data Analysis 18-24 20-30
D Probability and Probability Distribution 10-15 15-20
E Sampling and Decision making 15-18 20-25
Total 70-90 100

Learning Outcomes
Ref. Level Level
A. Basic Mathematics
Solve two-variable simultaneous equations and quadratic
1 P1 T1
equations.
2 Prepare graphs of linear equation. P1 T1
Apply arithmetic and geometric progression in business
problems to calculate monthly instalments, first instalment,
3 P1 T1
total amount paid and total time required for settlement of
a loan etc.
Formulate a system of linear programming for a business
4 P1 T1
problem.
Identify constraints, feasible region, cost minimization or
5 profit maximization functions, no feasible solution using P1 T1
linear programming.
Prepare a graphical solution of a linear programming
6 P1 T1
problem.
B. Financial Mathematics
Apply simple and compound interest rate on single or series
1 P1 T1
of amounts to find out interest amount and future values.
Apply discount rate on single or series of amounts including
2 P1 T1
perpetuity to find out present values.
3 Calculate the net present value (NPV) of future cash flows. P1 T1
4 Calculate internal rate of return on a project. P1 T1


Learning Outcomes
Ref. Level Level
C. Data Analysis
1 Classify different types of data. P1 T1
2 Explain data collection through various methods. P1 T1
3 Summarize and present data. P1 T1
4 Calculate various measures of central tendency. P1 T1
5 Identify the characteristics and measures of dispersion. P1 T1
Compute the degree of variation or variability in a
6 P1 T1
distribution.
7 Discuss the index number and its types. P1 T1
Calculate index number and discuss the practical application
8 P1 T1
of index no.
9 Construct deflated or inflated series using index numbers. P1 T1
Explain scatter diagrams their construction, uses and
10 P1 T1
limitations.
Explain the concept of regression lines and their uses and
11 P1 T1
limitations.
Calculate a linear regression line (line of best fit) using least
12 P1 T1
squares.
13 Calculate and discuss correlation coefficients, rank
P1 T1
correlation coefficients and determination.
D. Probability and Probability Distribution
Calculate the total number of possible outcomes and
1 P1 T1
selections from a set of data using counting techniques.
2 Discuss and compute probability using different techniques. P1 T1
Discuss and estimate the probability distribution using
3 P1 T1
different techniques.
E. Sampling and Decision making
Explain the term population, sample, sample distribution
1 P1 T1
and sampling distribution.
2 Explain methods for selecting a sample. P1 T1
3 Explain a sampling distribution of the sample means. P1 T1
Calculate the mean and standard error of a sampling
4 P1 T1
distribution of sample and proportion means.
Apply hypothesis test of proportions and difference
5 P1 T1
between proportions.
Apply hypothesis test of population means based on small
6 P1 T1
and large samples.


Learning Outcomes
Ref. Level Level
Apply hypothesis tests of the difference between two
7 P1 T1
population means.
Apply the Chi-square distribution to perform tests of
8 P1 T1
goodness of fit and independence.
1 Evaluate given information through integration and analysis.
2 Apply critical thinking skills to solve problems.
3 Apply intellectual agility.
2 Use critical thinking in determining appropriate course of action.
1 Array, Frequency distribution, Tally, Class boundaries

2 Bar and pie chart
3 Histograms, frequency polygons, Ogives, graphs, stem and leaf displays, Box and
whisker plots
4 Mode, median, arithmetic, geometric and harmonic means
5 Standard deviation
6 Variance
7 Laspeyre, Paasche and Fisher index
8 Scatter diagrams
9 mn counting rule and factorials
10 Permutations and combination
11 Addition and multiplication law for probability
12 Conditional and complementary probabilities
13 Binomial, Hyper-Geometric, Poisson, Normal distribution
14 Normal approximation
15 Random, systematic, stratified, multi-stage, cluster and quota sampling

PRC-3: PRINCIPLES OF ECONOMICS

Competency
Discuss fundamental principles of economics relevant to the managerial analysis.
Syllabus
Ref
A Economic Principles and Micro Economics 25-30 30-45
B Macroeconomics – Basic Concepts 10-15 20-30
C Economic Policies and Trends 25-30 30-45
Total 60-75 100

Contents Level Level
Ref
A Economics Principles and Micro Economics
1 Define basic economic concepts. P1 T1
Discuss the production possibility frontier and its relevance to
2 the concept of opportunity cost for different economic P1 T1
analysis.
Discuss features of planned, mixed, market economy and
3 P1 T1
Islamic economic system.
4 Discuss law of demand. P1 T1
5 Discuss law of supply. P1 T1
6 Discuss market equilibrium and its dynamics. P1 T1
7 Discuss elasticity of demand and supply. P1 T1
8 Describe basic concepts of firm’s costs and revenue. P1 T1
Discuss short and long-run equilibrium of firms under perfect
9 competition, imperfect competition, monopoly, monopolistic P1 T1
competition and oligopoly.
B Macroeconomics – Basic Concepts
Discuss measurement of national income, nominal and real
gross domestic product, gross national product, net national
1 P1 T1
product, personal income and disposable personal income
per capita.
Explain the functions of consumption, saving and
2 P1 T1
investment.
3 Explain multiplier and accelerator principle. P1 T1


Contents Level Level
Ref
Discuss the different phases of the business cycle and the
4 P1 T1
indicators.
C Economic Policy and Trends
1 Discuss nature and objectives of taxation. P1 T1
2 Discuss kinds and objectives of fiscal policy. P1 T1
3 State key features of Pakistan’s prevailing fiscal budget. P1 T1
4 Discuss the concepts associated with money and banking. P1 T1
Define the functions of a central bank and the role of the State
5 P1 T1
Bank of Pakistan.
6 Define monetary policy and its objectives. P1 T1
7 Discuss inflation, its causes, measurement and impact. P1 T1
8 State unemployment and its types. P1 T1
9 Discuss interest rate determination and its trends in Pakistan. P1 T1
10 Discuss the balance of payment and trade and their trends in
P1 T1
Pakistan.
11 Discuss exchange rate determination and its impact on the
P1 T1
balance of payments of a country.
integration and analysis.

1 Properties of Production possibility frontier

2 Demand and supply
3 Buffer Stock
4 Cobweb theory
5 Accounting and economic profit
6 Keynesian theory of consumption
7 Keynesian two-sector economy

8 Keynesian Aggregate Demand and Supply

9 Output gaps
10 Keynes Multiplier and Accelerator principles
11 Keynesian Liquidity preference Model
12 The Quantity theory of money (Irving Fisher)
13 Short-run and long-run Philips Curve
14 J-Curve (Currency devaluation and balance of payments)

PRC-4: INTRODUCTION TO ACCOUNTING

Competency
Account for financial transactions and prepare basic components of financial statements.
Syllabus
Ref.
A Accounting and Book keeping 30-35 40-60
B Financial Statements 20-25 25-35
C Depreciation and Inventories 10-15 15-25
Total 60-75 100

Learning Outcomes
Ref. Level Level
A. Accounting and Book Keeping
1 Describe accounting and book keeping. P1 T1
2 Discuss elements of financial statements. P1 T1
3 Account for financial transactions in books of prime entry, P1 T1
factory ledger and general ledger.
4 Compute and account for adjustments for bad debts and P1 T1
doubtful, accrued expenses and prepayment.
5 Prepare trial balance. P1 T1
6 Prepare bank reconciliation statements and make P1 T1
corrections in books of accounts.
B. Financial Statements
1 Prepare manufacturing account. P1 T2
2 Prepare a statement of comprehensive income. P1 T2
3 Prepare a statement of financial position P1 T2
C. Depreciation and Inventories
1 Calculate cost and net realizable value of inventory. P1 T1
2 Compute depreciation. P1 T1
3 Account for the given amount of depreciation. P1 T1

1 IAS 1 - Presentation of Financial Statements

2 IAS 2 - Inventories
3 IAS 16 - Property, plant and equipment

PRC-5 INTRODUCTION TO BUSINESS

Competency
Discuss fundamentals of business organizations, their operations and finance.
Syllabus
Ref
1 Business Organizations 18-21 25-35
2 Business Operations 24-30 35-50
3 Business Finance 12-15 15-25
4 Business Ethics 06-09 05-10
Total 60-75 100
Syllabus Ref Proficiency Testing

Learning Outcomes
Level Level
A. Business Organizations
1 Discuss business and its long term vision and P1 T1
objectives.
2 Explain the concept of sole proprietorship, P1 T1
partnerships, private, public limited and public
sector companies.
3 Describe key features of general laws that govern P1 T1
partnership and limited companies.
4 Explain businesses of exploration, power supply, P1 T1
manufacturing, trading, service rendering, public
utility, infrastructure development and construction.
B. Business Operations
1 Discuss the role of directors, management and P1 T1
shareholders in the governance of a limited
company.
2 Explain functional, divisional, matrix and virtual P1 T1
organizational structure.
3 Prepare an operational structure of a P1 T1
manufacturing company.
4 Explain the interest of different stakeholders of a P1 T1
limited company.
5 Discuss the fundamentals of recruitment, P1 T1
development, retention of human resource.

Syllabus Ref Proficiency Testing

Learning Outcomes
Level Level
6 Elaborate on the level, role and types of P1 T1
information systems in business organizations.
7 Discuss concepts of branding, marketing and P1 T1
selling.
C. Business Finance
1 Identify various sources of financing available to a P1 T1
limited company along with their advantages and
disadvantages.
2 Apply the concept of financial leverage on business P1 T1
scenarios.
D. Business Ethics
1 Explain the nature of ethics for business decisions. P1 T1
2 Discuss the importance of core values for a business P1 T1
organization.

2 Explain nature of Ethics
1 Companies Act 2017

Section 2 (49, 52, 54)
2 Partnership Act 1932
Section 4

EXEMPTIONS
Directive 1.21
EXEMPTIONS 1
EXEMPTIONS
In exercise of the powers conferred by section 15 of the Chartered Accountants Ordinance, 1961 (CA
Ordinance) read with bye-law 113, 123 and 129A of Chartered Accountants Bye-Laws, 1983 (CA Bye-
Laws) and Directive 1.01, to regulate the grant of exemption to candidates with relevant academic,
university or professional qualification from member bodies of International Federation of
Accountants, the Council approves the following policy.
1. APPLICATION
All persons seeking exemption from any examination shall be required to apply to the Institute
on the specified exemption form along with the prescribed fee.
2. EXEMPTION FROM PRE-REQUISITE COMPETENCIES (PRC)

(1) Persons holding a degree with 14 years of education from any degree-awarding institution
recognized by Higher Education Commission or those holding, Higher Secondary School
Certificate (HSSC), A-Levels or other equivalent qualification shall be eligible to claim
exemption from the following competence areas after fulfilling the criteria specified in sub-
paragraph (2).
(2) Criteria for exemption shall be as follows:
(i) For graduates with 14 years of education:
(a) Minimum 60% marks or equivalent grades in aggregate;
(b) Minimum 75% marks or equivalent grades in the relevant subject(s) from which the
person is seeking exemption; and
(c) The syllabus contents and learning outcomes of the subject match at least 70% with
that of the prescribed syllabus and learning outcomes of the Institute or are of a
more advanced level.
(ii) For persons with HSSC or other equivalent qualification:

(a) Minimum 70% marks or equivalent grades in aggregate;
(b) Minimum 75% marks or equivalent grades in relevant subject(s) from which the
person is seeking exemption; and
that of the prescribed syllabus and learning outcomes of the Institute or are of a
more advanced level.
(iii) For persons with A-Levels:
(a) Minimum two B Grades;
(b) Minimum B Grade in the subject(s) from which the person is seeking exemption;
and
that of the prescribed syllabus and learning outcomes of the Institute or are of more
advanced level.
EXEMPTIONS 2
(iv) Persons with HSSC, A-Levels or other equivalent qualification who have enrolled in PRC
after passing QAT shall not be eligible to obtain any exemption.
3. EXEMPTION FROM CERTIFICATE IN ACCOUNTING AND FINANCE (CAF)

(1) Graduates with 16 year of education
Exemption from CAF, subject to the criteria specified in (2) below, shall be available
as follows:5
(i) Persons who hold a minimum of a four-year relevant degree from ‘Specified
Degree Awarding Institutes (SDAI)’ shall be eligible to claim exemption from all
papers of CAF.
(ii) Persons who hold a minimum of a four-year relevant degree from ‘Relevant
Degree Awarding Institute (RDAI)’ shall be eligible to claim exemption from the
following CAF papers:
CAF-4 Business Law
CAF-7 Company Law
(iii) Persons who hold a minimum of a four-year relevant degree from any other local
or foreign institution recognized by the Higher Education Commission (HEC),
shall be eligible to claim exemption from the following CAF papers.
CAF-4 Business Law
CAF-7 Company Law
(iv) Persons who hold a degree with a minimum of 16 years of education from a
foreign degree awarding institute and having equivalence issued by HEC shall be
eligible to claim exemption from all papers of CAF. Provided the university was
included in the list of Association to Advanced Collegiate Schools of Business
(AACSB) at the time of issuance of degree.
(v) Persons who hold a degree with a minimum of 16 year of education from any
local degree awarding institute having accreditation from the National Business
Education Accreditation Council established by HEC at the time of issuance of
the degree shall be eligible to claim exemption from the following CAF papers:
CAF-4 Business Law
CAF-7 Company Law
Provided that such candidates shall not be eligible to claim exemptions from the
papers of CAF stage, namely:
CAF-2 Tax Practices
EXEMPTIONS 3
(2) Criteria for exemption from CAF shall be as follows:

(i) the syllabus contents and learning outcomes of the subject match at least 70%
with that of the prescribed syllabus and learning outcomes of the Institute or are
of more advanced level; and
(ii) person has secured a minimum of 60% marks or equivalent grades in the subject
from which exemption is sought.
(3) Professional qualification
(i) Persons who have passed all examinations of the professional accountancy bodies
specified below shall be eligible to claim exemption from papers of CAF mentioned
under the name of each such body:
(a) Institute of Cost and Management Accountants of Pakistan (ICMAP)
All papers up to CAF stage
(b) Pakistan Institute of Public Finance Accountants (PIPFA)
CAF-4 Business Law
CAF-7 Company Law
(c) Association of Chartered Certified Accountants (ACCA) of UK
Provided that the exemption from ‘CAF-8 Audit and Assurance’ shall only
be granted to persons who have passed AAA - Advanced Audit and
Assurance.
(d) Chartered Institute of Management Accountants (CIMA) of UK
CAF-4 Business Law
CAF-7 Company Law
(e) Other relevant professional bodies
Exemptions shall be granted on basis of qualification on a case-to-case basis
by the Council.
(ii) A person shall be eligible to claim exemption on the basis of different
qualifications that the person holds.
(iii) The reference to passing of the examination in this paragraph means attempting
and passing the examinations of the relevant qualification and does not include
obtaining an exemption from such examinations. Provided that subject to the
conditions imposed by the Council, this clause shall not apply to candidates who
have gained the qualification of the Institute of Cost and Management
Accountants of Pakistan (ICMAP) and Pakistan Institute of Public Finance
EXEMPTIONS 4
Accountants (PIPFA) after obtaining some exemptions from examinations of the

said professional bodies.
4. EXEMPTION FROM HANDS-ON COURSES (HOC)

(1) Exemption from Hands-on Courses shall be granted subject to the following condition:
(i) Criteria for exemption from HOC shall be as follows:
(a) the syllabus contents and learning outcomes of the course match at least 70%
with that of the prescribed syllabus of the Institute or are of more advanced level;
(b) person has secured a minimum of 60% marks or equivalent grades in the course;
and
(ii) for courses on technology, a person has passed the course no earlier than three years
from the date of application for exemption.
(iii) Additionally, the following shall be exempt from PPE:
(a) A person who has commenced training on or before the effective date of this
directive;
(b) Four-year degree holders from any recognized university;
(c) Candidates holding equivalence of four-year degree issued by HEC on the basis of
their professional qualification;
(d) Candidates who have completed PCSC – 1; or
(e) Candidate who are enrolled in PCSC under Education and Training Scheme 2013
and successfully complete the same not later than February 28, 2022.
5. No person shall be eligible to claim exemptions from papers of CFAP and MSA.
6. EFFECTIVE DATE
This Directive shall become effective from March 1, 2022 subject to gazette notification of the
amendments in the corresponding CA Bye-Laws.
EXEMPTIONS 5
Directive 1.22
Assessment of Fundamental Competencies

(superseded)
CRITERIA FOR APPROVED COURSE PROVIDERS

(ACP) FOR HANDS-ON COURSES
ON MS OFFICE
Directive 1.23
1
TABLE OF CONTENTS
1 Approval mechanism 3
2 Register of approved course providers 3
3 Requirements for approval 3
4 Course certification 4
5 Oversight by the Institute 5
6 Withdrawal of approval 5
7 Appeal 5
8 Fees and other dues 6
9 Effective date 6
2
CRITERIA FOR APPROVED COURSE PROVIDERS (ACP) FOR HANDS-ON COURSE

ON MS OFFICE
In exercise of the powers conferred by Section 15 of the Chartered Accountants Ordinance, 1961 read
with Bye Law 110 of the Chartered Accountants Bye Laws 1983, the Council of the Institute approved the
following scheme to approve the Course Providers for Hands-on Courses, namely, ‘MS Office’ included in
the Education Scheme 2021.
1. APPROVAL MECHANISM
(1) This directive provides two modes of registration of Course Providers:
(i) Application based registration
(ii) Institute’s unilateral registration
(2) Application based approval

(i) Applicants shall submit an application to the Institute in a prescribed format along with the
prescribed fee and necessary documents to demonstrate that the applicant fulfills the
requirements of approval.
(ii) The Secretary shall issue the recognition letter/certificate to the concerned course provider
and communicate the same to the students/RAETs.
(3) Institute’s unilateral approval

(i) The Directorate of Education and Training may identify and recommend to the Secretary for
recognition of any reputable local/foreign institution offering any of the courses online and in
person covering the syllabus of the course.
(ii) The Secretary shall issue the recognition letter to the concerned course provider and
communicate the same to the students/RAETs.
2. REGISTER OF APPROVED COURSE PROVIDERS

(1) On issuance of the certificate or unilateral recognition, the names of such course providers shall
be entered into a register maintained for the purpose.
(2) The name of course provider may be removed from the register by the Secretary on the
recommendation of Directorate of Education and Training through a formal report and, wherever
practically possible, after giving an opportunity to being heard to the concerned course provider.
3. REQUIREMENTS FOR APPROVAL
(1) Eligibility
The applicant should be a:
(i) Registered Accounting Education Tutor of the Institute; or
(ii) Degree awarding institution recognized by HEC; or
(iii) Certificate awarding institution, registered with a technical board approved by the provincial
or federal government, with three or more years’ experience of providing training of the same
or similar hands-on courses.
3
(2) Mode of Learning

(i) The mode of learning could be:
(a) In person; and/or
(b) E-Learning
 Virtual Instructor Led Training (VILT)
 Self-Paced
(ii) The applicant of in-person Hand-on Courses on MS office shall have:
(a) at a minimum one lab with necessary training staff, equipment and technology with at
least twenty-five computers and internet connectivity.
(b) authorized and licensed application/ software and network settings that satisfies
requirements of course outcomes and competencies.
(iii) The applicant of e-learning mode shall have both online and offline help.
(3) Faculty
Faculty shall have the following profile:
(i) minimum 16 years of education in any discipline; and
(ii) minimum three years of teaching experience with relevant certifications from a reputable
institute in the subject/field.
(iii) The faculty with other qualification may be engaged with the specific approval by ETCOM.
(4) Class
Class size shall not be more than thirty students.
(5) Contact hours

(i) Duration for classroom learning shall be for maximum eight hours per week; and
(ii) The overall course duration shall not be completed in less than three months.
4. COURSE CERTIFICATION
(1) Course Assessment

(i) The applicant shall have defined policy for evaluation Criteria or Basis of grading.
(ii) The Institute may prescribe reporting structure and requirements for maintaining student
record, if deemed necessary.
(2) The ACP shall issue course completion and passing certificate on the format specified by the
Institute only to those candidates who:
(i) have submitted their periodic feedback of the course to the ACP,
(ii) have achieved minimum of 70% grades in the summative assessment,
(iii) have maintained a minimum of 90% attendance in the class,
4
(iv) in case of self-paced e-learning mode, have fulfilled at least 90% of the course requirements,
and
(v) have successfully completed course assessment requirement.

(1) The Representative(s) of the Institute shall carry out planned reviews at each ACP, as and when
required.
(2) The visit shall be for the purpose of assuring whether ACP is in compliance with the requirements
of the courses. The representative(s) shall be allowed to meet the students attending the courses
and to attend any part of the course, if needed.
(3) For virtual instructor led training (VILT) ACP should provide class login to the representative(s) of
the institute.
(4) After each visit or virtual class participation a draft Visit Report shall be shared with the ACP and
ACP shall have 15 days to comment and respond. A final report shall be submitted to the Chairman
ETCOM through Head of Education and Training.
(5) The Directorate will share, for information, the details of all ACPs approved with the Education
and Training Committee in its next immediate meeting.
6. WITHDRAWAL OF APPROVAL
(1) In case of:
(i) non-payment of dues under this Directive; or
(ii) adverse Visit Report,
the Institute may take the actions as per paragraph 6(2):
(2) The actions against the defaulting ACP may be as follows:
(i) withdraw the approval of ACP in default;
(ii) suspend approval for a specified period and direct the ACP in default to comply with the
requirement within a specified period;
(3) In case of withdrawal and/or suspension, further intake for HOCs shall not be allowed.
7. APPEAL
(1) An applicant or an ACP aggrieved by the decision of Institute may prefer an appeal to the Council,
within 30 days of receiving the decision.
(2) The Council may, as the case be, after considering the facts, revert, amend or uphold the previous
decision.
(3) The ACP shall continue offering the Course till the decision of the Council on its appeal is
communicated to ACP.
5

(1) The following fee shall be charged:
Particular Rupees
Approval fee shall be paid along with the application 75,000
Annual fee in respect of each calendar year shall be payable in advance 50,000
by January 31 of that calendar year.
(2) The proprietor and partners/directors of an ACP shall be jointly and severally responsible for the
payment of fee and other dues within the time specified under this scheme.
9. EFFECTIVE DATE
This notification shall become effective on June 15, 2022.
6
CRITERIA FOR APPROVED COURSE PROVIDERS

(ACP) FOR HANDS-ON COURSES
ON PRESENTATION AND PERSONAL
EFFECTIVENESS
Directive 1.24
1
TABLE OF CONTENTS
1 Application for approval 3
3 Process of approval 4
7 Appeal 5
9 Effective date 6
2
CRITERIA FOR APPROVED COURSE PROVIDERS (ACP) FOR HANDS-ON COURSES

ON PRESENTATION AND PERSONAL EFFECTIVENESS
with Bye Law 110 of the Chartered Accountants Bye Laws 1983, the Council of the Institute has approved
the following scheme to approve the Course Providers for Hands-on Courses, namely, Presentation and
Personal Effectiveness included in the Education Scheme of the Institute:
1. APPLICATION FOR APPROVAL

(1) Application based approval
(i) Applicants that intend to be recognized as Approved Course Providers of the Hands-on
Courses shall submit an application in a prescribed format along with the prescribed fee.
(ii) The applicant shall submit details along with the necessary documents to demonstrate that it
fulfills the requirements of approval.

(1) Eligibility
(iii) Certificate awarding institution with three or more years’ experience of providing training of
the same or similar hands-on courses. Institution with lesser experience may also apply but
their case will be subject to specific approval by ETCOM.
(2) Facilities and faculty
(i) The mode of learning shall be in person, except where allowed, as specified in the syllabi.
(ii) The applicant shall have:
(a) class size not more than thirty students.
(b) appropriate infrastructure
(iii) Faculty shall have the following profile:
(a) Minimum 16 years of education in any discipline; and
(b) Minimum three years of teaching experience with relevant certifications from a
reputable institute in the subject/field.
(c) The faculty with other qualification may be engaged with the specific approval by
ETCOM.
(3) Academic liaison:
An applicant shall nominate a Course or Academic Coordinator for liaison with the Institute.
3
(4) Course planning and other requirements

Course planning
The course planning enables the faculty to efficiently utilize the allocated time for desired learning
outcome and it also provides assurance to student and the Institute about the comprehensive
coverage of the course. Such planning shall include:
(i) Documented lecture outlines including activities planned for each lecture.
(ii) Documented policies for conduct of course including schedule announcement, transfer,
refund and other relevant concerns.
(iii) Reading material and other learning resources relevant to planned lectures available and
accessible to students.
Other requirements
(i) Student-teacher contact must not be:
(a) more than eight hours per week.
(b) spread out on less than 3 months.
(ii) The ACP shall ensure that each student makes presentations of at least 20 minutes during the
course, each presentation not exceeding 5 minutes and share the recordings with the Institute
on the written request from the Institute.
3. PROCESS OF APPROVAL
(1) The application with required working papers as specified shall be accompanied by a ‘Reasonable
Assurance Report issued under the ‘International Standards on Assurance Engagement’ by a
practicing chartered accountant firm that carries satisfactory QCR rating.
(2) In case the assurance report contains a modification, the Institute shall take decision after taking
into consideration the impact of such modification.
(3) Upon successful completion of all the requirements for approval to the satisfaction of the
directorate, a certificate to the effect that the applicant is an ACP shall be issued by the Secretary
of the Institute.
(4) In case the application is rejected, the Directorate shall convey the reasons for rejection in writing
to the applicant.
(5) The applicant may:
(i) re-apply within three months after removing the deficiencies for which no application fee will
be required to be paid; or
(ii) prefer an appeal in accordance with the process specified in this notification in Clause 7.
Course Assessment
(1) The applicant shall have defined policy for evaluation Criteria or Basis of grading.
(2) The Institute shall prescribe reporting structure and requirements for maintaining student record,
if deemed necessary.
4
(3) The ACP shall issue course completion and passing certificate on the format specified by the
Institute only to those candidates who:
(ii) have fulfilled minimum of 50% grades in the summative assessment,
(iii) have maintained a minimum of 90% attendance in the class
(iv) have successfully completed course assessment requirement.

(1) The Representative(s) of the Institute shall carry out surprise or planned reviews at each ACP, as
and when required.
(2) To help schedule these reviews the ACP shall display the time table of courses on its
website/facebook and share the list of registered students, if practically possible, one week before
the commencement of each session with the Institute.
(3) The visit shall be for the purpose of assuring whether ACP is in compliance with the requirements
of the courses. The representative(s) shall be allowed to meet the students attending the courses
and to attend any part of the course, if needed.
(4) After each visit a draft Visit Report shall be shared with the ACP and ACP shall have 15 days to
comment and respond. A final report shall be submitted to the Chairman ETCOM through Head
of Education and Training.
(5) The Directorate will share, for information, the details of all ACPs approved with the Education
and Training Committee in its next immediate meeting.
(1) In case of:
(iii) In case of withdrawal and/or suspension, further intake for HOCs shall not be allowed.
7. APPEAL
(1) An applicant or an ACP aggrieved by the decision of Institute may prefer an appeal to the Council,
within 30 days of receiving the decision.
(2) The Council may, as the case be, after considering the facts, revert, amend or uphold the previous
decision.
5

Particular Rupees
Annual fee in respect of each calendar year shall be payable in advance 50,000
by January 31 of that calendar year.
(2) The proprietor and partners/directors of an ACP shall be jointly and severally responsible for the
payment of fee and other dues within the time specified under this scheme.
9. EFFECTIVE DATE
6
CRITERIA FOR APPROVED COURSE PROVIDERS (ACP)

FOR HANDS-ON COURSES
ON DATA MANAGEMENT AND ANALYTICS AND
FINTECH
Directive 1.25
1
TABLE OF CONTENTS
1 Application based approval 3
2 Institute’s unilateral approval 3
3 Register of approved course providers 3
5 Process of recognition 5
9 Appeal 6
11 Effective date 6
2
CRITERIA FOR APPROVED COURSE PROVIDERS (ACP) FOR HANDS-ON

COURSES ON “DATA MANAGEMENT AND ANALYTICS” AND “FINTECH”
with Bye Law 110 of the Chartered Accountants Bye Laws 1983, the Council of the Institute has
approved the following scheme for the recognition of independent “Approved Course Providers” of
Hands-on Course namely, ‘Data Management and Analytics” and “Fintech” included in the Education
Scheme 2021.
This directive provides two modes of registration of Course Providers:
1) Application based registration
2) Institute’s unilateral registration
1. Application based approval

(1) Applicants shall submit an application in a prescribed format along with the prescribed fee.
(2) The application shall include necessary documents to demonstrate that the applicant fulfils
the requirements of approval.
(3) The Secretary shall issue the recognition letter/certificate to the concerned course provider
and communicate the same to the students/RAETs.
2. Institute’s unilateral approval

(1) The Directorate of Education and Training may identify and recommend to the Secretary for
recognition of any reputable local/foreign institution offering any of the courses online and in
person covering the syllabus of the Courses.
(2) The Directorate of Education and Training and Secretary shall follow the requirements and
other rules given in this Directive as guiding principles while granting such unilateral
recognition.
(3) The Secretary shall issue the recognition letter to the concerned course provider and
communicate the same to the students/RAETs.
3. Register of Approved Course Providers
(1) On issuance of the certificate or unilateral recognition, the names of such course providers
shall be entered into a register maintained for the purpose.
(2) The name of course provider may be removed from the register by the Secretary on the
recommendation of Directorate of Education and Training through a formal report and after
giving an opportunity to being heard to the concerned course provider.

(1) Eligibility
(iii) Certificate awarding institution with three or more years’ experience of providing training
of the same or similar hands-on courses. Institution with lesser experience may also apply
but their case will be subject to specific approval by ETCOM.
3
(2) Mode of learning

(i) The mode of learning could be:
(a) In person; and/or
(b) E-Learning
 Virtual Instructor Led Training (VILT)
 Self-Paced
(3) Facilities and faculty
(i) The applicant of in-person Hand-on Courses on technology shall have:
(a) a minimum one lab with necessary training staff, equipment and technology with at
least twenty-five computers and internet connectivity.
(b) authorized and licensed application/ software and network settings that satisfies
requirements of course outcomes and competencies.
(ii) The applicant of Virtual Instructor Led Training (VILT) shall have:
(a) authorized and licensed application/software and network settings
(b) appropriate technological infrastructure, including classroom meetings
(c) both online and offline help
(iii) The applicant of Self-Paced mode shall have:
(a) authorized and licensed application/software and network settings
(b) appropriate Learning Management System
(c) both online and offline help
(4) Class and Faculty
Faculty
(i) Faculty shall have the following profile:
(a) minimum 16 years of education in any discipline; and
(b) minimum three years of teaching experience with relevant certifications from a
reputable institute in the subject/field.
(c) The faculty with other qualification may be engaged with the specific approval by
ETCOM.
Class
(i) Class size shall not be more than thirty students.
(5) Academic liaison
An applicant shall nominate a Course or Academic Coordinator for liaison with the Institute.
(6) Course planning and Documented policies
The course planning enables the faculty to efficiently utilize the allocated time for desired
learning outcome and it also provides assurance to trainee and the Institute about the
comprehensive coverage of the course. Such course planning shall include:
(i) Documented lecture outlines including activities planned for each lecture distributed
weekly.
4
(ii) Reading material and other learning resources relevant to planned lectures available and
accessible to students.
(iii) Documented policies for conduct of course including schedule announcement, transfer,
refund and other relevant concerns.
(iv) Student-teacher contact must not be:
- more than eight hours per week; and
- spread out on less than 3 months.
5. PROCESS OF RECOGNITION
(1) The application with required documents as specified shall be accompanied by a ‘Reasonable
Assurance Report issued under the ‘International Standards on Assurance Engagement’ by a
practicing chartered accountant firm that carries satisfactory QCR rating.
(2) In case the assurance report contains a modification, the Institute shall take decision after
(3) Upon successful completion of all the requirements for approval to the satisfaction of the
directorate, a certificate to the effect that the applicant is an ACP shall be issued by the
Secretary of the Institute.
(4) In case the application is rejected, the Directorate shall convey the reasons for rejection in
writing to the applicant. The applicant may:
(i) re-apply within three months after removing the deficiencies for which no application fee
will be required to be paid; or
(ii) Prefer an appeal in accordance with the process specified in this notification in Clause 8.
(1) Course Assessment
(i) The Institute shall conduct its own assessment on completion of the course as specified
in Annexure A of the Directive 1.01.
(2) Course Completion certificate
The ACP shall issue course completion certificate on the format specified by the Institute only
to those candidates who:
(ii) have achieved minimum of 90% course requirements for in-person sessions or self-paced
e-learning mode,
(iii) have maintained a minimum of 90% attendance in the class.
7. OVERIGHT BY THE INSTITUTE

(1) The Representative(s) of the Institute shall carry out surprise or planned reviews at each ACP,
as and when required, but atleast once in each session.
(2) To help schedule these reviews by the representative(s) of the Institute, the ACP shall display
the time table of courses on its website and share the list of registered students, within, one
week of the commencement of each session with the Institute.
5
(3) The visit shall be for the purpose of assuring whether ACP is in compliance with the
requirements of the courses. The representative(s) shall be allowed to meet the students
attending the courses and to attend any part of the course, if needed.
(4) After each visit a draft Visit Report shall be shared with the ACP and ACP shall have 15 days to
comment and respond. A final report shall be submitted to the Secretary through Head of
Education and Training.
(5) The Directorate will share, for information, the details of all ACPs visits with the Education and
Training Committee on a quarterly basis.
(1) In case of:
(3) In case of withdrawal and/or suspension, further intake for HOCs shall not be allowed.
9. APPEAL
(1) An applicant or an ACP aggrieved by the decision of Institute may prefer an appeal to the
Council, within 30 days of receiving the decision.
(2) The Council may, as the case be, after considering the facts, revert, amend or uphold the
previous decision.
10.FEE AND OTHER DUES

Particular Rupees
Annual fee shall be due on July 1 each year in advance and shall be 50,000
paid with 45 days from the due date
The proprietor and partners/directors of an ACP shall be jointly and severally responsible for
the payment of fee and other dues within the time specified under this scheme.
11.EFFECTIVE DATE
6
MEMBERS' HANDBOOK
PART IV
THE INSTITUTE OF
SECTIONAL INDEX
CONTENTS
2.01 Foreign training and examination (Whole) Revised 2008
2.02 Foreign training and examination (Part)
2.03 Residence in Pakistan a pre-requisite(withdrawn)

*
2.01
(Revised 2008)
FOREIGN TRAINING AND EXAMINATION (WHOLE)
“UK and other Institutes: The Council resolved that a person who has passed all
the requisite examinations and has completed prescribed training and is eligible to
be admitted as a member or is a member of any of the fo llowing Institutes, will be
treated as having passed equivalent examinations and fulfilled the training
requirements prescribed under the C.A. Bye- laws, 1983 for the purpose of
membership of the Institute of Chartered Accountants of Pakistan:
1. The Institute of Chartered Accountants in England & Wales
2. The Institute of Chartered Accountants in Ireland
3. The Institute of Chartered Accountants of Scotland
4. The Institute of Chartered Accountants in Australia
5. The Canadian Institute of Chartered Accountants

Provided that if such members desire to start practice as Chartered
Accountants, they will have to pass the papers of “Advanced Taxation” and
“Corporate Laws” of the Final examination and also undergo training with a
firm in practice in Pakistan for one year if their training did not involve at least
50% training with a firm enterprise in practice.”
This directive was approved by the Council in its meeting held on July 16, 1997.
The Council in its 125th meeting held on January 07, 1998 took a decision on the
matter deferred from the meeting of July 16, 1997 that for the time being no
recognition can be given to the training of the Institute of Chartered Accountants of
India.
(This directive supersedes earlier Directive 2.01 pursuant to 19th meeting of the
Council held on December 11, 1967, 126th meeting of the Council held on April
14, 1998 and 187th meeting of the Council held on January 26, 2007)
(198th meeting of the Council August 25-26, 2008)
* This Directive prescribes the institutes for the purposes of Bye Law 109. For revised conditions refer to new Bye-Law
109.
2. 02
FOREIGN TRAINING AND EXAMINATION (PART)
ACCA and CIMA
The Council decided that:
a. Candidates / students who have successfully completed all examinations of
ACCA / CIMA on or after June 1, 2002 and apply for exemption and
registration to ICAP would be exempted from the under mentioned
examinations only:
(i) Pre-entry Proficiency
(ii) Foundation and Intermediate
b. The Council also decided in respect of ACCA/CIMA qualified students
registered with ICAP upto May 31, 2002, to extend the following facility to
the said students:
(i) ACCA/CIMA qualified candidates who were granted exemptions from
certain papers of Professional examinations upto May 31, 2002 shall be required to
sit for a Specified paper of Advanced Accounting and Financial Reporting;
Management Accounting; Business Finance Decision at Module F examination
with effect from June 2003 Examination Session. The said paper shall be in
addition to other than the exempted papers of Module F required to be taken by
them. The syllabus of specified paper will be as prescribed and shall be subject to
changes as applicable to ICAP students. In particular the following may be noted:
Questions will not be set on new legislation, standards, guidelines,
statements and exposure drafts at any examination held within the six
months of the publication thereof. Six months are to be counted from the
date of publication of International Accounting Standard / Exposure
Draft by ICAP.
Notifications and circulars in respect of Finance Act / Ordinance, issued
within a period of less than six months from the examination date will not
be tested. However, the Finance Act / Ordinance would be examined
from the attempt following its date of enforcement.
(ii) The procedure described in paragraph b (i) above shall be valid upto
December 2005 Examination Session whereafter the facility offered shall
stand automatically withdrawn.
(156th Meeting of the Council - April 5, 2003)

2. 02
ICAEW and AICPA:
(i) The exemptions currently available for candidates who had completed
the PE-1 examination of The Institute of Chartered Accountants in
England and Wales (ICAEW) be withdrawn as the said examination had
been discontinued at ICAEW.
(ii) Cases of exemptions to AICPA qualified candidates be dealt with on a

case to case basis as different states in the US follow different policies.
(155th Meeting of the Council - February 1, 2003)
Bangladesh Institute: “The Council decided that such students who had
completed their service as an audit/articled clerk before December 16, 1971 and
passed equivalent examination in Bangladesh subsequently be considered for
exemption from the examination of the Pakistan Institute in the relevant Part or
Parts on case to case basis and after getting confirmation of result from the Institute
of Bangladesh as is the practice for other recognized Institutes”.
(71st meeting of the Council - December 21, 1983)
UK Institute:
i. Students who completed training and passed Intermediate Examination
from the UK Institute should be exempted from Intermediate
Examination.
ii. Students having completed training and passed Foundation / Intermediate
and Professional Examination I (PE I) Part I should be exempted from
Intermediate and paper II and IV of Final Group II.
iii. Students availing exemptions in Final Group II will not be entitled to

referral concession and they will be allowed only three successive
attempts to clear the remaining subject failing which they will be required to
appear in all the subjects of Final Group II".
(64th meeting of the Council - December 24, 1981

SECTIONAL INDEX
3. FEES AND SUBSCRIPTIONS
CONTENTS
3.01 Schedule of various fees
3.02 Retired members to pay fee at Concessional rates (Withdrawn)
3.03 Payment of Fee by Members (Revised-2018)

Concession in Fee for Those Members Who Have No Source
3.04 of Income (Revised-2019)
Directive 3.01
SCHEDULE OF VARIOUS FEES
(Effective from 1st July 2022)
MEMBERSHIP FEES: Pak Rupees
ADMISSION FEE:
Associate (ACA) 500
Fellow (FCA) 1200
Restoration Fee ACA 6000
Restoration Fee FCA 6000
ANNUAL FEE:
Associate - (ACA) 22,000
Fellow - (FCA) 31,900
Life Membership fee 3,000
Foreign Affiliation 78,400
ANNUAL PRACTICE FEE:

Associate (ACA) 22,000
Fellow (FCA) 31,900
MISCELLANEOUS:
Technical Credentials Verification – Normal (7 working days) 1,300
Technical Credentials Verification – urgent (3 working days) 2600
Duplicate Membership Certificate 5000
Duplicate Membership Card/ITAG 400
Dispatch charges for documents outside Pakistan through courier 6000
Overseas (in case of International Bank Draft except USD) 1,900
Directive 3.01
Pak Rupees
Fee Description
REGSITRATION FEES
Registration as Training on Probation 24,300
Full Time Students Registration Fee 18,700
Transfer Fee for Trainee Student 17,000
Course for trainee student (PVEA) 1,070
Bonafied Trainee/FTS Certificate 540
Duplicate Card/Examinee Card 320
AFFILATES
Registration Fees 2,150
Annual Fee 5,350
Readmission Fee 2,150
Professional Values, Ethics and Attitudes Course Fee 1,070
Registration and Annual Renewal fee for RAETs and APPs

RAET Application Fee 6,400
Induction of New RAET 171,800
Annual Renewal Fees – Category A - First Campus 114,500
Annual Renewal Fees – Category B - First Campus 57,200
APP Annual Fee 23,000
REAT Annual Renewal Fee – Additional Campus
- Main Cities 57,200
- Other Cities 23,100
Registration Fee for Training Organizations

Training Organization Inside Practice (TOIP) Fee 44,600
Training Organizations Outside Practice (TOOP) Fee 171,700
Opening of New Training Office 17,100
Directive 3.01
EXAMINATION FEES
Registration Fee
Registration as Student only 5, 500
Registration as Training on Probation 19, 000
Revised Examination Fee for 2022-23
W. E. F. Autumn 2022
CFAP Examination
PKR
1 Paper of CFAP 10, 200
For each additional paper 4, 000
Multi Subject Assessment (one paper only) 14, 500
Multi Subject Assessment (Two papers) 22, 000
CAF Examinations
1 Paper 5, 000
PRC Assessment
1 Paper 5, 300
Annual Subscription Fee 2, 200

Directive 3.01

Pak Rupees
EXEMPTION FEE:
(PRC) – Per Paper 4,300
Certificate in Accounting and Finance (CAF) – Per Paper 5,200
Certificate Finance & Accounting Professional (CFAP) – Per Paper 8,000
Multi Subject Assessment (Two papers) 20,500
EXEMPTION FEE FOR PROFESSIONAL QUALIFICATION

For PIPFA qualified candidates 10,400
For ICAEW/ICAI/ICAS/CAANZ/CPA Canada qualified candidates 113,100
For ICMAP qualified candidates 41,600
For CIMA qualified candidates 31,200
For ACCA qualified candidates
Exemption from three papers 15,600
Exemption from four papers 20,800
DUPLICATE DOCUMENTS:
Duplicate Examination Certificate 4,500
Duplicate Registration Card 350
OTHER SERVICES
Transcript 700
Attested Syllabus 1,200
Dispatching charges of documents to outside Pakistan through courier (for upto 0.5 kg) 7,500
Review of Answer Script/Result (per paper) 1,700
Attestation of Certificates/Result Cards/Exemption Letter/Transcript (each copy) 130
Letter of equivalence/Examinee Registration Confirmation Letter/other letters 500
Medium of instruction letter 550
Any correction of name in passing letter/grade sheet on request 1,300
Lletters
Letter to embassy (per letter) 500
Examinee Assesment Scheme-(CFAP & MSA Per Paper) 9,000
Bonafide Trainee/FTS Student Certificate 540
CAF equivalence certificate 3,000
Examinee Assessment Scheme- CAF (Per Paper) 6,600
Directive 3.01
GROUP LIFE INSURANCE “FOR EXISTING MEMBERS (WHO WERE ENROLLED IN 2021-2022
POLICY):”
GROUP LIFE INSURANCE “FOR NEW MEMBERS (WHO WERE NOT ENROLLED IN 2021-2022
POLICY):”
Directive 3.01
 Existing Members (Who were enrolled in 2021-2022 policy): All Pre-existing Maternity
Conditions shall be covered under Maternity Care benefits limits respectively
 New Members (Who were not enrolled in 2021-2022 policy): Nine (9) Months waiting period
shall be applicable on all Pre-Existing Maternity Conditions
 Room entitlement: Air Conditioned Private Room.
 Parents of the members will be covered subject to participation of member.
 Coverage available to members/spouses for “Basic Hospitalization” up to 80 years and
“Major Medical Care” up to 65 years of age.
 Coverage available to parents for “Basic Hospitalization” up to 85 years and “Major
Medical Care” up to 64 years of age.
 The insurance cover wouldn't be effective unless the member/family gets the insurance card,
payment of insurance premium doesn't guarantee the coverage of insurance.
 In-case of COVID-19, insurer is covering hospitalization and positive test only
 Change in category will not be allowed during the policy year
 Full year premium will be charged for all addition/deletion during the policy year
 In case of child birth, baby needs to be added from his/her date of birth. Baby addition request
should be shared within 60 days of birth
ICAP RENTAL CHARGES: KHI ISB LHR
Auditorium Rent (For 4 Hours) 50,000 50,000 50,000
Auditorium Rent (for each additional hour) 10,000 10,000 10,000
New Building 2nd Floor Hall with AC (Full day) 40,000 30,000 30,000
New Building 2nd Floor Hall without AC (Full day) 25,000 20,000 20,000
Class Room with AC 10,000 - -
Class Room without AC 6,000 - -

Directive 3.03
(Revised – 2018)
PAYMENT OF FEE BY MEMBERS
In pursuant to Section 6(2) and 15(2)(g) of the Chartered Accountants Ordinance, 1961 read with
Bye-Law 10 of the Chartered Accountants Bye-Laws, 1983, the Council of the Institute decided to
issue this Directive for compliance by the members.
It is observed that every year in June, the Institute starts approaching its members for payment of
fee for the upcoming financial year. Majority of members respond to the reminder calls and pay their
outstanding dues, however every year there are some members (including practicing members) who
pay their fee after a lapse of considerable time despite repeated reminders and follow up by the
Institute.
The Council of the Institute has considered the matter and decided to prescribe the following
requirement for payment of fee:
1. All members are required to pay their annual membership fee by the last day of August every year.
Non-payment of membership fee by members will result in removal of their names under section
19(1)(c) of the Chartered Accountants Ordinance, 1961 from the register of members with effect
from the first day of September and accordingly they will not be entitled to practice as or to use the
designation of “Chartered Accountant” with their names.
2. Before removal of names as above, appropriate communication may be published in August

Newsletter clearly communicating the consequences that non-payment of annual membership fee
would result in removal of name from the members’ register.
Furthermore, the membership numbers of members who have not paid the fee by August 25 should
be placed on the ICAP’s website in the members’ secured area on the same date and the link to this
information should be placed at a prominent place on the website.
The Council has advised the Secretariat to devise effective and efficient follow up mechanism in
order to facilitate members in payment of their dues.
(Approved by the Council in its 300th meeting held on July 28, 2018)
________________________________________________________________________________________________________
The Directive No. 3.03 (Revised-2018) before this revision reads as under:
Directive 3.03
PAYMENT OF FEE BY MEMBERS
In pursuant to Section 6(2) and 15(2)(g) of the Chartered Accountants Ordinance, 1961 read with Bye-Law 10 of
the Chartered Accountants Bye-Laws, 1983, the Council of the Institute decided to issue this Directive for
compliance by the members.
It is observed that every year in June, the Institute starts approaching its members for payment of fee for the
upcoming financial year. Majority of members respond to our call and pay their outstanding dues, however some
members (including practicing members) every year pay their fee after a lapse of considerable period of time despite
repeated reminders and follow up by the Institute.
The Council of the Institute has considered the matter and decided to prescribe the following requirement for
payment of fee:
1. All members are required to pay their annual membership fee by the last day of August every year. Non-
payment of membership fee by members will result in removal of their names under section 19(1)(c) of the
Chartered Accountants Ordinance, 1961 from the register of members with effect from the first day of
September and accordingly they will not be entitled to practice as or to use the designation of “Chartered
Accountant” with their names.
2. Before removal of names as above, the registration numbers of all such members who have not paid their
annual membership fee will be published in the ICAP Newsletter and placed on it’s website.
The Council has advised the Secretariat to devise effective and efficient follow up mechanism in order to facilitate
members in payment of their dues.
(Approved by the Council in its 264th meeting held on May 8-9, 2015)
Directive 3.04
(Revised 2019)
CONCESSION IN ANNUAL MEMBERSHIP FEES FOR MEMBERS EXPERIENCING

SEVERE PERSONAL HARDSHIP OR BEING UN-EMPLOYED FOR MORE THAN
ONE YEAR
In exercise of the powers conferred by Section 27(2)(kk) of the Chartered Accountants Ordinance,
1961 read with Bye-Law 129A and provisos (iv) and (vi) of Bye-Law 10(1) of the Chartered
Accountants Bye-Laws, 1983, the Council of the Institute has approved this Directive to provide the
procedure required to be followed by such members who intend to take benefit of proviso (iv) or
(vi) of Bye- Law 10(1) of the Chartered Accountants Bye-Laws, 1983.
A member who intends to obtain concession in the annual membership fee as per proviso (iv) or
(vi) of the Bye Law 10(1) of the Chartered Accountants Bye-Laws, 1983, must submit an
undertaking on the prescribed form, not later than 30 days, before the start of each financial year.
Concession in annual membership fees under proviso (iv) of the Bye Law 10(1) of the
Chartered Accountants Bye-Laws, 1983 (i.e. cases where the member is experiencing
severe personal hardship)
The undertaking, as stated above, would contain the date from which the member has been
facing severe personal hardship along with brief details of the nature of the last job. The
undertaking should be accompanied by a statement of annual earnings and expenses,
number of dependents of the member and the reasons for such hardship. The reasons for
the hardship may include, but are not limited to;
(i) inability to find employment due to migration to a foreign country,

(ii) financial instability due to prolonged illness,
(iii) permanent or temporary incapacity to work full-time,
(iv) inability to work for a period due to special circumstances.
A concession under this proviso would be to the extent of fifty percent of the annual
membership fees due.
Concession in annual membership fees under proviso (vi) of the Bye Law 10(1) of the
Chartered Accountants Bye-Laws, 1983 (i.e. cases where the member remains un-
employed for more than one year and is not engaged in any part-time remunerated
activity)
The undertaking, as stated above, would contain the date from which the member has been
unemployed along with brief details of the nature of the last job.
A concession under this proviso would be to the extent of seventy-five percent of the
annual membership fees due.
The member applying for concession under any of the above-mentioned provisos will inform the
Institute within 30 days from the date of ending of the period of hardship or getting re-employed or
getting engaged in any part/full time remunerated activity, as the case may be.
In all cases, a pro-rata fee will be charged from the member for the relevant year in which he/she is
no more experiencing personal hardship or has gained a full-time or a part-time employment, as the
case may be.
This Directive of the Council is applicable for annual membership fees falling due after July 1, 2019
and onwards.
[Approved by the Council in its 309th Meeting held on January 25-26, 2019]
________________________________________________________________________________________________________
Directive 3.04
CONCESSION IN FEE FOR THOSE MEMBERS WHO HAVE NO SOURCE OF INCOME
In exercise of the powers conferred by Section 27(2)(kk) of the Chartered Accountants Ordinance, 1961 read
with Bye-Law 129A and proviso (vi) of Bye-Law 10(1) of the Chartered Accountants Bye- Laws, 1983, the
Council of the Institute has approved this Directive to provide the procedure required to be followed by such
members who intend to take benefit of proviso (vi) of Bye-Law 10(1) of the Chartered Accountants Bye-
Laws, 1983.
A member who intends to obtain concession in the annual membership fee as per clause (vi) of the
Bye Law 10(1) of the Chartered Accountants Bye-Laws, 1983, must submit an undertaking not later than 30
days before the start of each financial year stating the date from which the member has been unemployed
along with brief detail of the nature of the last job.
That the member will inform the Institute within 30 days from the date of getting re-employed or getting
engaged in any part/full time remunerated activity, as the case may be. In such a case, prorata
fee will be charged from the member for the relevant year in which he/she has gained employment.
This Directive of the Council is applicable for annual membership fees due with effect from July 1, 2016 and
onwards.
[Approved by the Council in its 274th Meeting held on May 3-4, 2016]
MEMBERS' HANDBOOK
PART IV
4. PRACTICE ADMINISTRATION AS
CHARTERED ACCOUNTANTS
THE INSTITUTE OF
SECTIONAL INDEX
4. PRACTICE ADMINISTRATION AS CHARTERED

ACCOUNTANTS
CONTENTS
4.0 Practice Administration as CAs

4.01 Association with different firms
4.02 Offices to be manned by Chartered Accountants
4.03 Partnership firms to send particulars in the prescribed Proforma
4.04 Status of employee members
4.05 No ban on styling firm against member's name occupying high
Government position
4.06 Styling of firms (Revised-2010)
4.07 Use of designation 'Auditors' by practicing firms prohibited
4.08 Sleeping partners of professional firms not to sign Form ‘C’
4.09 Permission to engage in non-professional work by sleeping partners
while holding practice certificate
4.10 Withdrawn- Other occupation in which Members can engage without
Council’s permission
4.11 Withdrawn- Permission to refer to Association or affiliation with
Foreign Firms on stationery etc. of Practicing Firms
4.12 Attestation of partnership deed for submission to the Institute
4.13 Quality Control Review Programme
4.14 Corporate Governance
4.15 Quality Control Review
4.16 Withdrawn- Directives on exempted services for Auditors of Listed
Companies
4.17 Work from Off-Site and Absence from Office (Revised 2021)
4.18 Procedures of network amongst the firms/ practices registered with

the Institute of Chartered Accountants of Pakistan
4.19 Retention and custody of working papers by Chartered Accountant
firms
4.20 Conducting Non-Statutory Audits/Assignments
4.21 Directive On Standardization Of Letterheads Of Audit Firms
4.22 Engagement Of Chartered Accountants In Practice In Other
Occupations
4.23 Ensuring Audit Quality
4.24 Framework for Regulation and Supervision of Chartered Accountants
to Comply with Anti-Money Laundering & Countering the Financing
of Terrorism (AML & CFT) Requirements
4.25 Audit Practice Review & Support Program (APRSP)
4.26 Licensing Controls under AML / CFT Regulations
4.27 Unique Document Identification Number (UDIN)̀
4.28 Conditions and Process for Issuance, Renewal and Cessation of
Certificate of Practice (CoP)
4.29 Use of Audit Documentation Software
4.01
ASSOCIATION WITH DIFFERENT FIRMS
"The Council did not have an objection to the management of a branch office
of a firm of chartered accountants in another city through an arrangement with
another chartered accountant having his main office in the city provided a
regular partnership deed had been signed. A Certified copy of the partnership
deed is required to be deposited with the Institute".
(7th meeting of the Council - August 30, 1963)
"The Council of the Institute considered the question of association of

members of the Institute with different firms and management of branch
offices and took the following decisions:-
i) It was decided that the same partners of a firm of chartered

accountants should not be permitted to constitute another firm under a
different name.
ii) A member in practice intending to join a partnership may associate

with two firms only including his sole-proprietary concern, if any.
iii) Arrangement by a member with another member for looking after his
branch office should not be allowed. Such an arrangement, if it has to
take place, should be only through a regular partnership deed (under
the Partnership Act), a copy of which will be filed with the Institute.
Any other arrangement will not be accepted.
(16th meeting of the Council - August 22, 1966)
As there appeared to be some doubt regarding the meaning of clause (ii) of

Council's Directive No. 4.01 regarding Association with Different Firms, the
matter was considered by the Council in its 127th meeting held on July 5,
1998 and it was decided to issue the following clarification:-
4.01
A member having a sole proprietary concern can enter into one more
partnership. A member who does not have a sole proprietary concern can
enter into partnership in two firms.
In other word association of a member would not exceed two firms at a time,
whether one is sole proprietary and the other partnership or both are
partnerships.
(127th meeting of the Council - July 05, 1998)

4.02
OFFICES TO BE MANNED BY CHARTERED ACCOUNTANTS
"Attention of the members is invited to bye-law * 114 of the Chartered

Accountants Bye- Laws, 1961 whereby a chartered accountant in practice or a
firm of such chartered accountants having any branch office in Pakistan at the
commencement of the Ordinance is required to place such branch office under
the separate charge of a member of the Institute. A two years' period from the
date of enforcement of the Ordinance and Bye-Laws i.e. 1st July. 1961 was
allowed to regularize the position. The grace period of two years expired on
30th June, 1963".
(c.f. Para 12 of Circular 9 dated April 8, 1963)
"Of late certain cases have come to notice in which practicing members were
found to be not complying with the directives of the Council, which require
members to ensure that their various offices are functioning under charge of a
member of the Institute. A serious view has been taken of this irregularity and
it has been decided that provisions of bye- law *114 of the Chartered
Accountants Bye- Laws, 1961 read with the Council's directives dated 8th
April, 1963 should be specifically brought to the notice of the members.
Members are requested to make note of these important provisions".
(Institute's Circular No. 1/60/CA-74 dated December 20, 1974)
"The Council in its directive dated the 8th April, 1963 had advised that a
Chartered Accountant in practice or a firm of such Chartered Accountants
having any branch office or offices in Pakistan is required to place such office
or offices under the separate charge of a member of the Institute. In further
clarification of this directive the Council has decided that such branch office
or offices of the members will be considered to be in charge of a member of
the Institute only if a member resides physically and permanently at the place
of such branch office or offices.
*
Now see Section 26 of C.A. Ordinance, 1961 as amended.
4.02
"Members in practice having branch offices of their firms are requested to

take a note of the above directive of the 'Council and to regularize the position
by placing their branch office or offices under the charge of a member of the
Institute who should be present physically and permanently at a place where
such office or offices are situated".
(50th meeting of Council - July 31, 1976)
The Council in its directive dated the 8th April, 1963 had directed that a
Chartered Accountant in practice or a firm of such Chartered Accountants
having any branch office or offices in Pakistan is required to place such office
or offices under the separate charge of a member of the Institute. In further
clarification of this directive the Council had decided that such branch office
or offices of the members will be considered to be in charge of a member of
the Institute only if a member resides physically and permanent ly at the place
of such branch office or offices. However in view of the fact that the
Rawalpindi / Islamabad are twin cities and situated in close proximity of each
other, it is not feasible to enforce the above decision. The Council in its
meeting held on July 25, 1990, therefore, decided to exempt the
Rawalpindi/Islamabad offices from the application of Section 26 of the C.A.
Ordinance, 1961. This Council's directive shall be deemed to have complied
with if either of the offices in Rawalpindi/Islamabad are kept in charge of a
member of the Institute if a member resides physically and permanently at
either of the said places.
(94th meeting of the Council - July 25,1990)

4.03
PARTNERSHIP FIRMS TO SEND PARTICULARS IN THE

PRESCRIBED PROFORMA
The Institute maintains separate records of Firms of chartered accountants

functioning as partnership concerns. For this purpose Form 'C' * has been
devised. The form duly completed and signed by all the partners of each firm
are required to be filed with the Institute for record. Any change in the
constitution of the firm as and when takes place, is also required to be
intimated to the Institute in the same form.
(Institute's Circular No. 9 dated April 8, 1963)
Attention of members is also invited to bye- law 7 of the C.A Bye-Laws 1961
making it incumbent upon the members to notify any change in their address
to the Institute promptly. Members are requested to convey to the Institute any
change in their address within one month under all circumstances.
Attention of members practicing in partnership is particularly invited to form

*'C' wherein certain particulars are required to be furnished by them. It is
important that a fresh form duly completed is submitted whenever any change
in partnership takes place and the information must be furnished within one
month of change.
(Institute's Circular No. 1/60/CA-74 dated December 20, 1974)
“For this purpose, all the requirements of this Directive will be considered to
be fulfilled in case changes are notified by the firms to the Institute by using
online web portal developed for this purpose”.
221 Meeting of the Council-November 7, 2010
*
Now Form ‘C’, See Page 107.
4.04
STATUS OF EMPLOYEE MEMBERS
"The Council decided that an associate or a fellow of the Institute who is a
salaried employee of a chartered accountants or a firm of such Chartered
Accountants is to be deemed to be in practice for the limited purpose of
training of the articled clerks. Such members will not to be deemed to be in
practice for other purpose and will not be granted practice certificates under
the Chartered Accountants Bye-Laws. An employee member will, however,
be entitled to train articled clerks provided he fulfils the requirements of
Bye-Laws * 71 and other requirements. In other words he will be deemed to
have completed 3 years continuous practice whilst serving in a firm of
chartered accountants but will be permitted to train articled clerks after
having acquired sufficient number of audits. As determined by the Council
in his individual name or in partnership with a firm of chartered
accountants".
(3rd meeting of the Council - May 9-11, 1962)
Enquiry-(B)
In this connection the following specific queries were received which were
referred to the Ministry of Law for clarification. The queries and advice
received are reproduced below:
Whether-
(a) practicing members can form a limited company for
management consultancy;
(b) practicing members can form an unlimited company for
management consultancy;
(c) non-practicing members can form a limited company for
management consultancy; and
(d) non-practicing members can form an unlimited company for
management consultancy.
*
New Bye-law 102
4.04
"We confirm the presumption that the expression "member of the Institute"
as it occurs in the opening part of schedule ** 'C' to the bye- laws includes the
case of non-practicing member as well. A reference to section 4 of the
Chartered Accountants Ordinance, 1961 will show, that for entry of name in
the register of the Institute practicing in accountancy is not necessary and
this gets added support from bye- laws 5 to 10 as also from the contents of
Schedule 'A' to the Bye-Laws. We will invite attention to column 13 of the
said schedule.
"As far as queries are concerned we think that our earlier advice in this behalf
would not bear repetition. We dispose of the queries with the remarks that
practicing member can form an unlimited company for management
consultancy provided provision of Schedule 'C' to the bye- law are not
contravened and permission of the Council under paragraph 15 of that
Schedule is obtained. As for a formation of a limited company in the case of
practicing members is concerned that will be in violation of Section.* 23 of the
Ordinance. We may add that the attempted distinction in the case of non-
practicing member introduces a fallacy. All that we need say in this regard is
that no sooner non-practicing members will go far management consultancy
they will become practicing members. On this view of the matter therefore we
need not dilate any further and our answer to the queries as framed ma y be
taken in the negative".
(Ministry of Law advice dated May 25, 1967)
*
See part 1 of Schedule 1 of C.A. Ordinance 1961, as amended.
** Section 23 since amended to permit functioning of limited companies for practising as "Management
Consultants".
4.05
NO BAN ON STYLING FIRMS AGAINST MEMBERS' NAMES

OCCUPYING HIGH GOVERNMENT POSITIONS
"A question was considered by the Council whether there was any objection
to styling practic ing firms after members' name who are occupying
Government positions. These firms were established by the respective
members prior to joining the Government. According to the legal advice
obtained there was no bar to continue the firms under the names of such
members."
(49th meeting of Council - December 26, 1975)

4.06
(Revised – 2010)
STYLING OF FIRMS
A. Criteria for Approval of Trade/Firm Name:
1. The Council reaffirms to the effect that trade names of practicing
members shall represent the name of the me mbers in practice in the
case of a sole proprietor or in the name or names of the partners for
a partnership firm.
2. However, in the case of a partnership, a firm may , subject to the
approval of the Council, style itself by adopting the abbreviations of
the first names, the last names or the full names of the partners in a
manner as explained below for the purpose of clarity:
Example: Names of the partners are:
i. Cee Dee
ii. Why Zed
Initials of the first names, or last names or the full names are
permitted for styling the firm in one of the following manners:
(i) C.W. [& Co./ and Co./ & Company/ and Company/ &
Associates/ and Associates]
(ii) D.Z. [& Co./ and Co. / & Company/ and Company/ &
Associates/ and Associates]
(iii) C.D.W.Z. [& Co./ and Co. / & Company/ and Company/
& Associates/ and Associates]
The use of abbreviated names shall only be permitted subject to
the prior approval of the Council on a case to-case basis.
Provided that a firm shall not be allowed to be registered by a
name identical with that by which a firm or a company in existence
is already registered, or by a name which resembles or can be
construed to resemble the brand name or initials by which a firm or
a company is generally known whether in Pakistan or
internationally or so nearly resembles that name or a brand
name or initials so as to be calculated to deceive or misrepresent.
4.06
(Revised – 2010)
However, where the firm or a company in existence is in the
course of being dissolved and signifies its consent in such a
manner as the Institute may require, the new firm or company may
be registered in the name of the firm or the company being
dissolved.
B. Inclusion of the Name of a Foreign Firm in the Name of the
Pakistani Firm:
3. A recognition of an affiliation with a foreign firm may be
permitted to be indicated in the name and style with which the
Pakistani firm is allowed to practice in Pakistan by the Institute in
a manner as referred to in this section B.
4. A Pakistani firm in practice may enter into any one of the
following relationships with a foreign firm:
a) As an integrated firm;
b) as a member firm; or
c) in an other form.
The nature of each relationship as listed above has been explained
for the purpose of this Directive in its appendix A.
5. The manner in which the name of a firm shall be styled to
demonstrate the relationship as stated under paragraph 4 is
explained below.
The initials / full name of the international firm may be included as
a part of the name of the local firm using one of the three options
as set forth:
Example:
Exe Why & Co. ABG / Alpha Beta Gamma
(Pakistani name complying (Initials/name
with this Directive ) of the foreign firm)
4.06
(Revised – 2010)
Option (a)
The name of the firm can therefore be:
Exe Why & Co.- ABG, Chartered Accountants
Option (b)
Abbreviated initials of the foreign firm may be made a part of
the name of the Pakistani firm as follows:
ABG - Exe Why & Co., Chartered Accountants
Option (c)
The full name of the foreign firm may be made a part of the
name of the Pakistani firm as follows:
Alpha Beta Gamma - Exe Why & Co., Chartered Accountants
or
Exe Why & Co. – Alpha Beta Gamma, Chartered Accountants
The insertion of a dash (–) between the two names, in any of
the forms as mentioned above, is not compulsory.
The nature of the relationship between the Pakistani firm and
the foreign firm should be mentioned on the letterheads and
other stationery of the Pakistani firm.
6. The abbreviated initials or full foreign name will only be included
as a part of the name of a Pakistani firm subject to each of the
following conditions, as applicable:
a) A Pakistani firm which has a relationship as referred to
in sub-paragraphs 4 (a) and 4 (b) above shall only be
entitled to style its name in the manner as referred to
under the options in paragraph 5 above.
4.06
(Revised – 2010)
b) The Pakistani firm which is affiliated with a foreign

firm in any of the relationships as mentioned in
paragraph 4 above shall have an exclusive right to
operate in Pakistan on behalf of its affiliate subject to
conditions laid down in this Directive.
c) The term foreign name, as used in this Directive, means
a known name of an international network of firms (a
foreign firm) which is primarily engaged in public
accounting practice and recognised as such within and
outside its own country of domicile.
d) Use of the Pakistani firm’s name under any of the
options shall be subject to approval of the Council on a
case to-case basis.
e) The Council before granting the requisite approval may
obtain confirmation from the foreign firm that it has
given permission to the applicant Pakistani firm for the
sole use of its name in Pakistan.
f) The Pakistani firm shall ensure that all legal formalities,
as required under the laws of Pakistan, for a change in
the name of the firm by addition of the foreign name
are complied with and documentary evidence thereof is
provided to the Institute of Chartered Accountants of
Pakistan (ICAP).
g) The Pakistani firm shall make an application to ICAP
for registration of the revised name in the prescribed
form, alongwith all the required documents and deposit
the requisite fee as prescribed by the Council from time
to time.
h) The Pakistani firm shall file with ICAP a copy of the
affiliation agreement, by whatever name called, or
relevant extracts therefrom, with the foreign firm or
network of firms evidencing the existence and the
nature of the relationship, duly attested by the senior
partner of the Pakistani firm.
i) The Council shall be advised in writing by the Pakistani
firm of any change in the nature of its affiliation with
the foreign firm within a period of one month of the
change taking place.
j) The Pakistani firm, which will have been granted
permission by the Council to use a foreign name in
accordance with the terms as stated above, and all its
partners in Pakistan shall comply with the requirements
of the Chartered Accountants Ordinance, 1961, its bye-
laws, all directives of the Council and Technical
Releases and all the other requirements as prescribed by
the Institute from time to time and shall be subject to
the Quality Control Review and the Investigation and
Disciplinary processes of ICAP.
k) Any partner in the foreign / international network of
firms who is not a member of ICAP shall not be
permitted to hold out as being in practice in Pakistan
until such time that he/ she has complied with the
requirements contained in the Council Directive 2.01
(Revised 2008).
l) Upon revocation of the affiliation agreement(s), by
whatever name called, by and between the Pakistani
firm and the foreign firm or network of firms, it will be
incumbent upon the Pakistani firm to inform ICAP of
such an occurrence within one month thereof
whereupon the permission granted for use of the foreign
name as a part of the local name shall be withdrawn
forthwith.
C. Other matters
7. The following should be considered when styling the name of a firm
or adopting the name of the foreign firm as a part of the Pakistan
firm’s name:
(a) The members should not represent to the public at large

that their firm has partners who in fact are not Chartered
Accountants in practice within the meaning of the
Chartered Accountants Ordinance, 1961.
(b) Inanimate or abstract names partaking of the
designatory character of services to be rendered should
not be allowed in order to avoid disguised attempts at
publicity.
8. The restrictions relating to styling of firms shall not apply in matters
of succession in which case the continuation of the name of the
previous firm, including where the initials or name of a foreign firm
is included, is permissible. However, the inclusion of the name of the
foreign firm shall continue to be subject to the requirements referred
above.
9. The policies stated in this Directive shall also be applicable in
respect of members engaged in the business of management
consultancy.
The existing Directive 4.06 is superseded by this Directive No. 4.06

(Revised – 2010).
(214th meeting of the Council - January 28, 2010)

Appendix to the Council Directive No. 4.06 (Revised - 2010)
Integrated Firm
An integrated firm represents a form of a membership firm wherein in

addition to the requirements for a member firm as referred below, as a result
of an affiliation (by whatever name called) with the foreign firm or network of
firms, the profits / losses of the Pakistan firm are integrated with the financial
results of the foreign firm / network of firms in whatever manner.
Membership Firm
A membership firm is a form of an affiliation where the Pakistan firm forms a

part of the organisation / network of a foreign firm or a network of foreign
firms being a firm / organisation / network recognised to practice as a
professional accounting entity by any country being a member of the
International Federation of Accountants (IFAC), and the Pakistani firm is
identified as a ‘member’ of that firm / organisation / network. The sole
proprietor / partner / partners of the Pakistani firm form a part or a member or
a constituent of that foreign entity.
Others
Any other form of relationships that does not fall within the definition of an
integrated firm or a membership firm.
4.06
(Revised – 2005)
STYLING OF FIRMS
1. Keeping in view the requirements of profession, locally and internationally and the developments in the
status of Pakistani firms in relation to their affiliation with the foreign firms, it has been decide that an
Identification of affiliation with a foreign firm / enterprise may be allowed to be indicated in the name and
style with which the Pakistani firm is allowed to practice in Pakistan by the Institute.
2. A Pakistani firm in practice may enter into anyone of the following relationships with a foreign enterprise /
firm: -
a) An integrated firm;
b) A member firm;
c) Others
The nature of each category as listed above has been explained for the purpose of this Directive in Appendix
"A".
3. For the sake of clarity the relationship under 2 (a) and (b) above, the manner of styling the name has been
explained as under:
The abbreviated initials / full name of the international firm may be i ncluded as a part of the name of the
local firm as under:
Example (a) "Yahya Mehmood & Co. ABG / Alpha Beta Gamma
(Pakistan name complying (Abbreviated
with revised Directive 4.06 ) initials/name of the
foreign firm)
The name shall therefore be:
Yahya Mehmood & Co. - ABG . Chartered Accountants
Example (b)
Abbreviated initials / name of foreign firm may also be placed as under:
ABG - Yahya Mehmood & Co.
Example (c)
Alpha Beta Gamma - Yahya Mehmood & Co.
Nature of relationship should be mentioned on letterheads and other stationery.
4. The abbreviated initials or full foreign name will only be included as a part of name subject to
the following conditions:-
a) Only the Pakistani firms having the relationship under 2(a) and (b) will be entitled to style
their name in this manner;
b) The Pakistani firm having the nature of affiliation as mentioned in clause (a) shall have
Pakistan as it exclusive territory to operate;
c) Use of name will be subject to approval by the Council on a case-to-case basis;
d) Any change in the nature of affiliation will be require to be intimated to the Council within
one month of the change;
e) The term foreign names, as used in this revised D irective, mean a known name of
international; networks of firms (foreign firms) which are primarily engaged in public
accounting practice and recognized as such within and outside their own respective countries;
f) The Institute of Chartered Accountants of Pakistan (ICAP) before granting the requisite
permission may obtain confirmation from the foreign firm that has given permission for the
sole use of its name in Pakistan by the local/Pakistani firm;
g) Pakistani firms which will have been granted permission by ICAP to use a foreign name on
the terms stated above shall comply with other requirements prescribed by the Institute from
time to time;
h) The policy stated herein shall also be applicable in respect of members engaged in
Management Consultancy business;
i) The Pakistani firm shall file a copy of t he Management and Licensing agreement or relevant
extracts there from, duly attested by the local Senior Partner, with the International Firm or
network of firms to establish the nature of relationship;
j) The Pakistani firm shall ensure that all legal for malities, as required under the laws of
Pakistan, for a change in name of the firm by addition of the foreign name are complied
with and documentary evidence thereof provided to ICAP;
k) The Pakistani firm shall make an application in the prescribed form, along with all
documents required to ICAP and deposit the requisite administrative fee as prescribed by
the Council from time to time;
I) The Pakistani firm and all its partners in Pakistan shall f o l l o w the C.A. Ordinance, bye-
laws, all Council Directives and Technical Releases and be subject to the Quality Control
Review and Investigation and Disciplinary process of the ICAP;
m) Non -Members of ICAP who are partners in the International network or firm shall not be
permitted to hold themselves out as being in practice in Pakistan until such time that they
have complied with the Council Directive 2.01 (Revised 1998); and
n) Upon revocation of the agreement(s) by and between local firm and the International
Firm or Network of Firms, it will be incumbent upon the local firm to inform ICAP of
such occurrence, whereupon the permission granted for use of name shall be forthwith
withdrawn.
5. In order to ensure the professional interest of members, the following objectives needed to be
kept in view in the matter of adopting firm' name:
(a) The members should not represent to the public at large that their firm has partners who in
fact are not Chartered Accountants in practice within the meaning of Chartered
Accountants Ordinance, 1961.
(b) Inanimate or abstract na mes partaking of the designatory character of services to be
rendered should not be allowed in order to avoid disguised attempts at publicity.
6. The Council reaffirms to the effect that trade names of practicing members shall be after the name
of the members in practice in the case of a sole proprietor or in the name or names of the partners in
the case of a firm. This restriction shall not apply in the case of a succession in which case the
continuation of the name of the previous firm is permissible and in case of name of international
firm as specified in paragraph 3 above.
7. The Council further decided that the above policy shall also be applicable in respect of members
engaged in Management Consultancy business.
The existing Directive 4.06 and 4.11 are superseded by this Directive No. 4.06 (Revised-2005)
( 171st meeting of the Council – April 29, 2005)
Appendix to Council Directive No. 4.06 ( Revised – 2005)
Integrated Firm
Is the form of membership firm wherein in addition to the requireme nts for m ember firm as referred above, as a
result of an agreement / with the foreign firm / enterprise the profit / losses of Pakistan firm are integrated
with worldwide / foreign enterprise in certain manner.
Membership Firm
Its a form of affiliation wh ere the Pakistan firm forms part of the organization of a foreign firm / enterprise
being a firm / organization recognized to practice as professional accounting firm by any country being the
member of International Federation of Accountants (IFAC), and th e Pakistani firm is identified as "member".
The partners / partner of the Pakistani firm form part / constituent of international enterprise / entity.
Others
Any other form of relationships that does not fall within the definition of a membership / integrated firm.
4.07
USE OF DESIGNATION 'AUDITORS' BY PRACTICING FIRMS

PROHIBITED
"The Council decided that the members should use only CHARTERED
ACCCOUNTANTS(S) as their designation on letter head forms etc. and
should drop the use of word AUDITORS(S) since the words CHARTERED
ACCOUNTANTS(S) ordinarily covered a number of functions including
auditing".
(2nd meeting of Council - January 8-9, 1962)

4.08
SLEEPING PARTNERS OF PROFESSIONAL FIRMS NOT TO SIGN

FORM 'C'
"While considering a question of obtaining signatures on form *'C' by all the

partners of practicing firms it was decided not to require signatures of
sleeping partners on form*'C' provided the partnership agreement of the firm
includes a clause that the interest of the sleeping partners in the firm was
restricted to the sharing of profits to the extent of retiring benefits only. Such
agreement duly signed by all the partners should be filed with the Institute
within six months of the filing of form *'C' in this respect."
(70th meeting of the Council - September 12, 1983)
*
New Form ‘C’
4.09
PERMISSION TO ENGAGE IN NON-PROFESSIONAL WORK BY

SLEEPING PARTNERS WHILE HOLDING PRACTICE
CERTIFICATE
"Considering a request from a member for permission to engage in non-

professional work while holding practice certificate, the Council decided to
accept the request and to approve the basis of grant of such permission in the
future on the following criteria:-
1. 20 years of membership of the Institute; and
2. 15 years association with the same practicing firm either as a

sole proprietor, partner and/or employee".
(61st meeting of Council - December 30, 1980)

4.12
ATTESTATION OF PARTNERSHIP DEED FOR SUBMISSION TO

THE INSTITUTE
The Executive Committee in its meeting held on April 1, 1989 decided that
partnership deed submitted to the Institute by the practicing firms should not
necessarily be attested by the Notary Public as the same is not required under
the C.A Bye-Laws. Members therefore, have the option henceforth to get
partnership deed certified by a Notary public or a member of the Institute
other than the Partners listed in the Deed.
(Meeting of the Executive Committee April 1, 1989)

4.13
QUALITY CONTROL REVIEW PROGRAMME
The Council has decided that firms/ sole proprietorships of practicing

Chartered Accountants should furnish to the Institute a complete list of their
audit clients as of 30th June (within 3 months) each year, and as and when
required, to enable the Professional Standards Compliance Department to
carry out its Quality Control Review (QCR) programme. Ail practicing
members are directed to extend full cooperation to successfully implement the
QCR programme so as to ensure maintenance of the highest standards in
practice.
Attention of members is drawn to Bye- Law 8 (3) of the Chartered

Accountants Bye-Laws, 1983 which states that the validity of the Certificate
(of practice) shall, on payment of the annual fee, and on fulfillment of the
directives of the Council, be extended from time to time …………. Thus,
in order to renew the Certificate of Practice, it is essential for members to
comply with the above requirement.
It was also decided that all firms / sole proprietorship of practicing Chartered
Accountants may include a clause in their letter of engagement to all their
limited liability company clients, stating that the working paper files
pertaining to the client would be subject to Quality Control Review by the
Institute of Chartered Accountants of Pakistan without any reference to the
client.
(135th Meeting of the Council - 6 December, 1999)

4.14
CORPORATE GOVERNANCE
The Council draws attention of members, who hold the position of director or
chief executive officer or chief financial officer or any other position in a
corporate entity, to their responsibility for ensuring good corporate
governance in letter and spirit. This would particularly include establishing
and maintaining a proper system of internal controls, as well as preparation
and presentation of financial statements in conformity with International
Accounting Standards applicable in Pakistan, the requirements of the
Companies Ordinance 1984 and any other relevant corporate legal framework
applicable to the organization in which they are working.
(135th meeting of the Council - 6 December 1999)

4.15
QUALITY CONTROL REVIEW
The Council has reiterated that it is a professional requirement for practicing

Chartered Accountants to submit their audit working paper files for a Quality
Control Review (QCR) by the Institute. Thus practicing members are directed
to only accept audit engagements, if the client gives consent to a QCR.
(142nd Meeting of the Council - 7 April , 2001)

Directive 4.17
(Revised - 2021)
WORK FROM OFF-SITE AND ABSENCE FROM OFFICE
1. The Chartered Accountants Bye-Laws, 1983 and directives of the Council require practicing
members to commit full time to the professional practice from usual place of business subject
to certain directives that allow practicing member to carry out ancillary activities like teaching
and holding of certain political offices. However, the practicing members are not prohibited
from working from home or work from off-site.
2. The term ‘work from off-site’ means working from city or country other than where the usual
place of business of such practicing member is situated. For the purposes of this Directive
usual place of business will always include all offices of the firm (including sole proprietorship),
wherever situated. The term practicing members include sole proprietors and partners of
firm(s).
3. This Directive does not prescribe specific policies for ‘work from home’ or ‘work from off-
site’. Firms shall formulate their own written policies, procedures and protocols in this regard,
which shall be applicable to all employees and practicing members/partners/sole proprietor
of the firm(s).
4. In case of work from off-site, where the practicing member is the sole proprietor or is the sole
partner at the usual place of business/registered address of the firm, adequate arrangements
should be made for supervision of the place of business, including nomination of another
member of the Institute who is either a partner of the firm or is in the employment of the firm
as office incharge, in pursuance of Directive 4.02. The name of such office incharge shall be
intimated to ICAP at least 7 days prior to planned commencement period of work from off-
site.
5. No practicing member shall suspend provision of professional services for more than 90
continuous days or maximum of 180 days in a year (i.e. from July to June), other than for
reasons of inability due to ill health.
6. In case of any persistent medical or other conditions including advanced age which prevents
a practicing member from regularly providing professional services, the Council reserves the
right to reconsider continuity or renewal of Certificate of Practice and may withdraw or deny
renewal of Certificate of Practice, as the case may be.
7. Insufficient business shall not be an acceptable reason for the suspension of professional
services or absence from office.
Conditions for Practicing Members Providing Audit & Assurance Services
8. Audit and assurance services by its very nature require regular active participation of the
practicing member in the whole audit process. However, practicing members providing audit
and assurance services in Pakistan may also work from off-site, other than on permanent basis,
subject to adherence to the written policies, procedures and protocols defined by the firm for
work from off-site and compliance with all applicable laws and regulations.
9. The permanent basis for working from off-site will be deemed where the practicing member
does not practice at usual place of business/registered address in Pakistan for more than 180
days in aggregate, over 2 years period (fiscal years) on a cyclical basis or 60 continuous days in
a year.
10. Where the period of work from off-site is 60 or more continuous days, list of all audit opinions
issued during such period shall be submitted to ICAP within 30 days of the first day in excess
of the initial 60 days period, and thereafter periodically on a monthly basis, up to the date of
return of the member to the usual place of business.
11. All Unique Digital Identification Numbers of the audit reports (UDINs), as and when
implemented by the Institute, shall be self-obtained by the concerned practicing member.
12. It shall be the responsibility of the sole proprietor or the firm of the practicing member opting
to work from off-site and providing audit and assurance services, to invest in suitable
electronic audit tool (i.e. a formalized software designed to undertake and document the audit
and its various steps and procedures as well as effectively monitoring the member’s
engagement throughout the audit process) to enable such practicing member to adequately
demonstrate and document involvement throughout the audit process.
Non-Compliance of this Directive by Any Practicing Member
13. Notwithstanding anything contained to the contrary anywhere else in this Directive or in any
other laws, rules, directives or regulations, the Council of the Institute is empowered to
reconsider, reserve or deny the renewal of Certificate of Practice if the work from off-site
and/or absence from office is not in compliance with this Directive.
14. Non–Compliance of the Directives of the Council is considered as professional misconduct

and may also be referred for investigation.
[Approved by the Council in its 343rd Meeting held on August 27-28, 2021]
______________________________________________________________________________
The Directive 4.17 before this revision reads as under:
ABSENCE FROM OFFICE FOR A PRACTICING MEMBER
1. Pursuant to Bye-Law 7 read with Bye-Law 2(1)(i) of the Chartered Accountants Bye-laws, 1983 practicing members
are required to intimate their principal place of business (registered address) to the Institute. It is required that
practicing members regularly attend the office at the registered address notified in the Institute’s records to discharge
their professional responsibilities. However, absence from office is permissible under following exceptional
circumstances:
(a) professional engagement as a practicing member;
(b) rest and recreation and medical treatment; not exceeding three months in a financial year;
(c) training and education; in excess of three continuous months; and
(d) extraordinary situation such as prolonged adverse law and order condition, political unrest.
The above will be subject to conditions that:
(i) the office is looked after by another qualified member of the Institute, who is either a partner or in
full time employment of the concerned member; and
(ii) the period of continuous absence does not exceed six months.
If the period of continuous absence is expected to exceed six months, the member shall obtain prior approval
of the Executive Committee of the Council by providing detailed justifications.
(e) temporary transfer/posting at foreign office of affiliated firm or Head Office or Regional Office of Network
to which the firm of concerned practicing member belong, for the duration of transfer/posting not exceeding
36 months with prior approval of the Executive Committee of the Council;
Provided, that for the duration of such absence, the member shall not certify any audit report.
2. In determining period of continuous absence, attendance for a period of less than 60 days shall not be considered.
3. All applications for approval of absence shall include a statement confirming that the practicing member and/or his
legal attorney or a duly authorized member of the Institute would attend proceedings, investigations and reviews
carried out by the Institute and the Quality Assurance Board along with a consent of such attorney or a member and
a statement that he has made adequate arrangement to facilitate any proceedings, investigations and reviews by the
Institute and the Quality Assurance Board.
4. The practicing members shall maintain adequate record to demonstrate compliance with this Directive.
5. The Council of the Institute is empowered to reconsider the renewal of Certificate of Practice if the absence from
office is not in compliance with this Directive.
[Approved by the Council in its 253rd Meeting held on May 8-10, 2014]
The Directive 4.17 before this revision reads as under:
4.17
ABSENCE FROM OFFICE FOR A PRACTICING MEMBER
1. Pursuant to bye-law 8 of the Chartered Accountants Bye-laws, 1983 practicing members are
required to be present at the office, identified in their practicing certificate. However, absence
from office in certain circumstance is allowed subject to the following situations:
(a) absence not exceeding three months (in a financial year);
(b) absence for a period exceeding three months in a financial year provided:
(i) the absence is for training or education; and
(ii) the office is looked after by another qualified member of the Institute, who is a
partner or in full time employment.
Provided that the period of such absence would not exceed one year.
2. Council is empowered to review the renewal of certificate practice if absence exceeds any of
the above prescribed period. This will require special approval from the Council.
(166th Meeting of the Council held on September 17-18, 2004)

4.18
PROCEDURES OF NETWORK AMONGST THE FIRMS/

PRACTICES REGISTERED WITH THE INSTITUTE OF
1. These Directives will apply to firms/ practices opting to form a
network or to become part of the existing network and will be called as
‘Procedures for Network amongst the firms/ practices registered
with the Institute of Chartered Accountants of Pakistan’.
2. Definition
2.1 Bye Laws means The Chartered Accountants Bye-Laws, 1983

as amended or added to from time to time.
2.2 Code of Ethics – Code of Ethics means the Code of Ethics
issued by the Institute and decisions of the Council in this
regard.
2.3 Council – Council means the Council of the Institute.
2.4 Firm
2.4.1 A sole practitioner, partnership or Corporation of
professional accountants;
2.4.2 An entity that controls such parties; and
2.4.3 An entity controlled by such parties.
2.5 Formal Network - Formal network means a network amongst
two or more firms/ practices registered with the Institute, where
the object of network is to use the collective resources of the
affiliates for execution of professional services of one or more
types at one and/or at multi- locational points. The resources
would include human, financial, technical and other logistic
support required to execute the professional assignments. In such
type of network, the common resources may be pooled and
exhibited together before the service user as those belonging to
one particular set of professionals.
4.18
2.6 Institute – Institute means the Institute of Chartered

Accountants of Pakistan.
2.7 Member in Practice:

A member of the Institute shall be deemed “to be in practice”
when individually or in partnership with chartered accountants
in practice, he, in consideration received or to be received-
2.7.1 engages himself in the practice of accountancy, or

2.7.2 offers to perform services involving the auditing, or
verification of financial transactions, books, accounts,
or records or the preparation, verification or
certification of financial accounting and related
statements or holds himself, out to the public as an
accountant; or
2.7.3 renders professional services or assistance in or about
matters of principle or detail relating to accounting
procedure or the recording, presentation or certification
of financial facts or data; or
2.7.4 render such other services as, in the opinion of the

Council, are or may be rendered by a chartered
accountants in practice; and
2.7.5 the words “to be in practice” with their grammatical

variations and cognate expressions shall be construed
accordingly.
Explanation – An associate or a fellow of the Institute who is
salaried employee of a chartered accountant in practice or a
firm of such chartered accountants shall, notwithstanding such
employment, be deemed to be in practice for the limited
purpose of the training of (students).
2.8 Ordinance – Ordinance means The Chartered Accountants

Ordinance, 1961. (X of 1961).
4.18
2.9 Network
“Network amongst two or more firms/ practices means an
arrangement to facilitate the better functioning of the affiliate
member firms/practices in the common economic interest of the
profession and not for acquisition of any gain for the network.
Such Network shall include the formal Network to use the
collective resources such as turnover, infrastructures, manpower
and location for execution of Professional services of one or more
type.
[Explanation] –
2.9.1 An affiliation as referred to above shall also include: -
2.9.1.1 having an association with an accounting entity such
that it results directly or indirectly in a common
professional economic or beneficial interest.
2.9.1.2 one or more of the entities holding out that it is so
affiliated or networked.
2.9.2 An entity shall not be treated as an affiliate of another merely
for the reason that they
2.9.2.1 share professional knowledge and data base;
2.9.2.2 refer certain professional assignments or authorize the
other to represent certain specific matters.
2.10 Practice
A sole practitioner, a partnership or a corporation of
Professional accountants which offers professional services to
the public.
2.11 Referral Practice – Referral Practice means a practice to refer
professional work by a firm to one of its associate/affiliate
either situated at a different place or rendering professional
services not provided by it, to the user of the services. The pre-
dominant objective of suc h an arrangement is not to pool in
their collective resources and exhibits them as those belonging
to one particular set of professionals.
4.18
All other terms and expressions used but not defined in these rules
shall have the same meaning as assigned to them in the Chartered
Accountants Ordinance, 1961, Bye-Laws and Council Directives
issued and amended from time to time.
3. Name of Network:
3.1 The Network may have distinct name from its constituent’s and
from other networks. To distinguish a “Network” from a “firm”
of Chartered Accountants, standards provided in Directive 4.06
shall be applicable to the name of the network. The prescribed
format of application for approval of Name for Network is at
Form NWA-1 (enclosed).
3.2 If the name is subsequently found to be undesirable then the
Institute may require withdrawal of such name, which
directions of the Institute shall be complied with forthwith.
3.3 The Council Directive 6.04 ‘Code of Ethics for Chartered
Accountants’ permitting advertisement and use of logo will be
applicable on networks
3.4 The firms/ practices constituting the network are permitted to
print network name on their professional stationery.
4. Registration:
4.1 A Formal Network is required to be registered with the

Institute in a prescribed Form NWA-2 (enclo sed).
4.2 Referral Practice requires no registration.
4.3 It is for each firm/ practice to decide whether its affairs and
relations with another firm results in creation of a Formal
Network. The firms shall evaluate for themselves whether or
not a formal relations hip exists among them which warrants
registration of network with the Institute.
4.18
4.4 If different firms/ practices are networked with a common
Multinational Entity (MNE) then irrespective of the
presence/absence of any ‘network’ relationship between the
firms/ practices inter-se, they shall be considered as part of a
network. As such, for these firms/ practices the registration
with the Institute is not mandatory. It is only if these firms/
practices decide to constitute a Formal Network, then the
registration with the Institute is mandatory.
5. Ethical Compliance:
Once the network is registered with the Institute, it will be necessary
for such a network to comply with all applicable ethical requirements
prescribed by the Institute from time to time in general and the
following requirements in particular: -
5.1 If one firm of the network is the statutory auditor of a listed

entity then the constituent firms directly/indirectly should not
accept the internal audit or book-keeping or such other
professional assignments which are prohibited for the statutory
auditor firm as per clause (xl) of Code of Corporate
Governance.
5.2 Clause (xli) of the Code of Corporate Governance relating to
rotation of firm would be equally applicable on net work.
5.3 The Constituent member firms/ practices of a Network and the
Network shall comply with all the Ethical Standards prescribed
by the Council from time to time.
6. Quality Control:
It is the responsibility of Individual firms/ practices constituting the
network to obtain satisfactory ‘Quality Control Review’ rating from
the Institute. Firms/ practices not having satisfactory QCR rating but
are part of any network of firms/ practices in which other firm(s)
would have satisfactory QCR rating(s) are not allowed to accept and
conduct audit of listed companies in strict compliance of the
requirements of clause (xxxvii) of the Code of Corporate Governance.
4.18
7. Consent of Client:
The network firm shall obtain consent of the client to engage other
network firms in discharging the professional assignments.
8. Constitution of Network:
8.1 Proprietory/partnership firm(s) are permitted to form a
Network.
8.2 Proprietory/partnership firms are allowed to join only one
Formal network.
8.3 A Firm/ practice will be allowed to join only one formal
network.
9. Object of Network:
The Network itself will not carry on any business for acquisition of
gain for itself and only act as a facilitator for its members/constituent
Member firms/ practices to pursue their professional jobs.
10. Responding to Enquiries:

Only one firm can apply on behalf of the network showing the
collective strength of all the constituent firms/ practices of the
network, when responding to any enquiry.
11. Issuing Reports:

Only the constituent member firm(s)/ practice(s) which is/are part of
the network, and originally undertaken the assignment in its/ their own
name is/ are eligible to issue/sign/attest any
certificate/Report/professional document/assignment irrespective of
the fact that resources from other constituent firms have also been
engaged on the assignment.
4.18
12. * Violation of Ordinance:
In case of alleged violation of the provisions of the Ordinance, Bye-
laws, Directives/ guidelines laid down by the Council from time to
time and Code of Ethics by the Network firm, the
proprietary/partnership firm(s) constituting the Network which
originally undertakes the assignment as per paragraph 11 would be
answerable. Thus, the responsibility would rest with the Engagement
Partner who signs the report.
13. Exit From Network:

A constituent Member firm of a Network may after clearing dues of
network, if any, exit from the network by sending the declaration in
Form NWA-3 (enclosed) at the registered office of the network and to
the Institute. The concurrence/acceptance of the same by other firms/
practices forming part of the network firm shall not be required.
14. Framework of Internal Byelaws of Network requiring

Registration:
To streamline the networking, a network shall formulate operational
byelaws. Byelaws may contain the following clauses on which the
member firms/ practices of the network may enter into a written
agreement among themselves (a copy whereof should be sent to the
Institute):
14.1 Appointment of a Managing Committee, from among the
managing partners of the member firms/ practices of the
network and the terms and conditions under which it should
function. The minimum and maximum number of members of
the Managing Committee shall also be agreed upon.
14.2 Administration of the network.
14.3 Contribution of membership fees to meet the cost of the
administration of the network.
*
Rule 12 was amended by the Council in its 200 th Meeting held on October 16, 2008.
4.18
14.4 Dispute settlement procedures through arbitration, Alternate
Dispute Resolution (ADR) and mediation.
14.5 Development of training materials for members of the network.
14.6 Issue of News-letters for staff and clients.
14.7 Development of software’s for different types of assignments.
14.8 Development and maintenance of data bases relevant for
different types of assignments.
14.9 Setting up Library.
14.10 Appointment of a Chief Executive/ Technical Director to
whom references can be made.
14.11 Determining the methodology for drawing resources from each
member firm.
14.12 Determining compensation to member firms/ practices for
resources to be drawn from them.
14.13 Peer review of the member firms/ practices.
14.14 Development of a disclaimer statement such that the member
firms of the network are independent firms and are only
associated/ affiliated with the network and the network itself
provides no client services. No member firm has any authority
to obligate or bind any other network member firm vis-à-vis
third parties, nor does network itself have any such authority to
obligate or bind any of its member / constituent firm.
These clauses are illustrative.
(ICAP 193rd Council Meeting – November 7, 2007)

Form ‘NWA-1’
APPLICATION FOR APPROVAL OF NAME FOR NETWORK OF
FIRMS/ PRACTICES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN

[See Rule 3 of Procedures of Network amongst the firms/ practices
registered withThe Institute of Chartered Accountants of Pakistan]
1. Proposed name of Network (in order of preference) if the Network has a distinct name :
a)
b)
c)
d)
2. Name(s) of the Firm Name/ Membership

firm(s)/Member(s) Member No.
forming network Name
a)
b)
c)
d)
3. Address of the Office of the Network:
4. We hereby declare that the above firm(s)/ practice(s) proposed to have entered into an
understanding to form a network in accordance with Rules of Network amongst the
firms/ practices registered with The Institute of Chartered Accountants of Pakistan
and further affirm and confirm that the partner signing the application has been duly
authorized by the other partners of the respective firms/ practices .
Place : ............................
Name(s) with Membership No(s) and signature(s) of duly authorized

Partner(s)/Proprietor(s) of the firms/ practices/ Member constituting Network
Date : .............................
Form ‘NWA-2’
DECLARATION FOR REGISTRATION OF FORMAL NETWORK

AMONGST FIRMS/ PRACTICES REGISTERED WITH THE
INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN
registered with The Institute of Chartered Accountants of Pakistan]
PARTICULARS OF NETWORK
1. Name of the Network
2. Address of the Network
3. Names and addresses of firms/ practices/Member constituting the

Network
Names and addresses of Membership No.
Firm(s)/Member(s)
4. (a) Date of formation of Network
(b) Date on which present network arrangement was entered into

5. We undertake to comply with the guidelines/directions laid down by
the Council regarding Network from time to time.
We hereby declare that:
(a) the network constituents have entered into an agreement
to form this network.
(b) that the partner(s) signing this declaration has been duly
authorized by the other partners of the firm.
Place : .............................
Name(s) with Membership No(s). and signature(s) of duly authorized
Partner(s)/ Proprietor(s) of the firms/ practices/
Date : .............................
Form ‘NWA-3’
DECLARATION FOR DISSOCIATION FROM A NETWORK

registered with The Institute of Chartered Accountants of Pakistan]
1. Name of the Network
2. Address of the Network
3. Names and addresses of firms/ practices constituting the Network
Names and addresses of Membership No.

Firm(s)/Member(s)
4. Name and address of the firm/member willing to dissociate from the

Network
Name and address of Membership No.

Firm(s)/Member(s)
In pursuance to the Rule 13 of Rules of the Network issued by The

Institute of Chartered Accountants of Pakistan, We/I
…………….hereby declare our dissociation from the Network w.e.f.
……………….
I hereby declare that I have been duly authorized by the other partners
to issue this declaration.
Place : ........................... Name with Membership No(s).

and signature(s) of duly authorized
Date : ........................... Partner(s)/Proprietor(s) of the firm/
Member dissociating from the Network
4.19
RETENTION AND CUSTODY OF WORKING PAPERS BY

CHARTERED ACCOUNTANT FIRMS
In exercise of the powers conferred by Section 27(2)(kk) of the Chartered
Accountants Ordinance, 1961 read with Bye-Law 129A of the Chartered
Accountants Bye-Laws, 1983, the Council of the Institute has approved this
Directive for compliance by the members.
It is observed that there is no mandatory requirement for the preservation

period of working paper files/documentation by the firms of Chartered
Accountants in respect of assignments pertaining to audit, review of financial
statements and other assurance and related service engagements.
Accordingly, the Council of the Institute has considered the matter and
decided to prescribe the following requirements for the practicing Chartered
Accountants, with immediate effect, in relation to the retention and safe
custody of their working papers.
In case of failure of the firm to comply with the requirements of this

Directive, all the partners of the firm will be held responsible for non-
compliance under the provisions of the Chartered Accountants Ordinance,
1961:
1) The Chartered Accountant firms shall establish policies and

procedures for the retention of engagement documentation for a period
sufficient to meet the needs of their practice and in accordance with
the relevant laws and regulations. However, the retention period for
audit engagements should not be less than six years from the date of
signing of the auditor’s report or, if later, the date of the group
auditor’s report.
2) The auditor should not delete or discard audit documentation which

forms the basis of forming an opinion on the financial statements
before the end of its retention period.
3) In case a report has not been issued in connection with an engagement,

or incase of withdrawal of the engagement, the audit documentation
must be retained for two years from the date that fieldwork was
substantially completed.
4.19
4) Unless otherwise agreed amongst the partners of the firm in writing, in

case of re-organization, resignation or retirement of partners (changes
in composition, changes in name of firm etc.), the responsibility for
retention of working papers will rest with the partners carrying the
name of the firm.
5) In case of splitting of the firm, unless otherwise specifically agreed by

the partners in writing, the engagement partner of the assignment will
be responsible for the retention and safe custody of the working
papers.
6) In case any proceedings of misconduct or other legal proceedings are

in process against the auditor the relevant records shall be maintained
and retained till the completion of such proceedings or the above
mentioned period of six years whichever is later.
Additional Guidance may be obtained from the International Standard on

Auditing (ISA) 230 (Audit Documentation) and relevant paragraphs of
International Standard on Quality Control (ISQC) 1 regarding the retention
and safe custody of working papers.
This Directive of the Council is applicable with effect from July 1, 2014.
[Approved by the Council in its 253rd Meeting held on May 8-10, 2014]
4.20
DIRECTIVE ON CONDUCTING NON-STATUTORY AUDITS /
ASSIGNMENTS
In exercise of the powers conferred by Section 27(2)(kk) of the Chartered
Accountants Ordinance, 1961 read with Bye-Law 129A of the Chartered
Accountants Bye-Laws, 1983, the Council of the Institute has approved this
Directive to provide guidance to the practicing members during the conduct of
non-statutory audit of financial statements and other assignments of their
clients in the nature of assurance and related services.
It has been noted in certain instances that the practicing members do not
follow the applicable assurance or related services framework while
conducting non-statutory audits and other professional assignments which are
performed for internal purposes and/or on specific request of their clients.
Consequently, members are hereby advised to follow and strictly comply with
all the provisions of the applicable standards and the relevant framework
while performing professional services for their clients which are outside the
scope of statutory audits. Furthermore, the terms of the engagement including
the nature of the assignment, its key deliverables and the framework which
will be followed should be documented in the form of an Engagement Letter
which is duly agreed by the client.
In case of an assignment of compilation or preparation of financial statements
of the client, the provisions of the International Standard on Related Services
(ISRS) 4410 (relating to Compilation engagements) have to be followed by
the members. In the case of engagement to perform Agreed upon Procedures,
members are required to follow the provisions of ISRS 4400 [Engagements to
Perform Agreed-Upon Procedures regarding Financial Information]. Further,
the International Standards on Assurance Engagement (ISAEs) are to be
applied in assurance engagements other than audits or reviews of historical
financial information. The Auditing Technical Release (ATR) 17 also
provides guidance on the application of appropriate auditing standards in
carrying out professional engagement by the auditor.
It is mentioned that non-compliance with the directives of the Council results
in professional misconduct under Clause (3) of Part 4 of Schedule I of the
Chartered Accountants Ordinance, 1961. Therefore, members are advised to
take note of the above in order to avoid violation of relevant laws and
regulations.
[Approved by the Council in its 266th Meeting held on July 24-25, 2015]
4.21
DIRECTIVE ON STANDARDIZATION OF LETTERHEADS OF

AUDIT FIRMS
The Council of the Institute has approved this Directive in exercise of the
powers conferred on it by Section 27(2)(kk) of the Chartered Accountants
Ordinance, 1961 read with Bye-Law 129A of the Chartered Accountants Bye
Laws, 1983. This Directive is to be read in conjunction with the Bye-Law 8 of
the Chartered Accountants Bye-Laws, 1983 and Institute’s Directive 4.06
“Styling of Firms”.
This guidance applies to all members in practice operating as sole proprietor,
partnership firms or under network of firms.
For the purposes of this Directive, the term “letterhead” means the member's
or member firm's notepaper and documents used by the member or member
firm for communicating with clients or other parties including electronic mail.
“Electronic letterhead” is not a substitute for printed letterhead but is intended
to be used for letters and documents that are transmitted electronically via fax
or e-mail. Printed letterhead should be used for official correspondence
intended to be sent through traditional mail.
The firms are directed to use same letterhead formats at all of their offices
regardless of the nature of arrangement between the partners. The name of the
firm printed on the letterhead should be the same as that appearing in the
Institute’s records. In case of association with any foreign firm or network of
firms, the nature of the relationship between the Pakistani firm and the foreign
firm or network of firms can also be mentioned on the letterheads and other
stationery of the firm along with the name of the firm. However, the firm
should ensure that local name of the firm should be more prominent viz a viz
the name of foreign firm/network. Guidance in this regard can be obtained
from the Directive 4.06 [Styling of Firms] of the Council.
Firms should ensure that only the name(s) of the partners or that of the sole
proprietor should appear on the letterheads. No person named on the
letterhead of a firm should be described by a title, description or designatory
letters to which such person is not entitled. A letterhead should also include
the address and telephone numbers of the firm’s principal place of business
and may include the address of its regional offices(es), and if the firm has a
website, its web address as well.
4.21
A firm may decide to use its logo on the letterhead, however in such cases,
firms are only allowed to use one logo on all its letterheads and other
stationery.
[Approved by the Council in its 266th meeting held on July 24 and 25, 2015]
4.22
ENGAGEMENT OF CHARTERED ACCOUNTANTS IN PRACTICE

IN OTHER OCCUPATIONS
The Council of the Institute has approved this Directive in exercise of the
powers conferred on it by Section 27(2)(kk) of the Chartered Accountants
Ordinance, 1961 read with Bye-Law 129A of the Chartered Accountants Bye
Laws, 1983. This Directive is to be read in conjunction with the Bye-Law 8 of
the Chartered Accountants Bye-Laws, 1983 and Directive 4.09 of the
Institute.
A chartered accountant in practice may engage in the following occupations

without obtaining the prior approval of the Council:-
(a) Employment under chartered accountants in practice or firms of

such chartered accountants.
(b) Private tutorship.
(c) Attending classes and appearing for any examination, either

academic or accountancy or any examination relating to the other
professions and obtaining membership of such bodies/associations.
(d) Authorship of books
(e) Appearing before any Court of Law for representing clients etc., in
respect of the "other functions" as stated in the Bye-Laws of the
Institute, if so eligible.
(f) Proprietorship, partnership or directorship of educational and

training institutions extending professional or business education and
training.
(g) Part-time lecturer-ship in Universities or other institutions

including those relating to or accredited by the Institute or those run
under the auspices of the Institute or the Regional
Committees.
4.22
(h) Acting as examiner/paper-setter for educational and professional

institutions and to be a member of Universities/Colleges, Committees,
Board etc.
(i) Honorary editorship of professional journals.
(j) Holding membership/office in any charitable, religious, social or

educational organization without remuneration.
(k) Engaging in research and report writing and assisting national and
international organizations in the preparation of their research reports.
(l) Accepting directorship of any company as non-executive director.
(m) Holding public elected offices such as Member Provincial

Assembly, Member National Assembly, Senator etc.; or offices such
as Special Assistant or Advisor to a Minister or Prime
Minister etc.
It should be noted that the engagement of a chartered accountant in practice in

the above occupations shall not be deemed to be in contravention of the Bye
Law 8 of the Chartered Accountants Bye Laws and shall also not result in
professional misconduct as per Clause (10) of Part 1 of Schedule I of the
Chartered Accountants Ordinance, 1961, with reference to the requirement of
being in main occupation.
This Directive is being issued on transitionary basis and the Council of the
Institute is considering appropriate provisions to address the issue of main
occupation on permanent basis.
[Approved by the Council in its 266th meeting held on July 24-25, 2015]
Directive 4.23
ENSURING AUDIT QUALITY
1. The audit and assurance professionals are the stewards for building trust, ensuring transparency
and promoting good governance - the basic elements for corporate success and safeguarding
public interest. Audit has a pivotal role in strengthening the bond between corporate structure
and investors for any flourishing economy. In the international arena the new buzz word is
‘Audit Quality’.
2. Global focus is moving towards gauging Audit Quality Indicators which entail time spent by
senior audit team members, years of audit experience and industry specialization, average training
hours and industry specific training, independence and compliance with regulatory requirements
and external inspection results.
3. Audit of financial statements in Pakistan is required to be carried out in accordance with the
requirements of International Standards on Auditing (ISAs) as applicable in Pakistan.
4. The Council of the Institute of Chartered Accountants of Pakistan (ICAP) requires the firms to
mandatorily comply with ISQC 1, Quality Control for Firms that Perform Audits and Reviews of
Historical Financial Information and Other Assurance and Related Services Engagements, ISA 220 Quality
Control for Audits of Historical Financial Information, ISA 230 Audit Documentation etc issued by IFAC.
These standards require extensive documentation of audit procedures and recruitment of
qualified staff.
5. The Quality Control Framework has also been recently revised with enhanced requirements for
the practicing members/firms. Further, the Institute also collaborated with the Government in
the establishment of an Independent Audit Oversight Board of Pakistan. Hence, the cost to
perform audit by the firms has significantly increased. It is a challenge for firms to ensure that
quality control procedures are adequately complied within the limited funds and resources.
6. It is acknowledged that the level of fee is to be mutually agreed between the auditor and the
client, which largely depends upon the volume and complexity of work involved and estimated
time to be incurred on the audit engagement. The Council whilst recognizing this principle is
however, of the view that there has to be some threshold provided for the profession of auditing
to properly develop and work in public interest for delivering quality audit and meeting the high
level of expectations. The Council had also carried out a study of audit fees prevalent in other
jurisdictions (India, Sri Lanka, Malaysia, UK) and noted that the audit fees in Pakistan are
considerably lower.
7. The combination of falling audit fees and decreased audit effort can lead to reduced audit quality.
This impact can be especially serious for high risk public company audit clients.
8. To set a benchmark for quality audit the Council believes the fact that audit cost has a direct
linkage with audit quality. Therefore, to determine optimal audit fee, the factors necessary to be
considered are: past trend of audit fees charged, analysis of estimated audit time spent, cost of
resources including involvement of various levels of professional personnel required in carrying
out audit of financial statements and the prevailing remuneration of professional personnel.
Accordingly, in best public interest, development of the audit profession and taking into account
the above factors the Council has approved the attached Schedule of Audit Fee for members in
practice as recommended reference fee.
In case of an existing audit client, the present audit fee is recommended to be enhanced to the
level provided in the Schedule of Audit Fee mentioned above over a period of two years with
mutual consent. It is proposed that in the first year the enhanced fee is more or equal to 75% of
the fee recommended in the ‘Schedule of Audit Fee’.
9. The Schedule of Audit Fee will not be referred for audit engagements of clients in the pre-
incorporation/pre-operation stages or in case of sick project or closed operations or
discontinuation of business.
10. The Schedule of Audit Fee is exclusive of the below mentioned additional services to be
rendered by a statutory auditor under the Companies Act 2017, Code of Corporate Governance
and for any other certifications and the professional fee for such services shall be charged
separately by mutual consent.
 Issue a Review Report on Statement of Compliance with Best Practices of Corporate

Governance
 Issue Review Report on half – yearly financial statements
 Special reports/certification required by regulators over and above normal scope of

audit
11. The fee is exclusive of traveling and hotel expenses, out of pocket expenses and other incidental
costs which would be reimbursable to auditors as per the terms of arrangement.
12. The practicing members may choose to undertake the audit on a token fee or on an honorary
basis or voluntarily in case of a religious or charitable institution or a company “not for profit”
without compromising on the quality of audit work.
(311th meeting of the Council – March 21-22, 2019)

RECOMMENDED
SCHEDULE OF AUDIT FEE
Type of entity Fee
Listed companies
Turnover up to Rs.500 million Rs. 600,000
Turnover over Rs.500 million up to Rs.1 billion Rs. 700,000
Turnover over Rs.1 billion up to Rs.50 billion Rs.700,000 plus Rs.100,000 for
every 1 billion increase in turnover
Turnover over Rs.50 billion Rs. 6,400,000 or fee based on

engagement hours computed based
on hourly charge out rate/fee
amount agreed with client
whichever is higher
Large Sized Companies / Public Interest other than listed

Turnover up to Rs.500 million Rs.400,000
Turnover over Rs.500 million up to Rs.1 billion Rs.600,000
Turnover over Rs. 1 billion up to Rs.20 billion Rs.600,000 plus Rs.75,000 for every
1 billion increase in turnover
Turnover above Rs.20 billion Rs.2,250,000 or fee based on

engagement hours computed based
on hourly charge out rate/fee
amount agreed with client
whichever is higher
Medium Sized Companies* Rs.300,000
Small Sized Companies* Rs.175,000
*Excluding Medium Sized and Small Sized Companies having paid up capital less than three million.
Note: The terms Public Interest Company (PIC)”, “Large Sized Company (LSC)”, “Medium Sized
Company” (MSC) and “Small Sized Company” (SSC) shall have the same meaning as defined in
the Third Schedule of the Companies Act, 2017.
4.24
FRAMEWORK FOR REGULATION AND SUPERVISION OF CHARTERED ACCOUNTANTS TO

COMPLY WITH ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
REQUIREMENTS
The Institute, under section 5(7)(a) of the Anti-Money Laundering Act, 2010 (AML Act) has been
designated as an Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT)
Regulator/Supervisor of its members through the Finance Division, Government of Pakistan notification
dated December 23, 2019.
As a Self-Regulatory Body (SRB), the Institute is to prescribe regulatory and supervisory measures for the
chartered accountants in practice to ensure compliance with the provisions and obligations specified
under the AML Act. In this regard the Council has approved the “Framework for Regulation and
Supervision of Chartered Accountants to Comply with Anti-Money Laundering and Countering the
Financing of Terrorism Requirements” (the AML Framework) which is based on the Anti-Money
Laundering and Combating Financing of Terrorism Guidelines for Designated Non-Financial Business
Professions issued by the Financial Monitoring Unit (FMU).
The AML Framework outlines:
(a) Scope of the AML Framework;

(b) AML/CFT requirements for Institute’s members in practice;
(c) Institute’s role as Self-Regulatory body of its members for AML/CFT purposes; and
(d) AML Supervisory Board’s role to coordinate with the AML Supervisor.
The AML Framework is effective from March 5, 2020.
The AML Framework is enclosed and can also be accessed at: https://www.icap.org.pk/aml-
supervision/.
th
(324 meeting of Council – February 29, 2020)
FRAMEWORK FOR REGULATION AND SUPERVISION OF
CHARTERED ACCOUNTANTS TO COMPLY WITH ANTI-MONEY
LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
REQUIREMENTS
(THE AML FRAMEWORK)
February 29, 2020

Contents
Page
Preamble 1
The Institute as AML/CFT Regulator/Supervisor of its members 1
Scope of the AML Framework 1
Definitions 2
AML/CFT Requirements 4
Transitional Provisions 5
Flow charts
Scope of the AML Framework 6
AML Supervisory Model 7
Institute’s AML Self-Regulatory System 7
Obligations of the Reporting Firms 8
Section I - Risk Assessment and AML/CFT Programme 9

Section II - Customer Due Diligence 11
Section III - Enhanced Customer Due Diligence 16
Section IV - Record Keeping 19
Section V - Institute’s AML Self-Regulatory System 20
Section VI - Coordination with the AML Supervisor 23
Appendix A: AML Supervisory Board 24

Appendix B: Forms
Form A
Form B
The AML Framework
PREAMBLE
Pakistan is obligated to comply with the "International Standards on Combating Money Laundering and the
Financing of Terrorism & Proliferation" issued by the Financial Action Task Force (FATF
Recommendations). Pakistan has enacted the Anti-Money Laundering Act, 2010 (the AML Act) and Anti-
Terrorism Act, 1997.
The AML Act and FATF Recommendations place obligations on the accountancy profession.
Pakistan is also subject to Financial Action Task Force (“FATF”) mutual evaluations on the adoption and
implementation of FATF Recommendations.
In the recently concluded FATF Mutual Evaluation Report of Pakistan (issued in October 2019) Pakistan’s
Designated Non-Financial Businesses and Professions (“DNFBPs”), which include the accountancy sector,
have been evaluated as ‘Non-Compliant’ with the requirements of the FATF Recommendations.
The basic intent behind the AML Act and FATF Recommendations, as it relates to accounting professionals
is consistent with their ethical obligations as professionals, namely to avoid assisting criminals or facilitating
criminal activity.
The Anti-Money Laundering (“AML”) and Counter Financing of Terrorism (“CFT”) legislations have
implications on the responsibilities of chartered accountants, including the risk of criminal liability on
chartered accountants for non-compliance.
THE INSTITUTE AS AML/CFT REGULATOR/SUPERVISOR OF ITS MEMBERS
The Institute, under section 5(7)(a) of the AML Act, has been designated as an AML/CFT
Regulator/Supervisor of its members through the Finance Division, Government of Pakistan notification
dated December 23, 2019. Thereby requiring the Institute to act as a Self-Regulatory Body (SRB).
Further, through the above-mentioned notification Securities and Exchange Commission of Pakistan has
been designated as AML/CFT Supervisor of the Institute.
As a SRB, the Institute is obligated to prescribe regulatory and supervisory measures for the chartered
accountants in practice falling under the scope of this Framework, to ensure compliance with the provisions
and obligations specified under the AML Act. In this regard the Financial Monitoring Unit (FMU) has issued
Anti-Money Laundering and Combating Financing of Terrorism Guidelines for Designated Non-Financial
Business Professions (FMU Guidelines). The FMU has instructed the AML/CFT Regulator/Supervisor,
including the Institute, to follow these guidelines for issuing their own AML/CFT regulations/framework.
The scope of the Institute’s “Framework for Regulation and Supervision of Chartered Accountants to
Comply with Anti-Money Laundering and Countering the Financing of Terrorism Requirements” (the AML
Framework) is given in the next sub-sections.
The FMU Guidelines also require that the Institute shall prevent criminals as well as persons proscribed
and their known associates as designated under United Nations (Security Council) Act 1948 and/or Anti-
Terrorism Act 1997 from becoming professionally accredited or holding a management function in or
becoming a beneficial owner of the Firms.
SCOPE OF THE AML FRAMEWORK
The Institute’s AML Framework deals with the responsibilities of the Institute’s Members in Practice that in
the ordinary course of business are engaged in the rendering of “Accountant” and “Trust and Company
Service Provider” services, as specified. Such Members in Practice have to comply with specific customer
due diligence, record keeping and other AML/CFT Requirements.
The Institute of Chartered Accountants of Pakistan 1

The AML Framework
DEFINITIONS
For the sake of clarity, the words and phrases below, as used in this Framework, have the following
meaning:
(i) “Accountant” – means sole practitioners, partners or employed professionals within professional
firms when they prepare for or carry out transactions for their client concerning:
(a) The buying and selling of real estate;

(b) Buying and selling of business entities;
(c) The managing of client money, securities or other assets;
(d) The opening or management of bank, savings or securities accounts;
(e) The organisation of contributions necessary for the creation, operation or management of
companies; or
(f) Creation, operation or management of legal persons or arrangements.
Explanation: The term “Accountants” is not meant to refer to ‘internal’ professionals that are
employees of other types of businesses, nor to professionals working for government agencies, who
may already be subject to AML/CFT measures.
(ii) “AML Act” - means the Anti-Money Laundering Act, 2010 (VII of 2010).
(iii) “AML & CFT Regulator/Supervisor”- means designated regulatory or supervisory authority for
relevant DNFBPs who are members of it, or regulated or supervised by it.
(iv) “Beneficial owner” means the natural person who ultimately owns or controls a customer or the
person on whose behalf a transaction is being conducted and includes legal heir(s) and the person
who exercise ultimate effective control over a person.
(v) “Customer Due Diligence” or CDD - means
(a) Identifying the customer and verifying the customer’s identity on the basis of documents, data or
information obtained from customer and/or from reliable and independent sources;
(b) Identifying, where there is a beneficial owner who is not the customer, the beneficial owner and
taking adequate measures, to verify his identity so that the DNFBP is satisfied that it knows who
the beneficial owner is, including, in the case of a legal person, trust or similar legal arrangement,
measures to understand the ownership and control structure of the person, trust or arrangement;
(c) Understanding and, as appropriate, obtaining information on the purpose and intended nature
of the business relationship; and
(d) Monitoring of accounts/ transactions on ongoing basis to ensure that the transactions being
conducted are consistent with the DNFBP’s knowledge of the customer, their business and risk
profile, including, where necessary, the source of funds and, updating records and data/
information to take prompt action when there is material departure from usual and expected
activity through regular matching with information already available with the DNFBP.
(vi) “CTR” - means report on currency transactions exceeding such amount as may be specified by the
National Executive Committee by notification in the official Gazette.
(vii) “DNFBPs” - means Designated Non-Financial Businesses and Professions as defined in the AML
Act.
(viii) “Enhanced Due Diligence” or EDD - means diligence in addition to CDD and may be carried out in
case of high risk customers.

The AML Framework
(ix) “Firm” – means and includes Reporting Firms and Practicing Firms.
(x) “FMU” - means the Financial Monitoring Unit established under section 6 of the AML Act.
(xi) “Legal Person” - means body of persons or an entity (as a corporation, company, Non-Profit
Organization (NPO), Non-Governmental Organization (NGO), Trust, Charity, Society,
Association, club etc., established under any law and considered as having many of the rights
and responsibilities of a natural person and especially the capacity to sue and be sued.
(xii) “Member in Practice” – means a member of the Institute having certificate of practice and:
(a) Practicing as a "Chartered Accountant" individually (i.e. as a sole-proprietor) or in partnership

with chartered accountants.
(b) Practicing as a "Management Consultant".
(xiii) “Person” - includes an individual, association, authority, company, firm, institutions, partnership,
society, trust or other entities.
(xiv) “Politically exposed persons” or “PEPs” - means any person entrusted with a prominent public
function by the State of Pakistan, a foreign country or an international organization and includes
Heads of state or government, and members and senior officials of legislature, judiciary, executive,
military and regulatory authorities, and senior executives of corporations, departments or bodies that
are owned or controlled by the state.
(xv) “Practicing Firm” – means a Member in Practice, who is not subject to the AML Framework except
to the extent of filing the returns required under paragraphs 65 to 68 below.
(xvi) “Reporting Firm” – means a Member in Practice who is providing services as an Accountant or Trust
and Company Service Provider.
(xvii) “Risk”- refers to risk associated with money laundering, financing of terrorism and proliferation
finance;
(xviii) “STR” - means the report on suspicious transaction specified under Section 7 of the AML Act 2010.
(xix) “Trust and Company Service Provider” – means a Member in Practice providing the following
services:
(a) Forming companies or other legal persons;

(b) Acting, or arranging for another person to act:
(i) as a director or secretary of a company;
(ii) as a partner of a partnership; or
(iii) in a similar capacity in relation to other legal persons;
(c) Providing a registered office, business address, correspondence or administrative address or
other related services for a company, partnership or any other legal person or legal arrangement;
and
(d) Acting, or arranging for another person to act, as a trustee of an express trust or similar legal
arrangement.

The AML Framework
AML/CFT REQUIREMENTS
1. The Reporting Firm is required to:
(a) Assess risks of money laundering and terrorist financing and implement an AML/CFT program to
mitigate and manage the risks, as set out in Section I of the AML Framework.
(b) Perform customer due diligence, as set out in Section II of the AML Framework.
(c) Apply enhanced due diligence measures in certain cases indicative of higher AML/CFT risks, as
set out in Section III of the AML Framework.
(d) Keep record in accordance with the requirements set out in Section IV of the AML Framework.
2. The Reporting Firm shall not establish a business relationship with following entities and/or individuals:
(a) Designated by, or under the authority of, the United Nations (“UN”) Security Council under
Chapter VII of the Charter of the UN, including in accordance with UN Security Council
Resolutions.
(b) Proscribed under the Anti-Terrorism Act, 1997 (XXVII of 1997) or any other law relating to
terrorism.
(c) Persons acting on behalf of or at the direction of, above (a) and (b).
3. The Reporting Firm shall be required to submit Suspicious Transaction Report (“STR”) and Currency
Transaction Report (“CTR”) to the Financial Monitoring Unit (“FMU”) notified by the Federal
Government in accordance with AML Act.
(a) If a Reporting Firm suspects or has reasonable grounds to suspect that funds are the proceeds of
a criminal activity, or are related to terrorist financing, it is required to report promptly its suspicions
to the FMU established under section 6 of the AML Act.
(b) The Reporting Firm shall report all suspicious transactions including attempted transactions to
FMU regardless of the amount of the transaction.
(c) The Reporting Firm shall report CTR to FMU for every cash transaction exceeding the prescribed
limit made through the Reporting Firm, in accordance with Section 7(3) of the AML Act.
(d) The Reporting Firm, its senior management and employees shall not disclose to any person the
fact of filing of a STR or CTR with FMU, except where so required by law.
4. Members in Practice shall be subject to the Institute’s AML Review and Validation System set out in
Section V of the AML Framework.
5. The Reporting Firm, its partner(s) and employee(s) shall not be in breach of any restriction on
disclosure of information imposed by contract or by any legislative, regulatory or administrative
provision, if they report their suspicions in good faith to the FMU, even if they did not know precisely
what the underlying criminal activity was, and regardless of whether illegal activity actually occurred.
The Reporting Firm, including any of its partners or employees, are required not to disclose (“tipping-
off”) the fact that a STR or related information is being filed with the FMU. STR shall have the same
meaning as assigned to it in the AML Act.
The words and expressions used in the AML Framework but not defined shall have the same meaning
as assigned to them under the AML Act and Chartered Accountants Ordinance, 1961.

The AML Framework
TRANSITIONAL PROVISIONS
6. The transitional provisions of the AML Framework would be applicable, as explained below:
(a) The existing clients mean those clients of the Reporting Firms to which the services of Accountant
or Trust and Service Company Services are being provided as of the effective date of this
Framework. The new clients mean clients of the Firm with which business relationship is
established on or after the effective date of this Framework.
(b) The Reporting Firms shall apply the customer due diligence measures on all existing clients, in
accordance with this Framework. The customer due diligence measures include screening of
existing clients for identification of any proscribed or designated person. Further, the Reporting
Firms shall document and retain the record of the customer due diligence measures.
(c) The Reporting Firms, in case of any adverse customer due diligence of the existing clients, shall
follow the relevant requirements of the AML Framework.
(d) All Firms shall submit ‘Form A’ of Annual Return as mentioned in paragraph (65), based on their
existing clients (i.e. clients as of the effective date of the Framework) and new clients (i.e. clients
on or after the effective date of the AML Framework to June 30, 2020). The Form A shall be
submitted by July 31, 2020.
(e) All Reporting Firms shall submit ‘Form B’ of Annual Return as mentioned in paragraph (65), for all
existing clients (i.e. clients as of the effective date of the Framework) and new clients (i.e. clients
on or after the effective date of the AML Framework to June 30, 2020). The Form B shall be
submitted by August 15, 2020.
(f) The Reporting Firms would be subject to the first annual review under the AML Framework, based
on the Form B submitted above. Section V of the AML Framework would be applicable, under the
transitional provisions to the Firms.

The AML Framework
FLOW CHARTS
SCOPE OF AML FRAMEWORK
Are you in Practice?
Yes No
Are you providing any of following specified services?

Act as formation agent of legal persons or legal
arrangements
or
Act as, or arrange for a person to act as, a nominee director,
in relation to legal persons or legal arrangements
or
Manage client funds (other than sums paid for professional
services)
or
Manage client accounts, securities or other assets
or
Provide real estate agent work to effect a transaction
or
Provide a registered office or business address, a
correspondence address or an administrative address for a
company or partnership, or for any legal person or legal
arrangement
or
Engage in or give instructions on behalf of a client to another
person for:
 A transfer of beneficial interest in land or other real
estate property;
 A transaction on behalf of any person for buying or selling
or transferring of a business or legal person or any other
arrangement; or
 A transaction on behalf of a client in relation to creating,
operating and managing a legal person or any other legal
arrangement
Yes No
You are in scope of this AML Framework You are not in scope of this AML
as a Reporting Firm Framework

The AML Framework
AML SUPERVISORY MODEL
AML Supervisor of accountancy sector
Oversight of the Institute’s

AML Self-Regulatory System
AML Supervisory Board of the Institute
Monitoring and supervision of

Members in practice under
this Framework
Practicing Firms
INSTITUTE’S AML SELF-REGULATORY SYSTEM
Institute supervises and monitors the Practicing

Firms for AML/CFT purposes
Submits annual report,
coordinates and provides
information about AML Supervisor of
Institute’s AML Self- accountancy
Regulatory System sector
AML Supervisory Board of the Institute
Refers significant
Investigation
Issues
Functionally reports matter of non- Committee of the
Report on compliance arising
to the AML Institute
AML under this
Supervisory Board
Validation Framework
Reviews of
Reporting
AML Supervision Department
Firms
Performs Submit Submit

AML ‘Form B’ ‘Form A’
validation under this under this
reviews of Framework Framework
Reporting
Firms
Practicing Firms Institute can take disciplinary
measures for non-compliance
Reporting Firms under this Framework
Only those practicing firms that

provide specified services to their
clients

The AML Framework
OBLIGATIONS OF THE REPORTING FIRMS
Carry out assessment Carry out Customer

Develop and
of money laundering Due Diligence (CDD) -
implement AML/CFT
and terrorist including enhanced
Programme
financing risks due diligence
Report STRs and Mantain all record of

CTRs to FMU (if business relationship Submit annual return
required under AML with client (including to the Institute
Act) CDD)

The AML Framework
SECTION I
RISK ASSESSMENT AND AML/CFT PROGRAMME
1. The Reporting Firm shall develop and implement internal policies, procedures and controls to assess,
manage and mitigate money laundering (“ML”) and terrorist financing (“TF”) risks.
2. For assessing, managing and mitigating the money laundering and terrorist financing risks, the
policies, procedures and controls shall include the following:
(a) Risk assessment and management;

(b) Compliance management;
(c) Employee hiring and ongoing training;

(d) Customer due diligence;
(e) Records keeping; and
(f) Reporting.
3. The risk-based approach is an effective way to combat ML and TF. The Reporting Firm shall apply
risk-based approach to identify, assess, manage and mitigate their ML and TF risks.
4. By adopting the risk-based approach, the Reporting Firms shall be able to ensure that measures to
prevent or mitigate ML and TF are commensurate with the risks identified. The Reporting Firm need
to take into account the latest National Risk Assessment, for developing and updating its risk
assessment and AML/CFT Programme.
5. The Reporting Firm shall identify and assess ML and TF risks in relation to:
(a) Its customer (i.e. clients);

(b) Jurisdictions or countries clients are from or in;
(c) The jurisdictions or countries the Reporting Firm has operations or dealings in; and
(d) The products, services, transactions and delivery channels of the Reporting Firm.
6. The nature and extent of any assessment of ML/TF risks shall take into account the type of business,
nature of clients and size of operations of the Reporting Firm.
7. The type and extent of the Reporting Firm’s policies, procedures and controls in each of the areas
described in paragraph (2), above, shall be appropriate having regard to the risk of ML/TF and the
size and nature of the business. Some of the factors to be considered include:
(a) The nature, scale and complexity of the Reporting Firm’s business;
(b) The diversity of a Reporting Firm’s operations, including geographical diversity;
(c) The Reporting Firm’s clients, products and activity profile;
(d) The volume and size of the transactions;
(e) The degree of risk associated with each area of the Reporting Firm’s operations; and
(f) The extent to which the Reporting Firm is dealing directly with the client or is dealing through
intermediaries, third parties, correspondents, or non-face to face access.
8. The Reporting Firm shall also:
(a) Monitor the implementation of those policies, controls and procedures;
(b) Regularly review the risk assessment, policies, controls and procedures and revise them, where
necessary; and

The AML Framework
(c) Ensure that its risk assessment, policies, controls and procedures are approved by senior
management.
9. The policies and procedures shall include adequate screening procedures to ensure high standards
when hiring employees.
10. The Reporting Firm shall communicate the internal policies, procedures and controls established to
address the ML and TF concerns to its partners and employees (i.e. the professional staff).
11. The Reporting Firm shall maintain a record in writing of:
(a) The approved risk assessment, policies, controls and procedures;
(b) Any changes to those policies, controls and procedures made as a result of the Institute’s
supervisory AML/CFT review; and
(c) The steps taken to communicate those policies, controls and procedures, or any changes to
them, to the professional staff.
12. The Reporting Firm shall establish and implement an on-going training program for relevant staff. It
shall also be ensured that all levels of professional staff have undergone such training and a written
record is maintained.
13. Refresher training should be held at least once every two (2) years, or more regularly where there have
been significant developments such as new regulatory requirements or changes to key internal
processes.
14. The Reporting Firm having regard to the risk of ML and TF and the size of its business should:
(a) Develop appropriate compliance management arrangements to monitor Reporting Firm’s

compliance with its AML/CFT policy and procedures. This includes the appointment of a
compliance officer at the management level.
(b) Establish a function that regularly assesses the effectiveness of the Reporting Firm’s internal
policies, procedures and controls, and its compliance with AML/CFT requirements.
15. The Reporting Firm in relation to the specified services shall:
(a) Identify and assess the ML and TF risks that may arise in relation to the development of new
services, business practices including delivery mechanisms and the use of new or developing
technologies for both new and existing services and practices; and
(b) Formulate policies, procedures and controls taking into consideration ML and TF threats that may
arise from the new business practices or use of new or developing technologies, especially those
having features of anonymity.
16. The senior management of the Reporting Firm shall be responsible for the effective implementation of
the firm’s policies, procedures and controls established for the risk assessment, management and
mitigation of money laundering and terrorist financing risks.
“Senior management" includes:
(a) A sole proprietor of the Reporting Firm;

(b) Individual holding the position of chief executive officer/ managing partner, chief operating officer
in a Reporting Firm;
(c) Individual holding the position of AML/CFT compliance officer in a Reporting Firm;
(d) A partner or employee of the Reporting Firm with sufficient knowledge of the Reporting Firm’s
money laundering and terrorist financing risk exposure, and of sufficient authority, to take decisions
affecting its risk.

The AML Framework
SECTION II
CUSTOMER DUE DILIGENCE
17. The Reporting Firm shall apply customer due diligence measures when it:
(a) Establishes a business relationship (The customer due diligence measures shall be applied to
all new clients);
(b) Notices a significant change in the nature of business relationship or the ownership and control
structure of the client’s business;
(c) Suspects money laundering or terrorist financing; or
(d) Doubts the veracity or adequacy of documents or information previously obtained for the
purposes of identification or verification.
18. The Reporting Firm shall verify the identity of the client and beneficial owner (whether permanent or
occasional, and whether natural or legal person or legal arrangements) before or during the course of
establishing a business relationship.
The Reporting Firm can complete verification after the establishment of the business relationship,
provided that:
(a) The ML/TF risks are effectively managed;

(b) It is essential to not interrupt the normal conduct of business; and
(c) The verification procedures are completed as soon as reasonably practicable.
19. The following customer due diligence measures shall be performed:
(a) Identifying the client;

(b) Identifying the beneficial owner;
(c) Verifying the client’s and beneficial owner’s identity using reliable and independent source
documents, data or information, and taking reasonable measures, such that the firm is satisfied
that it knows who the beneficial owner is. For legal persons and arrangements, this shall include
firms understanding of the ownership and control structure of the client;
(d) Understanding and as appropriate, obtaining information on the purpose and intended nature of
the business relationship; and
(e) Conducting ongoing due diligence on any continuing business relationship and scrutiny of
transactions (if any) undertaken throughout the course of that relationship to ensure that the
services provided under the business relationship are consistent with the Reporting Firm’s
knowledge of the client, their business and risk profile, including, where necessary, the source
of funds.
20. The Reporting Firm shall also identify the beneficial owners of the client and take reasonable measures
to verify the identity of such persons using the relevant information or data obtained from reliable,
independent sources.
The Reporting Firm shall:

(a) For legal persons:
(i) Identify the natural persons (whether acting alone or together) who ultimately own the legal
person;
(ii) To the extent that there is doubt under (i) as to whether the natural persons who ultimately
own the legal person are the beneficial owners or where no natural persons ultimately own

The AML Framework
the legal person, identify the natural persons (if any) who ultimately control the legal person
or have ultimate effective control of the legal person; and
(iii) Where there is doubt under (ii) as to whether the natural person(s) who ultimately own or have
controlling ownership interest in the legal person are the beneficial owners or where no natural
persons ultimately own or exert control through ownership interest in the legal person, identify
the natural persons (if any) who ultimately control the legal person or have ultimate effective
control of the legal person; and
(iv) Where no natural persons are identified under clause (ii) or (iii), identify the natural persons
having executive authority in the legal person, or in equivalent or similar positions.
(b) For legal arrangements:
(i) Trusts – identify the settlors, the trustees, the protector (if any), the beneficiaries (including
every beneficiary that falls within a designated characteristic or class), and any natural person
exercising ultimate ownership, ultimate control or ultimate effective control over the trust
(including through a chain of control or ownership).
(ii) Other types of legal arrangements – identify persons in equivalent or similar positions, as
those described under (i) above.
21. The Reporting Firm shall:
(a) Verify the identity of person purporting to act on behalf of a client; and
(b) Obtain and verify evidence to determine authority of such person to act on behalf of the client.
Such evidence shall include documentary evidence that the client has appointed the person to
act on its behalf and the specimen signature of the person appointed.
22. The Reporting Firm shall verify identification document about a client and beneficial owner from
relevant authorities and bodies (including, various online registers available for the identification and
verification of entities). Further, where necessary Reporting Firm shall use other reliable independent
sources for verification of client and beneficial owner.
The Reporting Firm shall retain copies of all reference documents used for identification and
verification.
23. The documentary record of all reference source documents, data or information used to verify the
identity of the client or the beneficial owner shall be retained. Where the client is unable to produce
original documents, the Reporting Firm may consider accepting documents that are certified to be true
copies by an independent and qualified person (such as a network firm, a notary public, or an external
law firm).
24. The Reporting Firm shall also obtain information and examine, as far as possible the background and
purpose of all complex and unusual transactions, which have no apparent economic or visible lawful
purpose and the background and purpose of these transactions shall be inquired and findings shall be
documented with a view of making this information available to the relevant competent authorities when
required.
25. The Reporting Firm shall not establish or maintain business relationship through/under anonymous
contact details or fictitious names.
26. The Reporting Firm shall not establish a business relationship with following entities and/or individuals:
(a) Persons designated under UN Security Council Resolutions.
(b) Persons proscribed under the Anti-Terrorism Act, 1997 (XXVII of 1997).
(c) Persons acting on behalf of or at the direction of, above (a) and (b).

The AML Framework
The criteria for designation has been specified in various UN Security Council (UNSC) Resolutions
including among others (i) Security Council resolutions 1267 (1999), 1989 (2011) and their successor
resolutions; and (ii) Security Council Resolution 1373 (2001).
The implementation of the UN Security Council Resolutions is an international legal obligation for all
Member States of the United Nations. The UN Security Council Resolutions relating to its sanctions
regime are implemented in Pakistan through the United Nations (Security Council) Act, 1948 (Act No.
XIV of 1948). Under this Act, the Ministry of Foreign Affairs issues Statutory Regulatory Orders
(S.R.Os) to give legal effect in Pakistan to the decisions of the UN Security Council.
The Ministry of Interior / National Counter Terrorism Authority issues notifications of proscribed
individuals /entities pursuant to the Anti-Terrorism Act, 1997.
27. The Reporting Firm shall scan/screen its clients, natural persons appointed to act on behalf of the client
and beneficial owners of the client for any matches with the stated designated/proscribed person in the
S.R.Os/notifications issued by the Ministry of Foreign Affairs, National Counter Terrorism Authority and
Ministry of Interior, from time to time.
The Reporting Firm for scanning purposes may use software scanning tool(s) or utilize the information
available on websites of UN, Ministry of Foreign Affairs, National Counter Terrorism Authority and
Ministry of Interior. In terms of 26 (c) the Reporting Firm for identification of persons acting on behalf
of or at the direction of designated / proscribed persons shall use the publicly available information.
28. The Reporting Firm, if during the screening or monitoring of clients finds a true match (i.e. the
individual/entity is a designated/proscribed person) or suspects of a designated/proscribed person,
shall immediately:
(a) Freeze without delay the client’s fund or block the transaction (if it is an existing client);
(b) Reject the client, if the relationship has not commenced;
(c) Lodge a STR with the FMU;
(d) Notify the Ministry of Foreign Affairs, in case that person is designated under United Nations
Security Council Resolutions;
(e) Notify the National Counter Terrorism Authority, in case that person is designated under the Anti-
Terrorism Act, 1997; and
(f) Report to AML/CFT Supervisor/Regulator in case assets are frozen or action is taken in
compliance with the relevant UNSCRs prohibition requirements, including attempted transactions.
29. The Reporting Firm shall, in addition to continuous screening required under paragraph (28), apply the
customer due diligence measures to existing clients on the basis of risk assessment. The due diligence
on existing relationships shall be performed at appropriate times, taking into account whether and when
customer due diligence measures have previously been undertaken and the adequacy of data
obtained.
30. The application of customer due diligence measures does not imply that Reporting Firm has to
repeatedly identify and verify the identity of each client every time the client, with an existing business
relationship, enters into a new engagement with the Reporting Firm.
31. The Reporting Firm can rely on the identification and verification steps that it has already undertaken,
unless it has doubts about the veracity of that information. Examples of situations that might lead to
doubts could be where there is a suspicion of money laundering or terrorist financing in relation to that
client, or where there is a material change in the client’s activities, which is not consistent with the
client’s business profile.
32. If the Reporting Firm is not able to satisfactorily complete required customer due diligence measures,
the Reporting Firm shall:
(a) Not establish new business relationship;
(b) Terminate existing business relationship;

The AML Framework
(c) Consider the evidence and circumstances to evaluate as to whether it warrants the filing of an
STR; and
(d) Maintain a list of all such clients where the business relationship was refused or needed to be
closed on account of incomplete/negative verification.
33. Where Reporting Firm during performance of customer due diligence measures suspects money
laundering or terrorist financing, and it reasonably believes that performing the customer due diligence
process will tip-off the client, the Reporting Firm shall:
(a) Not pursue the customer due diligence process; and
(b) Shall file a STR in accordance with the applicable law.
34. The Reporting Firm is allowed to apply simplified customer due diligence measures, where low risk of
money laundering and terrorist financing has been assessed.
35. The examples of possible simplified customer due diligence measures are:
(a) Verifying the identity of the client and beneficial owner after the establishment of the business
relationship;
(b) Reducing the frequency of client identification updates;
(c) Reducing the degree of on-going monitoring and scrutinizing transactions, based on a reasonable
monetary threshold; and
(d) Not collecting specific information or not carrying out specific measures to understand the purpose
and intended nature of the business relationship, but inferring the purpose and nature from the type
of transaction or business relationship established.
36. Where simplified customer due diligence measures are performed, the details of the risk assessment
and the nature of such measures shall be documented.
37. The simplified due diligence measures are not acceptable:
(a) Whenever there is a suspicion of money laundering or terrorist financing; or

(b) Where specific higher-risk scenarios apply.
38. The Reporting Firm may rely on a third party to conduct customer due diligence on its behalf.
39. In a third party reliance scenario, the third party will usually have an existing business relationship with
the client, which is independent from the relationship to be formed between the Reporting Firm and the
client. For example, where a third party introduced a new client to the Reporting Firm resulting in direct
business relations between the Reporting Firm and the new client. Thus, if the third party has already
performed its own customer due diligence on the new client, the Reporting Firm can then dispense
with performing customer due diligence on the new client if the criteria in paragraph (41), below, are
satisfied.
40. This is contrasted with an outsourcing or agency scenario, in which the outsourced entity applies the
customer due diligence measures on behalf of the Reporting Firm, in accordance with its procedures,
and is subject to the Reporting Firm’s control of the effective implementation of those procedures by
the outsourced entity. The reliance on third parties is not intended to cover such outsourcing scenarios.
41. The Reporting Firm’s reliance on third party shall be subject to the following:
(a) The Reporting Firm shall obtain immediately, the necessary information relating to identification of
the client, identification of the beneficial owner and/or the nature of business of the client;
(b) Take steps to satisfy itself that copies of identification data and other relevant documentation
relating to customer due diligence requirements will be made available by the third party upon
request without delay;

The AML Framework
(c) Satisfy itself that the third party is regulated, supervised or monitored for, and has measures in
place for compliance with, customer due diligence and record-keeping requirements in line with
this Framework; and
(d) Maintain data/ information confidentiality and non-disclosure agreement with the third party.
42. When a Reporting Firm relies on a third party that is part of the same group or a network, the Reporting
Firm may be considered to have applied measures in paragraph 41(b) and 41(c) through its group or
network programme and that paragraph 41(d) is not a necessary precondition to reliance when higher
country risk is adequately mitigated by the Reporting Firm’s or network’s AML/CFT policies if:
(a) That group or network applies customer due diligence and record-keeping requirements, as well
as programmes against money laundering and terrorist financing, in line with standards set by the
FATF; and
(b) The effective implementation of those customer due diligence and record-keeping requirements
and AML/CFT programmes is supervised at a group or network level by a competent authority.
43. When determining in which countries the third party that meets the conditions can be based, Reporting
Firm should have regard to information available on the level of country risk.
44. The Reporting Firm shall have the ultimate responsibility for customer due diligence measures and
ongoing monitoring of its clients, notwithstanding the reliance upon a third party.

The AML Framework
SECTION III
ENHANCED CUSTOMER DUE DILIGENCE
45. The Reporting Firm shall apply enhanced customer due diligence and monitoring measures in the
circumstances where the risk of ML/TF is higher.
46. The Reporting Firm shall apply enhanced customer due diligence, proportionate to the risks of business
relationships and transactions with natural and legal persons, countries/geographies, channels,
typologies identified as high risk by FATF, National Risk Assessment, AML & CFT Supervisor and its
own risk assessment.
In particular, the Reporting Firm shall increase the degree and nature of monitoring of the business
relationship.
Possible circumstances where the risk of ML/TF is higher, include:
(a) The client or potential client is a politically exposed person (“PEP”), or a family member or known
close associate of a PEP;
(b) The client or potential client is a Non-Government Organization (NGO), Not for Profit
Organisation (NPO) or charity;
(c) Business relationship or transaction established with an individual/entity in a high-risk third

country;
(d) Customer risk factors:

(i) The business relationship is conducted in unusual circumstances (e.g. significant
unexplained geographic distance between the Reporting Firm and the client), Non-resident
clients.
(ii) Legal persons or arrangements that are personal asset-holding vehicles.
(iii) Business that are cash-intensive.
(iv) The ownership structure of the entity appears unusual or excessively complex given the
nature of the entity’s business.
(e) Country or geographic risk factors:

(i) Countries identified by credible sources, such as mutual evaluation or detailed assessment
reports or published follow-up reports, as not having adequate AML/CFT systems.
(ii) Countries subject to sanctions, embargos or similar measures issued by, for example, the
United Nations.
(iii) Countries identified by credible sources as having significant levels of corruption or other
criminal activity.
(iv) Countries or geographic areas identified by credible sources as providing funding or support
for terrorist activities, or that have designated terrorist organizations operating within their
country.
(f) Product, service, transaction or delivery channel risk factors:

(i) Anonymous transactions (which may include cash).
(ii) Non-face-to-face business relationships or transactions.
(iii) Payment received from unknown or un-associated third parties.
(g) When client receives donations and is a body corporate, partnership, association or any other
legal arrangement including non-governmental organizations and not for profit organizations;

The AML Framework
(h) When the Reporting Firm discovers that a client has provided false identification documentation
or information and the Reporting Firm proposes to continue to deal with that client;
(i) A complex and unusually large transaction, or there is an unusual pattern of transactions, and
such transaction or transactions have no apparent economic or legal purpose, and
(j) Other case which by its nature can present a higher risk of money laundering or terrorist
financing.
47. Examples of enhanced customer due diligence measures that could be applied for higher risk business
relationships include:
(a) Obtaining additional information on the client (e.g. occupation, volume of assets, information
available through public databases, internet, etc.), and updating more regularly the identification
data of client and beneficial owner.
(b) Obtaining additional information on the intended nature of the business relationship.
(c) Obtaining information on the source of funds or source of wealth of the client.
(d) Obtaining information on the reasons for intended or performed transactions.
(e) Obtaining the approval of senior management to commence or continue the business relationship
(f) Conducting enhanced monitoring of the business relationship, by increasing the number and timing
of controls applied, and selecting patterns of transactions that need further examination.
(g) Requiring the first payment to be carried out through an account in the client’s name with a bank
subject to similar customer due diligence standards.
48. The Reporting Firm shall have senior management approval for establishing or continuing such
business relationships with clients for which enhanced customer due diligence measures are
performed.
49. The Reporting Firm shall perform enhanced customer due diligence for the client and beneficial owners
who are PEPs.
50. For the identification of a PEP, the Reporting Firm shall have appropriate risk management systems to
determine whether a client or the beneficial owner of a client is a:
(a) Foreign PEP;

(b) Domestic PEP;
(c) International organisation PEP; or
(d) Family member or a known close associate of a PEP.
51. The enhanced customer due diligence requirements for a PEP shall also apply to the family members
and close associates of foreign and domestic PEPs.
For the purpose of deciding whether a person is a known close associate of a PEP, the Reporting Firm
need only have regard to information which is in its possession, or to credible information which is
publicly available.
“Family member of a politically exposed person” includes Spouse(s) and children of the PEP, the
spouses of the PEP’s children; and Parents of the PEP;
“Known close associate of a PEP” means:
(a) An individual known to have joint beneficial ownership of a legal entity or a legal arrangement
or any other close business relations with a PEP;
(b) An individual who has sole beneficial ownership of a legal entity or a legal arrangement which
is known to have been set up for the benefit of a PEP.

The AML Framework
52. Existing clients of the Reporting Firm may become PEPs after entering into a business relationship
with the Reporting Firm. Therefore, the Reporting Firm considering the level of risk shall periodically
monitor its existing client base for a change in PEP status.
53. The Reporting Firm shall ensure that enhanced customer due diligence is performed where there is
any business relationship or transaction with a client established in a jurisdiction for which this is called
for by FATF.
54. In addition to the jurisdictions called for by FATF in paragraph (53) above, the Federal Government or
Institute on the advice of the Federal Government, regarding weakness in the AML/CFT systems of
other countries, shall direct the Reporting Firms to adopt enhanced customer due diligence in case of
clients belonging to such countries.
The FMU and SECP may also communicate to the Institute about jurisdictions requiring the enhanced
customer due diligence by the Reporting Firms.
55. The Reporting Firm shall conduct enhanced due diligence of clients that are non-governmental
organizations (NGOs), non-profit organizations (NPOs) and charities. The Reporting Firm shall also:
(a) Ensure that the business relationship may not be used for unlawful objects;
(b) Issue the instruments in the name of the relevant NGO, NPO or charity, as given in its constituent
documents;
(c) Conduct enhanced due diligence of the authorized agents or representatives as well as members
of the governing body of the Trust, NGO, NPO or charity.
(d) Ensure that the authorized agents or representatives as well as members of the governing body of
any Trust, NGO, NPO or charity having existing relationship are not affiliated with any proscribed
or designated individual or entity, whether under the same name or a different name. In case of
any positive match, the Reporting Firm should consider actions required under paragraph (28).

The AML Framework
SECTION IV
RECORD KEEPING
56. The Reporting Firm shall maintain all necessary records relating to the customer due
diligence/enhanced customer due diligence (about the client and beneficial ownership) business
relationships/transactions (domestic and international) for a minimum period of five years of the end of
client relationship or end of the date of transaction, whichever is later, or a longer period if specified in
the AML legislation or where transactions, clients or instruments are involved in litigation or the same
is required by a Court of law or other competent authority.
57. The Reporting Firm shall also keep and maintain all record related to STRs and CTRs filed by it for a
period of at least ten years after such reporting, in accordance with the AML legislation.
58. The records shall be sufficient to permit reconstruction of individual engagements/transactions

including the nature and duration of the business relationship, nature and date of the engagement and
transaction, the type and amount of currency involved and the type and identifying number of any
account involved in the transactions so as to provide, when necessary, evidence for prosecution of
criminal activity and such records may be maintained in paper or electronic form, provided it is
admissible as evidence in a court of law.
59. The Reporting Firm shall ensure, to make available on a timely basis, all risk assessment, customer
due diligence and engagement records to the Institute, FMU and law enforcement agencies, whenever
required.

The AML Framework
SECTION V
INSTITUTE’S AML SELF-REGULATORY SYSTEM
60. The Council shall establish an AML Supervisory Board, which shall be supported by the AML
Supervision Department
61. The AML Supervisory Board shall be responsible for supervising, regulating, implementing and
enforcing the AML Framework and performing such other functions as are necessary for this purpose
and may be delegated to it by the Council.
The AML Supervisory Board shall ensure compliance by members in practice with the provisions and
obligations specified by the AML Act and the regulations issued there under on a risk-based approach
having a clear understanding of the ML and TF risks: (a) present in the country; and (b) associated
with the type of their clients, products and services.
62. The AML Supervisory Board may delegate any of the functions assigned to it to the AML Supervision
Department and its officers.
63. The composition, tenure, duties and other related matters of the AML Supervisory Board are provided
in Appendix A to this Framework.
64. The AML Supervisory Board in addition to its functions under this Framework, shall submit to the
Council an annual report within four (4) months after June 30 of each year, covering its duties under
this Framework (Duties of AML Supervisory Board are mentioned in Appendix A).
AML Review and Validation System
65. The AML Supervisory Board shall establish an ‘AML Review and Validation System’. Under this
system:
(a) All Practicing Firms shall on an annual basis submit ‘Form A’ of Annual Return, by July 31; and
(b) All Reporting Firms shall on an annual basis submit ‘Form B’ of Annual Return, by August 15.
All Firms, in addition to the above Forms of Annual Return, shall supply, in accordance with the terms
and return dates specified, any additional information and/or documentation requested by AML
Supervisory Board/AML Supervision Department in exercising its functions and responsibilities under
the AML Framework.
66. In cases where a Firm fails to comply with paragraph (65), one or more of the following actions may be
taken by the AML Supervisory Board:
(a) Require the submission of relevant Form or other information within the specified time;
(b) Require the partner(s) and/or employees to undergo AML training or CPD activities;
(c) Refer senior management (who is a member of the Institute) of the Firm, as the case may be, to
the Secretary of the Institute for the facts to be laid before the Investigation Committee, if:
i. Such Firm fails to act on (a) or (b) above; or
ii. Material misrepresentation is made by such Firm relating to scope and requirements under
this Framework.
(d) Subject to independent legal advice, may refer a Firm’s or a Member’s material or willful non-
compliance with this Framework or the AML/CFT legislation to the AML Supervisor or other
government agency under the AML/CFT legislation or make a disclosure as required under law.
Such reference or disclosure are not to be taken to breach any restriction, however imposed, on
the disclosure of information.

The AML Framework
67. A member found to be guilty of professional misconduct due to failure in complying with this Framework
shall be sanctioned in accordance with the Chartered Accountants Ordinance, 1961. Such penalty shall
be in addition to any penalty provided under the AML and CFT legislation.
68. The Institute, its Council, AML Supervisory Board members, Investigation Committee members and all
employees of the Institute shall keep confidential all material and information provided by the Reporting
Firm and Practicing Firm in connection with the AML review and validation, whether oral or in writing,
except that such material or information may be disclosed (directly or indirectly) to any person or body
undertaking regulatory or law enforcement responsibilities, for the purpose of assisting that person or
body in exercising their functions or responsibilities or where such disclosure is required by law.
Annual review of Reporting Firm
69. In order to validate the annual returns and information submitted under paragraph (65), AML
Supervisory Board through AML Supervision Department shall perform an annual review of the
Reporting Firms by adopting a risk-based approach. The AML Supervisory Board shall, however, has
discretion to review either all or a selected number of Reporting Firms.
The AML Supervisory Board shall also direct the AML Supervision Department to conduct a review of
any Firm, whether it is a Reporting Firm or a Practicing Firm, on receipt of a complaint from a
government agency.
70. The AML Supervisory Board may also direct the AML Supervision Department to conduct a review of
any Firm, whether it is a Reporting Firm or a Practicing Firm, on receipt of a complaint from any other
person. The AML Supervisory Board shall have the discretion to either first seek a response from the
Firm against whom a complaint has been received or to immediately direct that a review be conducted.
71. The review of the Reporting Firms will be carried out by the AML Supervision Department in the manner
set out below.
Conduct of the Review
72. The AML Supervision Department shall conduct the review of AML/CFT systems and controls of all or
any Reporting Firm, it considers necessary, to:
(a) Check that the AML/CFT risk assessment is up to date;

(b) Check that the AML/CFT controls, policies and procedures are in accordance with the AML
Framework;
(c) Identify any deficiencies in the effectiveness of the risk assessment and the AML/CFT systems
and controls, and issue a report thereon;
(d) Determine the course of action on the deficiencies noted during AML review; and
(e) Carry out any other task that is necessary for the implementation of this framework.
73. The AML Supervisory Board shall convey to the Reporting Firm not less than thirty (30) days in advance
its intent to carry out an annual review of the Firm.
74. Subject to paragraph (76), below, if, on the receipt of the notice under paragraph (73), the Reporting
Firm is of the opinion that it will not be convenient to carry out annual review on the review date, the
Reporting Firm shall, not more than ten (10) business days after service of the review notice, inform
the AML Supervision Department in writing of 3 further dates (being business days) on which AML
Supervision Department can carry out an AML review and validation.
75. The 3 further dates referred to in paragraph (74) above, shall be no later than forty five (45) days of the
review date communicated by the Institute, and the Reporting Firm shall comply with all reasonable
requests by AML Supervision Department to reschedule the date of the review.
76. Above paragraphs (73), (74) and (75) shall not apply where the AML Supervisory Board is of the
opinion that it is in the public interest for an annual review to be conducted with less than thirty (30)
days' notice.

The AML Framework
77. The Reporting Firm shall provide appropriate facilities to the AML reviewer(s) to enable them to carry
out their functions during an onsite review visit.
78. The Reporting Firm shall use best endeavors to ensure that the senior management of the Reporting
Firm is present during the AML review and validation.
79. At the conclusion of the review, any issues or concerns will be notified by the AML Supervision
Department in writing to the Reporting Firm. The Reporting Firm shall, within fourteen (14) days of
service of such notification (subject to any extension granted), provide a response in writing to the AML
Supervision Department, including setting out an action plan to address and rectify such issues or
concerns.
80. On the conclusion of review and on basis of any response received from the Reporting Firm, the AML
review reports prepared by the AML Supervision Department shall be presented before AML
Supervisory Board for approval, except for urgent cases where, with the permission of the Chairman
AML Supervisory Board, a report may be circulated to all members of AML Supervisory Board for
review and approval. At least three (3) members of the AML Supervisory Board including the Chairman
shall approve the circulated report. Reports approved by circulation shall be ratified in the next meeting
of the AML Supervisory Board.
81. After approval by the AML Supervisory Board, the final report as per the format/form established by
the AML Supervisory Board including deficiencies if any shall be issued to the Reporting Firm.
82. If the AML Supervisory Board is not satisfied with the response received from the Reporting Firm under
paragraph (81) above, it may take one or more of the following actions:
(a) Conduct a further review of the Reporting Firm;
(b) Require the partner(s) and/or employees to undergo additional AML training or Continuing
Professional Development (CPD) activities as recommended by the AML Supervisory Board;
(c) Arrange a fresh review of the Reporting Firm after the period of 90 days (subject to any extension
granted by the AML Supervisory Board);
(d) Subject to independent legal advice, may refer a Firm’s or a Member’s material or willful non-
compliance with this Framework or the AML/CFT legislation to the AML Supervisor or other
government agency under the AML/CFT legislation or make a disclosure as required under law.
Such reference or disclosure are not to be taken to breach any restriction, however imposed, on
the disclosure of information.
(e) May refer:
I. Partner(s) responsible for client’s business relationship/transaction and is considered non-

compliant with AML/CFT requirements under this Framework; and/or
II. Senior management (who is a member of the Institute) of the Reporting Firm
To the Secretary of the Institute for the facts to be laid before the Investigation Committee, if:
(i) The Reporting Firm fails to implement the action plan submitted at the time of earlier AML
review of the Reporting Firm under paragraph (79) above;
(ii) Significant deficiencies in the design and implementation AML/CFT programme, policies, or
procedures are noted during the Reporting Firm’s AML Review; or
(iii) Material misrepresentation is made by the Reporting Firm during the process of the AML
review and validation.

The AML Framework
SECTION VI
COORDINATION WITH THE AML SUPERVISOR
83. The AML Supervisory Board shall submit to the AML Supervisor of the accountancy sector, designated
by the Federal Government, annually, the report prepared under paragraph (64). The report shall be
submitted within one (1) month of its submission to the Council. The AML Supervisory Board shall also
provide the information reasonably required by the AML Supervisor in connection with the annual
report, in accordance with the applicable law.
84. The AML Supervisory Board shall coordinate with the AML Supervisor, with regard to the Institute’s
Self-Regulatory AML System, in accordance with the applicable law. In addition to the annual report to
be submitted by AML Supervisory Board, the AML Supervisor may request for additional information
from the AML Supervisory Board, if needed.
85. For the sake of clarity, the AML Supervisor will not directly be involved in the supervision of the
Members of the Institute. It will be the AML Supervisory Board that shall provide information and take
any such action that the AML Supervisor requires and the AML Supervisory Board deems appropriate.
These actions include:
(a) Request for information from the Members of the Institute;
(b) Interview or access to the Members of the Institute; and
(c) Any function of the Institute un-related to AML supervision carried out by the Council under the

Appendix A
AML Supervisory Board (Please refer to paragraph (64) of the Framework)
Composition
(1) The AML Supervisory Board shall comprise of five (5) members, nominated as follows:
(a) One member shall be nominated by the SECP;
(b) One member shall be nominated by the FMU; and
(c) Three members shall be nominated by the Council.
(2) The Chairman of AML Supervisory Board shall be nominated by the Council.
(3) The Council nominations would be subject to the condition that maximum two such nominations
could be of the Council members.
Appointment and Tenure
(4) The relevant nominating body shall nominate an individual as member of the AML Supervisory Board
in accordance with this Framework within thirty (30) days of effective date of this Framework.
(5) A member of the AML Supervisory Board shall serve for two (2) years, unless he/she ceases to be
a member.
(6) A member may serve up to two terms of two (2) years each. After completion of first term of two (2)
years, an individual would be eligible for re-nomination by the relevant appointing body, for another
term of two (2) years.
(7) In case of any casual vacancy the new member shall be nominated by the relevant appointing body
within thirty (30) days, for remaining period of the member who vacated the position.
(8) In computing the number of terms under clause (6), the term served by a member to fill in the casual
vacancy shall be disregarded.
Cessation of Membership
(9) A member of AML Supervisory Board shall cease to be a member if he:
(a) is replaced by his nominating body;
(b) has given his resignation in writing addressed to the Secretary of the Institute and the Council
has accepted the same;
(c) becomes of unsound mind;
(d) has applied to be adjudicated as an insolvent and his application is pending;
(e) is an undischarged insolvent;
(f) has been convicted by a court of law for an offence involving moral turpitude;
(g) has displayed lack of fiduciary behavior and a declaration to this effect has been made by a
court;
(h) is removed from the membership of the Institute; or
(i) fails to attend three consecutive meetings of the AML Supervisory Board without leave of
absence from the Chair.

Appendix A
Duties of AML Supervisory Board
(10) The AML Supervisory Board shall:
(a) Identify, assess and update the risks of ML and TF to which the Institute’s members in practice
are subject;
(b) Adopt a risk-based approach to the exercise of supervisory functions under this Framework;
(c) Carryout the monitoring and supervision of the Institute’s members in practice under the AML
review and validation system;
(d) Set the format and parameters of the AML review report of the Reporting Firms;
(e) Collect such information as it considers necessary for the purpose of AML review and validation
system;
(f) Approve the report on the Reporting Firm’s AML review and validation;
(g) Refer the matter of a member to the Investigation committee of the Institute for supervisory
action;
(h) Refer the matter of a Firm or a Member of the Institute, to the AML Supervisor, FMU or other
government agency for supervisory action;
(i) Keep a record in writing of the significant decisions and actions it has taken in the course of its
supervision, and of its reasons for deciding not to act in a particular case;
(j) Have sufficient resources in order to carry out its duties. It shall also ensure that adequate
training is carried out of the relevant staff for performing AML Review and Validation System;
(k) Evaluate and assess on a regular basis the performance of the AML Supervision department;
(l) Designate a person to liaison with AML Supervisor and other AML related government agencies,
and monitor and manage the Institute’s compliance with its responsibilities as a self-regulatory
body under this Framework;
(m) Issue guidance material to facilitate the members on how to meet their AML/CFT legal
obligations; and
(n) Perform any other function relating to the Institute’s AML Self-Regulatory Supervisory role under
this Framework, or as directed by the Council.
Duties and Powers of the Chairman of AML Supervisory Board
(11) The Chairman shall be responsible for the following:
(a) Chair the meetings of AML Supervisory Board;
(b) Ensure timely preparation and approval of agenda, working papers, minutes etc. of the meeting;
(c) Ensure that a meeting of AML Supervisory Board is planned effectively, conducted according to
this Framework and that matters are dealt with in an orderly and efficient manner;
(d) Recommend removal of member(s) to the nominating body in case a member of AML
Supervisory Board is absent for three consecutive meetings of AML Supervisory Board;
(e) Refer the matter to the nominating body for filling up of any casual vacancy;
(f) Allow any person to attend the meeting of the AML Supervisory Board; and

Appendix A
(g) Any other function as required/prescribed in the framework.
Secretary of AML Supervisory Board
(12) The head of AML Supervision Department, shall act as the secretary of the AML Supervisory Board.
(13) Secretary shall ensure that the AML Supervisory Board receives information and papers in a timely
manner to enable full and proper consideration to be given to the related issues.
Quorum
(14) Minimum three (3) members of AML Supervisory Board shall form the ‘Quorum’ for a meeting.
Meetings
(15) The AML Supervisory Board shall meet at least twice in a year, and otherwise as required.
(16) Meetings of AML Supervisory Board shall be convened by the secretary of the AML Supervisory
Board with the approval of the Chairman.
(17) The Chairman shall set the agenda of the meeting of the board and ensure that reasonable time is
available for discussion of the same.
(18) The following persons, may attend a meeting of the AML Supervisory Board:
(a) A member of the AML Supervisory Board;
(b) The secretary to the AML Supervisory Board;
(c) Any staff of Institute whose role it is to advise or inform the AML Supervisory Board on Institute’s
bye-laws, regulations or the law, or its responsibilities, duties, powers and procedures under the
Chartered Accountants Ordinance, 1961 and this Framework; and
(d) Any other person whom the Chairman permits.
(19) In the absence of the Chairman, the members present shall elect amongst themselves a Chairman,
who shall preside over the meeting of AML Supervisory Board.
(20) The meetings of the AML Supervisory Board may be conducted via video conference and other
alternative means, depending on the geographical spread of members.
(21) AML Supervisory Board meetings cannot be attended by proxy by any of its members.
(22) The AML Supervisory Board may also communicate between meetings by electronic or non-
electronic correspondence. For example, to obtain comment on any urgent matter or to poll initial
views on any matter for future discussion.
(23) At least three (3) members of the AML Supervisory Board including the Chairman shall approve the
AML Report of a firm.
All other matters before the AML Supervisory Board shall be decided by a majority of votes of the
members present in the meeting. In the event of equality of votes, the person presiding shall have a
casting vote in addition to his own vote.
Notice of meetings
(24) A notice in writing of each meeting of the AML Supervisory Board, confirming the venue, time and
date together with an agenda of items to be discussed, shall be forwarded to each member of the
AML Supervisory Board no later than seven business (7) days before the date of the meeting, except
in the case of emergency meetings, where the notice period may be reduced or waived. Supporting
papers shall be sent to members at the same time.

Appendix A
(25) Notices, agendas and supporting papers may be sent in electronic form.
Minutes of meetings
(26) The secretary shall minute the proceedings and decisions of all meetings of the AML Supervisory
Board, including recording the names of those present and in attendance.
(27) Draft minutes of AML Supervisory Board after approval by the chairman will be circulated promptly
to all members of the AML Supervisory Board.
Retention of record
(28) For all the reviews conducted, the AML Supervisory Board shall retain all AML Review reports issued
to the Reporting Firms for a period of ten years from the date of such reviews. Working papers
relating to AML review shall be retained at least for a period of ten years from the date of AML report.
All other records and documentation relating to the functions performed under this Framework shall
be retained for ten years from the date of the related document/record.
In case of any litigation in the court of law, the AML review reports and the working papers relating
to AML Review of the concerned Reporting Firm or member shall be retained until the conclusion of
the litigation.
........................

Appendix B
FORMS

Annual Return
Form A
(Required to be submitted by all firms)
Response
1 Name of the reporting entity: (Mention firm name)
2 Period of Form A of the Annual Return: (Mention the period 'From - to", information in Form A
covers)
3 Address of main office of the firm: (Mention firm's postal address and telephone number)
4 Details of partner designated to receive AML/CFT related information from external

stakeholders: (Please provide Name, Position, contact details including official telephone number
and email address)
4 Partners of the firm: (Mention number)
5 People working for the firm: (Mention number)
6 Physical branch/office location of firm in Pakistan, other than the main office: (Mention the
addresses)
7 Did the firm provide any of the AML/CFT regulated services (i.e. Accountant and Trust or
Company Service Provider) mentioned in the AML Framework? (Yes / No)*
8 If your answer to question 7 (above) is "Yes", please indicate the AML/CFT regulated services
performed by the firm: (Accountant / Trust or Company Service Provider / Both)*
* Please select one
Declaration and signature

I confirm that I have the authority to submit this form on behalf of the reporting entity (Name of the Firm) . I have reviewed the answers
and information and I confirm that I am satisfied that, to the best of my knowledge, after undertaking all reasonable inquiries, all
answers are true and correct.
Date:
Signature:
Full name:
Position:
Official email address:
NOTE
Under the AML Framework, Firm shall:
1.1 Submit Form A by July 31, 2020 (i.e. Submit Form A in accordance with the requirements of the Transitional Provisions of the AML Framework. Based
First submission) on the services rendered to (i) existing clients as of the effective date of the AML Framework and (ii) new clients
during the period from effective date of the AML Framework to June 30, 2020.
1.2 Subsequently submit Form A by 31 Subsequently submit Form A annually. Based on the services rendered to clients during the period of last 12
July each year months, i.e. 01 July to 30 June.
Annual Return
Form B
(Required to be submitted by the Reporting Firms under the AML Framework)
Response Explanation
1 Reporting Firm
1.1 Name of the Reporting Firm: (Mention firm name)
1.2 Period of Form B of the Annual Return: (Mention the period 'from - to", information in Form B covers)
1.3 Date of last submitted Form B of Annual Return (if any): (Date)
1.4 Date of Institute's last AML/CFT review of the Reporting Firm: (Date)
1.5 Has the Reporting Firm been asked to provide AML/CFT relating information to FMU/ Government
agencies/ court of law? (Yes / No)*
2 AML/CFT Risk Assessment
2.1 Has the Reporting Firm carried out a AML/CFT risk assessment? (Yes / No)*
2.2 When was the most recent AML/CFT risk assessment completed and documented? (Please mention the
date)
2.3 Has the Reporting Firm considered the latest National Risk Assessment (NRA) (subject to its availability
by the relevant government authority) while assessing its risks relating to ML and TF? (Yes / No)*
3 AML/CFT Programme
3.1 Does the Reporting Firm have written policies and procedures, designed to detect ML/TF, relating to:
- Customer due-diligence and On going Monitoring (Yes/No)*
- Reporting knowledge or suspicion of money laundering (Yes/No)*
- Record-keeping (Yes/No)*
- Risk assessment and management (Yes/No)*
- Employee hiring and ongoing training (Yes/No)*
- Compliance management (Yes/No)*
3.2 Does the Reporting Firm have procedures to identify and verify the identity of—
- A new client (including the client’s beneficial owners or any person acting on behalf of a client)? (Yes/No)*
- A person seeking to conduct an occasional transaction or occasional activity through the Reporting Firm?
(Yes/No)*
- Existing clients, according to the level of risk involved, if there has been a material change in the nature or
purpose of the business relationship and Reporting Firm considers that it has insufficient information about the
client? (Yes/No)*
3.3 Has the Reporting Firm designed exception handling procedures for issues related to customer due
diligence? (Yes/No)*
3.4 Has the Reporting Firm provided relevant partners and relevant staff with appropriate training of AML /
CFT? (Yes / No)*
3.5
When was the most recent internal review of Reporting Firm's AML/CFT programme completed? [Date]
3.6 Were significant deficiencies identified by the Reporting Firm during the most recent internal review of
Reporting Firm's AML/CFT programme? (Please mention the deficiencies noted)
4 Specified services
4.1 Has the Reporting Firm acted as a formation agent of legal persons or arrangements? (Yes / No)*
4.2 If you answered “yes”, please mention how many of the following entities have been formed. (Circle the
estimated number)
Number of entities
Companies 0 1-5 6-15 25+
Trusts (excluding NGOs)

0 1-5 6-15 25+
Partnerships 0 1-5 6-15 25+
NGOs (including charitable

trusts, societies and other
charitable entities) 0 1-5 6-15 25+
Other [Please specify] 0 1-5 6-15 25+
4.3 Has the Reporting Firm incorporated companies or formed trusts or other legal structures or
arrangements in jurisdictions outside Pakistan? (Yes/No)*
4.4 Has the Reporting Firm rendered the services by arranging for a person to act as a nominee director or
trustee in relation to legal persons or legal arrangements? (Yes/No)*
4.5 If you answered “yes”, please mention the number of:
Nominee directorship roles: [Number]
Trustee roles: [Number]
4.6 If you answered “yes”, please mention how many of the entities (where the firm has any of the above
roles) were formed/established by the Reporting Firm. (Number)
4.7 Has the Reporting Firm provided a registered office or a business address, a correspondence address,
or an administrative address for a company, or a partnership, or any other legal person or arrangement?
(Yes/No)*
4.8 If you answered “yes”, please encircle the number of companies, partnerships, or other legal persons or
arrangements that Reporting Firm provides these services to. (Encircle the number)
Number of entities
Companies: 0 1-5 6-15 25+
Trusts (excluding charitable trusts): 0 1-5 6-15 25+
Partnerships 0 1-5 6-15 25+
NGOs (including charitable

trusts, societies and other
charitable entities) 0 1-5 6-15 25+
Other: [specify]
4.9 Has the Reporting Firm managed client funds (other than sums paid as fees for professional services),
accounts, securities, or other assets? (Yes / No)*
4.10 If you answered “yes”, estimate the value of funds managed. (Circle the estimated value of funds managed)
(Rupees)
0 1 - 100,000 101,000 - 1,000,000 1,000,000+
4.11 Has the Reporting Firm provided following services by engaging in or giving instructions on behalf of a
client to another person for:
(a) A transfer of beneficial interest in land or other real estate property. (Yes/No)*
(b) A transaction on behalf of any person in relation to the buying, transferring, or selling of a business or legal
person (for example, a company) or any other legal arrangement. (Yes/No)*
(c) A transaction on behalf of a client in relation to creating, operating, and managing a legal person (for
example, a company) or any other legal arrangement. (Yes/No)*
4.12 Estimate the total value of the transactions listed in 4.11 above (excluding your professional fees). (Circle
the total estimated value)
(Rupees)
0 1 - 1,000,000 1,000,001 - 3,000,000 3,000,000+
4.13 Did the Reporting Firm introduce any new product, service, technology relating to accountant or trust &
company service provider? (Yes/No)*
4.14 If you answered "yes", please specify the new product, service or technology relating to AML/CFT
regulated services under the AML Framework?
4.15 When providing AML/CFT regulated services, has the Reporting Firm used intermediaries or agents in
Pakistan or outside Pakistan? (Yes/No)*
5 Clients
5.1
Has the Reporting Firm undertaken customer-due diligence (CDD) of all new clients? (Yes/No)*
5.2 Has the Reporting Firm undertaken CDD of existing clients, according to the level of risk involved, if
there has been a material change in the nature or purpose of the business relationship and the Reporting
Firm considers that it has insufficient information about the customer? (Yes/No)*
5.3 How many clients the Reporting Firm conducted CDD in the course of carrying out AML/CFT regulated
services under the AML Framework: [Mention the number]
5.4 How many of the clients are:
• classified as politically exposed persons (PEP). (Include clients that are beneficially owned or are controlled by,
or for the benefit of, a PEP): [number]
• a trust or another vehicle for holding personal assets: [number]
• an overseas government body: [number]
• a Pakistan resident individual: [number]
• a Pakistan resident entity (including companies, partnerships, trusts, charities, and other incorporated or
unincorporated entities): [number]
• a non-resident individual: [number]
• a non-resident entity (including companies, partnerships, trusts, charities, and incorporated societies):
[number)
5.5 Has the Reporting Firm provided AML/CFT regulated services under the AML Framework to other
DNFBPs? (Yes / No)*
5.6 Has the Reporting Firm identified any client from the FATF designated 'high-risk' countries? (Yes / No) *
5.7 Has the Reporting Firm carried out screening of existing clients, after issuance of notification/SRO by
the Ministry of Interior/ NACTA or Ministry of Foreign Affairs relating to designated and proscribed
persons. (Yes / No) *
5.8 If answer to above is 'yes', please mention the number of times the screenings have been carried out.
(Number)
5.9 Has the Reporting Firm identified any designated / proscribed person during CDD screening
procedures? (Yes / No) *
5.1 If answer to above is 'yes', did the Reporting Firm take action under the AML Framework and AML law
(including immediate reporting to relevant government agencies)? (Yes / No) *
5.10 Has the Reporting Firm rejected client(s) due to incomplete / negative CDD? (Number)
5.11 Has the Reporting Firm outsourced any CDD requirements to third parties? (Yes/No)*
6 Record Keeping
6.1 Has the Reporting Firm complied with the record keeping requirements of the AML Framework? (Yes /
No) *
7 Reporting
7.1 Did the Reporting Firm file STR with the FMU? (Mention number of STR(s) filed, if any)
7.2 Did the Reporting Firm file CTR with the FMU? (Mention number of CTRS filed, if any)
7.3 Has the Reporting Firm been required to report any matter under the AML or CFT legislations to a
government agency or court of law. (Yes / No)*
8 Supplementary questions
8.1 Does the Reporting Firm accept cash or bearer cheque (physical currency) as a payment of professional
fee? (Yes/No)*
8.2 Has the Reporting Firm sent/received funds from other countries (including the payment of fees either
on own behalf or on behalf of someone else)? (Yes/No)*
8.3 If you answered “yes”, estimate the total value of transactions: (Mention the estimated total value of
transactions for the past year)
Declaration and signature

I confirm that I have the authority to submit this form on behalf of the Reporting Firm (name of the firm). I have reviewed the
answers and information and I confirm that I am satisfied that, to the best of my knowledge, after undertaking all reasonable
inquiries, all answers are true and correct.
Date:
Signature:
Full name:
Position:
NOTE
1. Under the AML Framework, the Reporting Firm shall:
1.1 Submit Form B by Submit Form B in accordance with the requirements of the Transitional Provisions of the AML
August 15, 2020 (i.e. Framework. Based on the AML/CFT regulated services that are provided to (i) existing clients as
First submission) of the effective date of the AML Framework and (ii) new clients during the period from effective
date to June 30, 2020.
1.2 Subsequently submit Subsequently submit Form B annually by 15 August. Based on the AML/CFT regulated services
Form B by 15 August provided to clients during the period of last 12 months, i.e. 01 July to 30 June.
each year
The Institute of
CA
PAKISTAN
Chartered Accountants
of Pakistan HEAD OFFICE
Directive 4.25
AUDIT PRACTICE REVIEW & SUPPORT PROGRAM (APRSP)
The Institute of Chartered Accountants of Pakistan being a member of the International

Federation of Accountants (IFAC) needs to mandatorily comply with Statements of Membership
Obligations (SMOs) issued by IFAC.
IFAC's SMO-1 Quality .Assurance requires that a mandatory quality assurance review system should
be in place for firms performing Audit, Assurance and Related Services to ensure that the firms
and its partners comply with all applicable professional standards with particular emphasis on
strengthening the quality of audit assignments. Similar programs for ensuring quality of practice
are followed by institutes globally including those operating in Bangladesh, Sri Lanka, UK and
Malaysia.
ICAP already runs a Quality Control Review (QCR) Program under QCR framework since 2003.
The QCR framework covers firms that are engaged in statutory external audits of:
• Public Interest Companies;

• Large Sized Companies; and
• Public Interest and Large Sized Companies which are either associations not for profit or
limited by guarantee.
Now the Institute is introducing 'Audit Practice Review & Support Program' for all the Non-
QCR rated firms engaged in Audit, Assurance and Related Services.
The APRS Program approved by the Council, after due process, is attached herewith. It outlines:
(a) Objectives & Scope of the program;

(b) Selection of firms for review under the Program and the review process;
(c) Details of Appellate Forums and Appeal Process; and
(d) Support by the Institute.
The APRS Program is effective from October 1, 2020.
The Program can also be accessed at hltPS://www.icap.org.pk/aprsrli
(331" meeting of the Council- September 4-5, 2020)
Syed Masood Akhtar

Secretary
(Established under the Chartered Accountants Ordinance, 1961 - X of 1961)
Chartered Accountants Avenue, Clifton, Karachi-75600 (Pakistan). Ph: (92-21) 111-000-422, Fax: 99251626
Website: www.icap.org.pk. E-mail: [email protected]
Directive 4.25
AUDIT PRACTICE REVIEW &

SUPPORT PROGRAM
[Not Applicable to QCR Rated Firms]
September 11, 2020

AUDIT PRACTICE REVIEW & SUPPORT PROGRAM (APRSP)
TABLE OF CONTENTS
Section Particulars Page

Reference No.
Preamble / Background 3
Part – I Scope, Definitions & Objectives
1.1 Scope 6
1.2 Definitions 6
1.3 Objective of the APRSP 9
Part - II Selection & Arrangement of Reviews

2.1 Firms subject to Practice Review 11
2.2 Selection for Review 11
2.3 Arrangement of Reviews 14
Part - III Directorate of Practice Review

3.1 Establishment of the Directorate of Practice Review (DPR) 16
3.2 Functions & Responsibilities of the DPR 16
3.3 Powers of the Reviewer 17
Part - IV The Review Process & Report

4.1 Review Process 19
4.2 Review Report 20
4.3 Consideration & Determination by the Committee 21
Part - V Retention & Confidentiality

5.1 File Retention 25
5.2 Confidentiality 25
Part - VI Appeal
6.1 Appellate Forum 27
6.2 Filing of Appeal 28
Part - VII Miscellaneous

7.1 Failure to Comply 30
7.2 Amendments / Removal of Difficulties / Effective Date 30
Part - VIII Support by the Institute

8.1 Technical Helpline 32
8.2 Frequently Asked Questions (FAQs) 32
Page 2 of 34
Preamble/Background
The Institute of Chartered Accountants of Pakistan (the Institute) is a member of the

International Federation of Accountants (IFAC) and Statements of Membership
Obligations (SMOs) by IFAC are issued, which are needed to be mandatorily
complied by its member bodies. The SMO-1 (Quality Assurance) of the IFAC requires
that a mandatory quality assurance review system should be in place for firms
performing audits of financial statements by virtue of which it should be ensured that
the firms and its partners are in compliance with the quality standards for professional
assignments. Similar programs for ensuring quality of practice are followed by
international institutes globally including those operating in Bangladesh, Sri Lanka,
UK and Malaysia.
Building public trust in the work performed by practicing members is one of the key
priorities of the Institute, therefore, improvements in the existing practice regime is
also one of the strategic objectives approved by the Council of the Institute.
Accordingly, the Council of the Institute decided to introduce this ‘Audit Practice
Review & Support Program’ to ensure maintenance of quality standards of the
professional practices. This will ensure that the work carried out by practicing
members complies with Professional Standards and is in accordance with the
directives of the Council and other laws, regulations and pronouncements of
professional bodies as applicable in Pakistan.
The ‘Audit Practice Review & Support Program’ provides the application of best
practices followed by professional institutes around the world. The ‘Audit Practice
Review & Support Program’ will run in parallel with the Quality Control Review
(QCR) Program and firms which have attained satisfactory QCR rating under the
QCR program of the Institute are excluded from the ambit of the ‘Audit Practice
Review & Support Program’.’.
The key features of the ‘Audit Practice Review & Support Program’ are as follows:
Page 3 of 34
(i) Review of engagements to ensure that Audit, Assurance and Related Services
rendered by firms, comply with the Chartered Accountants Ordinance, 1961,
Chartered Accountants Bye-Laws, 1983, Professional Standards, Training
Regulations and Directives of the Council of the Institute;
(ii) Applicable to - firms carrying out Audit, Assurance or Related Services;
(iii) Establishment of a Directorate of Practice Review; and
(iv) Constitution of an Independent Appellate Forum.
The Council believes that the effective implementation of the Program will go a long
way in the development of the profession.
Page 4 of 34
PART I – SCOPE, DEFINITIONS AND
OBJECTIVES
Page 5 of 34
1.1. Scope
The ‘Audit Practice Review & Support Program (APRSP, the Program)
applies to all firms providing Audit, Assurance or Related Services conducted
under legal and financial reporting framework as applicable in Pakistan.
This document prescribes the objectives and scope of the Program,

composition, responsibilities and functions of the Directorate of Practice
Review and the Appellate Forum. The Members’ Affairs Committee formed by
the Council shall be responsible for carrying out the implementation of the
Program.
1.2. Definitions
In this framework, unless there is anything repugnant in the context:
1.2.1. “Additional Practice Review” means review conducted due to

circumstances provided in paragraph 2.2.6 below;
1.2.2. “Audit, Assurance and related services partner” means a partner

as identified by the Firm to the Institute;
1.2.3. “Audit, Assurance or Related Services” “Audit” means an audit

assignment carried out by a Firm in respect of which the audit report is
issued under International Standards on Auditing as applicable in
Pakistan. “Assurance” means an assurance engagement in respect of
which the assurance report is issued under International Standards on
Assurance Engagement as applicable in Pakistan. “Related services”
refer to assignments performed under the pronouncement of
International Audit and Assurance Standards Board (IAASB) on related
services. These assignments carried out together or separately are
referred to as “Audit, Assurance or Related Services”;
Page 6 of 34
1.2.4. “Committee” means the ‘Members Affairs Committee’ formed by the
Council of the Institute;
1.2.5. Reviewer” means a Chartered Accountant appointed by the Institute

to carry out Practice Review under this Program and having post-
qualification experience including in a professional QCR rated firm of
Chartered Accountants, as may be prescribed by the Committee. ;
1.2.6. “Chartered Accountant” means a person who is a member of the

Institute;
1.2.7. “QAB” means the Quality Assurance Board;
1.2.8. “Firm” means a sole practitioner or a partnership of the members of

the Institute engaged in providing Audit, Assurance or Related
services;
1.2.9. “Non-Reportable Matters” means matters which are insignificant

departures from the requirements of the Program and are not
considered as Reportable Deficiencies;
1.2.10. “Practice Review” means a review performed under the Program to

ensure that the work carried out by the Firm or Member(s) is in
compliance with professional standards and with the requirements
mentioned in clause 1.3.1 below;
1.2.11. “Director of Practice Review” means a Chartered Accountant

appointed by the Institute under the Program, with post-qualification
experience including in a professional QCR rated firm of Chartered
Accountants as may be prescribed by the Committee, and may include
a Senior Manager of equivalent qualification and prescribed experience
appointed in place of the Director, as deemed appropriate;
Page 7 of 34
1.2.12. “Re-Review” means re-review conducted as prescribed under
paragraph 4.3.1(c) of this Program on the direction of the Committee
on some or all of the aspects covered in clause 1.3.1;
1.2.13. “Practice Review Year” means a period of twelve months

commencing on 1st July of any year and ending on 30th June of
following year;
1.2.14. “Professional Standards” means the International Standards on

Auditing (ISAs), International Standard on Quality Control 1 (ISQC 1),
Related Services Pronouncements, Ethical Standards, Directives and
Pronouncements issued by the Institute, Legal and Regulatory
Framework and other requirements with respect to Audit, Assurance or
Related Services as applicable in Pakistan;
1.2.15. “Public Practice Program” means a training program prescribed by

the Council and to be completed by a practicing member carrying out
Audit, Assurance or Related Services.
1.2.16. “Reportable Deficiencies” mean matters which are departures from

the requirements of the Program or Professional Standards and are
further categorized as either “significant” (e.g. important to the quality
of the work performed to support the report issued by the practicing
member or important to the usefulness of the financial statements); and
1.2.17. “Partner” means a Chartered Accountant identified as a partner in a

firm of chartered accountants on “Form C” submitted to the Institute.
Any term not defined under this Program shall have the same meaning as
prescribed in the Chartered Accountants Ordinance, 1961 (here-in-after
referred to as ‘the Ordinance’) or the Chartered Accountants Bye-Laws, 1983
(here-in-after referred to as ‘the Bye-Laws’) or any other Directive or
pronouncement of the Institute.
Page 8 of 34
1.3. Objective of the APRSP
1.3.1 The objective of the Program with respect to a firm is to ensure that:
a) in providing Audit, Assurance or Related Services, a firm complies

with Professional Standards; and
b) it complies with Training Regulations for Firms employing students

as given in Council’s Directive(s);
c) Members are compliant with CPD requirements of the Institute.
1.3.2. In order to achieve the above objectives there shall be periodical

Practice Review of the Firms. The scope of the Practice Review shall
only cover matters noted in 1.3.1 above.
1.3.3. Further, the Program incorporate requirements for members to

complete the Public Practice Program prescribed by the Institute in
order to properly equip and remain updated with knowledge of the
matters related to the public practice concerning Audit, Assurance or
Related Services of the firm.
Page 9 of 34
PART II - SELECTION AND ARRANGEMENT
OF REVIEWS
Page 10 of 34
2.1. Firms subject to Practice Review
2.1.1. All firms engaged in providing Audit, Assurance or Related Services

shall be subject to Practice Review under this Program.
2.1.2. Where the name of the firm is appearing in the list of firms having
satisfactory QCR rating, that firm shall be excluded from the purview of
this Program. If the name of the firm is removed from the list of firms
having satisfactory QCR rating, that firm shall be subject to this
Program if it does not apply for review under the QCR Program within
one year from the date of removal from the list of firms having
satisfactory QCR rating.
2.1.3. A firm may apply for an exemption from Practice Review by filing an
Exemption Form in a prescribed format with the Director of Practice
Review certifying that:
a) The firm has not been engaged in Audit, Assurance or Related

Services during the two years preceding the end of last financial
year; or
b) The firm will discontinue the provision of Audit, Assurance or

Related Services within three months from the date of the notice of
Practice Review. However, firms which have provided Audit,
Assurance or Related Services to public limited companies (other
than those which are already covered under the QCR Program)
during the preceding one year from the date of Review shall be
subject to Practice Review, for that period.
2.2. Selection for Review

2.2.1. A member obtaining a practicing license for the first time and
establishing a new firm, either as a sole proprietor or in partnership with
others, in which either the sole proprietor or at least one Partner is
Page 11 of 34
engaged in providing Audit, Assurance or Related Services, shall be
subject to Practice Review after completing its two years of operation.
2.2.2. A firm, already in practice on the Effective Date of the Program and in
which at least one member is engaged in providing Audit, Assurance
or Related Services shall be subject to Practice Review at any time
after one year of effective date of the Program and thereafter, every
two and a half years from the date of its last Practice Review. However,
the Director of Practice Review may, on special request of the firm,
grant an extension in the Practice Review for a period not exceeding
three months, from the date the Practice Review is due to commence.
2.2.3. Up to fifty percent Members who are engaged in providing Audit,

Assurance or Related Services in a single firm shall be subject to
Practice Review referred to in clause 2.2.2.
Every firm shall ensure that all members engaged in providing Audit,
Assurance or Related Services shall be subjected to Practice Review
at least once within a period of five years. However, any delay on the
Part of Directorate of Practice Review to commence, conduct or
complete the Practice Review during the stipulated time shall be
excluded from this period.
2.2.4. Notwithstanding anything else contained in this Program, a firm can be

subjected to Re-Review in the event, the Committee, through a
resolution passed by at least three fourth majority of its members,
concludes that a firm or a member has not complied with the
requirements specified in paragraph 1.3.1.
2.2.5. Notwithstanding any previous Practice Review, a Firm can be subject

to additional Practice Review, if the Committee so concludes, in the
case of a change in the partnership profile of the Firm. For the purpose
Page 12 of 34
of this clause, the term “change” means:
(i) Induction of new member(s) by a Firm, which

constitutes 50% or more of the firm’s total partners’
strength.
(ii) Change in the role of existing partner(s) who was/were

not previously providing Audit, Assurance or Related
Services.
The member(s) and or partner(s) referred to in sub

clause (i) and (ii) above will be subject to Practice
Review after completion of one year from the date of
admission, or the change in role, of such member(s) or
partner(s) as the case may be.
(iii) Merger of a firm with another where one of the firms

has not been engaged in the provision of Audit,
Assurance or Related Services and the partner(s) in
such firm has/have not been subject to Practice
Review. Such partner(s) shall be subject to Practice
Review after completion of one year from the date of
merger.
2.2.6 If a case involving a member at the time of commencement of Practice

Review, is pending before the Investigation Committee, the Director of
Practice Review may, with the approval of the Committee, postpone
the Review of the member for the time being to the extent of that
particular assignment/client of the firm in respect of which the
investigation proceedings are in process. The Practice Review may
however, be commenced again with the approval of the Committee.
2.2.7 Notwithstanding anything contained in paragraphs 2.2.1 to 2.2.6 above,

Page 13 of 34
the Director of Practice Review, in consultation with the Chairman of
the Committee, may decide to defer the Practice Review if the
circumstances so require. However, in such cases Director of Practice
Review shall report the reasons for the consideration and approval of
the Committee in its next meeting.
2.3. Arrangement of Reviews
2.3.1. The Director of Practice Review shall serve a notice to a Firm indicating
that Practice Review of the firm is due.
2.3.2. The firm shall complete and file a Planning Questionnaire, in a format
prescribed by the Committee, with the Director of Practice Review
within 30 days of the notice issued under paragraph 2.3.1.
2.3.3. The Director of Practice Review shall consider the information

contained in the Planning Questionnaire submitted by the firm and
assign one or more Reviewer(s) to conduct the review.
2.3.4. The Director of Practice Review shall give notice in writing in a form to
be prescribed by the Committee giving the name(s) of the assigned
Reviewer(s) and the commencement date of a firm’s review.
2.3.5. The notice shall be served upon the firm at least 30 days prior to the
commencement date or such shorter period as may be mutually agreed
by the firm and the Director of Practice Review.
2.3.6. Within 15 days of receipt of the notice pursuant to section 2.3.4, the
firm may file an objection in writing to the named Reviewer(s) for any
other valid reason.
2.3.7. The Director of Practice Review, in consultation with the Chairman of

the Committee, shall consider the objection and may assign another
Reviewer(s) on being satisfied that there is a reasonable basis for the
objection.
Page 14 of 34
PART III - DIRECTORATE OF PRACTICE
REVIEW
Page 15 of 34
3.1. Establishment of the Directorate of Practice Review (DPR)
There shall be a DPR in the Institute for carrying out the activities and
functions under the Program. The DPR shall be headed by a Director
or Senior Manager, Practice Review appointed by the Council as it may
deem appropriate. There will be other staff and reviewers appointed by
the Committee. The reviewers shall be appointed as full time practice
reviewers.
3.2. Functions and responsibilities of the DPR
3.2.1. The Director of Practice Review shall have the following functions and
responsibilities:
a) to ensure adequate and effective implementation of Practice

Review in accordance with this Program;
b) to ensure conduct of Practice Review is in accordance with the

procedure laid down;
c) to seek guidance of the Committee in respect of matters where

the Director of Practice Review feels that explicit guidance is
not available in the Program. The Committee shall decide on
the matter expeditiously within a period not exceeding 60 days
of the receipt of such matter or enquiry. Any matter not
specifically covered under this Program shall be referred to the
Council for advice;
d) to finalize the Practice Review report in consultation with the

Reviewer(s) for submission to the Committee;
e) to work as secretary of the Committee;
Page 16 of 34
f) to maintain record of all reviews, by name of the firm, partner,
location, period covered, date of review etc.
g) to represent the Directorate at the Appellate Forum;
h) to maintain an updated list of members and firms subjected to

practice review, conclusions and actions taken; and
i) to appoint, with the approval of the Secretary, any individual

on a fee and authorize him/her to perform Practice Review
under this Program.
3.2.2. The Director of Practice Review shall report functionally to the

Committee through its Chairman and administratively to the Secretary.
3.3. Powers of the Reviewer
3.3.1. A Reviewer shall have the following powers:
a) to review files, record and other information of a firm under

review;
b) to require the firm to provide information and produce

documents necessary for the purposes of Practice Review;
c) to report the findings of the Practice Review at its conclusion to

the Committee through Director of Practice Review;
d) to assist Director of Practice Review in presenting the “Report of

Review” to the Committee; and
e) to assist Director of Practice Review to make representations

before the Appellate Forum, if required.
Page 17 of 34
PART IV -THE REVIEW PROCESS AND
REPORT
Page 18 of 34
4.1. Review Process
4.1.1. The Practice Review shall be conducted in accordance with the

procedure laid down in this Program.
4.1.2. On the commencement date of the Practice Review, the Reviewer shall
attend at the office of the Firm, or any other location as may be agreed
with the firm. In conducting the Practice Review, the Reviewer shall
consider:
a) documentation and implementation of the quality control system of

the Firm;
b) current engagement files (covering Audit, Assurance or Related

Services) of last completed assignments provided that, in case of
private limited companies, selection preference would be given to
engagement files of companies having share capital exceeding
Rupees fifty million or annual turnover exceeding Rupees one
hundred million;
c) compliance with Professional Standards;
d) compliance with the provisions of the Ordinance, Byelaws and

Directives of the Institute;
e) compliance with training regulations of the Institute;
f) compliance with laws and regulations as applicable in Pakistan,

related to Audit, Assurance and Related services;
g) that the practicing members carrying out Audit, Assurance or

Related services of the firm have attended the Public Practice
Program once in three years; and
Page 19 of 34
h) Compliance with CPD program/directive of the Institute.
4.1.3. The Reviewer shall select two engagement files to be reviewed for each
partner or sole proprietor engaged in audit, assurance and related
services of the firm. However, the Reviewer may, if deemed necessary,
select additional files to be reviewed with reasons to be recorded in
writing duly concurred by Director of Practice Review. The Reviewer
shall consider the following factors regarding selection of files:
a) the degree of reliance, if any, to be placed on quality controls;
b) the size of the firm ; and
c) level of risk involved in the engagement.
4.1.4. The Reviewer shall use a Practice Review checklist duly approved by
the Committee to ensure that requirements of the Program have been
met. The format of the checklist shall be placed on the Institute’s
website for the information of members of the institute.
4.2. Review Report
4.2.1. At the conclusion of the Practice Review, the Reviewer shall prepare a
draft report within 30 days, setting out Reportable Deficiencies and
Non-Reportable Matters.
4.2.2. After completion of the review, the Reviewer shall discuss the
Reportable Deficiencies, if any, in the draft report with a representative
of the Firm and may revise the draft report.
4.2.3. The Director of Practice Review shall discuss the draft report with the
Reviewer to ensure that all Reportable Deficiencies have been
adequately identified and appropriately reported and the draft report
conforms to the requirement of the Practice Review.
Page 20 of 34
4.2.4. The Director of Practice Review may also discuss the report with the
Firm.
4.2.5. On conclusion of the review by the Director of Practice Review, the draft
report will be delivered to the firm for comments to be provided within
21 days.
4.2.6. The Director of Practice Review or a Reviewer may require the firm to
provide written confirmation of any actions planned by the firm to
address deficiencies.
4.2.7. If the Firm disagrees with a Reportable Deficiency listed in the report,
it may provide explanation and documentation to support its position.
4.2.8. The Director of Practice Review or a Reviewer may amend the draft
report as appropriate, taking into consideration any matters arising from
paragraph 4.2.3 to paragraph 4.2.7, concluding with recommendations
as to a course of action and submit the final report to the relevant bench
of the Committee for review.
4.2.9. The Director of Practice Review shall communicate the decision of

extending satisfactory report or otherwise of the Committee or the
Council as appropriate within fifteen days of the decision, to the firm.
4.3. Consideration and Determination by the Committee
4.3.1. The Committee shall consider the report and matters pertaining to the
Practice Review, or of a Re-Review, and may take one or more of the
following actions:
a) deem the Review or Re-Review complete and ratify the report of

Practice Review;
b) require the firm to provide further written submissions on the

intended correction of any identified deficiencies along with action
Page 21 of 34
plan in a prescribed format, and consider the matter further once
such submissions have been received or the time for making
submissions has expired;
c) require the firm or a member to be subject to full or partial Re-

Review within one year. However, Committee shall not allow
opportunity of more than two Re-Reviews to any firm or member
within one year from the date of first Practice Review;
d) require the firm or a member to undertake certain specified actions

in order to improve the overall standards of the Firm to ensure that
it conforms to the requirements of the Program;
e) subject to the approval of three-fourth majority of the members of

the Committee to refer the member to the Investigation Committee
for investigation, where the member has continuously failed to
implement the action plans and improve the standard of work after
two Re-Reviews; and/or
f) report to the Investigation Committee through Secretary on any

other matter relating to non-compliance with the Professional
Standards.
To educate and help improve the understanding of compliance

requirements by members / firms under the Program, the paragraphs
(e) and (f) above shall be applicable after three years from the effective
date of this Program.
4.3.2. The Committee shall not refer a matter to the Investigation Committee
or Secretary solely for the failure of a firm or a member, to produce a
document subject to a valid claim of legal privilege that has not been
waived.
Page 22 of 34
4.3.3. In determining the action to be taken pursuant to paragraph 4.3.1, the
Committee may consider, but will not be limited to, the following
matters:
a) the degree to which the requirements of the Practice Review have

been met;
b) the nature and severity of any identified deficiencies;
c) the cooperation of the firm or member;
d) implementation of action plan submitted as a result of an earlier

Practice Review or Re-review as the case may be; and
e) public interest;
4.3.4. A decision made by the Committee pursuant to paragraph 4.3.1(e) shall

be final unless a firm or a member files an appeal under Part VI of this
Program. Action taken or proposed to be taken against any partner of
a firm under this Program shall be limited to such partner without any
negative implications on other partner(s) of the firm or on the firm as a
whole.
4.3.5. The Investigation Committee and the Council shall proceed on the
recommendation of the Committee referred to in sub clause 4.3.1(e) in
accordance with the provisions of investigation envisaged in the
Ordinance and Bye-laws of the Institute.
4.3.6. The Committee shall ensure that its decision pursuant to paragraph
4.3.1(e) is communicated in writing to the firm or member through
Director of Practice Review within fifteen days from the date of such
decision.
4.3.7. Each Member covered in a review shall be awarded 20 CPD credit

hours after the successful completion of the Practice Review.
Page 23 of 34
PART V - RETENTION AND CONFIDENTIALITY
Page 24 of 34
5.1. File Retention
5.1.1. Any file created during a Practice Review shall be retained until the
Practice Review has been deemed complete by the Committee and
thereafter for a period of twelve months after the conclusion of Practice
Review Year in which the Practice Review was completed. However,
if a firm or a member makes an appeal under this Program against the
decision of the Committee, all files and documentation relevant for the
Practice Review shall be retained by the Firm, and the Institute till the
case attains finality or for a period of twelve months as described above
whichever is later.
5.1.2. Notwithstanding paragraph 5.1.1, the Institute shall at minimum retain

information required for administrative purposes till next Practice
Review date of the firm, including:
a) evidence that a Practice Review has been completed;
b) documentation identifying the firm or the member and client files

reviewed;
c) documentation that may assist in future review planning; and
d) any other documentation as required by the Committee.
5.2. Confidentiality
5.2.1. A member of the Committee, or any person acting on its behalf, or the
Director of Practice Review or any Reviewer, or a staff member of
Directorate of Practice Review, shall not make use of or disclose the
contents of any report, files, working paper files, books, documents or
other material reviewed, or any confidential information concerning the
affairs of any firm or a member or of its clients obtained in the course
of a Practice Review to anyone, except to the Director or Directorate of
the Practice Review, the Committee, the Appellate Forum and or the
Council as required under this Program.
Page 25 of 34
PART VI - Appeal
Page 26 of 34
6.1 - Appellate Forum
6.1.1 Two Appellate Forums (the Forum) shall be constituted by the Council under
the Program to provide grievance mechanism to firms or members not
satisfied with the outcome of the Practice Review, one each for the Northern
and Southern Regions.
6.1.2 The Forum shall comprise three members appointed by the Council, of which
two shall be from the members of the Institute who have been past members
of the Council and have served at-least one full term in the Council and one
shall be a person who has exercised the powers of, or has been, a judge of a
High Court or who is or has been, an advocate of a High Court and is qualified
to be a Judge of a High Court. Such person shall also act as Chairman of the
Forum.
6.1.3 The members of the Committee or of the Council shall not be nominated on
the Forum. A cooling off period of two years shall be required for eligibility to
be appointed at the Forum for the former members of the Committee or of the
Council.
6.1.4 The quorum for a meeting of the Forum shall be the majority of its members.
In case the Chairman is unable to attend the meeting, the members present
shall decide amongst themselves a person to act as Chairman at that meeting.
6.1.5 The term of the Forum shall be three years from the date of its constitution.
6.1.6 No member of the Forum shall serve for more than two consecutive terms of
two years each.
6.1.7 A member retiring after serving two consecutive terms shall be eligible for re-
appointment, after two years from the date of retirement.
Page 27 of 34
6.2 Filing of Appeal
6.2.1 Any member or a firm aggrieved by the decision of the Committee shall have
a right to appeal before the Forum within 30 days of such decision having been
communicated to the member or the firm, on the prescribed form and
accompanied by such documents and information as may be prescribed.
6.2.2 The Forum shall, at the request of the applicant, or on its own motion give a
personal hearing to the aggrieved member or authorized representative of the
firm, who must either be a lawyer or a member of the Institute.
6.2.3 The Committee shall authorize any of its members or any representative to
attend the hearing on its behalf.
6.2.4 Director of Practice review is also entitled to attend the hearing of the Forum,
if he so desires;
6.2.5 The Forum shall have the power to confirm, vary or reverse the original
recommendation/decision of the Committee that has been appealed. The
Forum can also remand the case to Director of Practice Review with
directions;
6.2.6 The decision of the Forum shall be final which shall be communicated to the
appellant with a copy to the Director of Practice Review and the Chairman of
the Committee.
6.2.7 The Forum shall preferably dispose of the appeal within 60 days from the date
of filing of appeal.
6.2.8 During the process of appeal, the Forum can grant relief to the firm or member
suspending the decision of the Committee.
Page 28 of 34
PART VII - MISCELLANEOUS
Page 29 of 34
7.1 Failure to Comply
7.1.1 Failure to comply with any provision of this Program, including a failure to
comply with any decision or requirement of the Committee, can be referred to
the Investigation Committee of the Institute under Section 20A of the
7.2 Amendments/ Removal of Difficulties/ Effective Date
7.2.1 This Program may be altered or amended, by the Council.
7.2.2 The Council may provide guidance on matters not specifically covered under
this Program.
7.2.3 This Program shall become effective from October 1, 2020.
Page 30 of 34
PART VIII – SUPPORT BY THE INSTITUTE
Page 31 of 34
8.1 TECHNICAL HELPLINE
A Technical Helpline has been established on the Institute’s website, where
members can post their queries in relation to financial reporting, auditing or
ethics related matters. Guidance will also be provided through this helpline in
respect of matters arising from the provisions of this Program. The Helpline
may be accessed by visiting the Institute’s website
http://www.icap.net.pk/your-technical-helpline .
8.2 FREQUENTLY ASKED QUESTIONS (FAQs)
1. When the firm shall be subject to Practice Review under this program?
A firm, already in practice on the effective date of this program and in which at least
one member is engaged in providing Audit, Assurance or Related Services shall be
subject to Practice Review at any time after one year of effective date of this program.
2. Whether the program is applicable to all CA firms?
The program applies to all firms providing Audit, Assurance or Related Services
conducted under legal and financial reporting framework as applicable in Pakistan.
3. Whether the Audit, Assurance or Related Services provided to the private

limited companies by the firm shall be subject to Practice Review?
Yes, the program is applicable to all types of private limited companies.
4. Why this program is being implemented in the presence of QCR program?
QCR is a voluntary program undertaken by CA firms who intend to conduct audits of

financial statements of listed and certain specified non-listed companies.
The Institute is a member of the International Federation of Accountants (IFAC) and

Page 32 of 34
there are Statements of Membership Obligations (SMOs) of IFAC which are needed
to be complied with by its member bodies. SMO-1 of IFAC requires a mandatory
quality assurance review system to be in place for firms performing audits of financial
statements by virtue of which it should be ensured that the firms and its partners are
in compliance with the quality standards for professional assignments
5. Does this program conflict with the existing QCR program of the Institute?
No, this program shall not be applicable to the firms which have attained satisfactory
QCR rating under the QCR program of the Institute.
6. What if the name of any firm is removed from the list of firms having
satisfactory QCR rating under the QCR program of the Institute?
If the name of the firm is removed from the list of firms having satisfactory QCR rating,
that firm shall be subject to this Program if it does not apply for review under the QCR
Program within one year from the date of removal from the list of firms having
satisfactory QCR rating.
7. What are the penalties for non-compliance with this program?
The Members’ Affairs Committee may with the approval of three-fourth majority of its
members, refer the case to the Investigation Committee of the Institute where the
member has continuously failed to implement the action plans and improve the
standard of work after two Re-Reviews. The Members’ Affairs Committee may also
report to the Investigation Committee any other matter relating to non-compliance
with professional standards.
8. What if the firm is restricted to produce any document to the Institute due to
absence of consent from its client?
The Committee shall not refer a matter to the Investigation Committee or Secretary
solely for the failure of a firm or a member, to produce a document subject to a valid
claim of legal privilege that has not been waived.
9. In case of any difficulty arising on the professional matters, whether any

guidance will be provided by the Institute?
Page 33 of 34
“Technical Helpline” is available on the Institute’s website for providing guidance on
professional and other matters relating to the Program. Members can post their
queries on the Helpline.
10. Whether an appeal can be filed against the decisions made under this
program?
There will be two Appellate Forums to provide grievance mechanism to firms or

members who are not satisfied with the outcome of the Practice Review, one each
for the Northern and Southern Regions.
11. What is the timeline to file an appeal before the Appellate Forum?
Any member or a firm aggrieved by the decision of the Committee shall have a right
to appeal before the Forum within 30 days of such decision having been
communicated to the member or the firm.
12. Whether the decision of the Appellate Forum can be challenged?
No, the decision of the Appellate Forum shall be final.
13. What is meant by ‘Related Services’?
Related Services comprise of ‘Compilation’ and ‘Agreed Upon Procedures’

engagements. There are separate International Standards on Related Services
(ISRS) for each of the above engagements. These standards explain the auditor’s
professional responsibilities along with the form and content of the reports that the
auditor issues in connection with such engagements.
The objective of an agreed-upon procedures engagement is for the auditor to carry

out procedures of an audit nature to which the auditor and the entity and any
appropriate third parties have agreed and to report on factual findings.
The objective of a compilation engagement is for the accountant to use accounting

expertise, as opposed to auditing expertise, to collect, classify and summarize
Page 34 of 34
Directivee 4.26
LICENC
CING CON
NTROLS UN
NDER AML
L / CFT RE
EGULATIO
ONS
The Antii-Money Lauundering Acct, 2010 (thee AML Act) t) places oblligations on the accoun ntancy
profession, requiring AML/ CFT T regulatory and
a supervissory measurees. The Parliament has p passed
Anti – Money
M Laundeering (Second
d Amendmen nt) Act, 20200 on Septembber 16, 20200 to further am
mend
the AML L Act. Accorrding to the amendmentt, the Instituute of Charteered Accoun ntants of Pakkistan
(ICAP) has
h been desiignated as an n AML / CF FT Regulatoory Authorityy of its memmbers in the AML
Act.
In accorddance with thet amendmeent in the AML A Act, alll AML / CF FT Regulatorry Authoritiees are
required to exercise powers with h regards to o licensing oor registratioon of their rreporting firrms /
reportingg entities. Thee relevant secction of the AML
A Act [Seection 6A (2)]] is reproduceed as under;
“6A.
6 AML / CFT regula latory authorrity. — (1) A AML / CFT T regulatory autthority means
thhe Regulators and
a SRBs as sppecified in Scheedule IV. Theyy shall exercise the powers andd perform the
fuunctions as set out
o in this Actt and as prescriibed thereunderr.
(22) AML / CF FT regulatory authority shalll exercise the fo following powers

rs and functionss with respect
too its reporting entities,
e namely: -
(aa) licensing or registration
r of reporting
r entitiees;
(bb) imposing any ny conditions tot conduct any activities by rreporting entitiies to prevent tthe offence of
money
m launderinng, predicate offffence or financinng of terrorism;;
(c)
c)…………… …...
Further as per Sectiion 3 (2) b of the “O Oversight Reegulations foor Self-Reguulatory Bodies of
Accountaants, 2020” issued
i by thee Securities and Exchannge Commisssion of Pakisstan, “Everyy SRB
shall app
ply suitable market entrry controls to ensure tthat it doess not profeessionally acccredit
accountannts that are criminals or acting as an
n associate off criminal, oor whose ben
neficial owneer is a
criminal or
o criminal associate”;
The issuaance of Certtificate of Prractice (COP

P) to the meembers of thhe Institute iss governed uunder
Bye-Law 8 of the Chaartered Accouuntants Bye--Laws, 1983. The Bye-Law w 8 is reprodduced as undder;
“8.
8 Certificatte of practicce.- (1) A mem mber may apply ly to the Councicil for a certificaate to practice
enntitling him to practice as a chartered
c accouuntant or manaagement consulltant and the C Council shall
grrant to him succh a certificate on his establishhing to its satisisfaction in suchh manner as itt may require
ANNEXURE ‘A’
DECLARATION FOR PRACTICING MEMBERS

[to be obtained at the time of issuance and renewal of Certificate of Practice to member]
Name of Member:
ICAP Registration Number:
CNIC No:
DECLARATION AND SIGNATURE:
I, hereby confirm that, to the best of my knowledge and belief:

a) I have not been convicted by a competent Court, whether within or outside Pakistan, of an offense
involving moral turpitude, money laundering and terrorism financing, and any other criminal offense
punishable with transportation or imprisonment; or of an offence, not of a technical nature, committed
in professional capacity unless in respect of the offence committed, I have either been granted a pardon
or, on an application made in this behalf, the Federal Government has, by an order in writing, removed
the disability, for the purpose of obtaining membership.
b) the information contained in this declaration is true and correct.
Date:
Name of Member:
Signature:
that he has complied with the requirements as stipulated in bye law 109 and any other directive
of the Council and that he will be in practice as a chartered accountant or management consultant
as his main occupation”
[emphasis is ours]
Accordingly, in order to comply with the provisions of AML Act, the members would now be
required to submit a Declaration at the time of issuance and renewal of Certificate of Practice
(Annexure A)
Transitional Provisions:
All existing COP holders, who have obtained COP before the issuance of this directive shall be
required to submit the signed declaration (Annexure A) within 2 months of the issuance of this
Directive.
The effective date of the Directive is January 07, 2020.

Directive 4.27
UNIQUE DOCUMENT IDENTIFICATION NUMBER (UDIN)
1) In accordance with the powers conferred under Section 27(2)(kk) of the Chartered Accountants
Ordinance, 1961 read with Bye-Law 129A of the Chartered Accountants Bye-Laws 1983, the Council
of the Institute of Chartered Accountants of Pakistan decided to issue the following directive for
compliance by practicing members of the Institute, providing audit and assurance services.
2) In order to enhance the trust of public in the auditors’ reports that these have been issued by
authorized practicing chartered accountants, the Institute has decided that auditors’ report shall carry
Unique Document Identification Number (UDIN) issued by the Institute.
3) Unique Document Identification Number (UDIN) is a unique 20-digit auto generated alpha numeric
number. UDIN shall be placed/printed below the Date and Place on the following reports issued by
the authorized practicing chartered accountant of the Institute, at the time of signing the reports:
a) Auditors’ Report on General Purpose Financial Statements;
b) Auditors’ Review Report on Interim Financial Information; and
c) Auditors’ Review Report on Statement of Compliance with the Code of Corporate

Governance.
4) The engagement partner will obtain UDIN through his own login for each report.
5) The objective of UDIN is to:
i. Provide ease of e-verification to the authorized financial institutions, regulators and authorities,
whereby they can verify the authenticity of auditors’ reports from ICAP’s UDIN portal.
ii. Prevent counterfeiting of Audit Reports and Review Reports.
6) All of the above types of reports, which are issued on or after the following dates on the financial
statements of the following entities, must bear the UDIN:
i) Public Interest Entities: January 1, 2022
ii) All other types of entities: July 1, 2022
7) The requirement for placing UDIN on the reports mentioned in para 3 above shall not apply to reports
for the period ended 30th September, 2021 or earlier.
8) Non-compliance of this Directive will result in professional misconduct under Clause (3) of Part (4)
of Schedule I of the Chartered Accountants Ordinance, 1961.
[Approved by the Council in its 351st Meeting held on December 29, 2021]
The Council approved that the term mentioned “Public Interest Entities” in para 6(i) should be read
as “Public Interest Companies”.
[Approved by the Council in its 352nd Meeting held on January 14, 2022]
Directive 4.28
CONDITIONS AND PROCESS FOR ISSUANCE, RENEWAL AND CESSATION OF

CERTIFICATE OF PRACTICE (CoP)
In accordance with powers conferred under Section 6(1), 15(1), 15(2)(e) and 15(2)(i) of the Chartered
Accountants Ordinance, 1961 (CA Ordinance) read with Bye-Laws 8, 109 (5), 129A of the Chartered
Accountants Bye-Laws, 1983, the Council of the Institute is pleased to direct as follows:
1. Section 2 of CA Ordinance provides that members offering services described therein shall be “deemed
to be in practice”.
2. All members in practice, including those deemed to be in practice and/or intending to start practice,
shall apply to the Council of the Institute for a new CoP or renewal of CoP, as the case may be, in
accordance with the provisions of CA Ordinance and Bye-Laws and Directives issued from time to time
including this directive.
3. Application for new CoP shall be made in the attached format (Form-E), along with the declarations &
undertakings as per the attached format (Form-E1), declarations under Directive 4.26 and copy of
challan for the fee prescribed by the Council of the Institute from time to time.
4. Application for renewal of CoP shall be made, not later than 31 May each year (30 days prior to expiry),
in the attached format (Form-H1), along with the declarations & undertakings in the attached format
(Form -H2) including Annual Return (Form ‘A’) and declarations under Directive 4.26 and copy of
challan for the fee prescribed by the Council of the Institute from time to time.
5. The declarations specified above shall also include a declaration of “Fit and Proper Person”. For the
purposes of this directive, a “Fit and Proper Person” is a person, who does not have any disability
specified under Section 8 of the Chartered Accountants Ordinance, 1961 and in addition, does not have
physical impairment or disability which in the judgement of the Council affects or is likely to affect
ability to undertake/continue practice as a Chartered Accountant or Management Consultant.
6. In accordance with the Council’s Directive 4.01, existing CoP holders can, at their sole discretion, apply
to the Council of the Institute to associate with more than one firm, either as a sole proprietor in one
and partner in second firm or partner in two firms, for practicing as a Chartered Accountant.
7. The application to practice as Chartered Accountant in the second firm shall be made in the attached
format (Form- E2) along with payment evidence for the additional fee prescribed by the Council of the
Institute from time to time.
8. However, no CoP holder shall associate with more than two firms.
9. A CoP holder shall have the practice as his main occupation under Bye-Law 8 and shall not engage in
services other than those specified under Directive 4.22.
10. Where considered necessary and appropriate, the Institute may call for such other additional information
as deemed necessary and may authorize a representative to visit the office of any practicing member to
assess the capacity to run the practice.
11. The Institute may evaluate authenticity of the information submitted before issuance /renewal of CoP.
The Council may decline granting/renewal of any practice license if the Council is not satisfied that the
requirements of CA Ordinance, Bye-laws and Directives have been complied with.
12. CoP is primarily for the purposes of providing services within geographical limits of Pakistan. However,
CoP holders and/or firms may opt to have offices in jurisdictions outside Pakistan. In all such cases,
CoP holder and/or firm shall provide details of legal requirements for opening offices in jurisdictions
outside Pakistan and undertaking of compliance with such requirements.
13. All members applying for granting or renewal of CoP, shall:
a. confirm to abide by the ICAP Code of Ethics issued by the Council of the Institute.
b. confirm to undertake professional services in accordance with prescribed professional standards

and pronouncements, including financial reporting standards, auditing standards, etc. as
applicable in Pakistan or agreed under the terms of engagement.
c. undertake that they will only accept and take-up such engagement for which they possess
requisite licenses, registrations, certifications, approvals, etc., such as having satisfactory QCR
and registration with AOB for audit of entities requiring such registration.
d. confirm the understanding that subject to the provisions of CA Ordinance, Bye-Laws, Code of
Ethics, Directives of the Council, etc., where situation demands, they may be subject to
disciplinary and investigation process of ICAP with which they will fully cooperate.
e. undertake to cooperate with the Institute in all matters including those related to investigations.
f. undertake to provide periodically or as and when required, information and documents required
by the Institute for its purposes including list of partners and staff, list of audit clients, etc.
g. confirm the understanding and accept that subject to provisions of CA Ordinance and Bye-
Laws, their CoP may be cancelled, suspended or their application for granting CoP or renewal
of CoP may be denied by the Council.
h. Confirm to the Institute that the member will be in practice as a Chartered Accountant or
Management Consultant as his main occupation.
14. In accordance with Bye-Law 8(4), a member on ceasing practice, shall inform the Council immediately
of the fact of his having done so, but in any case, not later than one month from the date he ceases to
practice and shall return the CoP to the Secretary.
15. Violation of any of the provisions of this directive, subject to the provisions of CA Ordinance and Bye-
Laws, may result in denial, non-renewal, suspension, and/or cancellation of CoP.
16. Every CoP shall, irrespective of the date of issue, expire on 30th day of June each year, following the
date of the issue.
17. The fee for CoP is non-refundable, except where CoP is denied.
18. Incomplete applications shall not be considered.
19. Any new firm shall be required to be registered with the Registrar of Firms under the Partnership Act,
1932 before registration with ICAP.
20. All firms of chartered accountants must be registered with the Registrar of Firms under the Partnership
Act, 1932 within 2 years of the issuance of this Directive.
21. The effective date of this Directive is January 1, 2022.
[Approved by the Council in its 343rd meeting held on August 27- 28, 2021]
FORM E
Form 'E' APPLICATION FOR THE ISSUANCE of CERTIFICATE OF PRACTICE (Bye-law 8)
PERSONAL DETAILS
Member’s Name: Title: First: Given: Surname:
(As per ICAP records) Mr. Ms./Mrs.
Father’s/Spouse Title: First: Given: Surname:

Name s/o d/o w/o
Date of Birth Day: XX Month: XX Year: XXXX
CNIC Number:
Residential Address:
Country:
Communication Residential: Business:
Address:
Cell number Land Line
Professional Qualification and Membership
ICAP Number Date Associate/Fellow
Training Experience
For those have undertaken training outside Practices (minimum two years training is
required in practice reference of Bye-law 109 )
Name of TOIP
Training Period From To
Job Experience Entity From: To: Position
Up to 5 years
Entity From: To: Position
Practice Details
Practice as: Sole Existing New Partnership

Proprietor Partnership
Please Tick
Trade Name
Registered Address
Cell Number Land line Fax
Email address
Name of Managing
Partner or by
whatever name
called .
Name of Partner Cell Land Line Email
Authorized to
Communicate with
the Institute
Name of branch Address Website
Registered as TO Yes / No Number of
Registered
(if existing practice)
Students on the
tick
date of
application
Details of any firm Yes /No Name Address Website
registered and not
Registered with
ICAP (both in
Pakistan and
Outside)
Note – City of residence should be same as the location of office (Directive 4.02)
Declaration
I declare to the best of my knowledge, that all the information I have given in this Form is correct I
understand that it is my responsibility to maintain professional competence and ICAP has the
unfettered right to verify and/or confirm the authenticity and accuracy of any and all information
provided by me.
Signature _________________
Place: ______________
Date: _______________
Please Attach:
 Form E 1
 Payment Receipt
 Copy of CNIC of applicant
 Declaration under Directive 4.26.
 If previously employed, submit Employment release letter from the last employer.
 In case of Partnership, submit, Partnership Deed and Form ‘C’
FORM E1
Form E1 Declarations and Undertakings for the Issuance of Certificate of Practice

1) I hereby declare that, I:
a. am a Fit and Proper person as defined in Directive 4.28.
b. have complied with minimum training requirements including training outside practice as
prescribed under the relevant bye-laws and directives to apply for the certificate of practice.
c. have complied and undertake to comply with all the requisite professional and ethical
standards and laws, rules and regulations, including but not limited to, the Code of Ethics,
Chartered Accountants Ordinance, 1961, Chartered Accountants Bye Laws, 1983, Rules,
Directives and applicable accounting and auditing standards
d. will notify to the Institute, any change in particulars of the practice within the time limit and
in the manner specified in Directive 4.03.
e. understand that ICAP must be and unconditionally undertake that ICAP will be informed of
any material changes to the information I have provided in this undertaking within 30 days of
the change.
f. shall appear before any person, committee, board, etc. of the Institute when called for and
facilitate and co-operate in quality reviews and investigations.
g. shall furnish all such information as may be required by the Institute or its Council from time
to time.
h. agree that ICAP may make such enquiries as it thinks fit to consider my application, and ICAP
may refuse to renew the CoP if it so deems appropriate under the provisions of the Chartered
Accountants Ordinance, 1961, and the Chartered Accountants Bye-laws, 1983.
i. confirm that I have submitted the Declaration under Directive 4.26.
j. confirm that I am well conversant with and in full compliance of all the laws, rules, regulations
and directives related to Anti-Money Laundering as applicable to practicing chartered
accountants;
2. I undertake to:
a. meet Continuing Professional Development requirements set by the Council Directive 8.01
and the competency requirements for the areas of work that I will undertake.
b. to be in practice as a public accountant being my main occupation under the name and style -
------------ (as specified in Directive 4.06) as laid down in Bye Law 8 of Chartered Accountants
Bye Laws, 1983 and shall not engage myself in any occupation other than those stated in
Directive 4.22, without the prior approval of the Council.
c. regularly attend the office at the registered address notified in the Institute’s records to
discharge my professional responsibilities except under special circumstances allowed under
Directive 4.17.
d. to ensure that any branch office of the practice established outside Pakistan will only be after
obtaining the relevant permission under the laws in force of that Country and submit the same
to the Institute as specified under Schedule 1 clause 4.
e. that as and when I cease to be in practice I shall duly inform the Council
of having done so and return the original CoP to the Institute
within [30] days of ceasing to practice as a chartered accountant.
Name ____________________
Place: ______________
Date : _______________
Signature _________________
FORM E2
(NEW) Form E2 APPLICATION FOR ADDITIONAL PRACTICE

( As per ICAP’s record) Mr./ Ms. /Mrs.
Father’s/Spouse Name Title: First: Given: Surname:
S/o D/O W/O
CNIC Number:
Existing Firm Details
Details of any firm Yes /No Address Email Website
Registered with ICAP
or not (both in Pakistan
and Outside)
Name Status choose Sole Partnership
one
City Address Note
City of residence
should be same as the
location of office and
proposed firm.
(Directive 4.02)
Branch Address Partner name
Residential Address -
Professional Qualification and Membership
ICAP Number Date Associate/Fellow
Proposed Practice Details
Practice as: Sole Proprietor Exiting New Partnership
Partnership
Trade Name
Registered Address
Cell Number Land Line
Email address
Name of Managing
Partner or by whatever
name called
Name of Partner Cell Land Line Email
Authorized to
Communicate with the
Institute
Name of firm for Email for
communication communication
Registered As TO ( for Firm 1 – Number of Firm 1
both Firms) Registered
Students on the
Firm 2 - date of Firm 2
application
Declaration
provided by me
Signature _________________
Place: ______________
Date: _______________
Please Attach:
 Payment Receipt
 Copy of CNIC of applicant
In case of Partnership, submit, Partnership Deed and Form ‘C’
FORM H1
(NEW) FORM ‘H1’ APPLICATION FOR RENEWAL OF THE CERTIFICATE OF

PRACTICE
( As per ICAP’s Mr./ Ms. /Mrs
record)
Father’s/Spouse Title: S/O First: Given: Surname:
Name D/O W/O
Date of Birth Day: XX Month: XX Year: XXXX
CNIC Number:
Residential
Address:
Cell number Land Line
Email
Practice Details
Practice as: Sole Proprietor Partnership Both Partnership
Tick all that
apply
Firm Details
S.No Name of firm Name of Name of Partner Cell Email
Managing Authorized to
Partner or by communicate with
whatever name the Institute
called
Details of any Yes /No Name Address Website

other firm not
Registered with
ICAP (both in
Pakistan and
Outside)
Declaration
provided by me.
Place: ______________
Date: _______________
Signature _________________
Please Attach:
 Form H2
 Payment Receipt
 Criminal Check Declaration under Directive 4.26.
Completed Annual Return (Form ‘A’) under the AML ACT 2010;
FORM H2
FORM H2 Declarations and Undertakings for Renewal of Certificate of Practice

1. I hereby declare that I
a. am a Fit and Proper person as defined in Directive 4.28.
b. have complied and undertake to comply with all the requisite professional and ethical standards
and laws, rules and regulations, including but not limited to, the Code of Ethics, Chartered
Accountants Ordinance, 1961, Chartered Accountants Bye Laws, 1983, Rules, Directives and
applicable accounting and auditing standards
c. have continued to and will continue to meet the condition in respect of practice of accountancy
being my main occupation as laid down in Bye Law 8 of Chartered Accountants Bye Laws, 1983
and not engage myself in any occupation other than those stated in Directive 4.22, without the
prior approval of the Council.
d. have and will notify to the Institute, any change in particulars of the practice within the time
limit and in the manner specified in Directive 4.03
e. understand that ICAP must be and unconditionally undertake that ICAP will be informed of
any material changes to the information I have provided in this undertaking within 30 days of
the change.
f. shall appear before any person, committee, board, etc. of the Institute when called for and
facilitate and co-operate in quality reviews and investigations.
g. shall furnish all such information as may be required by the Institute or its Council from time
to time.
h. agree that ICAP may make such enquiries as it thinks fit to consider my application, and ICAP
may refuse to renew the CoP if it so deems appropriate under the provisions of the Chartered
Accountants Ordinance, 1961, and the Chartered Accountants Bye-laws, 1983.
i. confirm that I am well conversant with and in full compliance of all the laws, rules, regulations
and directives related to Anti-Money Laundering as applicableto practicing chartered
accountants;
2. I undertake that I
a. have and will continue to regularly attend the office at the registered address notified in the
Institute’s records to discharge my professional responsibilities except under special
circumstances allowed under Directive 4.17.
b. have ensured and will continue to ensure that any branch office of the practice established
outside Pakistan will only be after obtaining the relevant permission under the laws in force of
that Country and submit the same to the Institute as specified under Schedule 1 clause 4.
c. {Choose the statement which is true}
A. have met Continuing Professional Development requirements set by the Council Directive
8.01 and will continue to meet competency requirements for the areas of work that I will
undertake.
B. have not met the Continuing Professional Development requirements set by the Council
Directive 8.01 and undertake that I will submit a declaration form of non-compliance with
a firm commitment to make up the deficit within 180 days as specified in the Directive 8.01
and will continue to competency requirements for the areas of work that I will undertake.
d. have submitted the Declaration under Directive 4.26 and submitted Annual Return (Form ‘A’).
e. that as and when I cease to be in practice I shall duly inform the Council
of having done so and return the original CoP to the Institute
within [30] days of ceasing to practice as a chartered accountant.
Name : ________________
Place: ______________
Date: _______________
Signature _________________
DIRECTIVE 4.29 Karachi

The Meeting of the Council was held on
December 08-09, 2022
LEGISLATIVE ACTS AND OTHER This Directive is being issued under Section 27
INSTRUMENTS subsection 2 clause kk of CAO, 1961, read with
Byelaw 129A of the Chartered Accountants
Byelaws, 1983.
Subject: Directive on the use of audit documentation software
DIRECTIVE 2022/4.29
PASSED BY THE COUNCIL OF
Pursuant to powers vested to it under Section 27(2) (kk) of the Chartered Accountants Ordinance,
1961, read with Byelaw 129A of the Chartered Accountants Byelaws, 1983.
The Council of the Institute is entrusted with the regulation and maintenance of the status and standard of
professional qualifications of the members of the Institute.
In Pakistan the most significant Companies that affect the public at large are Public Interest Companies
(PICs). Financial statements of PICs are prepared with higher set of requirements under the frameworks
prescribed in the Third Schedule to the Companies Act, 2017.There are enhanced regulatory requirements
to ensure the quality of compliance for such companies including but not limited to applicability of
International Financial Reporting Standards, and audit by only a Quality Control Rated audit firm registered
with Audit Oversight Board. Consequently, the audit of financial statements of PICs are subject to oversight
by the Quality Assurance Board and Audit Oversight Board.
Because of this increased risk exposure and in view of the importance of PICs, the Council of the Institute
decided to improve the quality of audit process for PICs by requiring the adoption of an audit documentation
software. The usage of the audit documentation software shall improve efficiency in carrying out the audit
engagements and their audit documentation by practicing members as well as streamlining the review and
audit process.
All practicing members who will issue auditor’s report on the financial statements of a PIC under the
requirements of Companies Act, 2017 shall use an audit documentation software that complies with the
requirements of International Standards on Auditing (ISAs) for audit documentation supporting the audit
opinion in addition to any paper-based documentation considered necessary by the audit engagement
partner.
This requirement shall be effective for the audit reports issued:
 On the financial statements of PICs for the financial year ending on or after June 30, 2024.
Non-compliance of this directive will result in professional misconduct under Clause (3) of Part (4) of
Schedule I of the Chartered Accountants Ordinance, 1961.
(Approved by the Council in its 363rd meeting held on December 08-09, 2022)
MEMBERS' HANDBOOK
PART IV
5. PRACTICE ADMINISTRATION
AS MANAGEMENT CONSULTANTS
THE INSTITUTE OF
SECTIONAL INDEX
5.0 Practice Administration as Management Consultants
CONTENTS
5.01 Engagement in Management Consultancy business
5.02 Formation of Companies for Management Consultancy
5.03 Use of Foreign names for Management Consultancy

5.01
ENGAGEMENT IN MANAGEMENT CONSULTANCY BUSINESS
1. A Chartered Accountant can practice either as a Chartered Accountant or

only as a Management Consultant as sole proprietor, through a partnership
firm or a limited liability company. In case he opts to practice as a
Chartered Accountant he can engage in all those functions which a
Chartered Accountant in practice undertakes including management
consultancy after obtaining the certificate of practice as a Chartered
Accountant under Bye-Law 8 of C.A. Bye- laws 1983.
Management Consultancy Practice by Chartered Accountants in practice
2. A Chartered Accountant in practice can also engage in management

consultancy practice by forming a separate sole proprietary concern,
partnership firm or a company. In case he wishes to associate non-
members, he is required to form a company and to undertake that such
non- members would observe the bye-laws and code of professional ethics
of the Institute.
3. The practicing Chartered Accountants who wish to practice as

"management consultants" through a limited liability company can style
themselves as "Management Consultants" under the company's name e.g.
XYZ Co., Ltd., Management Consultants". There should, however be
separate sign boards and stationery for practice as “"Chartered
Accountants”" and as “Management Consultants.”
4. However, the designation "Management Consultants" cannot be used by

the practicing Chartered Accountants either individually or by sole
proprietary concern or a partnership firm.
Management Consultancy Practice by Members Not in Practice as

5.01
5. A member who is interested in practicing only as a Management

Consultant, can engage in such practice either as sole proprietor or through
a partnership firm or a limited company after obtaining a certificate of
practice to practice as "Management Consultant" under Bye- law 8 of the
C.A. Bye-Laws, 1983.
6. Such members should be entitled to practice only as Management

Consultants and cannot engage in other functions which are normally
under-taken by Chartered Accountants in practice.
7. In case a member wishes to associate non- member in his Management

Consultancy practice he could do so only in case of practice as a limited
liability company and he would undertake that such non- member would
observe the bye- laws and code of professional ethics of the Institute.
8. In case a member not practicing as a Chartered Accountant is associated

with a Management Consultancy practice he would be required to obtain a
certificate of practice as a "Management Consultant".
9. The obligation to ensure that non- members observe the bye- laws and code
of professional ethics of the Institute under clause 10 of Part-2 of
Schedule-I of the Chartered Accountants Ordinance, 1961 would arise if a
member associates with non- members in any of the following capacities:
(a) a shareholder in a management consultancy company
(b) a director of the management consultancy company
(c) a shareholder and a director of the management consultancy

company.
10. However, association as an employee or an Executive Director in a

management consultancy company would not attract the above
requirement.
5.01
11. The above directive summarizes the official amendment in Bye- law 8 of
the Bye- laws of the Institute and various decisions of the Council and
substitutes the earlier directives issued as 5.01 and 5.02 of Volume I of the
Members' Handbook.
(106th meeting of the Council - July 9-10, 1994)

5.02
FORMATION OF COMPANIES FOR MANAGEMENT CONSULTANCY
The Council of the Institute has noted that certain members of the Institute form
companies to practice as Management Consultants without any intimation to the
Institute.
The members should note that the words "shall be permitted" used in the proviso
to Section 23 of the Chartered Accountants Ordinance, 1961 (as amended) do not
ipso facto permit formation of a limited company by the Chartered Accountants
for the practices of Management Consultancy. The members are required to
obtain permission from the Council in this regard which is granted immediately
on fulfilling the following requirements:
(i) The application should be on prescribed From "Z" (specimen

enclosed).
(ii) Compliance with the requirements of Part 2 of Schedules I and II

of the C.A. Ordinance, 1961.
(iii) The name of the Company is in accordance with Council's

Directive 4.06.
(iv) Proposed Memorandum and Articles of Association.
The above requirements are aimed at ensuring that the Institute has complete
record of the members practicing as Management Consultants and that the
practice is in accordance with the Ordinance, Bye- laws and the Directive 5.01 of
the Council.
(121st meeting of the Council - May 29, 1997)

5.03
(Revised – 2005)
USE OF FOREIGN NAMES FOR MANAGEMENT CONSULTANCY
The Council of the Institute has decided to give permission to the members who
wish to practice as Management Consultants by forming a limited liability
company (the "Company") using a foreign name attached to a local name. Use of
abbreviation of local and/or foreign names is also permitted for this purpose.
The term foreign name, as used in this directive, means a known name of an
international firm / company of Management Consultants ("Foreign Firm")
recognized by a foreign professional body, approved by the Council for this
purpose.
The Foreign Firm shall have given a formal permission for the sole use of its
name by the Company in Pakistan.
The Institute of Chartered Accountants of Pakistan (ICAP) itself, before granting

the requisite permission, shall obtain confirmation from the Foreign Firm that it
has given permission for the sole use of its name by the Company.
Company/ies which will have been granted permission by ICAP to use a foreign
name on the terms stated above shall comply with other requirements prescribed
by the Institute from time to time.
For Further guidance on the issue of foreign names, members are advised to refer
to Directive 4.06 (Revised-2005)
(171st meeting of the Council - April 29, 2005)

MEMBERS' HANDBOOK
PART IV
6. ETHICS
THE INSTITUTE OF
SECTIONAL INDEX
6. ETHICS
CONTENTS
6.01 Non payment of annual fee to be an act of misconduct
6.02 Withdrawn- Publicity and Advertising
6.03 Institute’s Elections (Revised 2017)
6.04 Code of Ethics for Chartered Accountants (Revised 2019)
1
6.01
NON-PAYMENT OF ANNUAL FEE

TO BE AN ACT OF MISCONDUCT
“Members of the Insitute not Paying an nual fees despite reminders an d requests
can be termed as g uilty of breach of discipline.”
(4 9 th meeting of Council-December 2 6,19 75)

Directive 6.03
(Revised 2017)
INSTITUTE’S ELECTIONS
With respect to the practices adopted by the members contesting elections to the
Council and Regional Committees, the Council reviewed the statutory obligations
under the Chartered Accountants Ordinance 1961, Bye-laws made there under
and practices prevalent elsewhere in this regard and decided to issue the following
directive, the breach of which shall be considered an act of misconduct liable for
disciplinary action:
1. Bye-law 47 of the Chartered Accountants Bye Laws comprehensively reflects
the requirements for a free and fair election to ensure that the members
contesting for the Council and Regional Committees are elected purely on the
basis of merit and the election process is reflective of the distinctive image
and standing of the Institute.
2. The candidates and voters to refrain from the following activities:
i) forming groups or panels of two or more persons overtly or covertly on
any basis;
ii) influencing any member to vote or not to vote for any candidate(s) through
pamphlets, brochures, cards or by any other means of communication
which tends to prevent a free exercise of the voting right;
iii) making any adverse comments/remarks about the Institute, Council and
other contesting candidates.
iv) arranging or causing to arrange for members any party or gathering, with
or without meals, refreshments, etc. on or before election day.
3. A candidate, if he wishes to circularize or canvass, shall observe good taste

and good sense. The Election Committee is authorized to issue such
guidelines as it deems appropriate with respect to good taste communication.
4. To assist the candidates in disseminating information about them, the Institute
will arrange to:
i) issue a profile of all the candidates with their photographs stating their
particulars, positions in their organization and other fields of service, their
achievements, their previous service to the Institute, or its Council,
Regional Committee or any other Committee(s);
ii) include the profile of the candidates in the Institute’s Newsletter and the
Pakistan Accountant; and
iii) organize a get-together of the members and candidates of the Council and
Regional Committees to enable an introduction of candidates at such
place(s) and at such time as the Election Committee may decide.
5. The member choosing to cast his/her vote in the election to the Council or
the Regional Committees shall have to cast as many votes as there are
number of seats for a particular zone in that region. Ballot papers showing
more or less votes than the number of seats shall be deemed invalid.
6. Any violation of the relevant laws/regulations/directives regarding
elections is to be reported to the Election Committee. In doing so the
reporting members are expected to be truthful. A report which is found to
be untrue or is calculated to prejudice any candidate or is made out of
malice shall be adequate ground for disciplinary action against the
reporting member.
7. The Election Committee on its own motion or on any complaint filed shall
(in its sole opinion) decide as to good taste and sense of such
communication and canvassing, and if it is so considered by the Election
Committee that such communication and/or canvassing do not fall within
the realm of good taste or form, the Election Committee shall proceed
with the actions as stated in clause 8;
8. In case of non-compliance of this Directive, the Election Committee can
take such actions as it deems appropriate, including (but not limited to)
issuance of warning to the candidate and communication to the members.
9. This Directive shall be read with the relevant provisions of the Chartered
Accountants Ordinance, 1961 and the Bye-laws made there under.
(285th Meeting of the Council – April 7-8, 2017)

__________________________________________________________________
Before above revision read as under:
6.03
(Revised 2013)
INSTITUTE'S ELECTIONS
1.0 Pursuant to the complaints received by the Council for unhealthy practices adopted by the
members contesting elections to the Council and Regional Committees, the Council
caused an in-depth review of the statutory obligations under the Chartered Accountants
Ordinance 1961, Bye-laws made there under and practices prevalent elsewhere in this
regard. After a good deal of deliberation, the Council has decided to issue the following
Statement as a directive, the breach of which shall be considered an act of misconduct
liable for disciplinary action.
2.0 The Council considers that bye-law 47 of the CA Ordinance comprehensively reflects the
requirements for a free and fair election to ensure that:
i. the members contesting for the Council and Regional Committees are elected purely on
the basis of merit;
ii. the election for the Institute of a learned profession is not reduced to the level of political
wranglings as it would deprive the profession of its distinctive image of being "a little
different"; and a good taste and good sense befitting an enviable conduct by the candidates
and the voters remain manifest throughout the election process.
3.0 In order to achieve the above objectives the Council directs the candidates and voters to
refrain from:
i. canvassing in any form or shape directly or indirectly through any person including
friends, relations, supporters, patrons or agents;
ii. forming groups or panels of two or more persons overtly or covertly on any basis;
iii. influencing any member to vote or not to vote for any candidate(s) through pamphlets,
brochures, cards or by any other means of communication which tends to prevent a free
exercise of the voting right; except in a manner allowed in paragraph 4 and 5 of the
Directive;
iv. gathering in or around polling stations by candidates or any other members or persons on
the day of elections to avoid influence on the voters. Members should immediately leave
the premises after casting their votes; and
v. arranging or causing to arrange for members any party or gathering, with or without
meals, refreshments, etc. on or before election day.
4.0 To assist the candidates in disseminating information about them the Council has decided
to:
i. issue an introductory expose of all the candidates with their photographs stating their
particulars, positions in their organization and other fields of service, their achievements,
their previous service to the Institute, or its Council, Regional Committee or any other
Committee(s);
ii. the introductory expose of the candidates, shall be included in the Institute's Newsletter
and the Pakistan Accountant; and
iii. organize a get-together of the members and candidates of the Council and Regional
Committees to enable an introduction of candidates at such place(s) and at such time as the
Election Committee may decide.
5.0 A candidate may, if he so wishes, circularize or canvass electors provided that he observes
good taste and good sense. The decision of the Election Committee as to the acceptability
or otherwise of such a circular or canvassing shall be final and not open to challenge. Any
such circularization or canvassing shall be at the candidate’s personal expense.
6.0 The Council has also decided that the member choosing to cast his/her vote in the
election to the Council or the Regional Committees shall have to cast as many votes as
there are vacancies. Ballot papers showing more or less votes than the vacancies shall be
deemed invalid.
7.0 To ensure healthy practices for ICAP Elections, the Council expects members to report
any breach of the CA Ordinance and Bye laws there under and the foregoing directive if
such breach impairs the letter and spirit of free and fair election. In doing so the reporting
members are expected to be truthful. A report which is found to be untrue or is calculated
to prejudice any candidate or is made out of malice shall be adequate ground for
disciplinary action against the reporting member.
8.0 This directive shall be read with relevant provisions of the CA Ordinance and the Bye
laws there under.
(Revised 242nd meeting of the Council – January 23-24, 2013)

6.04
Code of Ethics for

(Revised 2019)
CODE OF ETHICS FOR CHARTERED ACCOUNTANTS
The "Code of Ethics for Chartered Accountants (Revised 2019)" is based on the Handbook
of the International Code of Ethics for Professional Accountants, 2018 Edition of the
International Ethics Standards Board for Accountants, published by the International
Federation of Accountants (IFAC) in July 2018 and is used with permission of IFAC.
Handbook of the International Code of Ethics for Professional Accountants, 2018 Edition
© July 2018 by the International Federation of Accountants.
Contact [email protected] for permission to reproduce, store or transmit, or to make

other similar uses of this document.
TABLE OF CONTENTS
Historical Background ................................................................................................................................ 6

Foreword .......................................................................................................................................................... 7
Preface .............................................................................................................................................................. 8
Part 1 - Complying with the Code, Fundamental Principles and Conceptual
sFramework .....................................................................................................................................10
Part 2 - Chartered Accountants in Business.......................................................................................27
Part 3 - Chartered Accountants in Practice ........................................................................................ 68
International Independence Standards (Parts 4A and 4B)
Part 4A - Independence for Audit and Review Engagement .................................................... 124
Part 4B - Independence for Assurance Engagements Other than Audit and Review
ddfEngagements ........................................................................................................................... 210
Glossary, including Lists of Abbreviations .................................................................... 252

Effective Date ................................................................................................................. 263
TABLE OF CONTENTS Page 1 of 263

OVERVIEW OF THE CODE
PART 1
COMPLYING WITH THE CODE,
FUNDAMENTAL PRINCIPLES AND CONCEPTUAL FRAMEWORK
(ALL CHARTERED ACCOUNTANTS - SECTIONS 100 TO 199)
PART 2
CHARTERED ACCOUNTANTS IN BUSINESS
(SECTIONS 200 TO 299)
(PART 2 IS ALSO APPLICABLE TO INDIVIDUAL CHARTERED
ACCOUNTANTS IN PRACTICE WHEN PERFORMING PROFESSIONAL ACTIVITIES
PURSUANT TO THEIR RELATIONSHIP WITH THE FIRM)
PART 3
CHARTERED ACCOUNTANTS IN PRACTICE
(PARTS 4A AND 4B)

INTERNATIONAL INDEPENDENCE STANDARDS
PART 4A
INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS
PART 4B
INDEPENDENCE FOR ASSURANCE ENGAGEMENTS
OTHER THAN AUDIT AND REVIEW ENGAGEMENTS
GLOSSARY
(ALL CHARTERED ACCOUNTANTS)
Page 2 of 263 OVERVIEW OF THE CODE

TABLE OF CONTENTS
HISTORICAL BACKGROUND .................................................................................... 6

FOREWORD .................................................................................................................... 7
PREFACE ......................................................................................................................... 8
PART 1 - COMPLYING WITH THE CODE, FUNDAMENTAL PRINCIPLES
AND CONCEPTUAL FRAMEWORK ...................................................... 10
100 Complying with the Code ...................................................................................... 11
110 The Fundamental Principles .................................................................................. 13
111 Integrity .................................................................................................................................14
112 Objectivity ...........................................................................................................................15
113 Professional Competence and Due Care ...................................................................15
114 Confidentiality ....................................................................................................................16
115 Professional Behavior ......................................................................................................18
120 The Conceptual Framework ................................................................................... 19
PART 2 - CHARTERED ACCOUNTANTS IN BUSINESS ...................................... 27
200 Applying the Conceptual Framework – Chartered Accountants in Business ........ 28
210 Conflicts of Interest ............................................................................................... 33
220 Preparation and Presentation of Information ......................................................... 36
230 Acting with Sufficient Expertise ............................................................................ 42
240 Financial Interests, Compensation and Incentives Linked to Financial Reporting
and Decision Making ............................................................................................. 44
250 Inducements, Including Gifts and Hospitality ....................................................... 46
260 Responding to Non-Compliance with Laws and Regulations................................ 53
270 Pressure to Breach the Fundamental Principles ..................................................... 64
PART 3 - CHARTERED ACCOUNTANTS IN PRACTICE ..................................... 68
300 Applying the Conceptual Framework – Chartered Accountants in Practice .......... 69
310 Conflicts of Interest ............................................................................................... 77
320 Professional Appointments .................................................................................... 84
321 Second Opinions .................................................................................................... 89
330 Fees and Other Types of Remuneration ................................................................. 90
340 Inducements, Including Gifts and Hospitality ....................................................... 92
350 Custody of Client Assets ........................................................................................ 99

360 Responding to Non-Compliance with Laws and Regulations.............................. 100

370 Public Notices, Announcements and Communications Undue Publicity be
Avoided................................................................................................................ 117
INTERNATIONAL INDEPENDENCE STANDARDS (PARTS 4A AND 4B)
PART 4A - INDEPENDENCE FOR AUDIT AND REVIEW
ENGAGEMENTS ..................................................................................... 124
400 Applying the Conceptual Framework to Independence for Audit and Review
Engagements ........................................................................................................ 125
410 Fees ...................................................................................................................... 140
411 Compensation and Evaluation Policies ................................................................ 144
420 Gifts and Hospitality ............................................................................................ 145
430 Actual or Threatened Litigation ........................................................................... 146
510 Financial Interests ................................................................................................ 147
511 Loans and Guarantees .......................................................................................... 153
520 Business Relationships......................................................................................... 155
521 Family and Personal Relationships ...................................................................... 157
522 Recent Service with an Audit Client .................................................................... 161
523 Serving as a Director or Officer of an Audit Client ............................................. 163
524 Employment with an Audit Client ....................................................................... 164
525 Temporary Personnel Assignments ..................................................................... 168
540 Long Association of Personnel (Including Partner Rotation) with an Audit
Client.................................................................................................................... 169
600 Provision of Non-Assurance Services to an Audit Client .................................... 175
601 Accounting and Bookkeeping Services ...................................................................180
602 Administrative Services ................................................................................................ 183
603 Valuation Services ..........................................................................................................184
604 Tax Services ......................................................................................................................186
605 Internal Audit Services ..................................................................................................192
606 Information Technology Systems Services ............................................................ 196
607 Litigation Support Services .......................................................................................... 198
608 Legal Services...................................................................................................................199
609 Recruiting Services .........................................................................................................201
610 Corporate Finance Services ......................................................................................... 203
Page 4 of 263 TABLE OF CONTENTS

800 Reports on Special Purpose Financial Statements that Include a Restriction on

Use and Distribution (Audit and Review Engagements) ..................................... 206
PART 4B - INDEPENDENCE FOR ASSURANCE ENGAGEMENTS
OTHER THAN AUDIT AND REVIEW ENGAGEMENTS ................ 210
900 Applying the Conceptual Framework to Independence for Assurance
Engagements Other than Audit and Review Engagements .................................. 211
905 Fees ...................................................................................................................... 220
906 Gifts and Hospitality ............................................................................................ 222
907 Actual or Threatened Litigation ........................................................................... 223
910 Financial Interests ................................................................................................ 224
911 Loans and Guarantees .......................................................................................... 228
920 Business Relationships......................................................................................... 230
921 Family and Personal Relationships ...................................................................... 232
922 Recent Service with an Assurance Client ............................................................ 236
923 Serving as a Director or Officer of an Assurance Client ...................................... 238
924 Employment with an Assurance Client ................................................................ 239
940 Long Association of Personnel with an Assurance Client ................................... 242
950 Provision of Non-Assurance Services to Assurance Clients Other than Audit and
Review Engagement Clients ................................................................................ 245
990 Reports that Include a Restriction on Use and Distribution (Assurance
Engagements Other than Audit and Review Engagements) ................................ 249
GLOSSARY, INCLUDING LISTS OF ABBREVIATIONS .................................... 252
EFFECTIVE DATE ..................................................................................................... 263

HISTORICAL BACKGROUND
1969-70 "Green Book" became part of Members' Handbook
July 1990 IFAC Code of Ethics for Professional Accountants was adopted
for the first time
April 2000 Code of Ethics was revised by Council
February 2003 Section 7 'Publicity and Advertising by Chartered Accountants'

was changed
August 2004 Code of Ethics was amended by Council
May 2005 Section 9 'Independence' and Definitions were replaced with new
IFAC requirements
May 2008 Code of Ethics was revised by Council
April 2015 Code of Ethics was revised by Council
Page 6 of 263 HISTORICAL BACKGROUND

FOREWORD
The accounting profession has a vital role in society. The accounting profession’s
unwavering commitment to serve public interest is like an unbreakable chain, running
throughout our profession, connecting all of us.
The recognition of the value that the profession brings to the society translates into the
public trust invested in the profession. Our commitment to serve public interest is a huge
responsibility, however, it is the chief attribute through which we have generated goodwill
and great standing for our profession over the centuries. Importantly, the profession has to
continuously reinforce and elevate its goodwill in the evolving and challenging business
and regulatory environment. The significance and the role of ethical practices has become
more and more central.
Our Institute’s vision defines and dictates that professional excellence can only be achieved
by upholding the principles of integrity, transparency and accountability. To fulfill its
vision, the Institute sets the standards of professional ethics and professional behaviour for
chartered accountants. These ethical standards set out the professional responsibilities and
duties owed by chartered accountants to their clients, employers, the authorities and the
public at large.
The Institute is a member of the International Federation of Accountants (IFAC). It is

committed to the IFAC’s broad objective of developing and enhancing a coordinated and
coherent worldwide accountancy profession with common standards. In this regard, the
Institute, as an obligation of its IFAC membership, is obliged to support the work of IFAC
by:
a) informing its members of every pronouncement developed by IFAC, and
b) implementing to the extent possible under local circumstances.
IFAC has issued the restructured Code of Ethics for Professional Accountants which
includes substantive revisions and is completely rewritten under a new structure and
drafting convention. The restructured Code has been issued after extensive research and
global stakeholder consultation.
The Council takes great pleasure in the adoption of the revised Code of Ethics for Chartered
Accountants that is based on the IFAC restructured Code of Ethics. The revised Code of
Ethics for Chartered Accountants contains all-around and multifaceted improvements,
including the Code's structure and applicability, formatting and drafting, reinforced
conceptual framework and ethical requirements and guidance.
Our members are expected to adhere to the ethical requirements of the restructured Code
of Ethics and exhibit the highest standards of ethics and professional conduct that are
expected of our profession.
Jafar Husain
President
Karachi, September 30, 2019
FOREWORD Page 7 of 263

PREFACE
The revised IESBA Code
In April 2015, the Institute's last Code of Ethics was revised and issued to members. In
April 2018, the International Ethics Standards Board for Accountants (IESBA) of IFAC
issued a revised and restructured Code of Ethics for Professional Accountants which
brought significant changes in the structure of the Code and substantially strengthened the
independence requirements of auditors and clarified other requirements for all professional
accountants.
The latest edition of the Handbook of the IESBA Code of Ethics was issued in July 2018
which replaces the previous editions of the Code. Since 2015 to 2018, major structural
changes and new requirements have been introduced by IESBA in the Code.
In order to adopt the same, the Auditing Standards and Ethics Committee of the Institute
made an exhaustive study of the IESBA Codes issued from 2015 to 2018 and recommended
latest Code of IESBA for adoption, subject to few changes. These changes are not in
conflict with the requirements of IESBA Code; rather make it more stringent and
principally arising out of the requirements of the Chartered Accountants Ordinance, 1961.
About the revised ICAP Code
The revised ICAP Code establishes a conceptual framework that requires a chartered
accountant to identify, evaluate, and address threats to compliance with the fundamental
principles. The conceptual framework approach assists chartered accountants in complying
with the ethical requirements of this Code and meeting their responsibility to act in the
public interest. When a chartered accountant identifies threats to compliance with the
fundamental principles and determines that they are not at an acceptable level, the chartered
accountant needs to ensure whether appropriate safeguards are available or not.
The revised ICAP Code entails ensuring compliance with the five fundamental principles
of professional ethics which are integrity, objectivity, professional competence and due
care, confidentiality and professional behavior. The revised ICAP Code applies to all
Chartered Accountants, whether in practice or not.
Chartered accountants are expected to demonstrate the highest standards of professional

conduct and to take into consideration the public interest. Ethical behavior by chartered
accountants plays a vital role in ensuring public trust in financial reporting and business
practices and upholding the reputation of the accountancy profession.
The Code of Ethics helps members of the Institute meet these obligations by providing
them with ethical guidance. The Code applies to all members, students, affiliates,
employees of member firms and, where applicable, member firms, in all of their
professional and business activities, whether remunerated or voluntary.
Page 8 of 263 PREFACE

Adoption by the Council
Pursuant to clause (i) of sub-section (2) of Section 15 of the Chartered Accountants

Ordinance, 1961 (CA Ordinance) the Council in its 316th meeting held on July 25-26, 2019
has adopted the Code of Ethics for Chartered Accountants (Revised 2019) to be effective
from July 1, 2020.
The revised ICAP Code of Ethics is being issued as a Directive of the Council and any
violation of the provisions of the Code will fall under Part 4 of Schedule 1 of the CA
Ordinance.
Conflict with the Code and the CA Ordinance & Chartered Accountants Bye-Laws
In the event of any conflict between matters contained in this Code and CA Ordinance,
Chartered Accountants Bye-Laws, or any specific directive issued by the Council, the
provisions of CA Ordinance, Chartered Accountants Bye-Laws, and the specific directive
shall prevail in that order respectively.
PREFACE Page 9 of 263

PART 1 - COMPLYING WITH THE CODE, FUNDAMENTAL

PART 1 - PRINCIPLES AND CONCEPTUAL FRAMEWORK
Section 100 Complying with the Code ........................................................................... 11
Section 110 The Fundamental Principles ........................................................................ 13
Subsection 111 Integrity ...................................................................................... 14
Subsection 112 Objectivity .................................................................................. 15
Subsection 113 Professional Competence and Due Care ..................................... 15
Subsection 114 Confidentiality ............................................................................ 16
Subsection 115 Professional Behavior ................................................................. 18
Section 120 The Conceptual Framework ........................................................................ 19
Page 10 of 263 INDEX OF PART 1

PART 1 - COMPLYING WITH THE CODE, FUNDAMENTAL

PART 1 - PRINCIPLES AND CONCEPTUAL FRAMEWORK
SECTION 100
COMPLYING WITH THE CODE
General
100.1 A1 A distinguishing mark of the accountancy profession is its acceptance of the

responsibility to act in the public interest. A chartered accountant’s
responsibility is not exclusively to satisfy the needs of an individual client
or employing organization. Therefore, the Code contains requirements and
application material to enable chartered accountants to meet their
responsibility to act in the public interest.
100.2 A1 The requirements in the Code, designated with the letter “R,” impose
obligations.
100.2 A2 Application material, designated with the letter “A,” provides context,
explanations, suggestions for actions or matters to consider, illustrations and
other guidance relevant to a proper understanding of the Code. In particular,
the application material is intended to help a chartered accountant to
understand how to apply the conceptual framework to a particular set of
circumstances and to understand and comply with a specific requirement.
While such application material does not of itself impose a requirement,
consideration of the material is necessary to the proper application of the
requirements of the Code, including application of the conceptual
framework.
R100.3 A chartered accountant shall comply with the Code. There might be
circumstances where laws or regulations preclude an accountant from
complying with certain parts of the Code. In such circumstances, those laws
and regulations prevail, and the accountant shall comply with all other parts
of the Code.
100.3 A1 The principle of professional behavior requires a chartered accountant to

comply with relevant laws and regulations. Some jurisdictions might have
provisions that differ from or go beyond those set out in the Code.
Accountants in those jurisdictions need to be aware of those differences and
comply with the more stringent provisions unless prohibited by law or
regulation.
100.3 A2 A chartered accountant might encounter unusual circumstances in which the

accountant believes that the result of applying a specific requirement of the
Code would be disproportionate or might not be in the public interest. In
SECTION 100 Page 11 of 263

those circumstances, the accountant is encouraged to consult with a

professional or regulatory body.
Breaches of the Code
R100.4 Paragraphs R400.80 to R400.89 and R900.50 to R900.55 address a breach

of International Independence Standards. A chartered accountant who
identifies a breach of any other provision of the Code shall evaluate the
significance of the breach and its impact on the accountant’s ability to
comply with the fundamental principles. The accountant shall also:
(a) Take whatever actions might be available, as soon as possible, to

address the consequences of the breach satisfactorily; and
(b) Determine whether to report the breach to the relevant parties.
100.4 A1 Relevant parties to whom such a breach might be reported include those who
might have been affected by it, a professional or regulatory body or an
oversight authority.
Page 12 of 263 SECTION 100

SECTION 110
THE FUNDAMENTAL PRINCIPLES
General
110.1 A1 There are five fundamental principles of ethics for chartered accountants:
(a) Integrity – to be straightforward and honest in all professional and

business relationships.
(b) Objectivity – not to compromise professional or business judgments

because of bias, conflict of interest or undue influence of others.
(c) Professional Competence and Due Care – to:
(i) Attain and maintain professional knowledge and skill at the

level required to ensure that a client or employing organization
receives competent professional service, based on current
technical and professional standards and relevant legislation;
and
(ii) Act diligently and in accordance with applicable technical and

professional standards.
(d) Confidentiality – to respect the confidentiality of information acquired

as a result of professional and business relationships.
(e) Professional Behavior – to comply with relevant laws and regulations

and avoid any conduct that the chartered accountant knows or should
know might discredit the profession.
R110.2 A chartered accountant shall comply with each of the fundamental

principles.
110.2 A1 The fundamental principles of ethics establish the standard of behavior

expected of a chartered accountant. The conceptual framework establishes
the approach which an accountant is required to apply to assist in complying
with those fundamental principles. Subsections 111 to 115 set out
requirements and application material related to each of the fundamental
principles.
110.2 A2 A chartered accountant might face a situation in which complying with one
fundamental principle conflicts with complying with one or more other
fundamental principles. In such a situation, the accountant might consider
consulting, on an anonymous basis if necessary, with:
 Others within the firm or employing organization.

 Those charged with governance.
 A professional body.
 A regulatory body.
 Legal counsel.
However, such consultation does not relieve the accountant from the
responsibility to exercise professional judgment to resolve the conflict or, if
necessary, and unless prohibited by law or regulation, disassociate from the
matter creating the conflict.
110.2 A3 The chartered accountant is encouraged to document the substance of the

issue, the details of any discussions, the decisions made and the rationale for
those decisions.
SUBSECTION 111
INTEGRITY
R111.1 A chartered accountant shall comply with the principle of integrity, which
requires an accountant to be straightforward and honest in all professional
and business relationships.
111.1 A1 Integrity implies fair dealing and truthfulness.
R111.2 A chartered accountant shall not knowingly be associated with reports,

returns, communications or other information where the accountant believes
that the information:
(a) Contains a materially false or misleading statement;
(b) Contains statements or information provided recklessly; or
(c) Omits or obscures required information where such omission or

obscurity would be misleading.
111.2 A1 If a chartered accountant provides a modified report in respect of such a

report, return, communication or other information, the accountant is not in
breach of paragraph R111.2.
R111.3 When a chartered accountant becomes aware of having been associated with
information described in paragraph R111.2, the accountant shall take steps
to be disassociated from that information.

SUBSECTION 112
OBJECTIVITY
R112.1 A chartered accountant shall comply with the principle of objectivity, which
requires an accountant not to compromise professional or business judgment
because of bias, conflict of interest or undue influence of others.
R112.2 A chartered accountant shall not undertake a professional activity if a

circumstance or relationship unduly influences the accountant’s professional
judgment regarding that activity.
SUBSECTION 113
PROFESSIONAL COMPETENCE AND DUE CARE
R113.1 A chartered accountant shall comply with the principle of professional

competence and due care, which requires an accountant to:
(a) Attain and maintain professional knowledge and skill at the level
required to ensure that a client or employing organization receives
competent professional service, based on current technical and
professional standards and relevant legislation; and
(b) Act diligently and in accordance with applicable technical and

professional standards.
113.1 A1 Serving clients and employing organizations with professional competence

requires the exercise of sound judgment in applying professional knowledge
and skill when undertaking professional activities.
113.1 A2 Maintaining professional competence requires a continuing awareness and

an understanding of relevant technical, professional and business
developments. Continuing professional development enables a chartered
accountant to develop and maintain the capabilities to perform competently
within the professional environment.
113.1 A3 Diligence encompasses the responsibility to act in accordance with the

requirements of an assignment, carefully, thoroughly and on a timely basis.
R113.2 In complying with the principle of professional competence and due care, a
chartered accountant shall take reasonable steps to ensure that those working
in a professional capacity under the accountant’s authority have appropriate
training and supervision.
R113.3 Where appropriate, a chartered accountant shall make clients, the employing
organization, or other users of the accountant’s professional services or
activities, aware of the limitations inherent in the services or activities.

SUBSECTION 114
CONFIDENTIALITY
R114.1 A chartered accountant shall comply with the principle of confidentiality,

which requires an accountant to respect the confidentiality of information
acquired as a result of professional and business relationships. An
accountant shall:
(a) Be alert to the possibility of inadvertent disclosure, including in a

social environment, and particularly to a close business associate or
an immediate or a close family member;
(b) Maintain confidentiality of information within the firm or employing

organization;
(c) Maintain confidentiality of information disclosed by a prospective

client or employing organization;
(d) Not disclose confidential information acquired as a result of

professional and business relationships outside the firm or employing
organization without proper and specific authority, unless there is a
legal or professional duty or right to disclose;
(e) Not use confidential information acquired as a result of professional

and business relationships for the personal advantage of the
accountant or for the advantage of a third party;
(f) Not use or disclose any confidential information, either acquired or

received as a result of a professional or business relationship, after
that relationship has ended; and
(g) Take reasonable steps to ensure that personnel under the accountant’s
control, and individuals from whom advice and assistance are
obtained, respect the accountant’s duty of confidentiality.
114.1 A1 Confidentiality serves the public interest because it facilitates the free flow
of information from the chartered accountant’s client or employing
organization to the accountant in the knowledge that the information will not
be disclosed to a third party. Nevertheless, the following are circumstances
where chartered accountants are or might be required to disclose confidential
information or when such disclosure might be appropriate:
(a) Disclosure is required by law, for example:
(i) Production of documents or other provision of evidence in the

course of legal proceedings; or

(ii) Disclosure to the appropriate public authorities of infringements

of the law that come to light;
(b) Disclosure is permitted by law and is authorized by the client or the

employing organization; and
(c) There is a professional duty or right to disclose, when not prohibited

by law:
(i) To comply with the quality review of a professional body;
(ii) To respond to an inquiry or investigation by a professional or

regulatory body;
(iii) To protect the professional interests of a chartered accountant

in legal proceedings; or
(iv) To comply with technical and professional standards, including

ethics requirements.
114.1 A2 In deciding whether to disclose confidential information, factors to consider,

depending on the circumstances, include:
 Whether the interests of any parties, including third parties whose

interests might be affected, could be harmed if the client or employing
organization consents to the disclosure of information by the
chartered accountant.
 Whether all the relevant information is known and substantiated, to

the extent practicable. Factors affecting the decision to disclose
include:
o Unsubstantiated facts.
o Incomplete information.
o Unsubstantiated conclusions.
 The proposed type of communication, and to whom it is addressed.
 Whether the parties to whom the communication is addressed are

appropriate recipients.
R114.2 A chartered accountant shall continue to comply with the principle of

confidentiality even after the end of the relationship between the accountant
and a client or employing organization. When changing employment or
acquiring a new client, the accountant is entitled to use prior experience but
shall not use or disclose any confidential information acquired or received
as a result of a professional or business relationship.

SUBSECTION 115
PROFESSIONAL BEHAVIOR
R115.1 A chartered accountant shall comply with the principle of professional

behavior, which requires an accountant to comply with relevant laws and
regulations and avoid any conduct that the accountant knows or should know
might discredit the profession. A chartered accountant shall not knowingly
engage in any business, occupation or activity that impairs or might impair
the integrity, objectivity or good reputation of the profession, and as a result
would be incompatible with the fundamental principles.
115.1 A1 Conduct that might discredit the profession includes conduct that a
reasonable and informed third party would be likely to conclude adversely
affects the good reputation of the profession.

SECTION 120
THE CONCEPTUAL FRAMEWORK
Introduction
120.1 The circumstances in which chartered accountants operate might create

threats to compliance with the fundamental principles. Section 120 sets out
requirements and application material, including a conceptual framework,
to assist accountants in complying with the fundamental principles and
meeting their responsibility to act in the public interest. Such requirements
and application material accommodate the wide range of facts and
circumstances, including the various professional activities, interests and
relationships, that create threats to compliance with the fundamental
principles. In addition, they deter accountants from concluding that a
situation is permitted solely because that situation is not specifically
prohibited by the Code.
120.2 The conceptual framework specifies an approach for a chartered accountant

to:
(a) Identify threats to compliance with the fundamental principles;
(b) Evaluate the threats identified; and
(c) Address the threats by eliminating or reducing them to an acceptable

level.
Requirements and Application Material
General
R120.3 The chartered accountant shall apply the conceptual framework to identify,
evaluate and address threats to compliance with the fundamental principles
set out in Section 110.
120.3 A1 Additional requirements and application material that are relevant to the
application of the conceptual framework are set out in:
(a) Part 2 – Chartered Accountants in Business;
(b) Part 3 – Chartered Accountants in Practice; and
(c) International Independence Standards, as follows:
(i) Part 4A – Independence for Audit and Review Engagements;

and

(ii) Part 4B – Independence for Assurance Engagements Other than

Audit and Review Engagements.
R120.4 When dealing with an ethics issue, the chartered accountant shall consider
the context in which the issue has arisen or might arise. Where an individual
who is a chartered accountant in practice is performing professional
activities pursuant to the accountant’s relationship with the firm, whether as
a contractor, employee or owner, the individual shall comply with the
provisions in Part 2 that apply to these circumstances.
R120.5 When applying the conceptual framework, the chartered accountant shall:
(a) Exercise professional judgment;
(b) Remain alert for new information and to changes in facts and
circumstances; and
(c) Use the reasonable and informed third party test described in
paragraph 120.5 A4.
Exercise of Professional Judgment
120.5 A1 Professional judgment involves the application of relevant training,

professional knowledge, skill and experience commensurate with the facts
and circumstances, including the nature and scope of the particular
professional activities, and the interests and relationships involved. In
relation to undertaking professional activities, the exercise of professional
judgment is required when the chartered accountant applies the conceptual
framework in order to make informed decisions about the courses of actions
available, and to determine whether such decisions are appropriate in the
circumstances.
120.5 A2 An understanding of known facts and circumstances is a prerequisite to the

proper application of the conceptual framework. Determining the actions
necessary to obtain this understanding and coming to a conclusion about
whether the fundamental principles have been complied with also require
the exercise of professional judgment.
120.5 A3 In exercising professional judgment to obtain this understanding, the

chartered accountant might consider, among other matters, whether:
 There is reason to be concerned that potentially relevant information

might be missing from the facts and circumstances known to the
accountant.
 There is an inconsistency between the known facts and circumstances

and the accountant’s expectations.

 The accountant’s expertise and experience are sufficient to reach a

conclusion.
 There is a need to consult with others with relevant expertise or

experience.
 The information provides a reasonable basis on which to reach a

conclusion.
 The accountant’s own preconception or bias might be affecting the

accountant’s exercise of professional judgment.
 There might be other reasonable conclusions that could be reached

from the available information.
Reasonable and Informed Third Party
120.5 A4 The reasonable and informed third party test is a consideration by the
chartered accountant about whether the same conclusions would likely be
reached by another party. Such consideration is made from the perspective
of a reasonable and informed third party, who weighs all the relevant facts
and circumstances that the accountant knows, or could reasonably be
expected to know, at the time the conclusions are made. The reasonable and
informed third party does not need to be an accountant, but would possess
the relevant knowledge and experience to understand and evaluate the
appropriateness of the accountant’s conclusions in an impartial manner.
Identifying Threats
R120.6 The chartered accountant shall identify threats to compliance with the
fundamental principles.
120.6 A1 An understanding of the facts and circumstances, including any professional

activities, interests and relationships that might compromise compliance
with the fundamental principles, is a prerequisite to the chartered
accountant’s identification of threats to such compliance. The existence of
certain conditions, policies and procedures established by the profession,
legislation, regulation, the firm, or the employing organization that can
enhance the accountant acting ethically might also help identify threats to
compliance with the fundamental principles. Paragraph 120.8 A2 includes
general examples of such conditions, policies and procedures which are also
factors that are relevant in evaluating the level of threats.
120.6 A2 Threats to compliance with the fundamental principles might be created by

a broad range of facts and circumstances. It is not possible to define every
situation that creates threats. In addition, the nature of engagements and

work assignments might differ and, consequently, different types of threats

might be created.
120.6 A3 Threats to compliance with the fundamental principles fall into one or more
of the following categories:
(a) Self-interest threat – the threat that a financial or other interest will
inappropriately influence a chartered accountant’s judgment or
behavior;
(b) Self-review threat – the threat that a chartered accountant will not
appropriately evaluate the results of a previous judgment made; or an
activity performed by the accountant, or by another individual within
the accountant’s firm or employing organization, on which the
accountant will rely when forming a judgment as part of performing
a current activity;
(c) Advocacy threat – the threat that a chartered accountant will promote
a client’s or employing organization’s position to the point that the
accountant’s objectivity is compromised;
(d) Familiarity threat – the threat that due to a long or close relationship
with a client, or employing organization, a chartered accountant will
be too sympathetic to their interests or too accepting of their work;
and
(e) Intimidation threat – the threat that a chartered accountant will be

deterred from acting objectively because of actual or perceived
pressures, including attempts to exercise undue influence over the
accountant.
120.6 A4 A circumstance might create more than one threat, and a threat might affect
compliance with more than one fundamental principle.
Evaluating Threats
R120.7 When the chartered accountant identifies a threat to compliance with the
fundamental principles, the accountant shall evaluate whether such a threat
is at an acceptable level.
Acceptable Level
120.7 A1 An acceptable level is a level at which a chartered accountant using the

reasonable and informed third party test would likely conclude that the
accountant complies with the fundamental principles.

Factors Relevant in Evaluating the Level of Threats
120.8 A1 The consideration of qualitative as well as quantitative factors is relevant in

the chartered accountant’s evaluation of threats, as is the combined effect of
multiple threats, if applicable.
120.8 A2 The existence of conditions, policies and procedures described in paragraph

120.6 A1 might also be factors that are relevant in evaluating the level of
threats to compliance with fundamental principles. Examples of such
conditions, policies and procedures include:
 Corporate governance requirements.
 Educational, training and experience requirements for the profession.
 Effective complaint systems which enable the chartered accountant

and the general public to draw attention to unethical behavior.
 An explicitly stated duty to report breaches of ethics requirements.
 Professional or regulatory monitoring and disciplinary procedures.
Consideration of New Information or Changes in Facts and Circumstances
R120.9 If the chartered accountant becomes aware of new information or changes in

facts and circumstances that might impact whether a threat has been
eliminated or reduced to an acceptable level, the accountant shall re-evaluate
and address that threat accordingly.
120.9 A1 Remaining alert throughout the professional activity assists the chartered
accountant in determining whether new information has emerged or changes
in facts and circumstances have occurred that:
(a) Impact the level of a threat; or
(b) Affect the accountant’s conclusions about whether safeguards applied

continue to be appropriate to address identified threats.
120.9 A2 If new information results in the identification of a new threat, the chartered
accountant is required to evaluate and, as appropriate, address this threat.
(Ref: Paras. R120.7 and R120.10).
Addressing Threats
R120.10 If the chartered accountant determines that the identified threats to

compliance with the fundamental principles are not at an acceptable level,

the accountant shall address the threats by eliminating them or reducing them
to an acceptable level. The accountant shall do so by:
(a) Eliminating the circumstances, including interests or relationships,

that are creating the threats;
(b) Applying safeguards, where available and capable of being applied, to

reduce the threats to an acceptable level; or
(c) Declining or ending the specific professional activity.
Actions to Eliminate Threats
120.10 A1 Depending on the facts and circumstances, a threat might be addressed by

eliminating the circumstance creating the threat. However, there are some
situations in which threats can only be addressed by declining or ending the
specific professional activity. This is because the circumstances that created
the threats cannot be eliminated and safeguards are not capable of being
applied to reduce the threat to an acceptable level.
Safeguards
120.10 A2 Safeguards are actions, individually or in combination, that the chartered

accountant takes that effectively reduce threats to compliance with the
fundamental principles to an acceptable level.
Consideration of Significant Judgments Made and Overall Conclusions Reached
R120.11 The chartered accountant shall form an overall conclusion about whether the
actions that the accountant takes, or intends to take, to address the threats
created will eliminate those threats or reduce them to an acceptable level. In
forming the overall conclusion, the accountant shall:
(a) Review any significant judgments made or conclusions reached; and
(b) Use the reasonable and informed third party test.
Considerations for Audits, Reviews and Other Assurance Engagements
Independence
120.12 A1 Chartered accountants in practice are required by International

Independence Standards to be independent when performing audits,
reviews, or other assurance engagements. Independence is linked to the
fundamental principles of objectivity and integrity. It comprises:
(a) Independence of mind – the state of mind that permits the expression
of a conclusion without being affected by influences that compromise

professional judgment, thereby allowing an individual to act with

integrity, and exercise objectivity and professional skepticism.
(b) Independence in appearance – the avoidance of facts and

circumstances that are so significant that a reasonable and informed
third party would be likely to conclude that a firm’s or an audit or
assurance team member’s integrity, objectivity or professional
skepticism has been compromised.
120.12 A2 International Independence Standards set out requirements and application

material on how to apply the conceptual framework to maintain
independence when performing audits, reviews or other assurance
engagements. Chartered accountants and firms are required to comply with
these standards in order to be independent when conducting such
engagements. The conceptual framework to identify, evaluate and address
threats to compliance with the fundamental principles applies in the same
way to compliance with independence requirements. The categories of
threats to compliance with the fundamental principles described in
paragraph 120.6 A3 are also the categories of threats to compliance with
independence requirements.
Professional Skepticism
120.13 A1 Under auditing, review and other assurance standards, including those
issued by the IAASB, chartered accountants in practice are required to
exercise professional skepticism when planning and performing audits,
reviews and other assurance engagements. Professional skepticism and the
fundamental principles that are described in Section 110 are inter-related
concepts.
120.13 A2 In an audit of financial statements, compliance with the fundamental

principles, individually and collectively, supports the exercise of
professional skepticism, as shown in the following examples:
 Integrity requires the chartered accountant to be straightforward and

honest. For example, the accountant complies with the principle of
integrity by:
(a) Being straightforward and honest when raising concerns about

a position taken by a client; and
(b) Pursuing inquiries about inconsistent information and seeking

further audit evidence to address concerns about statements that
might be materially false or misleading in order to make
informed decisions about the appropriate course of action in the
circumstances.

In doing so, the accountant demonstrates the critical assessment of

audit evidence that contributes to the exercise of professional
skepticism.
 Objectivity requires the chartered accountant not to compromise

professional or business judgment because of bias, conflict of interest
or the undue influence of others. For example, the accountant
complies with the principle of objectivity by:
(a) Recognizing circumstances or relationships such as familiarity

with the client, that might compromise the accountant’s
professional or business judgment; and
(b) Considering the impact of such circumstances and relationships

on the accountant’s judgment when evaluating the sufficiency
and appropriateness of audit evidence related to a matter
material to the client’s financial statements.
In doing so, the accountant behaves in a manner that contributes to

the exercise of professional skepticism.
 Professional competence and due care requires the chartered

accountant to have professional knowledge and skill at the level
required to ensure the provision of competent professional service,
and to act diligently in accordance with applicable standards, laws
and regulations. For example, the accountant complies with the
principle of professional competence and due care by:
(a) Applying knowledge that is relevant to a particular client’s

industry and business activities in order to properly identify
risks of material misstatement;
(b) Designing and performing appropriate audit procedures; and
(c) Applying relevant knowledge when critically assessing whether

audit evidence is sufficient and appropriate in the
circumstances.
In doing so, the accountant behaves in a manner that contributes to

the exercise of professional skepticism.

PART 2 - CHARTERED ACCOUNTANTS IN BUSINESS
Section 200 Applying the Conceptual Framework – Chartered Accountants in

Business ................................................................................................ 28
Section 210 Conflicts of Interest ............................................................................... 33
Section 220 Preparation and Presentation of Information ......................................... 36
Section 230 Acting with Sufficient Expertise ............................................................ 42
Section 240 Financial Interests, Compensation and Incentives Linked to Financial

Reporting and Decision Making ............................................................ 44
Section 250 Inducements, Including Gifts and Hospitality ....................................... 46
Section 260 Responding to Non-Compliance with Laws and Regulations ............... 53
Section 270 Pressure to Breach the Fundamental Principles ..................................... 64
INDEX OF PART 2 Page 27 of 263

PART 2 - CHARTERED ACCOUNTANTS IN BUSINESS
SECTION 200
APPLYING THE CONCEPTUAL FRAMEWORK – CHARTERED ACCOUNTANTS

IN BUSINESS
Introduction
200.1 This Part of the Code sets out requirements and application material for
chartered accountants in business when applying the conceptual framework
set out in Section 120. It does not describe all of the facts and circumstances,
including professional activities, interests and relationships, that could be
encountered by chartered accountants in business, which create or might
create threats to compliance with the fundamental principles. Therefore, the
conceptual framework requires chartered accountants in business to be alert
for such facts and circumstances.
200.2 Investors, creditors, employing organizations and other sectors of the

business community, as well as governments and the general public, might
rely on the work of chartered accountants in business. Chartered accountants
in business might be solely or jointly responsible for the preparation and
reporting of financial and other information, on which both their employing
organizations and third parties might rely. They might also be responsible
for providing effective financial management and competent advice on a
variety of business-related matters.
200.3 A chartered accountant in business might be an employee, contractor,

partner, director (executive or non-executive), owner-manager, or volunteer
of an employing organization. The legal form of the relationship of the
accountant with the employing organization has no bearing on the ethical
responsibilities placed on the accountant.
200.4 In this Part, the term “chartered accountant” refers to:
(a) A chartered accountant in business; and
(b) An individual who is a chartered accountant in practice when

performing professional activities pursuant to the accountant’s
relationship with the accountant’s firm, whether as a contractor,
employee or owner. More information on when Part 2 is applicable
to chartered accountants in practice is set out in paragraphs R120.4,
R300.5 and 300.5 A1.

General
R200.5 A chartered accountant shall comply with the fundamental principles set out
in Section 110 and apply the conceptual framework set out in Section 120 to
identify, evaluate and address threats to compliance with the fundamental
principles.
200.5 A1 A chartered accountant has a responsibility to further the legitimate

objectives of the accountant’s employing organization. The Code does not
seek to hinder accountants from fulfilling that responsibility, but addresses
circumstances in which compliance with the fundamental principles might
be compromised.
200.5 A2 Chartered accountants may promote the position of the employing

organization when furthering the legitimate goals and objectives of their
employing organization, provided that any statements made are neither false
nor misleading. Such actions usually would not create an advocacy threat.
200.5 A3 The more senior the position of a chartered accountant, the greater will be
the ability and opportunity to access information, and to influence policies,
decisions made and actions taken by others involved with the employing
organization. To the extent that they are able to do so, taking into account
their position and seniority in the organization, accountants are expected to
encourage and promote an ethics-based culture in the organization.
Examples of actions that might be taken include the introduction,
implementation and oversight of:
 Ethics education and training programs.
 Ethics and whistle-blowing policies.
 Policies and procedures designed to prevent non-compliance with

laws and regulations.
Identifying Threats

a broad range of facts and circumstances. The categories of threats are
described in paragraph 120.6 A3. The following are examples of facts and
circumstances within each of those categories that might create threats for a
chartered accountant when undertaking a professional activity:

(a) Self-interest Threats
 A chartered accountant holding a financial interest in, or

receiving a loan or guarantee from, the employing organization.
 A chartered accountant participating in incentive compensation

arrangements offered by the employing organization.
 A chartered accountant having access to corporate assets for

personal use.
 A chartered accountant being offered a gift or special treatment

from a supplier of the employing organization.
(b) Self-review Threats
 A chartered accountant determining the appropriate accounting

treatment for a business combination after performing the
feasibility study supporting the purchase decision.
(c) Advocacy Threats
 A chartered accountant having the opportunity to manipulate

information in a prospectus in order to obtain favorable
financing.
(d) Familiarity Threats
 A chartered accountant being responsible for the financial

reporting of the employing organization when an immediate or
close family member employed by the organization makes
decisions that affect the financial reporting of the organization.
 A chartered accountant having a long association with

individuals influencing business decisions.
(e) Intimidation Threats
 A chartered accountant or immediate or close family member

facing the threat of dismissal or replacement over a
disagreement about:
o The application of an accounting principle.
o The way in which financial information is to be reported.

 An individual attempting to influence the decision-making

process of the chartered accountant, for example with regard to
the awarding of contracts or the application of an accounting
principle.
Evaluating Threats
200.7 A1 The conditions, policies and procedures described in paragraphs 120.6 A1

and 120.8 A2 might impact the evaluation of whether a threat to compliance
with the fundamental principles is at an acceptable level.
200.7 A2 The chartered accountant’s evaluation of the level of a threat is also

impacted by the nature and scope of the professional activity.
200.7 A3 The chartered accountant’s evaluation of the level of a threat might be

impacted by the work environment within the employing organization and
its operating environment. For example:
 Leadership that stresses the importance of ethical behavior and the

expectation that employees will act in an ethical manner.
 Policies and procedures to empower and encourage employees to

communicate ethics issues that concern them to senior levels of
management without fear of retribution.
 Policies and procedures to implement and monitor the quality of

employee performance.
 Systems of corporate oversight or other oversight structures and

strong internal controls.
 Recruitment procedures emphasizing the importance of employing

high caliber competent personnel.
 Timely communication of policies and procedures, including any

changes to them, to all employees, and appropriate training and
education on such policies and procedures.
 Ethics and code of conduct policies.
200.7 A4 Chartered accountants might consider obtaining legal advice where they
believe that unethical behavior or actions by others have occurred, or will
continue to occur, within the employing organization.

Addressing Threats
200.8 A1 Sections 210 to 270 describe certain threats that might arise during the
course of performing professional activities and include examples of actions
that might address such threats.
200.8 A2 In extreme situations, if the circumstances that created the threats cannot be
eliminated and safeguards are not available or capable of being applied to
reduce the threat to an acceptable level, it might be appropriate for a
chartered accountant to resign from the employing organization.
Communicating with Those Charged with Governance
R200.9 When communicating with those charged with governance in accordance

with the Code, a chartered accountant shall determine the appropriate
individual(s) within the employing organization’s governance structure
with whom to communicate. If the accountant communicates with a
subgroup of those charged with governance, the accountant shall determine
whether communication with all of those charged with governance is also
necessary so that they are adequately informed.
200.9 A1 In determining with whom to communicate, a chartered accountant might

consider:
(a) The nature and importance of the circumstances; and
(b) The matter to be communicated.
200.9 A2 Examples of a subgroup of those charged with governance include an audit

committee or an individual member of those charged with governance.
R200.10 If a chartered accountant communicates with individuals who have

management responsibilities as well as governance responsibilities, the
accountant shall be satisfied that communication with those individuals
adequately informs all of those in a governance role with whom the
accountant would otherwise communicate.
200.10 A1 In some circumstances, all of those charged with governance are involved
in managing the employing organization, for example, a small business
where a single owner manages the organization and no one else has a
governance role. In these cases, if matters are communicated with
individual(s) with management responsibilities, and those individual(s) also
have governance responsibilities, the chartered accountant has satisfied the
requirement to communicate with those charged with governance.

SECTION 210
CONFLICTS OF INTEREST
Introduction
210.1 Chartered 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.
210.2 A conflict of interest creates threats to compliance with the principle of

objectivity and might create threats to compliance with the other
fundamental principles. Such threats might be created when:
(a) A chartered accountant undertakes a professional activity related to

a particular matter for two or more parties whose interests with
respect to that matter are in conflict; or
(b) The interest of a chartered accountant with respect to a particular

matter and the interests of a party for whom the accountant
undertakes a professional activity related to that matter are in
conflict.
A party might include an employing organization, a vendor, a customer, a

lender, a shareholder, or another party.
210.3 This section sets out specific requirements and application material relevant
to applying the conceptual framework to conflicts of interest.
General
R210.4 A chartered accountant shall not allow a conflict of interest to compromise

professional or business judgment.
210.4 A1 Examples of circumstances that might create a conflict of interest include:
 Serving in a management or governance position for two employing

organizations and acquiring confidential information from one
organization that might be used by the chartered accountant to the
advantage or disadvantage of the other organization.
 Undertaking a professional activity for each of two parties in a

partnership, where both parties are employing the accountant to
assist them to dissolve their partnership.

 Preparing financial information for certain members of management

of the accountant’s employing organization who are seeking to
undertake a management buy-out.
 Being responsible for selecting a vendor for the employing

organization when an immediate family member of the accountant
might benefit financially from the transaction.
 Serving in a governance capacity in an employing organization that

is approving certain investments for the company where one of those
investments will increase the value of the investment portfolio of the
accountant or an immediate family member.
Conflict Identification
R210.5 A chartered accountant shall take reasonable steps to identify circumstances

that might create a conflict of interest, and therefore a threat to compliance
with one or more of the fundamental principles. Such steps shall include
identifying:
(a) The nature of the relevant interests and relationships between the
parties involved; and
(b) The activity and its implication for relevant parties.
R210.6 A chartered accountant shall remain alert to changes over time in the nature
of the activities, interests and relationships that might create a conflict of
interest while performing a professional activity.
Threats Created by Conflicts of Interest
210.7 A1 In general, the more direct the connection between the professional activity
and the matter on which the parties’ interests conflict, the more likely the
level of the threat is not at an acceptable level.
210.7 A2 An example of an action that might eliminate threats created by conflicts of

interest is withdrawing from the decision-making process related to the
matter giving rise to the conflict of interest.
210.7 A3 Examples of actions that might be safeguards to address threats created by

conflicts of interest include:
 Restructuring or segregating certain responsibilities and duties.
 Obtaining appropriate oversight, for example, acting under the

supervision of an executive or non-executive director.

Disclosure and Consent
General
210.8 A1 It is generally necessary to:
(a) Disclose the nature of the conflict of interest and how any threats
created were addressed to the relevant parties, including to the
appropriate levels within the employing organization affected by a
conflict; and
(b) Obtain consent from the relevant parties for the chartered accountant
to undertake the professional activity when safeguards are applied
to address the threat.
210.8 A2 Consent might be implied by a party’s conduct in circumstances where the

chartered accountant has sufficient evidence to conclude that the parties
know the circumstances at the outset and have accepted the conflict of
interest if they do not raise an objection to the existence of the conflict.
210.8 A3 If such disclosure or consent is not in writing, the chartered accountant is

encouraged to document:
(a) The nature of the circumstances giving rise to the conflict of interest;
(b) The safeguards applied to address the threats when applicable; and
(c) The consent obtained.
Other Considerations
210.9 A1 When addressing a conflict of interest, the chartered accountant is

encouraged to seek guidance from within the employing organization or
from others, such as a professional body, legal counsel or another
accountant. When making such disclosures or sharing information within
the employing organization and seeking guidance of third parties, the
principle of confidentiality applies.

SECTION 220
PREPARATION AND PRESENTATION OF INFORMATION
Introduction

220.2 Preparing or presenting information might create a self-interest, intimidation

or other threats to compliance with one or more of the fundamental
principles. This section sets out specific requirements and application
material relevant to applying the conceptual framework in such
circumstances.
General
220.3 A1 Chartered accountants at all levels in an employing organization are

involved in the preparation or presentation of information both within and
outside the organization.
220.3 A2 Stakeholders to whom, or for whom, such information is prepared or

presented, include:
 Management and those charged with governance.
 Investors and lenders or other creditors.
 Regulatory bodies.
This information might assist stakeholders in understanding and evaluating

aspects of the employing organization’s state of affairs and in making
decisions concerning the organization. Information can include financial
and non-financial information that might be made public or used for internal
purposes.
Examples include:
 Operating and performance reports.
 Decision support analyses.
 Budgets and forecasts.

 Information provided to the internal and external auditors.
 Risk analyses.
 General and special purpose financial statements.
 Tax returns.
 Reports filed with regulatory bodies for legal and compliance

purposes.
220.3 A3 For the purposes of this section, preparing or presenting information

includes recording, maintaining and approving information.
R220.4 When preparing or presenting information, a chartered accountant shall:
(a) Prepare or present the information in accordance with a relevant

reporting framework, where applicable;
(b) Prepare or present the information in a manner that is intended

neither to mislead nor to influence contractual or regulatory
outcomes inappropriately;
(c) Exercise professional judgment to:
(i) Represent the facts accurately and completely in all material

respects;
(ii) Describe clearly the true nature of business transactions or

activities; and
(iii) Classify and record information in a timely and proper manner;

and
(d) Not omit anything with the intention of rendering the information
misleading or of influencing contractual or regulatory outcomes
inappropriately.
220.4 A1 An example of influencing a contractual or regulatory outcome

inappropriately is using an unrealistic estimate with the intention of avoiding
violation of a contractual requirement such as a debt covenant or of a
regulatory requirement such as a capital requirement for a financial
institution.

Use of Discretion in Preparing or Presenting Information
R220.5 Preparing or presenting information might require the exercise of discretion

in making professional judgments. The chartered accountant shall not
exercise such discretion with the intention of misleading others or
influencing contractual or regulatory outcomes inappropriately.
220.5 A1 Examples of ways in which discretion might be misused to achieve

inappropriate outcomes include:
 Determining estimates, for example, determining fair value

estimates in order to misrepresent profit or loss.
 Selecting or changing an accounting policy or method among two or

more alternatives permitted under the applicable financial reporting
framework, for example, selecting a policy for accounting for long-
term contracts in order to misrepresent profit or loss.
 Determining the timing of transactions, for example, timing the sale

of an asset near the end of the fiscal year in order to mislead.
 Determining the structuring of transactions, for example, structuring

financing transactions in order to misrepresent assets and liabilities
or classification of cash flows.
 Selecting disclosures, for example, omitting or obscuring

information relating to financial or operating risk in order to mislead.
R220.6 When performing professional activities, especially those that do not require
compliance with a relevant reporting framework, the chartered accountant
shall exercise professional judgment to identify and consider:
(a) The purpose for which the information is to be used;
(b) The context within which it is given; and
(c) The audience to whom it is addressed.
220.6 A1 For example, when preparing or presenting pro forma reports, budgets or
forecasts, the inclusion of relevant estimates, approximations and
assumptions, where appropriate, would enable those who might rely on such
information to form their own judgments.
220.6 A2 The chartered accountant might also consider clarifying the intended
audience, context and purpose of the information to be presented.

Relying on the Work of Others
R220.7 A chartered accountant who intends to rely on the work of others, either
internal or external to the employing organization, shall exercise
professional judgment to determine what steps to take, if any, in order to
fulfill the responsibilities, set out in paragraph R220.4.
220.7 A1 Factors to consider in determining whether reliance on others is reasonable

include:
 The reputation and expertise of, and resources available to, the other
individual or organization.
 Whether the other individual is subject to applicable professional

and ethics standards.
Such information might be gained from prior association with, or from

consulting others about, the other individual or organization.
Addressing Information that is or Might be Misleading
R220.8 When the chartered accountant knows or has reason to believe that the
information with which the accountant is associated is misleading, the
accountant shall take appropriate actions to seek to resolve the matter.
220.8 A1 Actions that might be appropriate include:
 Discussing concerns that the information is misleading with the

chartered accountant’s superior and/or the appropriate level(s) of
management within the accountant’s employing organization or
those charged with governance, and requesting such individuals to
take appropriate action to resolve the matter. Such action might
include:
o Having the information corrected.
o If the information has already been disclosed to the intended

users, informing them of the correct information.
 Consulting the policies and procedures of the employing

organization (for example, an ethics or whistle-blowing policy)
regarding how to address such matters internally.

220.8 A2 The chartered accountant might determine that the employing organization
has not taken appropriate action. If the accountant continues to have reason
to believe that the information is misleading, the following further actions
might be appropriate provided that the accountant remains alert to the
principle of confidentiality:
 Consulting with:
o A relevant professional body.
o The internal or external auditor of the employing organization.
o Legal counsel.
 Determining whether any requirements exist to communicate to:
o Third parties, including users of the information.
o Regulatory and oversight authorities.
R220.9 If after exhausting all feasible options, the chartered accountant determines
that appropriate action has not been taken and there is reason to believe that
the information is still misleading, the accountant shall refuse to be or to
remain associated with the information.
220.9 A1 In such circumstances, it might be appropriate for a chartered accountant to

resign from the employing organization.
Documentation
220.10 A1 The chartered accountant is encouraged to document:
 The facts.
 The accounting principles or other relevant professional standards

involved.
 The communications and parties with whom matters were discussed.
 The courses of action considered.
 How the accountant attempted to address the matter(s).

220.11 A1 Where threats to compliance with the fundamental principles relating to the
preparation or presentation of information arise from a financial interest,
including compensation and incentives linked to financial reporting and
decision making, the requirements and application material set out in Section
240 apply.
220.11 A2 Where the misleading information might involve non-compliance with laws
and regulations, the requirements and application material set out in Section
260 apply.
220.11 A3 Where threats to compliance with the fundamental principles relating to the
preparation or presentation of information arise from pressure, the
requirements and application material set out in Section 270 apply.

SECTION 230
ACTING WITH SUFFICIENT EXPERTISE
Introduction

230.2 Acting without sufficient expertise creates a self-interest threat to

compliance with the principle of professional competence and due care. This
section sets out specific requirements and application material relevant to
applying the conceptual framework in such circumstances.
General
R230.3 A chartered accountant shall not intentionally mislead an employing

organization as to the level of expertise or experience possessed.
230.3 A1 The principle of professional competence and due care requires that a
chartered accountant only undertake significant tasks for which the
accountant has, or can obtain, sufficient training or experience.
230.3 A2 A self-interest threat to compliance with the principle of professional

competence and due care might be created if a chartered accountant has:
 Insufficient time for performing or completing the relevant duties.
 Incomplete, restricted or otherwise inadequate information for

performing the duties.
 Insufficient experience, training and/or education.
 Inadequate resources for the performance of the duties.
230.3 A3 Factors that are relevant in evaluating the level of such a threat include:
 The extent to which the chartered accountant is working with others.
 The relative seniority of the accountant in the business.
 The level of supervision and review applied to the work.

230.3 A4 Examples of actions that might be safeguards to address such a self-interest

threat include:
 Obtaining assistance or training from someone with the necessary

expertise.
 Ensuring that there is adequate time available for performing the

relevant duties.
R230.4 If a threat to compliance with the principle of professional competence and

due care cannot be addressed, a chartered accountant shall determine
whether to decline to perform the duties in question. If the accountant
determines that declining is appropriate, the accountant shall communicate
the reasons.
230.5 A1 The requirements and application material in Section 270 apply when a
chartered accountant is pressured to act in a manner that might lead to a
breach of the principle of professional competence and due care.

SECTION 240
FINANCIAL INTERESTS, COMPENSATION AND INCENTIVES LINKED TO

FINANCIAL REPORTING AND DECISION MAKING
Introduction

240.2 Having a financial interest, or knowing of a financial interest held by an

immediate or close family member might create a self-interest threat to
compliance with the principles of objectivity or confidentiality. This section
sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.
General
R240.3 A chartered accountant shall not manipulate information or use confidential

information for personal gain or for the financial gain of others.
240.3 A1 Chartered accountants might have financial interests or might know of

financial interests of immediate or close family members that, in certain
circumstances, might create threats to compliance with the fundamental
principles. Financial interests include those arising from compensation or
incentive arrangements linked to financial reporting and decision making.
240.3 A2 Examples of circumstances that might create a self-interest threat include

situations in which the chartered accountant or an immediate or close family
member:
 Has a motive and opportunity to manipulate price-sensitive

information in order to gain financially.
 Holds a direct or indirect financial interest in the employing

organization and the value of that financial interest might be directly
affected by decisions made by the accountant.
 Is eligible for a profit-related bonus and the value of that bonus

might be directly affected by decisions made by the accountant.
 Holds, directly or indirectly, deferred bonus share rights or share

options in the employing organization, the value of which might be
affected by decisions made by the accountant.

 Participates in compensation arrangements which provide incentives

to achieve targets or to support efforts to maximize the value of the
employing organization’s shares. An example of such an
arrangement might be through participation in incentive plans which
are linked to certain performance conditions being met.
 The significance of the financial interest. What constitutes a

significant financial interest will depend on personal circumstances
and the materiality of the financial interest to the individual.
 Policies and procedures for a committee independent of

management to determine the level or form of senior management
remuneration.
 In accordance with any internal policies, disclosure to those charged

with governance of:
o All relevant interests.
o Any plans to exercise entitlements or trade in relevant shares.
 Internal and external audit procedures that are specific to address

issues that give rise to the financial interest.
240.3 A4 Threats created by compensation or incentive arrangements might be

compounded by explicit or implicit pressure from superiors or colleagues.
See Section 270, Pressure to Breach the Fundamental Principles.

SECTION 250
INDUCEMENTS, INCLUDING GIFTS AND HOSPITALITY
Introduction

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.
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 chartered accountant to comply with relevant laws and
regulations when offering or accepting inducements.
General
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 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 chartered 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 The offering or accepting of inducements that is not prohibited by laws and
regulations might still create threats to compliance with the fundamental
principles.
Inducements with Intent to Improperly Influence Behavior
R250.7 A chartered 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.
R250.8 A chartered 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.
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 chartered
accountant in considering what constitutes unethical behavior on the part of
the accountant and, if necessary by analogy, other individuals.
250.9 A2 A breach of the fundamental principle of integrity arises when a chartered

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.
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 chartered 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.
Consideration of Further Actions
250.10 A1 If the chartered 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.
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 chartered accountant or the
offeror regarding the offer.
 Amending or terminating the business relationship with the offeror.

Inducements with No Intent to Improperly Influence Behavior
250.11 A1 The requirements and application material set out in the conceptual
framework apply when a chartered accountant has concluded there is no
actual or perceived intent to improperly influence the behavior of the
250.11 A2 If such an inducement is trivial and inconsequential, any threats created will
be at an acceptable level.
250.11 A3 Examples of circumstances where offering or accepting such an inducement

might create threats even if the chartered accountant has concluded there is
no actual or perceived intent to improperly influence behavior include:
 Self-interest threats
o A chartered accountant is offered part-time employment by a

vendor.
 Familiarity threats
o A chartered accountant regularly takes a customer or supplier

to sporting events.
 Intimidation threats
o A chartered accountant accepts hospitality, the nature of which

could be perceived to be inappropriate were it to be publicly
disclosed.
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.
250.11 A5 Examples 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 chartered
accountant has no reason to believe would be, or would be perceived
to be, improperly influenced in making the decision.
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 chartered
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 A chartered accountant shall remain alert to potential threats to the

accountant’s compliance with the fundamental principles created by the
offering of an inducement:
(a) By an immediate or close family member of the accountant to a

counterparty with whom the accountant has a professional
relationship; or
(b) To an immediate or close family member of the accountant by a

counterparty with whom the accountant has a professional
relationship.
R250.13 Where the chartered 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.

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 chartered accountant or of the counterparty. Another factor
that is relevant is the nature or closeness of the relationship, between:
(a) The accountant and the immediate or close family member;
(b) The immediate or close family member and the counterparty; and
(c) 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.
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 chartered accountant or of
the counterparty even if the immediate or close family member has followed
the advice given pursuant to paragraph R250.13.
Application of the Conceptual Framework
250.14 A1 Where the chartered 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:
(a) The immediate or close family member offers or accepts the

inducement contrary to the advice of the accountant pursuant to
paragraph R250.13; or
(b) 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.
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.

250.15 A1 If a chartered 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.
250.15 A2 If a chartered 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.
250.15 A3 If a chartered 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.

SECTION 260
RESPONDING TO NON-COMPLIANCE WITH LAWS AND REGULATIONS
Introduction

260.2 A self-interest or intimidation threat to compliance with the principles of

integrity and professional behavior is created when a chartered accountant
becomes aware of non-compliance or suspected non-compliance with laws
and regulations.
260.3 A chartered accountant might encounter or be made aware of non-

compliance or suspected non-compliance in the course of carrying out
professional activities. This section guides the accountant in assessing the
implications of the matter and the possible courses of action when
responding to non-compliance or suspected non-compliance with:
(a) Laws and regulations generally recognized to have a direct effect on

the determination of material amounts and disclosures in the
employing organization’s financial statements; and
(b) Other laws and regulations that do not have a direct effect on the
determination of the amounts and disclosures in the employing
organization’s financial statements, but compliance with which
might be fundamental to the operating aspects of the employing
organization’s business, to its ability to continue its business, or to
avoid material penalties.
Objectives of the Chartered Accountant in Relation to Non-compliance with Laws

and Regulations
260.4 A distinguishing mark of the accountancy profession is its acceptance of the

responsibility to act in the public interest. When responding to non-
compliance or suspected non-compliance, the objectives of the chartered
accountant are:
(a) To comply with the principles of integrity and professional behavior;
(b) By alerting management or, where appropriate, those charged with

governance of the employing organization, to seek to:
(i) Enable them to rectify, remediate or mitigate the consequences

of the identified or suspected non-compliance; or

(ii) Deter the non-compliance where it has not yet occurred; and
(c) To take such further action as appropriate in the public interest.
General
260.5 A1 Non-compliance with laws and regulations (“non-compliance”) comprises

acts of omission or commission, intentional or unintentional, which are
contrary to the prevailing laws or regulations committed by the following
parties:
(a) The chartered accountant’s employing organization;
(b) Those charged with governance of the employing organization;
(c) Management of the employing organization; or
(d) Other individuals working for or under the direction of the

employing organization.
260.5 A2 Examples of laws and regulations which this section addresses include those
that deal with:
 Fraud, corruption and bribery.
 Money laundering, terrorist financing and proceeds of crime.
 Securities markets and trading.
 Banking and other financial products and services.
 Data protection.
 Tax and pension liabilities and payments.
 Environmental protection.
 Public health and safety.
260.5 A3 Non-compliance might result in fines, litigation or other consequences for

the employing organization, potentially materially affecting its financial
statements. Importantly, such non-compliance might have wider public
interest implications in terms of potentially substantial harm to investors,
creditors, employees or the general public. For the purposes of this section,
non-compliance that causes substantial harm is one that results in serious

adverse consequences to any of these parties in financial or non-financial

terms. Examples include the perpetration of a fraud resulting in significant
financial losses to investors, and breaches of environmental laws and
regulations endangering the health or safety of employees or the public.
R260.6 In some jurisdictions, there are legal or regulatory provisions governing how
chartered accountants are required to address non-compliance or suspected
non-compliance. These legal or regulatory provisions might differ from or
go beyond the provisions in this section. When encountering such non-
compliance or suspected non-compliance, the accountant shall obtain an
understanding of those legal or regulatory provisions and comply with them,
including:
(a) Any requirement to report the matter to an appropriate authority; and
(b) Any prohibition on alerting the relevant party.
260.6 A1 A prohibition on alerting the relevant party might arise, for example,
pursuant to anti-money laundering legislation.
260.7 A1 This section applies regardless of the nature of the employing organization,
including whether or not it is a public interest entity.
260.7 A2 A chartered accountant who encounters or is made aware of matters that are
clearly inconsequential is not required to comply with this section. Whether
a matter is clearly inconsequential is to be judged with respect to its nature
and its impact, financial or otherwise, on the employing organization, its
stakeholders and the general public.
260.7 A3 This section does not address:
(a) Personal misconduct unrelated to the business activities of the

employing organization; and
(b) Non-compliance by parties other than those specified in paragraph

260.5 A1.
The chartered accountant might nevertheless find the guidance in this

section helpful in considering how to respond in these situations.
Responsibilities of the Employing Organization’s Management and Those Charged

with Governance
260.8 A1 The employing organization’s management, with the oversight of those

charged with governance, is responsible for ensuring that the employing
organization’s business activities are conducted in accordance with laws and
regulations. Management and those charged with governance are also
responsible for identifying and addressing any non-compliance by:

(a) The employing organization;
(b) An individual charged with governance of the employing

organization;
(c) A member of management; or

Responsibilities of All Chartered Accountants
R260.9 If protocols and procedures exist within the chartered accountant’s

employing organization to address non-compliance or suspected non-
compliance, the accountant shall consider them in determining how to
respond to such non-compliance.
260.9 A1 Many employing organizations have established protocols and procedures

regarding how to raise non-compliance or suspected non-compliance
internally. These protocols and procedures include, for example, an ethics
policy or internal whistle-blowing mechanism. Such protocols and
procedures might allow matters to be reported anonymously through
designated channels.
R260.10 Where a chartered accountant becomes aware of a matter to which this

section applies, the steps that the accountant takes to comply with this
section shall be taken on a timely basis. For the purpose of taking timely
steps, the accountant shall have regard to the nature of the matter and the
potential harm to the interests of the employing organization, investors,
creditors, employees or the general public.
Responsibilities of Senior Chartered Accountants in Business
260.11 A1 Senior chartered accountants in business (“senior chartered accountants”)

are directors, officers or senior employees able to exert significant influence
over, and make decisions regarding, the acquisition, deployment and control
of the employing organization’s human, financial, technological, physical
and intangible resources. There is a greater expectation for such individuals
to take whatever action is appropriate in the public interest to respond to
non-compliance or suspected non-compliance than other chartered
accountants within the employing organization. This is because of senior
chartered accountants’ roles, positions and spheres of influence within the

Obtaining an Understanding of the Matter
R260.12 If, in the course of carrying out professional activities, a senior chartered
accountant becomes aware of information concerning non-compliance or
suspected non-compliance, the accountant shall obtain an understanding of
the matter. This understanding shall include:
(a) The nature of the non-compliance or suspected non-compliance and

the circumstances in which it has occurred or might occur;
(b) The application of the relevant laws and regulations to the

circumstances; and
(c) An assessment of the potential consequences to the employing

organization, investors, creditors, employees or the wider public.
260.12 A1 A senior chartered accountant is expected to apply knowledge and expertise,

and exercise professional judgment. However, the accountant is not
expected to have a level of understanding of laws and regulations greater
than that which is required for the accountant’s role within the employing
organization. Whether an act constitutes non-compliance is ultimately a
matter to be determined by a court or other appropriate adjudicative body.
260.12 A2 Depending on the nature and significance of the matter, the senior chartered
accountant might cause, or take appropriate steps to cause, the matter to be
investigated internally. The accountant might also consult on a confidential
basis with others within the employing organization or a professional body,
or with legal counsel.
Addressing the Matter
R260.13 If the senior chartered accountant identifies or suspects that non-compliance

has occurred or might occur, the accountant shall, subject to paragraph
R260.9, discuss the matter with the accountant’s immediate superior, if any.
If the accountant’s immediate superior appears to be involved in the matter,
the accountant shall discuss the matter with the next higher level of authority
within the employing organization.
260.13 A1 The purpose of the discussion is to enable a determination to be made as to

how to address the matter.
R260.14 The senior chartered accountant shall also take appropriate steps to:
(a) Have the matter communicated to those charged with governance;
(b) Comply with applicable laws and regulations, including legal or

regulatory provisions governing the reporting of non-compliance or
suspected non-compliance to an appropriate authority;

(c) Have the consequences of the non-compliance or suspected non-

compliance rectified, remediated or mitigated;
(d) Reduce the risk of re-occurrence; and
(e) Seek to deter the commission of the non-compliance if it has not

yet occurred.
260.14 A1 The purpose of communicating the matter to those charged with governance
is to obtain their concurrence regarding appropriate actions to take to
respond to the matter and to enable them to fulfill their responsibilities.
260.14 A2 Some laws and regulations might stipulate a period within which reports of
non-compliance or suspected non-compliance are to be made to an
appropriate authority.
R260.15 In addition to responding to the matter in accordance with the provisions of

this section, the senior chartered accountant shall determine whether
disclosure of the matter to the employing organization’s external auditor, if
any, is needed.
260.15 A1 Such disclosure would be pursuant to the senior chartered accountant’s duty
or legal obligation to provide all information necessary to enable the auditor
to perform the audit.
Determining Whether Further Action Is Needed
R260.16 The senior chartered accountant shall assess the appropriateness of the
response of the accountant’s superiors, if any, and those charged with
governance.
260.16 A1 Relevant factors to consider in assessing the appropriateness of the response

of the senior chartered accountant’s superiors, if any, and those charged with
governance include whether:
 The response is timely.
 They have taken or authorized appropriate action to seek to rectify,

remediate or mitigate the consequences of the non-compliance, or to
avert the non-compliance if it has not yet occurred.
 The matter has been disclosed to an appropriate authority where

appropriate and, if so, whether the disclosure appears adequate.
R260.17 In light of the response of the senior chartered accountant’s superiors, if any,
and those charged with governance, the accountant shall determine if further
action is needed in the public interest.

260.17 A1 The determination of whether further action is needed, and the nature and
extent of it, will depend on various factors, including:
 The legal and regulatory framework.
 The urgency of the situation.
 The pervasiveness of the matter throughout the employing

organization.
 Whether the senior chartered accountant continues to have

confidence in the integrity of the accountant’s superiors and those
charged with governance.
 Whether the non-compliance or suspected non-compliance is likely

to recur.
 Whether there is credible evidence of actual or potential substantial

harm to the interests of the employing organization, investors,
creditors, employees or the general public.
260.17 A2 Examples of circumstances that might cause the senior chartered accountant
no longer to have confidence in the integrity of the accountant’s superiors
and those charged with governance include situations where:
 The accountant suspects or has evidence of their involvement or

intended involvement in any non-compliance.
 Contrary to legal or regulatory requirements, they have not reported,

or authorized the reporting of, the matter to an appropriate authority
within a reasonable period.
R260.18 The senior chartered accountant shall exercise professional judgment in

determining the need for, and nature and extent of, further action. In making
this determination, the accountant shall take into account whether a
reasonable and informed third party would be likely to conclude that the
accountant has acted appropriately in the public interest.
260.18 A1 Further action that the senior chartered accountant might take includes:
 Informing the management of the parent entity of the matter if the

employing organization is a member of a group.
 Disclosing the matter to an appropriate authority even when there is

no legal or regulatory requirement to do so.
 Resigning from the employing organization.

260.18 A2 Resigning from the employing organization is not a substitute for taking
other actions that might be needed to achieve the senior chartered
accountant’s objectives under this section. In some jurisdictions, however,
there might be limitations as to the further actions available to the
accountant. In such circumstances, resignation might be the only available
course of action.
Seeking Advice
260.19 A1 As assessment of the matter might involve complex analysis and judgments,
the senior chartered accountant might consider:
 Consulting internally.
 Obtaining legal advice to understand the accountant’s options and

the professional or legal implications of taking any particular course
of action.
 Consulting on a confidential basis with a regulatory or professional

body.
Determining Whether to Disclose the Matter to an Appropriate Authority
260.20 A1 Disclosure of the matter to an appropriate authority would be precluded if

doing so would be contrary to law or regulation. Otherwise, the purpose of
making disclosure is to enable an appropriate authority to cause the matter
to be investigated and action to be taken in the public interest.
260.20 A2 The determination of whether to make such a disclosure depends in

particular on the nature and extent of the actual or potential harm that is or
might be caused by the matter to investors, creditors, employees or the
general public. For example, the senior chartered accountant might
determine that disclosure of the matter to an appropriate authority is an
appropriate course of action if:
 The employing organization is engaged in bribery (for example, of

local or foreign government officials for purposes of securing large
contracts).
 The employing organization is regulated and the matter is of such

significance as to threaten its license to operate.
 The employing organization is listed on a securities exchange and

the matter might result in adverse consequences to the fair and
orderly market in the employing organization’s securities or pose a
systemic risk to the financial markets.

 It is likely that the employing organization would sell products that

are harmful to public health or safety.
 The employing organization is promoting a scheme to its clients to

assist them in evading taxes.
260.20 A3 The determination of whether to make such a disclosure will also depend on
external factors such as:
 Whether there is an appropriate authority that is able to receive the

information, and cause the matter to be investigated and action to be
taken. The appropriate authority will depend upon the nature of the
matter. For example, the appropriate authority would be a securities
regulator in the case of fraudulent financial reporting or an
environmental protection agency in the case of a breach of
environmental laws and regulations.
 Whether there exists robust and credible protection from civil,

criminal or professional liability or retaliation afforded by
legislation or regulation, such as under whistle-blowing legislation
or regulation.
 Whether there are actual or potential threats to the physical safety of

the senior chartered accountant or other individuals.
R260.21 If the senior chartered accountant determines that disclosure of the matter to
an appropriate authority is an appropriate course of action in the
circumstances, that disclosure is permitted pursuant to paragraph R114.1(d)
of the Code. When making such disclosure, the accountant shall act in good
faith and exercise caution when making statements and assertions.
Imminent Breach
R260.22 In exceptional circumstances, the senior chartered accountant might become

aware of actual or intended conduct that the accountant has reason to believe
would constitute an imminent breach of a law or regulation that would cause
substantial harm to investors, creditors, employees or the general public.
Having first considered whether it would be appropriate to discuss the matter
with management or those charged with governance of the employing
organization, the accountant shall exercise professional judgment and
determine whether to disclose the matter immediately to an appropriate
authority in order to prevent or mitigate the consequences of such imminent
breach. If disclosure is made, that disclosure is permitted pursuant to
paragraph R114.1(d) of the Code.

Documentation
260.23 A1 In relation to non-compliance or suspected non-compliance that falls within

the scope of this section, the senior chartered accountant is encouraged to
have the following matters documented:
 The matter.
 The results of discussions with the accountant’s superiors, if any,

and those charged with governance and other parties.
 How the accountant’s superiors, if any, and those charged with

governance have responded to the matter.
 The courses of action the accountant considered, the judgments

made and the decisions that were taken.
 How the accountant is satisfied that the accountant has fulfilled the
responsibility set out in paragraph R260.17.
Responsibilities of Chartered Accountants Other than Senior Chartered Accountants
R260.24 If, in the course of carrying out professional activities, a chartered

accountant becomes aware of information concerning non-compliance or
suspected non-compliance, the accountant shall seek to obtain an
understanding of the matter. This understanding shall include the nature of
the non-compliance or suspected non-compliance and the circumstances in
which it has occurred or might occur.
260.24 A1 The chartered accountant is expected to apply knowledge and expertise, and
exercise professional judgment. However, the accountant is not expected to
have a level of understanding of laws and regulations greater than that which
is required for the accountant’s role within the employing organization.
Whether an act constitutes non-compliance is ultimately a matter to be
determined by a court or other appropriate adjudicative body.
260.24 A2 Depending on the nature and significance of the matter, the chartered
accountant might consult on a confidential basis with others within the
employing organization or a professional body, or with legal counsel.
R260.25 If the chartered accountant identifies or suspects that non-compliance has

occurred or might occur, the accountant shall, subject to paragraph R260.9,
inform an immediate superior to enable the superior to take appropriate
action. If the accountant’s immediate superior appears to be involved in the
matter, the accountant shall inform the next higher level of authority within
the employing organization.

R260.26 In exceptional circumstances, the chartered accountant may determine that

disclosure of the matter to an appropriate authority is an appropriate course
of action. If the accountant does so pursuant to paragraphs 260.20 A2 and
A3, that disclosure is permitted pursuant to paragraph R114.1(d) of the
Code. When making such disclosure, the accountant shall act in good faith
and exercise caution when making statements and assertions.
Documentation

the scope of this section, the chartered accountant is encouraged to have the
following matters documented:
 The matter.
 The results of discussions with the accountant’s superior,

management and, where applicable, those charged with governance
and other parties.
 How the accountant’s superior has responded to the matter.


SECTION 270
PRESSURE TO BREACH THE FUNDAMENTAL PRINCIPLES
Introduction

270.2 Pressure exerted on, or by, a chartered accountant might create an

intimidation or other threat to compliance with one or more of the
fundamental principles. This section sets out specific requirements and
application material relevant to applying the conceptual framework in such
circumstances.
General
R270.3 A chartered accountant shall not:
(a) Allow pressure from others to result in a breach of compliance with

the fundamental principles; or
(b) Place pressure on others that the accountant knows, or has reason to
believe, would result in the other individuals breaching the
fundamental principles.
270.3 A1 A chartered accountant might face pressure that creates threats to

compliance with the fundamental principles, for example an intimidation
threat, when undertaking a professional activity. Pressure might be explicit
or implicit and might come from:
 Within the employing organization, for example, from a colleague

or superior.
 An external individual or organization such as a vendor, customer

or lender.
 Internal or external targets and expectations.
270.3 A2 Examples of pressure that might result in threats to compliance with the
fundamental principles include:

 Pressure related to conflicts of interest:
o Pressure from a family member bidding to act as a vendor to the

chartered accountant’s employing organization to select the
family member over another prospective vendor.
See also Section 210, Conflicts of Interest.
 Pressure to influence preparation or presentation of information:
o Pressure to report misleading financial results to meet investor,

analyst or lender expectations.
o Pressure from elected officials on public sector accountants to

misrepresent programs or projects to voters.
o Pressure from colleagues to misstate income, expenditure or

rates of return to bias decision-making on capital projects and
acquisitions.
o Pressure from superiors to approve or process expenditures that

are not legitimate business expenses.
o Pressure to suppress internal audit reports containing adverse

findings.
See also Section 220, Preparation and Presentation of Information.
 Pressure to act without sufficient expertise or due care:
o Pressure from superiors to inappropriately reduce the extent of

work performed.
o Pressure from superiors to perform a task without sufficient

skills or training or within unrealistic deadlines.
See also Section 230, Acting with Sufficient Expertise.
 Pressure related to financial interests:
o Pressure from superiors, colleagues or others, for example,

those who might benefit from participation in compensation or
incentive arrangements to manipulate performance indicators.
See also Section 240, Financial Interests, Compensation and

Incentives Linked to Financial Reporting and Decision Making.

 Pressure related to inducements:
o Pressure from others, either internal or external to the

employing organization, to offer inducements to influence
inappropriately the judgment or decision making process of an
individual or organization.
o Pressure from colleagues to accept a bribe or other inducement,

for example to accept inappropriate gifts or entertainment from
potential vendors in a bidding process.
See also Section 250, Inducements, Including Gifts and Hospitality.
 Pressure related to non-compliance with laws and regulations:
o Pressure to structure a transaction to evade tax.
See also Section 260, Responding to Non-compliance with Laws and

Regulations.
270.3 A3 Factors that are relevant in evaluating the level of threats created by pressure
include:
 The intent of the individual who is exerting the pressure and the
nature and extent of the pressure.
 The application of laws, regulations, and professional standards to

the circumstances.
 The culture and leadership of the employing organization including

the extent to which they reflect or emphasize the importance of
ethical behavior and the expectation that employees will act
ethically. For example, a corporate culture that tolerates unethical
behavior might increase the likelihood that the pressure would result
in a threat to compliance with the fundamental principles.
 Policies and procedures, if any, that the employing organization has

established, such as ethics or human resources policies that address
pressure.
270.3 A4 Discussing the circumstances creating the pressure and consulting with
others about those circumstances might assist the chartered accountant to
evaluate the level of the threat. Such discussion and consultation, which
requires being alert to the principle of confidentiality, might include:
 Discussing the matter with the individual who is exerting the

pressure to seek to resolve it.

 Discussing the matter with the accountant’s superior, if the superior

is not the individual exerting the pressure.
 Escalating the matter within the employing organization, including

when appropriate, explaining any consequential risks to the
organization, for example with:
o Higher levels of management.
o Internal or external auditors.
o Those charged with governance.
 Disclosing the matter in line with the employing organization’s

policies, including ethics and whistleblowing policies, using any
established mechanism, such as a confidential ethics hotline.
 Consulting with:
o A colleague, superior, human resources personnel, or another

chartered accountant;
o Relevant professional or regulatory bodies or industry

associations; or
o Legal counsel.
270.3 A5 An example of an action that might eliminate threats created by pressure is

the chartered accountant’s request for a restructure of, or segregation of,
certain responsibilities and duties so that the accountant is no longer
involved with the individual or entity exerting the pressure.
Documentation
270.4 A1 The chartered accountant is encouraged to document:
 The facts.
 The communications and parties with whom these matters were

discussed.
 The courses of action considered.
 How the matter was addressed.

PART 3 - CHARTERED ACCOUNTANTS IN PRACTICE
Section 300 Applying the Conceptual Framework – Chartered Accountants in

Practice .................................................................................................. 69
Section 310 Conflicts of Interest ............................................................................... 77
Section 320 Professional Appointments .................................................................... 84
Section 321 Second Opinions .................................................................................... 89
Section 330 Fees and Other Types of Remuneration ................................................. 90
Section 340 Inducements, Including Gifts and Hospitality ....................................... 92
Section 350 Custody of Client Assets........................................................................ 99
Section 360 Responding to Non-Compliance with Laws and Regulations ............. 100
Section 370 Public Notices, Announcements and Communications Undue Publicity

be Avoided ........................................................................................... 117
Page 68 of 263 INDEX OF PART 3

PART 3 - CHARTERED ACCOUNTANTS IN PRACTICE
SECTION 300
APPLYING THE CONCEPTUAL FRAMEWORK – CHARTERED ACCOUNTANTS

IN PRACTICE
Introduction
300.1 This Part of the Code sets out requirements and application material for
chartered accountants in practice when applying the conceptual framework
set out in Section 120. It does not describe all of the facts and circumstances,
including professional activities, interests and relationships, that could be
encountered by chartered accountants in practice, which create or might
create threats to compliance with the fundamental principles. Therefore, the
conceptual framework requires chartered accountants in practice to be alert
for such facts and circumstances.
300.2 The requirements and application material that apply to chartered

accountants in practice are set out in:
 Part 3 – Chartered Accountants in Practice, Sections 300 to 399,

which applies to all chartered accountants in practice, whether they
provide assurance services or not.
 International Independence Standards as follows:
o Part 4A – Independence for Audit and Review Engagements,

Sections 400 to 899, which applies to chartered accountants in
practice when performing audit and review engagements.
o Part 4B – Independence for Assurance Engagements Other than

Audit and Review Engagements, Sections 900 to 999, which
applies to chartered accountants in practice when performing
assurance engagements other than audit or review engagements.
300.3 In this Part, the term “chartered accountant” refers to individual chartered
accountants in practice and their firms.
General
R300.4 A chartered accountant shall comply with the fundamental principles set out
in Section 110 and apply the conceptual framework set out in Section 120 to
identify, evaluate and address threats to compliance with the fundamental
principles.

R300.5 When dealing with an ethics issue, the chartered accountant shall consider
the context in which the issue has arisen or might arise. Where an individual
who is a chartered accountant in practice is performing professional
activities pursuant to the accountant’s relationship with the firm, whether as
a contractor, employee or owner, the individual shall comply with the
provisions in Part 2 that apply to these circumstances.
300.5 A1 Examples of situations in which the provisions in Part 2 apply to a chartered

accountant in practice include:
 Facing a conflict of interest when being responsible for selecting a

vendor for the firm when an immediate family member of the
accountant might benefit financially from the contract. The
requirements and application material set out in Section 210 apply
in these circumstances.
 Preparing or presenting financial information for the accountant’s

client or firm. The requirements and application material set out in
Section 220 apply in these circumstances.
 Being offered an inducement such as being regularly offered

complimentary tickets to attend sporting events by a supplier of the
firm. The requirements and application material set out in Section
250 apply in these circumstances.
 Facing pressure from an engagement partner to report chargeable

hours inaccurately for a client engagement. The requirements and
application material set out in Section 270 apply in these
circumstances.
Identifying Threats

a broad range of facts and circumstances. The categories of threats are
described in paragraph 120.6 A3. The following are examples of facts and
circumstances within each of those categories of threats that might create
threats for a chartered accountant when undertaking a professional service:
(a) Self-interest Threats
 A chartered accountant having a direct financial interest in a

client.
 A chartered accountant quoting a low fee to obtain a new

engagement and the fee is so low that it might be difficult to
perform the professional service in accordance with applicable
technical and professional standards for that price.

 A chartered accountant having a close business relationship

with a client.
 A chartered accountant having access to confidential

information that might be used for personal gain.
 A chartered accountant discovering a significant error when

evaluating the results of a previous professional service
performed by a member of the accountant’s firm.
(b) Self-review Threats
 A chartered accountant issuing an assurance report on the

effectiveness of the operation of financial systems after
implementing the systems.
 A chartered accountant having prepared the original data used

to generate records that are the subject matter of the assurance
engagement.
(c) Advocacy Threats
 A chartered accountant promoting the interests of, or shares in,

a client.
 A chartered accountant acting as an advocate on behalf of a

client in litigation or disputes with third parties.
 A chartered accountant lobbying in favor of legislation on

behalf of a client.
(d) Familiarity Threats
 A chartered accountant having a close or immediate family

member who is a director or officer of the client.
 A director or officer of the client, or an employee in a position

to exert significant influence over the subject matter of the
engagement, having recently served as the engagement partner.
 An audit team member having a long association with the audit

client.

(e) Intimidation Threats
 A chartered accountant being threatened with dismissal from a

client engagement or the firm because of a disagreement about
a professional matter.
 A chartered accountant feeling pressured to agree with the

judgment of a client because the client has more expertise on
the matter in question.
 A chartered accountant being informed that a planned

promotion will not occur unless the accountant agrees with an
inappropriate accounting treatment.
 A chartered accountant having accepted a significant gift from

a client and being threatened that acceptance of this gift will be
made public.
Evaluating Threats
300.7 A1 The conditions, policies and procedures described in paragraph 120.6 A1

and 120.8 A2 might impact the evaluation of whether a threat to compliance
with the fundamental principles is at an acceptable level. Such conditions,
policies and procedures might relate to:
(a) The client and its operating environment; and
(b) The firm and its operating environment.
300.7 A2 The chartered accountant’s evaluation of the level of a threat is also impacted
by the nature and scope of the professional service.
The Client and its Operating Environment
300.7 A3 The chartered accountant’s evaluation of the level of a threat might be

impacted by whether the client is:
(a) An audit client and whether the audit client is a public interest entity;
(b) An assurance client that is not an audit client; or
(c) A non-assurance client.
For example, providing a non-assurance service to an audit client that is a

public interest entity might be perceived to result in a higher level of threat
to compliance with the principle of objectivity with respect to the audit.

300.7 A4 The corporate governance structure, including the leadership of a client

might promote compliance with the fundamental principles. Accordingly, a
chartered accountant’s evaluation of the level of a threat might also be
impacted by a client’s operating environment. For example:
 The client requires appropriate individuals other than management

to ratify or approve the appointment of a firm to perform an
engagement.
 The client has competent employees with experience and seniority

to make managerial decisions.
 The client has implemented internal procedures that facilitate

objective choices in tendering non-assurance engagements.
 The client has a corporate governance structure that provides

appropriate oversight and communications regarding the firm’s
services.
The Firm and its Operating Environment
300.7 A5 A chartered accountant’s evaluation of the level of a threat might be

impacted by the work environment within the accountant’s firm and its
operating environment. For example:
 Leadership of the firm that promotes compliance with the

fundamental principles and establishes the expectation that
assurance team members will act in the public interest.
 Policies or procedures for establishing and monitoring compliance

with the fundamental principles by all personnel.
 Compensation, performance appraisal and disciplinary policies and

procedures that promote compliance with the fundamental
principles.
 Management of the reliance on revenue received from a single

client.
 The engagement partner having authority within the firm for

decisions concerning compliance with the fundamental principles,
including decisions about accepting or providing services to a client.
 Educational, training and experience requirements.
 Processes to facilitate and address internal and external concerns or

complaints.

Consideration of New Information or Changes in Facts and Circumstances
300.7 A6 New information or changes in facts and circumstances might:
(a) Impact the level of a threat; or
(b) Affect the chartered accountant’s conclusions about whether safeguards

applied continue to address identified threats as intended.
In these situations, actions that were already implemented as safeguards

might no longer be effective in addressing threats. Accordingly, the
application of the conceptual framework requires that the chartered
accountant re-evaluate and address the threats accordingly. (Ref: Paras.
R120.9 and R120.10).
300.7 A7 Examples of new information or changes in facts and circumstances that

might impact the level of a threat include:
 When the scope of a professional service is expanded.
 When the client becomes a listed entity or acquires another business

unit.
 When the firm merges with another firm.
 When the chartered accountant is jointly engaged by two clients and

a dispute emerges between the two clients.
 When there is a change in the chartered accountant’s personal or

immediate family relationships.
Addressing Threats
300.8 A1 Paragraphs R120.10 to 120.10 A2 set out requirements and application

material for addressing threats that are not at an acceptable level.
Examples of Safeguards
300.8 A2 Safeguards vary depending on the facts and circumstances. Examples of

actions that in certain circumstances might be safeguards to address threats
include:
 Assigning additional time and qualified personnel to required tasks

when an engagement has been accepted might address a self-interest
threat.

 Having an appropriate reviewer who was not a member of the team

review the work performed or advise as necessary might address a
self-review threat.
 Using different partners and engagement teams with separate

reporting lines for the provision of non-assurance services to an
assurance client might address self-review, advocacy or familiarity
threats.
 Involving another firm to perform or re-perform part of the

engagement might address self-interest, self-review, advocacy,
familiarity or intimidation threats.
 Disclosing to clients any referral fees or commission arrangements

received for recommending services or products might address a
self-interest threat.
 Separating teams when dealing with matters of a confidential nature

might address a self-interest threat.
300.8 A3 The remaining sections of Part 3 and International Independence Standards

describe certain threats that might arise during the course of performing
professional services and include examples of actions that might address
threats.
Appropriate Reviewer
300.8 A4 An appropriate reviewer is a professional with the necessary knowledge,

skills, experience and authority to review, in an objective manner, the
relevant work performed or service provided. Such an individual might be a
chartered accountant.
Communicating with Those Charged with Governance
R300.9 When communicating with those charged with governance in accordance

with the Code, a chartered accountant shall determine the appropriate
individual(s) within the entity’s governance structure with whom to
communicate. If the accountant communicates with a subgroup of those
charged with governance, the accountant shall determine whether
communication with all of those charged with governance is also necessary
so that they are adequately informed.
300.9 A1 In determining with whom to communicate, a chartered accountant might

consider:
(a) The nature and importance of the circumstances; and
(b) The matter to be communicated.

300.9 A2 Examples of a subgroup of those charged with governance include an audit

committee or an individual member of those charged with governance.
R300.10 If a chartered accountant communicates with individuals who have

management responsibilities as well as governance responsibilities, the
accountant shall be satisfied that communication with those individuals
adequately informs all of those in a governance role with whom the
accountant would otherwise communicate.
300.10 A1 In some circumstances, all of those charged with governance are involved in
managing the entity, for example, a small business where a single owner
manages the entity and no one else has a governance role. In these cases, if
matters are communicated to individual(s) with management
responsibilities, and those individual(s) also have governance
responsibilities, the chartered accountant has satisfied the requirement to
communicate with those charged with governance.

SECTION 310
CONFLICTS OF INTEREST
Introduction

310.2 A conflict of interest creates threats to compliance with the principle of

objectivity and might create threats to compliance with the other
fundamental principles. Such threats might be created when:
(a) A chartered accountant provides a professional service related to a

particular matter for two or more clients whose interests with respect
to that matter are in conflict; or
(b) The interests of a chartered accountant with respect to a particular

matter and the interests of the client for whom the accountant
provides a professional service related to that matter are in conflict.
310.3 This section sets out specific requirements and application material relevant
to applying the conceptual framework to conflicts of interest. When a
chartered accountant provides an audit, review or other assurance service,
independence is also required in accordance with International
Independence Standards.
General
R310.4 A chartered accountant shall not allow a conflict of interest to compromise

professional or business judgment.
310.4 A1 Examples of circumstances that might create a conflict of interest include:
 Providing a transaction advisory service to a client seeking to

acquire an audit client, where the firm has obtained confidential
information during the course of the audit that might be relevant to
the transaction.
 Providing advice to two clients at the same time where the clients
are competing to acquire the same company and the advice might be
relevant to the parties’ competitive positions.

 Providing services to a seller and a buyer in relation to the same

transaction.
 Preparing valuations of assets for two parties who are in an

adversarial position with respect to the assets.
 Representing two clients in the same matter who are in a legal

dispute with each other, such as during divorce proceedings, or the
dissolution of a partnership.
 In relation to a license agreement, providing an assurance report for

a licensor on the royalties due while advising the licensee on the
amounts payable.
 Advising a client to invest in a business in which, for example, the

spouse of the chartered accountant has a financial interest.
 Providing strategic advice to a client on its competitive position

while having a joint venture or similar interest with a major
competitor of the client.
 Advising a client on acquiring a business which the firm is also

interested in acquiring.
 Advising a client on buying a product or service while having a

royalty or commission agreement with a potential seller of that
product or service.
Conflict Identification
General
R310.5 Before accepting a new client relationship, engagement, or business

relationship, a chartered accountant shall take reasonable steps to identify
circumstances that might create a conflict of interest, and therefore a threat
to compliance with one or more of the fundamental principles. Such steps
shall include identifying:
(a) The nature of the relevant interests and relationships between the
parties involved; and
(b) The service and its implication for relevant parties.
310.5 A1 An effective conflict identification process assists a chartered accountant

when taking reasonable steps to identify interests and relationships that
might create an actual or potential conflict of interest, both before
determining whether to accept an engagement and throughout the

engagement. Such a process includes considering matters identified by

external parties, for example clients or potential clients. The earlier an actual
or potential conflict of interest is identified, the greater the likelihood of the
accountant being able to address threats created by the conflict of interest.
310.5 A2 An effective process to identify actual or potential conflicts of interest will

take into account factors such as:
 The nature of the professional services provided.
 The size of the firm.
 The size and nature of the client base.
 The structure of the firm, for example, the number and geographic
location of offices.
310.5 A3 More information on client acceptance is set out in Section 320, Professional
Appointments.
Changes in Circumstances
R310.6 A chartered accountant shall remain alert to changes over time in the nature
of services, interests and relationships that might create a conflict of interest
while performing an engagement.
310.6 A1 The nature of services, interests and relationships might change during the
engagement. This is particularly true when a chartered accountant is asked
to conduct an engagement in a situation that might become adversarial, even
though the parties who engage the accountant initially might not be involved
in a dispute.
Network Firms
R310.7 If the firm is a member of a network, a chartered accountant shall consider

conflicts of interest that the accountant has reason to believe might exist or
arise due to interests and relationships of a network firm.
310.7 A1 Factors to consider when identifying interests and relationships involving a

network firm include:
 The nature of the professional services provided.
 The clients served by the network.
 The geographic locations of all relevant parties.

Threats Created by Conflicts of Interest
310.8 A1 In general, the more direct the connection between the professional service
and the matter on which the parties’ interests conflict, the more likely the
level of the threat is not at an acceptable level.
310.8 A2 Factors that are relevant in evaluating the level of a threat created by a
conflict of interest include measures that prevent unauthorized disclosure of
confidential information when performing professional services related to a
particular matter for two or more clients whose interests with respect to that
matter are in conflict. These measures include:
 The existence of separate practice areas for specialty functions

within the firm, which might act as a barrier to the passing of
confidential client information between practice areas.
 Policies and procedures to limit access to client files.
 Confidentiality agreements signed by personnel and partners of the

firm.
 Separation of confidential information physically and electronically.
 Specific and dedicated training and communication.
310.8 A3 Examples of actions that might be safeguards to address threats created by a

conflict of interest include:
 Having separate engagement teams who are provided with clear

policies and procedures on maintaining confidentiality.
 Having an appropriate reviewer, who is not involved in providing

the service or otherwise affected by the conflict, review the work
performed to assess whether the key judgments and conclusions are
appropriate.
Disclosure and Consent
General
R310.9 A chartered accountant shall exercise professional judgment to determine

whether the nature and significance of a conflict of interest are such that
specific disclosure and explicit consent are necessary when addressing the
threat created by the conflict of interest.
310.9 A1 Factors to consider when determining whether specific disclosure and

explicit consent are necessary include:

 The circumstances creating the conflict of interest.
 The parties that might be affected.
 The nature of the issues that might arise.
 The potential for the particular matter to develop in an unexpected

manner.
310.9 A2 Disclosure and consent might take different forms, for example:
 General disclosure to clients of circumstances where, as is common

commercial practice, the chartered accountant does not provide
professional services exclusively to any one client (for example, in
a particular professional service and market sector). This enables the
client to provide general consent accordingly. For example, an
accountant might make general disclosure in the standard terms and
conditions for the engagement.
 Specific disclosure to affected clients of the circumstances of the

particular conflict in sufficient detail to enable the client to make an
informed decision about the matter and to provide explicit consent
accordingly. Such disclosure might include a detailed presentation
of the circumstances and a comprehensive explanation of any
planned safeguards and the risks involved.
 Consent might be implied by clients’ conduct in circumstances

where the chartered accountant has sufficient evidence to conclude
that clients know the circumstances at the outset and have accepted
the conflict of interest if they do not raise an objection to the
existence of the conflict.
310.9 A3 It is generally necessary:
(a) To disclose the nature of the conflict of interest and how any threats
created were addressed to clients affected by a conflict of interest;
and
(b) To obtain consent of the affected clients to perform the professional

services when safeguards are applied to address the threat.
310.9 A4 If such disclosure or consent is not in writing, the chartered accountant is

encouraged to document:
(a) The nature of the circumstances giving rise to the conflict of interest;
(b) The safeguards applied to address the threats when applicable; and
(c) The consent obtained.

When Explicit Consent is Refused
R310.10 If a chartered accountant has determined that explicit consent is necessary

in accordance with paragraph R310.9 and the client has refused to provide
consent, the accountant shall either:
(a) End or decline to perform professional services that would result in

the conflict of interest; or
(b) End relevant relationships or dispose of relevant interests to

eliminate the threat or reduce it to an acceptable level.
Confidentiality
General
R310.11 A chartered accountant shall remain alert to the principle of confidentiality,

including when making disclosures or sharing information within the firm
or network and seeking guidance from third parties.
310.11 A1 Subsection 114 sets out requirements and application material relevant to
situations that might create a threat to compliance with the principle of
confidentiality.
When Disclosure to Obtain Consent would Breach Confidentiality
R310.12 When making specific disclosure for the purpose of obtaining explicit
consent would result in a breach of confidentiality, and such consent cannot
therefore be obtained, the firm shall only accept or continue an engagement
if:
(a) The firm does not act in an advocacy role for one client in an
adversarial position against another client in the same matter;
(b) Specific measures are in place to prevent disclosure of confidential

information between the engagement teams serving the two clients;
and
(c) The firm is satisfied that a reasonable and informed third party
would be likely to conclude that it is appropriate for the firm to
accept or continue the engagement because a restriction on the
firm’s ability to provide the professional service would produce a
disproportionate adverse outcome for the clients or other relevant
third parties.

310.12 A1 A breach of confidentiality might arise, for example, when seeking consent
to perform:
 A transaction-related service for a client in a hostile takeover of

another client of the firm.
 A forensic investigation for a client regarding a suspected fraud,

where the firm has confidential information from its work for
another client who might be involved in the fraud.
Documentation
R310.13 In the circumstances set out in paragraph R310.12, the chartered accountant
shall document:
(a) The nature of the circumstances, including the role that the
accountant is to undertake;
(b) The specific measures in place to prevent disclosure of information

between the engagement teams serving the two clients; and
(c) Why it is appropriate to accept or continue the engagement.

SECTION 320
PROFESSIONAL APPOINTMENTS
Introduction

320.2 Acceptance of a new client relationship or changes in an existing

engagement might create a threat to compliance with one or more of the
circumstances.
Client and Engagement Acceptance
General
320.3 A1 Threats to compliance with the principles of integrity or professional

behavior might be created, for example, from questionable issues associated
with the client (its owners, management or activities). Issues that, if known,
might create such a threat include client involvement in illegal activities,
dishonesty, questionable financial reporting practices or other unethical
behavior.
 Knowledge and understanding of the client, its owners, management

and those charged with governance and business activities.
 The client’s commitment to address the questionable issues, for

example, through improving corporate governance practices or
internal controls.
320.3 A3 A self-interest threat to compliance with the principle of professional

competence and due care is created if the engagement team does not possess,
or cannot acquire, the competencies to perform the professional services.
 An appropriate understanding of:
o The nature of the client’s business;

o The complexity of its operations;
o The requirements of the engagement; and
o The purpose, nature and scope of the work to be performed.
 Knowledge of relevant industries or subject matter.
 Experience with relevant regulatory or reporting requirements.
 The existence of quality control policies and procedures designed to

provide reasonable assurance that engagements are accepted only
when they can be performed competently.
320.3 A5 Examples of actions that might be safeguards to address a self-interest threat

include:
 Assigning sufficient engagement personnel with the necessary

competencies.
 Agreeing on a realistic time frame for the performance of the

engagement.
 Using experts where necessary.
Changes in a Professional Appointment
General
R320.4 A chartered accountant shall determine whether there are any reasons for not
accepting an engagement when the accountant:
(a) Is asked by a potential client to replace another accountant;
(b) Considers tendering for an engagement held by another accountant;

or
(c) Considers undertaking work that is complementary or additional to

that of another accountant.
320.4 A1 There might be reasons for not accepting an engagement. One such reason
might be if a threat created by the facts and circumstances cannot be
addressed by applying safeguards. For example, there might be a self-
interest threat to compliance with the principle of professional competence
and due care if a chartered accountant accepts the engagement before
knowing all the relevant facts.

320.4 A2 If a chartered accountant is asked to undertake work that is complementary

or additional to the work of an existing or predecessor accountant, a self-
interest threat to compliance with the principle of professional competence
and due care might be created, for example, as a result of incomplete
information.
320.4 A3 A factor that is relevant in evaluating the level of such a threat is whether
tenders state that, before accepting the engagement, contact with the existing
or predecessor accountant will be requested. This contact gives the proposed
accountant the opportunity to inquire whether there are any reasons why the
engagement should not be accepted.

threat include:
 Asking the existing or predecessor accountant to provide any known

information of which, in the existing or predecessor accountant’s
opinion, the proposed accountant needs to be aware before deciding
whether to accept the engagement. For example, inquiry might
reveal previously undisclosed pertinent facts and might indicate
disagreements with the existing or predecessor accountant that
might influence the decision to accept the appointment.
 Obtaining information from other sources such as through inquiries

of third parties or background investigations regarding senior
management or those charged with governance of the client.
Communicating with the Existing or Predecessor Accountant
320.5 A1 A proposed accountant will usually need the client’s permission, preferably
in writing, to initiate discussions with the existing or predecessor accountant.
R320.6 If unable to communicate with the existing or predecessor accountant, the

proposed accountant shall take other reasonable steps to obtain information
about any possible threats.
Communicating with the Proposed Accountant
R320.7 When an existing or predecessor accountant is asked to respond to a

communication from a proposed accountant, the existing or predecessor
accountant shall:
(a) Comply with relevant laws and regulations governing the request;
and
(b) Provide any information honestly and unambiguously.

320.7 A1 An existing or predecessor accountant is bound by confidentiality. Whether

the existing or predecessor accountant is permitted or required to discuss the
affairs of a client with a proposed accountant will depend on the nature of
the engagement and:
(a) Whether the existing or predecessor accountant has permission from

the client for the discussion; and
(b) The legal and ethics requirements relating to such communications

and disclosure, which might vary by jurisdiction.
320.7 A2 Circumstances where a chartered accountant is or might be required to

disclose confidential information, or when disclosure might be appropriate,
are set out in paragraph 114.1 A1 of the Code.
Changes in Audit or Review Appointments
R320.8 In the case of an audit or review of financial statements, a chartered

accountant shall request the existing or predecessor accountant to provide
known information regarding any facts or other information of which, in the
existing or predecessor accountant’s opinion, the proposed accountant needs
to be aware before deciding whether to accept the engagement. Except for
the circumstances involving non-compliance or suspected non-compliance
with laws and regulations set out in paragraphs R360.21 and R360.22:
(a) If the client consents to the existing or predecessor accountant

disclosing any such facts or other information, the existing or
predecessor accountant shall provide the information honestly and
unambiguously; and
(b) If the client fails or refuses to grant the existing or predecessor

accountant permission to discuss the client’s affairs with the
proposed accountant, the existing or predecessor accountant shall
disclose this fact to the proposed accountant, who shall carefully
consider such failure or refusal when determining whether to accept
the appointment.
Client and Engagement Continuance
R320.9 For a recurring client engagement, a chartered accountant shall periodically

review whether to continue with the engagement.
320.9 A1 Potential threats to compliance with the fundamental principles might be

created after acceptance which, had they been known earlier, would have
caused the chartered accountant to decline the engagement. For example, a
self-interest threat to compliance with the principle of integrity might be
created by improper earnings management or balance sheet valuations.

Using the Work of an Expert
R320.10 When a chartered accountant intends to use the work of an expert, the
accountant shall determine whether the use is warranted.
320.10 A1 Factors to consider when a chartered accountant intends to use the work of
an expert include the reputation and expertise of the expert, the resources
available to the expert, and the professional and ethics standards applicable
to the expert. This information might be gained from prior association with
the expert or from consulting others.

SECTION 321
SECOND OPINIONS
Introduction

321.2 Providing a second opinion to an entity that is not an existing client might
create a self-interest or other threat to compliance with one or more of the
circumstances.
General
321.3 A1 A chartered accountant might be asked to provide a second opinion on the

application of accounting, auditing, reporting or other standards or principles
to (a) specific circumstances, or (b) transactions by or on behalf of a
company or an entity that is not an existing client. A threat, for example, a
self-interest threat to compliance with the principle of professional
competence and due care, might be created if the second opinion is not based
on the same facts that the existing or predecessor accountant had, or is based
on inadequate evidence.
321.3 A2 A factor that is relevant in evaluating the level of such a self-interest threat
is the circumstances of the request and all the other available facts and
assumptions relevant to the expression of a professional judgment.

threat include:
 With the client’s permission, obtaining information from the

existing or predecessor accountant.
 Describing the limitations surrounding any opinion in
communications with the client.
 Providing the existing or predecessor accountant with a copy of the
opinion.
When Permission to Communicate is Not Provided
R321.4 If an entity seeking a second opinion from a chartered accountant will not
permit the accountant to communicate with the existing or predecessor
accountant, the accountant shall determine whether the accountant may
provide the second opinion sought.

SECTION 330
FEES AND OTHER TYPES OF REMUNERATION
Introduction

330.2 The level and nature of fee and other remuneration arrangements might
create a self-interest threat to compliance with one or more of the
fundamental principles. This section sets out specific application material
relevant to applying the conceptual framework in such circumstances.
Application Material
Level of Fees
330.3 A1 The level of fees quoted might impact a chartered accountant’s ability to
perform professional services in accordance with professional standards.
R330.4 When entering into negotiations regarding professional services, a chartered

accountant in practice may quote whatever fee is deemed to be appropriate
commensurate with the nature and service to be rendered. However, in such
cases, chartered accountants in practice should be careful not to quote fee
lower than that charged by the chartered accountants in practice previously
carrying out the audit unless scope and quantum of work materially differs
from the scope and quantum of work carried out by the previous auditor, as
it could then be regarded as undercutting.
 Whether the client is aware of the terms of the engagement and, in

particular, the basis on which fees are charged and which professional
services the quoted fee covers.
 Whether the level of the fee is set by an independent third party such as
a regulatory body.

threat include:
 Adjusting the level of fees or the scope of the engagement.
 Having an appropriate reviewer review the work performed.

Referral Fees or Commissions
330.5 A1 A self-interest threat to compliance with the principles of objectivity and

professional competence and due care is created if a chartered accountant
pays or receives a referral fee or receives a commission relating to a client.
Such referral fees or commissions include, for example:
 A fee paid to another chartered accountant for the purposes of

obtaining new client work when the client continues as a client of
the existing accountant but requires specialist services not offered
by that accountant.
 A fee received for referring a continuing client to another chartered

accountant or other expert where the existing accountant does not
provide the specific professional service required by the client.
 A commission received from a third party (for example, a software

vendor) in connection with the sale of goods or services to a client.

threat include:
 Obtaining an advance agreement from the client for commission

arrangements in connection with the sale by another party of goods
or services to the client might address a self-interest threat.
 Disclosing to clients any referral fees or commission arrangements

paid to, or received from, another chartered accountant or third party
for recommending services or products might address a self-interest
threat.
Purchase or Sale of a Firm
330.6 A1 A chartered accountant may purchase all or part of another firm on the basis
that payments will be made to individuals formerly owning the firm or to
their heirs or estates. Such payments are not referral fees or commissions for
the purposes of this section.

SECTION 340
INDUCEMENTS, INCLUDING GIFTS AND HOSPITALITY
Introduction

340.2 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.
applying the conceptual framework in relation to the offering and accepting
of inducements when performing professional services that does not
constitute non-compliance with laws and regulations. This section also
requires a chartered accountant to comply with relevant laws and regulations
when offering or accepting inducements.
General
340.4 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 chartered accountants and existing
or prospective clients to acts that result in non-compliance with laws and
regulations. An inducement can take many different forms, for example:
 Gifts.
 Hospitality.
 Entertainment.

Inducements Prohibited by Laws and Regulations
R340.5 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 chartered 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
340.6 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.
Inducements with Intent to Improperly Influence Behavior
R340.7 A chartered 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.
R340.8 A chartered 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.
340.9 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 chartered
accountant in considering what constitutes unethical behavior on the part of
the accountant and, if necessary by analogy, other individuals.
340.9 A2 A breach of the fundamental principle of integrity arises when a chartered

accountant offers or accepts, or encourages others to offer or accept, an
inducement where the intent is to improperly influence the behavior of the
340.9 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

service, 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 firm, such as other suppliers to the
client.
 The roles and positions of the individuals at the firm or the client
offering or being offered the inducement.
 Whether the chartered accountant knows, or has reason to believe,

that accepting the inducement would breach the policies and
procedures of the client.
 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.
Consideration of Further Actions
340.10 A1 If the chartered 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 R340.7 and R340.8 are met.
 Informing senior management of the firm or those charged with

governance of the client regarding the offer.
 Amending or terminating the business relationship with the client.

Inducements with No Intent to Improperly Influence Behavior
340.11 A1 The requirements and application material set out in the conceptual
framework apply when a chartered accountant has concluded there is no
actual or perceived intent to improperly influence the behavior of the
340.11 A2 If such an inducement is trivial and inconsequential, any threats created will
be at an acceptable level.
340.11 A3 Examples of circumstances where offering or accepting such an inducement

might create threats even if the chartered accountant has concluded there is
no actual or perceived intent to improperly influence behavior include:
 Self-interest threats
○ A chartered accountant is offered hospitality from the

prospective acquirer of a client while providing corporate
finance services to the client.
 Familiarity threats
○ A chartered accountant regularly takes an existing or

prospective client to sporting events.
 Intimidation threats
○ A chartered accountant accepts hospitality from a client, the

nature of which could be perceived to be inappropriate were it
to be publicly disclosed.
340.11 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 340.9 A3 for determining intent.
340.11 A5 Examples of actions that might eliminate threats created by offering or

accepting such an inducement include:
 Declining or not offering the inducement.
 Transferring responsibility for the provision of any professional

services to the client to another individual who the chartered
accountant has no reason to believe would be, or would be perceived
to be, improperly influenced when providing the services.
340.11 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 of the firm or of the

client about offering or accepting an inducement.
 Registering the inducement in a log monitored by senior

management of the firm or another individual responsible for the
firm’s ethics compliance or maintained by the client.
 Having an appropriate reviewer, who is not otherwise involved in
providing the professional service, review any work performed or
decisions made by the chartered accountant with respect to the client
from which the accountant accepted the inducement.
 Donating the inducement to charity after receipt and appropriately

disclosing the donation, for example, to a member of senior
management of the firm 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
R340.12 A chartered accountant shall remain alert to potential threats to the

accountant’s compliance with the fundamental principles created by the
offering of an inducement:
(a) By an immediate or close family member of the accountant to an

existing or prospective client of the accountant.
(b) To an immediate or close family member of the accountant by an

existing or prospective client of the accountant.
R340.13 Where the chartered 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
an existing or prospective client of the accountant, 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.
340.13 A1 The factors set out in paragraph 340.9 A3 are relevant in determining
whether there is actual or perceived intent to improperly influence the
behavior of the chartered accountant or of the existing or prospective client.

Another factor that is relevant is the nature or closeness of the relationship,

between:
(a) The accountant and the immediate or close family member;
(b) The immediate or close family member and the existing or

prospective client; and
(c) The accountant and the existing or prospective client.
For example, the offer of employment, outside of the normal recruitment

process, to the spouse of the accountant by a client for whom the accountant
is providing a business valuation for a prospective sale might indicate such
intent.
340.13 A2 The application material in paragraph 340.10 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 chartered accountant, or
of the existing or prospective client even if the immediate or close family
member has followed the advice given pursuant to paragraph R340.13.
Application of the Conceptual Framework
340.14 A1 Where the chartered accountant becomes aware of an inducement offered in

the circumstances addressed in paragraph R340.12, threats to compliance
with the fundamental principles might be created where:
(a) The immediate or close family member offers or accepts the

inducement contrary to the advice of the accountant pursuant to
paragraph R340.13; or
(b) The accountant does not have reason to believe an actual or

perceived intent to improperly influence the behavior of the
accountant or of the existing or prospective client exists.
340.14 A2 The application material in paragraphs 340.11 A1 to 340.11 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 340.13 A1.

340.15 A1 If a chartered accountant encounters or is made aware of inducements that

might result in non-compliance or suspected non-compliance with laws and
regulations by a client or individuals working for or under the direction of
the client, the requirements and application material in Section 360 apply.
340.15 A2 If a firm, network firm or an audit team member is being offered gifts or
hospitality from an audit client, the requirement and application material set
out in Section 420 apply.
340.15 A3 If a firm or an assurance team member is being offered gifts or hospitality

from an assurance client, the requirement and application material set out in
Section 906 apply.

SECTION 350
CUSTODY OF CLIENT ASSETS
Introduction

350.2 Holding client assets creates a self-interest or other threat to compliance with
the principles of professional behavior and objectivity. This section sets out
specific requirements and application material relevant to applying the
conceptual framework in such circumstances.
Before Taking Custody
R350.3 A chartered accountant shall not assume custody of client money or other
assets unless permitted to do so by law and in accordance with any
conditions under which such custody may be taken.
R350.4 As part of client and engagement acceptance procedures related to assuming

custody of client money or assets, a chartered accountant shall:
(a) Make inquiries about the source of the assets; and
(b) Consider related legal and regulatory obligations.
R350.4 A1 Inquiries about the source of client assets might reveal, for example, that the
assets were derived from illegal activities, such as money laundering. In such
circumstances, a threat would be created and the provisions of Section 360
would apply.
After Taking Custody
R350.5 A chartered accountant entrusted with money or other assets belonging to

others shall:
(a) Comply with the laws and regulations relevant to holding and
accounting for the assets;
(b) Keep the assets separately from personal or firm assets;
(c) Use the assets only for the purpose for which they are intended; and
(d) Be ready at all times to account for the assets and any income,
dividends, or gains generated, to any individuals entitled to that
accounting.

SECTION 360
RESPONDING TO NON-COMPLIANCE WITH LAWS AND REGULATIONS
Introduction

360.2 A self-interest or intimidation threat to compliance with the principles of

integrity and professional behavior is created when a chartered accountant
becomes aware of non-compliance or suspected non-compliance with laws
and regulations.
360.3 A chartered accountant might encounter or be made aware of non-

compliance or suspected non-compliance in the course of providing a
professional service to a client. This section guides the accountant in
assessing the implications of the matter and the possible courses of action
when responding to non-compliance or suspected non- compliance with:
(a) Laws and regulations generally recognized to have a direct effect on

the determination of material amounts and disclosures in the client’s
financial statements; and
(b) Other laws and regulations that do not have a direct effect on the
determination of the amounts and disclosures in the client’s financial
statements, but compliance with which might be fundamental to the
operating aspects of the client’s business, to its ability to continue its
business, or to avoid material penalties.
Objectives of the Chartered Accountant in Relation to Non-compliance with Laws

and Regulations
360.4 A distinguishing mark of the accountancy profession is its acceptance of the

responsibility to act in the public interest. When responding to non-
compliance or suspected non-compliance, the objectives of the chartered
accountant are:
(a) To comply with the principles of integrity and professional behavior;
(b) By alerting management or, where appropriate, those charged with

governance of the client, to seek to:
(i) Enable them to rectify, remediate or mitigate the

consequences of the identified or suspected non- compliance;
or

(ii) Deter the commission of the non-compliance where it has not

yet occurred; and
(c) To take such further action as appropriate in the public interest.
General
360.5 A1 Non-compliance with laws and regulations (“non-compliance”) comprises

acts of omission or commission, intentional or unintentional, which are
contrary to the prevailing laws or regulations committed by the following
parties:
(a) A client;
(b) Those charged with governance of a client;
(c) Management of a client; or
(d) Other individuals working for or under the direction of a client.
360.5 A2 Examples of laws and regulations which this section addresses include those
that deal with:
 Fraud, corruption and bribery.
 Money laundering, terrorist financing and proceeds of crime.
 Securities markets and trading.
 Banking and other financial products and services.
 Data protection.
 Tax and pension liabilities and payments.
 Environmental protection.
 Public health and safety.
360.5 A3 Non-compliance might result in fines, litigation or other consequences for

the client, potentially materially affecting its financial statements.
Importantly, such non-compliance might have wider public interest
implications in terms of potentially substantial harm to investors, creditors,
employees or the general public. For the purposes of this section, an act that
causes substantial harm is one that results in serious adverse consequences

to any of these parties in financial or non-financial terms. Examples include

the perpetration of a fraud resulting in significant financial losses to
investors, and breaches of environmental laws and regulations endangering
the health or safety of employees or the public.
R360.6 In some jurisdictions, there are legal or regulatory provisions governing how
chartered accountants should address non-compliance or suspected non-
compliance. These legal or regulatory provisions might differ from or go
beyond the provisions in this section. When encountering such non-
compliance or suspected non-compliance, the accountant shall obtain an
understanding of those legal or regulatory provisions and comply with them,
including:
(a) Any requirement to report the matter to an appropriate authority; and
(b) Any prohibition on alerting the client.
360.6 A1 A prohibition on alerting the client might arise, for example, pursuant to
anti-money laundering legislation.
360.7 A1 This section applies regardless of the nature of the client, including whether
or not it is a public interest entity.
360.7 A2 A chartered accountant who encounters or is made aware of matters that are
clearly inconsequential is not required to comply with this section. Whether
a matter is clearly inconsequential is to be judged with respect to its nature
and its impact, financial or otherwise, on the client, its stakeholders and the
general public.
360.7 A3 This section does not address:
(a) Personal misconduct unrelated to the business activities of the client;

and
(b) Non-compliance by parties other than those specified in paragraph

360.5 A1. This includes, for example, circumstances where a
chartered accountant has been engaged by a client to perform a due
diligence assignment on a third party entity and the identified or
suspected non-compliance has been committed by that third-party.
The accountant might nevertheless find the guidance in this section helpful
in considering how to respond in these situations.
Responsibilities of Management and Those Charged with Governance
360.8 A1 Management, with the oversight of those charged with governance, is

responsible for ensuring that the client’s business activities are conducted in
accordance with laws and regulations. Management and those charged with

governance are also responsible for identifying and addressing any non-
compliance by:
(a) The client;
(b) An individual charged with governance of the entity;
(c) A member of management; or
(d) Other individuals working for or under the direction of the client.
Responsibilities of All Chartered Accountants
R360.9 Where a chartered accountant becomes aware of a matter to which this

section applies, the steps that the accountant takes to comply with this
section shall be taken on a timely basis. In taking timely steps, the accountant
shall have regard to the nature of the matter and the potential harm to the
interests of the entity, investors, creditors, employees or the general public.
Audits of Financial Statements
Obtaining an Understanding of the Matter
R360.10 If a chartered accountant engaged to perform an audit of financial statements

becomes aware of information concerning non-compliance or suspected
non-compliance, the accountant shall obtain an understanding of the matter.
This understanding shall include the nature of the non-compliance or
suspected non-compliance and the circumstances in which it has occurred or
might occur.
360.10 A1 The chartered accountant might become aware of the non-compliance or

suspected non-compliance in the course of performing the engagement or
through information provided by other parties.
have a level of knowledge of laws and regulations greater than that which is
required to undertake the engagement. Whether an act constitutes non-
compliance is ultimately a matter to be determined by a court or other
appropriate adjudicative body.
accountant might consult on a confidential basis with others within the firm,
a network firm or a professional body, or with legal counsel.

occurred or might occur, the accountant shall discuss the matter with the

appropriate level of management and, where appropriate, those charged with

governance.
360.11 A1 The purpose of the discussion is to clarify the chartered accountant’s

understanding of the facts and circumstances relevant to the matter and its
potential consequences. The discussion also might prompt management or
those charged with governance to investigate the matter.
360.11 A2 The appropriate level of management with whom to discuss the matter is a
question of professional judgment. Relevant factors to consider include:
 The nature and circumstances of the matter.
 The individuals actually or potentially involved.
 The likelihood of collusion.
 The potential consequences of the matter.
 Whether that level of management is able to investigate the matter

and take appropriate action.
360.11 A3 The appropriate level of management is usually at least one level above the
individual or individuals involved or potentially involved in the matter. In
the context of a group, the appropriate level might be management at an
entity that controls the client.
360.11 A4 The chartered accountant might also consider discussing the matter with
internal auditors, where applicable.
R360.12 If the chartered accountant believes that management is involved in the non-
compliance or suspected non-compliance, the accountant shall discuss the
matter with those charged with governance.
Addressing the Matter
R360.13 In discussing the non-compliance or suspected non-compliance with

management and, where appropriate, those charged with governance, the
chartered accountant shall advise them to take appropriate and timely
actions, if they have not already done so, to:
(a) Rectify, remediate or mitigate the consequences of the non-

compliance;
(b) Deter the commission of the non-compliance where it has not yet
occurred; or

(c) Disclose the matter to an appropriate authority where required by

law or regulation or where considered necessary in the public
interest.
R360.14 The chartered accountant shall consider whether management and those
charged with governance understand their legal or regulatory responsibilities
with respect to the non-compliance or suspected non-compliance.
360.14 A1 If management and those charged with governance do not understand their
legal or regulatory responsibilities with respect to the matter, the chartered
accountant might suggest appropriate sources of information or recommend
that they obtain legal advice.
R360.15 The chartered accountant shall comply with applicable:
(a) Laws and regulations, including legal or regulatory provisions

governing the reporting of non-compliance or suspected non-
compliance to an appropriate authority; and
(b) Requirements under auditing standards, including those relating to:
 Identifying and responding to non-compliance, including

fraud.
 Communicating with those charged with governance.
 Considering the implications of the non-compliance or

suspected non-compliance for the auditor’s report.
360.15 A1 Some laws and regulations might stipulate a period within which reports of
non-compliance or suspected non-compliance are to be made to an
appropriate authority.
Communication with Respect to Groups
R360.16 Where a chartered accountant becomes aware of non-compliance or

suspected non-compliance in relation to a component of a group in either of
the following two situations, the accountant shall communicate the matter to
the group engagement partner unless prohibited from doing so by law or
regulation:
(a) The accountant is, for purposes of an audit of the group financial
statements, requested by the group engagement team to perform
work on financial information related to the component; or

(b) The accountant is engaged to perform an audit of the component’s

financial statements for purposes other than the group audit, for
example, a statutory audit.
The communication to the group engagement partner shall be in addition to

responding to the matter in accordance with the provisions of this section.
360.16 A1 The purpose of the communication is to enable the group engagement

partner to be informed about the matter and to determine, in the context of
the group audit, whether and, if so, how to address it in accordance with the
provisions in this section. The communication requirement in paragraph
R360.16 applies regardless of whether the group engagement partner’s firm
or network is the same as or different from the chartered accountant’s firm
or network.
R360.17 Where the group engagement partner becomes aware of non-compliance or

suspected non-compliance in the course of an audit of group financial
statements, the group engagement partner shall consider whether the matter
might be relevant to one or more components:
(a) Whose financial information is subject to work for purposes of the

audit of the group financial statements; or
(b) Whose financial statements are subject to audit for purposes other
than the group audit, for example, a statutory audit.
This consideration shall be in addition to responding to the matter in the

context of the group audit in accordance with the provisions of this section.
R360.18 If the non-compliance or suspected non-compliance might be relevant to one

or more of the components specified in paragraph R360.17(a) and (b), the
group engagement partner shall take steps to have the matter communicated
to those performing work at the components, unless prohibited from doing
so by law or regulation. If necessary, the group engagement partner shall
arrange for appropriate inquiries to be made (either of management or from
publicly available information) as to whether the relevant component(s)
specified in paragraph R360.17(b) is subject to audit and, if so, to ascertain
to the extent practicable the identity of the auditor.
360.18 A1 The purpose of the communication is to enable those responsible for work
at the components to be informed about the matter and to determine whether
and, if so, how to address it in accordance with the provisions in this section.
The communication requirement applies regardless of whether the group
engagement partner’s firm or network is the same as or different from the
firms or networks of those performing work at the components.

Determining Whether Further Action Is Needed
R360.19 The chartered accountant shall assess the appropriateness of the response of
management and, where applicable, those charged with governance.
360.19 A1 Relevant factors to consider in assessing the appropriateness of the response

of management and, where applicable, those charged with governance
include whether:
 The response is timely.
 The non-compliance or suspected non-compliance has been

adequately investigated.
 Action has been, or is being, taken to rectify, remediate or mitigate

the consequences of any non-compliance.
 Action has been, or is being, taken to deter the commission of any

non-compliance where it has not yet occurred.
 Appropriate steps have been, or are being, taken to reduce the risk
of re-occurrence, for example, additional controls or training.
 The non-compliance or suspected non-compliance has been

disclosed to an appropriate authority where appropriate and, if so,
whether the disclosure appears adequate.
R360.20 In light of the response of management and, where applicable, those charged
with governance, the chartered accountant shall determine if further action
is needed in the public interest.
360.20 A1 The determination of whether further action is needed, and the nature and
extent of it, will depend on various factors, including:
 The pervasiveness of the matter throughout the client.
 Whether the chartered accountant continues to have confidence in

the integrity of management and, where applicable, those charged
with governance.
 Whether the non-compliance or suspected non-compliance is likely

to recur.

 Whether there is credible evidence of actual or potential substantial

harm to the interests of the entity, investors, creditors, employees or
the general public.
360.20 A2 Examples of circumstances that might cause the chartered accountant no

longer to have confidence in the integrity of management and, where
applicable, those charged with governance include situations where:
 The accountant suspects or has evidence of their involvement or

intended involvement in any non-compliance.
 The accountant is aware that they have knowledge of such non-

compliance and, contrary to legal or regulatory requirements, have
not reported, or authorized the reporting of, the matter to an
appropriate authority within a reasonable period.
R360.21 The chartered accountant shall exercise professional judgment in

determining the need for, and nature and extent of, further action. In making
this determination, the accountant shall take into account whether a
reasonable and informed third party would be likely to conclude that the
accountant has acted appropriately in the public interest.
360.21 A1 Further action that the chartered accountant might take includes:

 Withdrawing from the engagement and the professional relationship

where permitted by law or regulation.
360.21 A2 Withdrawing from the engagement and the professional relationship is not a
substitute for taking other actions that might be needed to achieve the
chartered accountant’s objectives under this section. In some jurisdictions,
however, there might be limitations as to the further actions available to the
accountant. In such circumstances, withdrawal might be the only available
course of action.
R360.22 Where the chartered accountant has withdrawn from the professional
relationship pursuant to paragraphs R360.20 and 360.21 A1, the accountant
shall, on request by the proposed accountant pursuant to paragraph R320.8,
provide all relevant facts and other information concerning the identified or
suspected non-compliance to the proposed accountant. The predecessor
accountant shall do so, even in the circumstances addressed in paragraph
R320.8(b) where the client fails or refuses to grant the predecessor
accountant permission to discuss the client’s affairs with the proposed
accountant, unless prohibited by law or regulation.

360.22 A1 The facts and other information to be provided are those that, in the
predecessor accountant’s opinion, the proposed accountant needs to be
aware of before deciding whether to accept the audit appointment. Section
320 addresses communications from proposed accountants.
R360.23 If the proposed accountant is unable to communicate with the predecessor

accountant, the proposed accountant shall take reasonable steps to obtain
information about the circumstances of the change of appointment by other
means.
360.23 A1 Other means to obtain information about the circumstances of the change of
appointment include inquiries of third parties or background investigations
of management or those charged with governance.
360.24 A1 As assessment of the matter might involve complex analysis and judgments,
the chartered accountant might consider:
 Obtaining legal advice to understand the accountant’s options and

the professional or legal implications of taking any particular course
of action.

body.
Determining Whether to Disclose the Matter to an Appropriate Authority
360.25 A1 Disclosure of the matter to an appropriate authority would be precluded if

doing so would be contrary to law or regulation. Otherwise, the purpose of
making disclosure is to enable an appropriate authority to cause the matter
to be investigated and action to be taken in the public interest.
360.25 A2 The determination of whether to make such a disclosure depends in

particular on the nature and extent of the actual or potential harm that is or
might be caused by the matter to investors, creditors, employees or the
general public. For example, the chartered accountant might determine that
disclosure of the matter to an appropriate authority is an appropriate course
of action if:
 The entity is engaged in bribery (for example, of local or foreign

government officials for purposes of securing large contracts).
 The entity is regulated and the matter is of such significance as to

threaten its license to operate.

 The entity is listed on a securities exchange and the matter might

result in adverse consequences to the fair and orderly market in the
entity’s securities or pose a systemic risk to the financial markets.
 It is likely that the entity would sell products that are harmful to
public health or safety.
 The entity is promoting a scheme to its clients to assist them in

evading taxes.
360.25 A3 The determination of whether to make such a disclosure will also depend on
external factors such as:
 Whether there is an appropriate authority that is able to receive the

information, and cause the matter to be investigated and action to be
taken. The appropriate authority will depend on the nature of the
matter. For example, the appropriate authority would be a securities
regulator in the case of fraudulent financial reporting or an
environmental protection agency in the case of a breach of
environmental laws and regulations.
 Whether there exists robust and credible protection from civil,

criminal or professional liability or retaliation afforded by
legislation or regulation, such as under whistle-blowing legislation
or regulation.
 Whether there are actual or potential threats to the physical safety of

the chartered accountant or other individuals.
R360.26 If the chartered accountant determines that disclosure of the non-compliance

or suspected non-compliance to an appropriate authority is an appropriate
course of action in the circumstances, that disclosure is permitted pursuant
to paragraph R114.1(d) of the Code. When making such disclosure, the
accountant shall act in good faith and exercise caution when making
statements and assertions. The accountant shall also consider whether it is
appropriate to inform the client of the accountant’s intentions before
disclosing the matter.
Imminent Breach
R360.27 In exceptional circumstances, the chartered accountant might become aware

of actual or intended conduct that the accountant has reason to believe would
constitute an imminent breach of a law or regulation that would cause
with management or those charged with governance of the entity, the
accountant shall exercise professional judgment and determine whether to

disclose the matter immediately to an appropriate authority in order to

prevent or mitigate the consequences of such imminent breach. If disclosure
is made, that disclosure is permitted pursuant to paragraph R114.1(d) of the
Code.
Documentation
R360.28 In relation to non-compliance or suspected non-compliance that falls within

the scope of this section, the chartered accountant shall document:
 How management and, where applicable, those charged with


made and the decisions that were taken, having regard to the
reasonable and informed third party test.
360.28 A1 This documentation is in addition to complying with the documentation

requirements under applicable auditing standards. ISAs, for example,
require a chartered accountant performing an audit of financial statements
to:
 Prepare documentation sufficient to enable an understanding of

significant matters arising during the audit, the conclusions reached,
and significant professional judgments made in reaching those
conclusions;
 Document discussions of significant matters with management,

those charged with governance, and others, including the nature of
the significant matters discussed and when and with whom the
discussions took place; and
 Document identified or suspected non-compliance, and the results

of discussion with management and, where applicable, those
charged with governance and other parties outside the entity.
Professional Services Other than Audits of Financial Statements
Obtaining an Understanding of the Matter and Addressing it with Management and Those
Charged with Governance
R360.29 If a chartered accountant engaged to provide a professional service other

than an audit of financial statements becomes aware of information
concerning non-compliance or suspected non-compliance, the accountant

shall seek to obtain an understanding of the matter. This understanding shall

include the nature of the non-compliance or suspected non-compliance and
the circumstances in which it has occurred or might be about to occur.
have a level of understanding of laws and regulations beyond that which is
required for the professional service for which the accountant was engaged.
Whether an act constitutes actual non-compliance is ultimately a matter to
be determined by a court or other appropriate adjudicative body.
accountant might consult on a confidential basis with others within the firm,
a network firm or a professional body, or with legal counsel.

occurred or might occur, the accountant shall discuss the matter with the
appropriate level of management. If the accountant has access to those
charged with governance, the accountant shall also discuss the matter with
them where appropriate.
360.30 A1 The purpose of the discussion is to clarify the chartered accountant’s

understanding of the facts and circumstances relevant to the matter and its
potential consequences. The discussion also might prompt management or
those charged with governance to investigate the matter.
360.30 A2 The appropriate level of management with whom to discuss the matter is a
question of professional judgment. Relevant factors to consider include:
 The nature and circumstances of the matter.
 The individuals actually or potentially involved.
 The likelihood of collusion.
 The potential consequences of the matter.
 Whether that level of management is able to investigate the matter

and take appropriate action.
Communicating the Matter to the Entity’s External Auditor
R360.31 If the chartered accountant is performing a non-audit service for:
(a) An audit client of the firm; or
(b) A component of an audit client of the firm,

the accountant shall communicate the non-compliance or suspected non-

compliance within the firm, unless prohibited from doing so by law or
regulation. The communication shall be made in accordance with the firm’s
protocols or procedures. In the absence of such protocols and procedures, it
shall be made directly to the audit engagement partner.
R360.32 If the chartered accountant is performing a non-audit service for:
(a) An audit client of a network firm; or
(b) A component of an audit client of a network firm,
the accountant shall consider whether to communicate the non-compliance

or suspected non-compliance to the network firm. Where the communication
is made, it shall be made in accordance with the network’s protocols or
procedures. In the absence of such protocols and procedures, it shall be made
directly to the audit engagement partner.
R360.33 If the chartered accountant is performing a non-audit service for a client that
is not:
(a) An audit client of the firm or a network firm; or
(b) A component of an audit client of the firm or a network firm,
the accountant shall consider whether to communicate the non-compliance

or suspected non-compliance to the firm that is the client’s external auditor,
if any.
Relevant Factors to Consider
360.34 A1 Factors relevant to considering the communication in accordance with

paragraphs R360.31 to R360.33 include:
 Whether doing so would be contrary to law or regulation.
 Whether there are restrictions about disclosure imposed by a

regulatory agency or prosecutor in an ongoing investigation into the
non-compliance or suspected non-compliance.
 Whether the purpose of the engagement is to investigate potential

non-compliance within the entity to enable it to take appropriate
action.
 Whether management or those charged with governance have

already informed the entity’s external auditor about the matter.

 The likely materiality of the matter to the audit of the client’s

financial statements or, where the matter relates to a component of
a group, its likely materiality to the audit of the group financial
statements.
Purpose of Communication
360.35 A1 In the circumstances addressed in paragraphs R360.31 to R360.33, the

purpose of the communication is to enable the audit engagement partner to
be informed about the non-compliance or suspected non-compliance and to
determine whether and, if so, how to address it in accordance with the
provisions of this section.
Considering Whether Further Action Is Needed
R360.36 The chartered accountant shall also consider whether further action is
needed in the public interest.
360.36 A1 Whether further action is needed, and the nature and extent of it, will depend
on factors such as:
 The appropriateness and timeliness of the response of management

and, where applicable, those charged with governance.
 The involvement of management or those charged with governance

in the matter.
 The likelihood of substantial harm to the interests of the client,

investors, creditors, employees or the general public.
360.36 A2 Further action by the chartered accountant might include:

 Withdrawing from the engagement and the professional relationship

where permitted by law or regulation.
360.36 A3 In considering whether to disclose to an appropriate authority, relevant

factors to take into account include:
 Whether doing so would be contrary to law or regulation.

 Whether there are restrictions about disclosure imposed by a

regulatory agency or prosecutor in an ongoing investigation into the
non-compliance or suspected non-compliance.
 Whether the purpose of the engagement is to investigate potential

non-compliance within the entity to enable it to take appropriate
action.
R360.37 If the chartered accountant determines that disclosure of the non-compliance

or suspected non-compliance to an appropriate authority is an appropriate
course of action in the circumstances, that disclosure is permitted pursuant
to paragraph R114.1(d) of the Code. When making such disclosure, the
accountant shall act in good faith and exercise caution when making
statements and assertions. The accountant shall also consider whether it is
appropriate to inform the client of the accountant’s intentions before
disclosing the matter.
Imminent Breach
R360.38 In exceptional circumstances, the chartered accountant might become aware

of actual or intended conduct that the accountant has reason to believe would
constitute an imminent breach of a law or regulation that would cause
with management or those charged with governance of the entity, the
accountant shall exercise professional judgment and determine whether to
disclose the matter immediately to an appropriate authority in order to
prevent or mitigate the consequences of such imminent breach of law or
regulation. If disclosure is made, that disclosure is permitted pursuant to
paragraph R114.1(d) of the Code.
Seeking Advice
360.39 A1 The chartered accountant might consider:
 Obtaining legal advice to understand the professional or legal

implications of taking any particular course of action.

body.

Documentation

the scope of this section, the chartered accountant is encouraged to
document:
 The matter.
 The results of discussion with management and, where applicable,

those charged with governance and other parties.
 How management and, where applicable, those charged with



SECTION 370
PUBLIC NOTICES, ANNOUNCEMENTS AND COMMUNICATIONS UNDUE

PUBLICITY BE AVOIDED
R370.1 In any communications, announcements and public notices, chartered

accountants should not:
(a) use means, which bring the profession into disrepute;
(b) make exaggerated claims for the services they are able to offer, the
qualifications they possess, or experience they have gained; and
(c) denigrate the work of other accountants.
A chartered accountant preparing or authorizing the issue of matter falling

within this Section should do so with a due sense of responsibility to the
profession and to the public as a whole. In particular, such material should
be in good taste both as to content and presentation and should not belittle
services offered by others, whether members or not, either by claiming
superiority for the services of a particular member or otherwise. The same
attitude should be adopted towards activities mentioned in subsequent
paragraphs.
Advertising for solicitation be avoided
R370.2 All communications, announcements and public notices be issued in such

manner and within the limits prescribed in the following paragraphs so that
the provisions of clauses (5) and (6) of Part 1 and clauses (1) and (2) of Part
2 of Schedule-I of the Chartered Accountants Ordinance, 1961, are not
violated:
(a) All announcements, communications and public notices should:
(i) be aimed at informing the recipients or the public in an

objective manner;
(ii) conform to the basic principles of legality, decency, clarity,

honesty and truthfulness; and
(iii) not project an image, which is inconsistent with that of a

professional person bound to high ethical and technical
standards.

(b) Activities which may expressly be considered not to meet the above
criteria and are therefore prohibited include those that:
(i) create false, deceptive or unjustified expectations of favorable

results;
(ii) imply the ability to influence any court, tribunal, regulatory

agency or similar body or official;
(iii) consist of self-laudatory statements that are not based on

verifiable facts;
(iv) make comparisons with other chartered accountants in

practice;
(v) contain testimonials or endorsements;
(vi) contain any other representations that would be likely to cause

a reasonable person to misunderstand or be deceived; and
(vii) make unjustified claims to be an expert or specialist in a

particular field of accountancy.
(c) The examples which follow are illustrative of circumstances in

which communications, announcements, public notices, etc., are
acceptable and the matters to be considered in connection therewith
subject always to the overriding requirements mentioned in the
preceding paragraphs:
(i) Appointments and Awards
It is in the interests of the public and the profession that any

appointment or other activity of a chartered accountant in a
matter of national or local importance, or the award of any
distinction to a member, should receive publicity and that
membership of the Institute should be mentioned. However,
the chartered accountant should not make use of any of the
aforementioned appointments or activities for personal
professional advantage.
(ii) Chartered Accountants seeking employment or Professional

Business
A chartered accountant may inform interested parties through

any medium that a partnership or salaried employment of an
accountancy nature is being sought. The chartered accountants
should not, however, publicize for subcontract work in a
manner, which could be interpreted as seeking to procure

professional business. Public announcements or public notices

seeking subcontract work may be acceptable if placed only in
the professional press and provided that neither the chartered
accountant's name, address or telephone number appears in the
public announcements or public notices. A chartered
accountant may write a letter or make a direct approach to
another chartered accountant when seeking employment or
professional business.
(iii) Directories & Internet
A chartered accountant and his firm may be listed in the

directories both alphabetically and in lead type and in
classified list under "Chartered Accountants" in the
directories. He can however, use the classification
"Accountants and Auditors" when the directories do not have
specific classification for "Chartered Accountants". Entries
should be limited to name, address, telephone numbers,
internet address, e-mail address, professional description and
any other information necessary to enable the users of the
directories to make contact with the chartered accountant and
his firm may also develop and maintain a website on the
internet provided the contents comply with the requirements
of paragraphs 370.1, (a) and (b) of 370.2 and (ix) of 370.2(c).
(iv) Books, Articles, Interviews, Lectures, and Electronic Media
A member who is author of a book or articles on a professional

subject, may state his name and professional qualifications and
give the name of his firm but shall not give any information as
to the services that the firm provides.
Similar provisions are applicable to participation by a

chartered accountant in practice in a lecture, interview or a
radio or television program on a professional subject. What
practicing member write or say, however, should not be
promotional of themselves or their firm but should be an
objective professional view of the topic under consideration.
Practicing members are responsible for using their best
endeavors to ensure that what ultimately goes before the
public complies with these requirements.
When interviewed by a writer or reporter, the chartered

accountant should observe the limitations imposed on him by
this Section. The chartered accountant may not provide the
press with any information for publication that he could not
publish himself.

(v) Training Courses, Seminars, etc.
A chartered accountant may invite clients, their staff and the

general public to attend training courses or seminars
conducted for imparting professional education. However,
undue prominence should not be given to the name of a
chartered accountant in any booklets or documents issued in
connection therewith.
(vi) Professional Literature and Publications
Any professional literature bearing the name of a chartered

accountant or his firm giving technical information for the
assistance of staff and clients may be issued to any other firm
or persons.
A publication developed/ authored by a firm may be published

in the firm's name but it shall not give any information as to
the services that the firm provides.
Such professional literature and publications can also be

placed on the website of the firm.
(vii) Staff Recruitment
Genuine vacancies for staff may be communicated to the

public through any medium in which comparable staff
vacancies normally appear. The fact that a job specification
necessarily gives some detail as to one or more of the services
provided by the chartered accountant or his firm is acceptable
but it should not contain any promotional element. There
should not be any suggestion that the services offered are
superior to those offered by other chartered accountants as a
consequence of size, associations, or for any other reason.
In publications such as those specifically directed to schools

and other places of education to inform students and graduates
of career opportunities in the profession, services offered to
the public may be described in a businesslike way.
More latitude may also be permissible in a section of a

newspaper devoted to staff vacancies than would be allowed
if the vacancy appears in a prominent position elsewhere in a
newspaper on the grounds that it would be most unlikely that
a potential client would use such media to select his
professional adviser.

(viii) Recruitment on behalf of clients
A member may advertise on behalf of clients. However, he

should ensure that the emphasis in the advertisement is
directed towards the objectives to be achieved for the client.
The designation of any services provided by the practice as
being of specialist nature is not permitted.
(ix) Brochures and Firm Directories
A chartered accountant in practice may issue:
(a) A factual and objectively worded account of the

services provided, the firm's resources (human and
other, specifying qualifications and experience of
personnel where appropriate), existing clients (unless
this breaches client confidentiality) and of professional
assignments undertaken; and
(b) A directory setting out names of partners, office

addresses and names and addresses of associated firms
and correspondents.
(x) Stationery and Nameplates
Stationery of chartered accountants in practice should be of an

acceptable professional standard and comply with the
requirements of the directives issued by the Council of the
Institute from time to time as to names of partners, principals
and others who participate in the practice, use of professional
descriptions and designatory letters, cities or countries where
the practice is represented, logotypes, etc. The designation of
any services provided by the practice as being of specialist
nature is not permitted. Similar provisions apply to
nameplates.
(xi) Newspaper Announcements
Appropriate newspapers or magazines may be used to inform

the public of the establishment of a new practice, of changes
in the composition of a partnership, or of any alteration in the
address and telephone number of a practice.
Such announcements should be limited to a bare statement of

facts and consideration given to the appropriateness of the area
of distribution of the newspaper or magazine and number of
insertions.

(xii) Inclusion of the name of a chartered accountant in practice in

a document issued by a client
When a client proposes to publish a report by a chartered

accountant in practice dealing with the client's existing
business affairs or in connection with the establishment of a
new business venture, chartered accountant in practice should
take steps to ensure that the context in which the report is
published is not such as might result in the public being misled
as to the nature and meaning of the report. In these
circumstances, practicing member should advise the client that
permission should first be obtained before publication of the
document.
Similar consideration should be given to other documents

proposed to be issued by a client containing the name of a
chartered accountant in practice acting in an independent
professional capacity.
This does not preclude the inclusion of the name of a chartered

accountant in practice in the annual report of a client.
When chartered accountant in practice in their private capacity

are associated with, or hold office in, an organization, the
organization may use their name and professional status on
stationery and other documents. The chartered accountant in
practice should ensure that this information is not used in such
a way as might lead the public to believe that there is a
connection with the organization in an independent
professional capacity.
(xiii) Advertising material used to promote a course, which he has

been asked to conduct
It is of value to prospective students and course participants to

know the instructor's background - such as degrees he holds,
professional body affiliations, and the name of his firm. The
chartered accountant has the responsibility to ascertain that all
promotional efforts are within the bounds of this Section.
(xiv) The use of the CA title on an Employer's Stationery
The use of the CA title on an employer's stationery by a

chartered accountant not in practice is proper. It would also be
proper for the CA title of the member to appear in paid
advertisements of the employer that list the officers and
directors.

(xv) Greeting and Invitation Cards
Greeting and invitation cards may be sent in the name of a

chartered accountant or his firm. Professional qualifications
may be indicated but no information shall be given regarding
the services that the chartered accountant or the firm provides.

INTERNA TI ONAL INDEP ENDENCE STANDARD S (PAR TS 4A AND 4B)
PART 4A – INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS
Section 400 Applying the Conceptual Framework to Independence for Audit and
Review Engagements ................................................................................ 125
Section 410 Fees ........................................................................................................... 140
Section 411 Compensation and Evaluation Policies ..................................................... 144
Section 420 Gifts and Hospitality ................................................................................. 145
Section 430 Actual or Threatened Litigation ................................................................ 146
Section 510 Financial Interests ..................................................................................... 147
Section 511 Loans and Guarantees ............................................................................... 153
Section 520 Business Relationships .............................................................................. 155
Section 521 Family and Personal Relationships ........................................................... 157
Section 522 Recent Service with an Audit Client ......................................................... 161
Section 523 Serving as a Director or Officer of an Audit Client .................................. 163
Section 524 Employment with an Audit Client............................................................. 164
Section 525 Temporary Personnel Assignments ........................................................... 168
Section 540 Long Association of Personnel (Including Partner Rotation) with an Audit
Client ......................................................................................................... 169
Section 600 Provision of Non-Assurance Services to an Audit Client ......................... 175

Subsection 601 Accounting and Bookkeeping Services ..................................... 180
Subsection 602 Administrative Services ............................................................. 183
Subsection 603 Valuation Services ..................................................................... 184
Subsection 604 Tax Services .............................................................................. 186
Subsection 605 Internal Audit Services .............................................................. 192
Subsection 606 Information Technology Systems Services ............................... 196
Subsection 607 Litigation Support Services ....................................................... 198
Subsection 608 Legal Services ........................................................................... 199
Subsection 609 Recruiting Services .................................................................... 201
Subsection 610 Corporate Finance Services ....................................................... 203
Section 800 Reports on Special Purpose Financial Statements that Include a Restriction
on Use and Distribution (Audit and Review Engagements) ...................... 206
Page 124 of 263 INDEX OF PART 4A

INTERNATIONAL INDEPENDENCE STANDARDS (PARTS 4A AND 4B)
PART 4A - INDEPENDENCE FOR AUDIT AND REVIEW

ENGAGEMENTS
SECTION 400
APPLYING THE CONCEPTUAL FRAMEWORK TO INDEPENDENCE FOR

AUDIT AND REVIEW ENGAGEMENTS
Introduction
General
400.1 It is in the public interest and required by the Code that chartered accountants
in practice be independent when performing audit or review engagements.
400.2 This Part applies to both audit and review engagements. The terms “audit,”
“audit team,” “audit engagement,” “audit client,” and “audit report” apply
equally to review, review team, review engagement, review client, and
review engagement report.
400.4 ISQC 1 requires a firm to establish policies and procedures designed to

provide it with reasonable assurance that the firm, its personnel and, where
applicable, others subject to independence requirements (including network
firm personnel), maintain independence where required by relevant ethics
requirements. ISAs and ISREs establish responsibilities for engagement
partners and engagement teams at the level of the engagement for audits and
reviews, respectively. The allocation of responsibilities within a firm will
depend on its size, structure and organization. Many of the provisions of this
Part do not prescribe the specific responsibility of individuals within the firm
for actions related to independence, instead referring to “firm” for ease of
reference. Firms assign responsibility for a particular action to an individual
or a group of individuals (such as an audit team), in accordance with ISQC
1. In addition, an individual chartered accountant remains responsible for
compliance with any provisions that apply to that accountant’s activities,
interests or relationships.
400.5 Independence is linked to the principles of objectivity and integrity. It

comprises:
of a conclusion without being affected by influences that
compromise professional judgment, thereby allowing an individual

to act with integrity, and exercise objectivity and professional

skepticism.

third party would be likely to conclude that a firm’s, or an audit team
member’s, integrity, objectivity or professional skepticism has been
compromised.
In this Part, references to an individual or firm being “independent” mean

that the individual or firm has complied with the provisions of this Part.
400.6 When performing audit engagements, the Code requires firms to comply
with the fundamental principles and be independent. This Part sets out
specific requirements and application material on how to apply the
conceptual framework to maintain independence when performing such
engagements. The conceptual framework set out in Section 120 applies to
independence as it does to the fundamental principles set out in Section 110.
400.7 This Part describes:
(a) Facts and circumstances, including professional activities, interests

and relationships, that create or might create threats to
independence;
(b) Potential actions, including safeguards, that might be appropriate to

address any such threats; and
(c) Some situations where the threats cannot be eliminated or there can
be no safeguards to reduce them to an acceptable level.
Public Interest Entities
400.8 Some of the requirements and application material set out in this Part reflect
the extent of public interest in certain entities which are defined to be public
interest entities. Firms are encouraged to determine whether to treat
additional entities, or certain categories of entities, as public interest entities
because they have a large number and wide range of stakeholders. Factors
to be considered include:
 The nature of the business, such as the holding of assets in a

fiduciary capacity for a large number of stakeholders. Examples
might include financial institutions, such as banks and insurance
companies, and pension funds.
 Size.

 Number of employees.
Reports that Include a Restriction on Use and Distribution
400.9 An audit report might include a restriction on use and distribution. If it does
and the conditions set out in Section 800 are met, then the independence
requirements in this Part may be modified as provided in Section 800.
Assurance Engagements other than Audit and Review Engagements
400.10 Independence standards for assurance engagements that are not audit or
review engagements are set out in Part 4B – Independence for Assurance
Engagements Other than Audit and Review Engagements.
General
R400.11 A firm performing an audit engagement shall be independent.
R400.12 A firm shall apply the conceptual framework set out in Section 120 to
identify, evaluate and address threats to independence in relation to an audit
engagement.
[Paragraphs 400.13 to 400.19 are intentionally left blank]
Related Entities
R400.20 As defined, an audit client that is a listed entity includes all of its related
entities. For all other entities, references to an audit client in this Part include
related entities over which the client has direct or indirect control. When the
audit team knows, or has reason to believe, that a relationship or
circumstance involving any other related entity of the client is relevant to
the evaluation of the firm’s independence from the client, the audit team
shall include that related entity when identifying, evaluating and addressing
threats to independence.
Period During which Independence is Required
R400.30 Independence, as required by this Part, shall be maintained during both:
(a) The engagement period; and
(b) The period covered by the financial statements.

400.30 A1 The engagement period starts when the audit team begins to perform the
audit. The engagement period ends when the audit report is issued. When
the engagement is of a recurring nature, it ends at the later of the notification
by either party that the professional relationship has ended or the issuance
of the final audit report.
R400.31 If an entity becomes an audit client during or after the period covered by the
financial statements on which the firm will express an opinion, the firm shall
determine whether any threats to independence are created by:
(a) Financial or business relationships with the audit client during or

after the period covered by the financial statements but before
accepting the audit engagement; or
(b) Previous services provided to the audit client by the firm or a

network firm.
400.31 A1 Threats to independence are created if a non-assurance service was provided

to an audit client during, or after the period covered by the financial
statements, but before the audit team begins to perform the audit, and the
service would not be permitted during the engagement period.
 Using professionals who are not audit team members to perform the
service.
 Having an appropriate reviewer review the audit and non-assurance

work as appropriate.
 Engaging another firm outside of the network to evaluate the results

of the non-assurance service or having another firm outside of the
network re-perform the non-assurance service to the extent
necessary to enable the other firm to take responsibility for the
service.
Communication with those Charged with Governance
400.40 A1 Paragraphs R300.9 and R300.10 set out requirements with respect to
communicating with those charged with governance.
400.40 A2 Even when not required by the Code, applicable professional standards, laws
or regulations, regular communication is encouraged between a firm and
those charged with governance of the client regarding relationships and
other matters that might, in the firm’s opinion, reasonably bear on

independence. Such communication enables those charged with governance

to:
(a) Consider the firm’s judgments in identifying and evaluating threats;
(b) Consider how threats have been addressed including the

appropriateness of safeguards when they are available and capable
of being applied; and
(c) Take appropriate action.
Such an approach can be particularly helpful with respect to intimidation

and familiarity threats.
Network Firms
400.50 A1 Firms frequently form larger structures with other firms and entities to
enhance their ability to provide professional services. Whether these larger
structures create a network depends on the particular facts and
circumstances. It does not depend on whether the firms and entities are
legally separate and distinct.
R400.51 A network firm shall be independent of the audit clients of the other firms
within the network as required by this Part.
400.51 A1 The independence requirements in this Part that apply to a network firm
apply to any entity that meets the definition of a network firm. It is not
necessary for the entity also to meet the definition of a firm. For example, a
consulting practice or professional law practice might be a network firm but
not a firm.
R400.52 When associated with a larger structure of other firms and entities, a firm
shall:
(a) Exercise professional judgment to determine whether a network is

created by such a larger structure;
(b) Consider whether a reasonable and informed third party would be

likely to conclude that the other firms and entities in the larger
structure are associated in such a way that a network exists; and
(c) Apply such judgment consistently throughout such a larger

structure.

R400.53 When determining whether a network is created by a larger structure of firms

and other entities, a firm shall conclude that a network exists when such a
larger structure is aimed at co-operation and:
(a) It is clearly aimed at profit or cost sharing among the entities within
the structure. (Ref: Para. 400.53 A2);
(b) The entities within the structure share common ownership, control
or management. (Ref: Para. 400.53 A3);
(c) The entities within the structure share common quality control
policies and procedures. (Ref: Para. 400.53 A4);
(d) The entities within the structure share a common business strategy.
(Ref: Para. 400.53 A5);
(e) The entities within the structure share the use of a common brand
name. (Ref: Para. 400.53 A6, 400.53 A7); or
(f) The entities within the structure share a significant part of

professional resources. (Ref: Para 400.53 A8, 400.53 A9).
400.53 A1 There might be other arrangements between firms and entities within a larger
structure that constitute a network, in addition to those arrangements
described in paragraph R400.53. However, a larger structure might be aimed
only at facilitating the referral of work, which in itself does not meet the
criteria necessary to constitute a network.
400.53 A2 The sharing of immaterial costs does not in itself create a network. In
addition, if the sharing of costs is limited only to those costs related to the
development of audit methodologies, manuals or training courses, this
would not in itself create a network. Further, an association between a firm
and an otherwise unrelated entity jointly to provide a service or develop a
product does not in itself create a network. (Ref: Para. R400.53(a)).
400.53 A3 Common ownership, control or management might be achieved by contract

or other means. (Ref: Para. R400.53(b)).
400.53 A4 Common quality control policies and procedures are those designed,
implemented and monitored across the larger structure. (Ref: Para.
R400.53(c)).
400.53 A5 Sharing a common business strategy involves an agreement by the entities

to achieve common strategic objectives. An entity is not a network firm
merely because it co-operates with another entity solely to respond jointly
to a request for a proposal for the provision of a professional service. (Ref:
Para. R400.53(d)).

400.53 A6 A common brand name includes common initials or a common name. A firm
is using a common brand name if it includes, for example, the common brand
name as part of, or along with, its firm name when a partner of the firm signs
an audit report. (Ref: Para. R400.53(e)).
400.53 A7 Even if a firm does not belong to a network and does not use a common
brand name as part of its firm name, it might appear to belong to a network
if its stationery or promotional materials refer to the firm being a member of
an association of firms. Accordingly, if care is not taken in how a firm
describes such membership, a perception might be created that the firm
belongs to a network. (Ref: Para. R400.53(e)).
400.53 A8 Professional resources include:
 Common systems that enable firms to exchange information such as

client data, billing and time records.
 Partners and other personnel.
 Technical departments that consult on technical or industry specific

issues, transactions or events for assurance engagements.
 Audit methodology or audit manuals.
 Training courses and facilities. (Ref: Para. R400.53(f)).
400.53 A9 Whether the shared professional resources are significant depends on the
circumstances. For example:
 The shared resources might be limited to common audit

methodology or audit manuals, with no exchange of personnel or
client or market information. In such circumstances, it is unlikely
that the shared resources would be significant. The same applies to
a common training endeavor.
 The shared resources might involve the exchange of personnel or

information, such as where personnel are drawn from a shared pool,
or where a common technical department is created within the larger
structure to provide participating firms with technical advice that the
firms are required to follow. In such circumstances, a reasonable and
informed third party is more likely to conclude that the shared
resources are significant. (Ref: Para. R400.53(f)).
R400.54 If a firm or a network sells a component of its practice, and the component
continues to use all or part of the firm’s or network’s name for a limited
time, the relevant entities shall determine how to disclose that they are not
network firms when presenting themselves to outside parties.

400.54 A1 The agreement for the sale of a component of a practice might provide that,
for a limited period of time, the sold component can continue to use all or
part of the name of the firm or the network, even though it is no longer
connected to the firm or the network. In such circumstances, while the two
entities might be practicing under a common name, the facts are such that
they do not belong to a larger structure aimed at cooperation. The two
entities are therefore not network firms.
General Documentation of Independence for Audit and Review Engagements
R400.60 A firm shall document conclusions regarding compliance with this Part, and
the substance of any relevant discussions that support those conclusions. In
particular:
(a) When safeguards are applied to address a threat, the firm shall
document the nature of the threat and the safeguards in place or
applied; and
(b) When a threat required significant analysis and the firm concluded
that the threat was already at an acceptable level, the firm shall
document the nature of the threat and the rationale for the
conclusion.
400.60 A1 Documentation provides evidence of the firm’s judgments in forming

conclusions regarding compliance with this Part. However, a lack of
documentation does not determine whether a firm considered a particular
matter or whether the firm is independent.
Mergers and Acquisitions
When a Client Merger Creates a Threat
400.70 A1 An entity might become a related entity of an audit client because of a

merger or acquisition. A threat to independence and, therefore, to the ability
of a firm to continue an audit engagement might be created by previous or
current interests or relationships between a firm or network firm and such a
related entity.
R400.71 In the circumstances set out in paragraph 400.70 A1
(a) The firm shall identify and evaluate previous and current interests
and relationships with the related entity that, taking into account any
actions taken to address the threat, might affect its independence and

therefore its ability to continue the audit engagement after the

effective date of the merger or acquisition; and
(b) Subject to paragraph R400.72, the firm shall take steps to end any
interests or relationships that are not permitted by the Code by the
effective date of the merger or acquisition.
R400.72 As an exception to paragraph R400.71(b), if the interest or relationship

cannot reasonably be ended by the effective date of the merger or
acquisition, the firm shall:
(a) Evaluate the threat that is created by the interest or relationship; and
(b) Discuss with those charged with governance the reasons why the
interest or relationship cannot reasonably be ended by the effective
date and the evaluation of the level of the threat.
400.72 A1 In some circumstances, it might not be reasonably possible to end an interest

or relationship creating a threat by the effective date of the merger or
acquisition. This might be because the firm provides a non-assurance service
to the related entity, which the entity is not able to transition in an orderly
manner to another provider by that date.
400.72 A2 Factors that are relevant in evaluating the level of a threat created by mergers
and acquisitions when there are interests and relationships that cannot
reasonably be ended include:
 The nature and significance of the interest or relationship.
 The nature and significance of the related entity relationship (for

example, whether the related entity is a subsidiary or parent).
 The length of time until the interest or relationship can reasonably

be ended.
R400.73 If, following the discussion set out in paragraph R400.72(b), those charged
with governance request the firm to continue as the auditor, the firm shall do
so only if:
(a) The interest or relationship will be ended as soon as reasonably

possible but no later than six months after the effective date of the
merger or acquisition;
(b) Any individual who has such an interest or relationship, including

one that has arisen through performing a non-assurance service that
would not be permitted by Section 600 and its subsections, will not

be a member of the engagement team for the audit or the individual

responsible for the engagement quality control review; and
(c) Transitional measures will be applied, as necessary, and discussed

with those charged with governance.
400.73 A1 Examples of such transitional measures include:
 Having a chartered accountant review the audit or non-assurance

work as appropriate.
 Having a chartered accountant, who is not a member of the firm

expressing the opinion on the financial statements, perform a review
that is equivalent to an engagement quality control review.
 Engaging another firm to evaluate the results of the non-assurance

service or having another firm re-perform the non-assurance service
to the extent necessary to enable the other firm to take responsibility
for the service.
R400.74 The firm might have completed a significant amount of work on the audit
prior to the effective date of the merger or acquisition and might be able to
complete the remaining audit procedures within a short period of time. In
such circumstances, if those charged with governance request the firm to
complete the audit while continuing with an interest or relationship
identified in paragraph 400.70 A1, the firm shall only do so if it:
(a) Has evaluated the level of the threat and discussed the results with
those charged with governance;
(b) Complies with the requirements of paragraph R400.73(a) to (c); and
(c) Ceases to be the auditor no later than the date that the audit report is
issued.
If Objectivity Remains Compromised
R400.75 Even if all the requirements of paragraphs R400.71 to R400.74 could be met,
the firm shall determine whether the circumstances identified in paragraph
400.70 A1 create a threat that cannot be addressed such that objectivity
would be compromised. If so, the firm shall cease to be the auditor.

Documentation
R400.76 The firm shall document:
(a) Any interests or relationships identified in paragraph 400.70 A1 that

will not be ended by the effective date of the merger or acquisition
and the reasons why they will not be ended;
(b) The transitional measures applied;
(c) The results of the discussion with those charged with governance;
and
(d) The reasons why the previous and current interests and relationships
do not create a threat such that objectivity would be compromised.
[Paragraphs 400.77 to 400.79 are intentionally left blank.]
Breach of an Independence Provision for Audit and Review Engagements
When a Firm Identifies a Breach
R400.80 If a firm concludes that a breach of a requirement in this Part has occurred,
the firm shall:
(a) End, suspend or eliminate the interest or relationship that created the
breach and address the consequences of the breach;
(b) Consider whether any legal or regulatory requirements apply to the

breach and, if so:
(i) Comply with those requirements; and
(ii) Consider reporting the breach to a professional or

regulatory body or oversight authority if such reporting is
common practice or expected in the relevant jurisdiction;
(c) Promptly communicate the breach in accordance with its policies

and procedures to:
(i) The engagement partner;
(ii) Those with responsibility for the policies and procedures

relating to independence;
(iii) Other relevant personnel in the firm and, where

appropriate, the network; and

(iv) Those subject to the independence requirements in Part

4A who need to take appropriate action;
(d) Evaluate the significance of the breach and its impact on the firm’s
objectivity and ability to issue an audit report; and
(e) Depending on the significance of the breach, determine:
(i) Whether to end the audit engagement; or
(ii) Whether it is possible to take action that satisfactorily

addresses the consequences of the breach and whether
such action can be taken and is appropriate in the
circumstances.
In making this determination, the firm shall exercise professional judgment

and take into account whether a reasonable and informed third party would
be likely to conclude that the firm’s objectivity would be compromised, and
therefore, the firm would be unable to issue an audit report.
400.80 A1 A breach of a provision of this Part might occur despite the firm having
policies and procedures designed to provide it with reasonable assurance that
independence is maintained. It might be necessary to end the audit
engagement because of the breach.
400.80 A2 The significance and impact of a breach on the firm’s objectivity and ability
to issue an audit report will depend on factors such as:
 The nature and duration of the breach.
 The number and nature of any previous breaches with respect to the
current audit engagement.
 Whether an audit team member had knowledge of the interest or

relationship that created the breach.
 Whether the individual who created the breach is an audit team

member or another individual for whom there are independence
requirements.
 If the breach relates to an audit team member, the role of that

individual.
 If the breach was created by providing a professional service, the

impact of that service, if any, on the accounting records or the
amounts recorded in the financial statements on which the firm will
express an opinion.

 The extent of the self-interest, advocacy, intimidation or other

threats created by the breach.
400.80 A3 Depending upon the significance of the breach, examples of actions that the
firm might consider to address the breach satisfactorily include:
 Removing the relevant individual from the audit team.
 Using different individuals to conduct an additional review of the

affected audit work or to re-perform that work to the extent
necessary.
 Recommending that the audit client engage another firm to review

or re-perform the affected audit work to the extent necessary.
 If the breach relates to a non-assurance service that affects the

accounting records or an amount recorded in the financial
statements, engaging another firm to evaluate the results of the non-
assurance service or having another firm re-perform the non-
assurance service to the extent necessary to enable the other firm to
take responsibility for the service.
R400.81 If the firm determines that action cannot be taken to address the
consequences of the breach satisfactorily, the firm shall inform those
charged with governance as soon as possible and take the steps necessary to
end the audit engagement in compliance with any applicable legal or
regulatory requirements. Where ending the engagement is not permitted by
laws or regulations, the firm shall comply with any reporting or disclosure
requirements.
R400.82 If the firm determines that action can be taken to address the consequences
of the breach satisfactorily, the firm shall discuss with those charged with
governance:
(a) The significance of the breach, including its nature and duration;
(b) How the breach occurred and how it was identified;
(c) The action proposed or taken and why the action will satisfactorily
address the consequences of the breach and enable the firm to issue
an audit report;
(d) The conclusion that, in the firm’s professional judgment, objectivity

has not been compromised and the rationale for that conclusion; and

(e) Any steps proposed or taken by the firm to reduce or avoid the risk
of further breaches occurring.
Such discussion shall take place as soon as possible unless an alternative

timing is specified by those charged with governance for reporting less
significant breaches.
Communication of Breaches to Those Charged with Governance
400.83 A1 Paragraphs R300.9 and R300.10 set out requirements with respect to
communicating with those charged with governance.
R400.84 With respect to breaches, the firm shall communicate in writing to those
charged with governance:
(a) All matters discussed in accordance with paragraph R400.82 and

obtain the concurrence of those charged with governance that action
can be, or has been, taken to satisfactorily address the consequences
of the breach; and
(b) A description of:
(i) The firm’s policies and procedures relevant to the breach

designed to provide it with reasonable assurance that
independence is maintained; and
(ii) Any steps that the firm has taken, or proposes to take, to reduce
or avoid the risk of further breaches occurring.
R400.85 If those charged with governance do not concur that the action proposed by
the firm in accordance with paragraph R400.80(e)(ii) satisfactorily addresses
the consequences of the breach, the firm shall take the steps necessary to end
the audit engagement in accordance with paragraph R400.81.
Breaches Before the Previous Audit Report was Issued
R400.86 If the breach occurred prior to the issuance of the previous audit report, the
firm shall comply with the provisions of Part 4A in evaluating the
significance of the breach and its impact on the firm’s objectivity and its
ability to issue an audit report in the current period.
R400.87 The firm shall also:
(a) Consider the impact of the breach, if any, on the firm’s objectivity
in relation to any previously issued audit reports, and the possibility
of withdrawing such audit reports; and
(b) Discuss the matter with those charged with governance.

Documentation
R400.88 In complying with the requirements in paragraphs R400.80 to R400.87, the

firm shall document:
(a) The breach;
(b) The actions taken;
(c) The key decisions made;
(d) All the matters discussed with those charged with governance; and
(e) Any discussions with a professional or regulatory body or oversight

authority.
R400.89 If the firm continues with the audit engagement, it shall document:
(a) The conclusion that, in the firm’s professional judgment, objectivity

has not been compromised; and
(b) The rationale for why the action taken satisfactorily addressed the
consequences of the breach so that the firm could issue an audit
report.

SECTION 410
FEES
Introduction
410.1 Firms are required to comply with the fundamental principles, be

independent and apply the conceptual framework set out in Section 120 to
identify, evaluate and address threats to independence.
410.2 The nature and level of fees or other types of remuneration might create a
self-interest or intimidation threat. This section sets out specific
requirements and application material relevant to applying the conceptual
framework in such circumstances.
Fees – Relative Size
All Audit Clients
410.3 A1 When the total fees generated from an audit client by the firm expressing the
audit opinion represent a large proportion of the total fees of that firm, the
dependence on that client and concern about losing the client create a self-
interest or intimidation threat.
410.3 A2 Factors that are relevant in evaluating the level of such threats include:
 The operating structure of the firm.
 Whether the firm is well established or new.
 The significance of the client qualitatively and/or quantitatively to

the firm.
410.3 A3 An example of an action that might be a safeguard to address such a self-

interest or intimidation threat is increasing the client base in the firm to
reduce dependence on the audit client.
410.3 A4 A self-interest or intimidation threat is also created when the fees generated
by a firm from an audit client represent a large proportion of the revenue of
one partner or one office of the firm.

the partner or office.

 The extent to which the compensation of the partner, or the partners

in the office, is dependent upon the fees generated from the client.
410.3 A6 Examples of actions that might be safeguards to address such self-interest or

intimidation threats include:
 Increasing the client base of the partner or the office to reduce

dependence on the audit client.
 Having an appropriate reviewer who did not take part in the audit
engagement review the work.
Audit Clients that are Public Interest Entities
R410.4 Where an audit client is a public interest entity and, for two consecutive
years, the total fees from the client and its related entities represent more
than 15% of the total fees received by the firm expressing the opinion on the
financial statements of the client, the firm shall:
(a) Disclose to those charged with governance of the audit client the fact
that the total of such fees represents more than 15% of the total fees
received by the firm; and
(b) Discuss whether either of the following actions might be a safeguard

to address the threat created by the total fees received by the firm
from the client, and if so, apply it:
(i) Prior to the audit opinion being issued on the second year’s
financial statements, a chartered accountant, who is not a
member of the firm expressing the opinion on the financial
statements, performs an engagement quality control review of
that engagement; or a professional body performs a review of
that engagement that is equivalent to an engagement quality
control review (“a pre-issuance review”); or
(ii) After the audit opinion on the second year’s financial statements
has been issued, and before the audit opinion being issued on
the third year’s financial statements, a chartered accountant,
who is not a member of the firm expressing the opinion on the
financial statements, or a professional body performs a review
of the second year’s audit that is equivalent to an engagement
quality control review (“a post-issuance review”).
R410.5 When the total fees described in paragraph R410.4 significantly exceed
15%, the firm shall determine whether the level of the threat is such that a
post-issuance review would not reduce the threat to an acceptable level. If
so, the firm shall have a pre-issuance review performed.

R410.6 If the fees described in paragraph R410.4 continue to exceed 15%, the firm
shall each year:
(a) Disclose to and discuss with those charged with governance the
matters set out in paragraph R410.4; and
(b) Comply with paragraphs R410.4(b) and R410.5.
Fees – Overdue
410.7 A1 A self-interest threat might be created if a significant part of fees is not paid
before the audit report for the following year is issued. It is generally
expected that the firm will require payment of such fees before such audit
report is issued. The requirements and application material set out in Section
511 with respect to loans and guarantees might also apply to situations where
such unpaid fees exist.

threat include:
 Obtaining partial payment of overdue fees.
 Having an appropriate reviewer who did not take part in the audit
engagement review the work performed.
R410.8 When a significant part of fees due from an audit client remains unpaid for
a long time, the firm shall determine:
(a) Whether the overdue fees might be equivalent to a loan to the client;
and
(b) Whether it is appropriate for the firm to be re-appointed or continue

the audit engagement.
Contingent Fees
410.9 A1 Contingent fees are fees calculated on a predetermined basis relating to the
outcome of a transaction or the result of the services performed. A
contingent fee charged through an intermediary is an example of an indirect
contingent fee. In this section, a fee is not regarded as being contingent if
established by a court or other public authority.
R410.10 A firm shall not charge directly or indirectly a contingent fee for an audit
engagement.
R410.11 A firm or network firm shall not charge directly or indirectly a contingent
fee for a non-assurance service provided to an audit client, if:

(a) The fee is charged by the firm expressing the opinion on the financial
statements and the fee is material or expected to be material to that
firm;
(b) The fee is charged by a network firm that participates in a significant

part of the audit and the fee is material or expected to be material to
that firm; or
(c) The outcome of the non-assurance service, and therefore the amount
of the fee, is dependent on a future or contemporary judgment
related to the audit of a material amount in the financial statements.

SECTION 411
COMPENSATION AND EVALUATION POLICIES
Introduction

411.2 A firm’s evaluation or compensation policies might create a self-interest

threat. This section sets out specific requirements and application material
General
411.3 A1 When an audit team member for a particular audit client is evaluated on or
compensated for selling non-assurance services to that audit client, the level
of the self-interest threat will depend on:
(a) What proportion of the compensation or evaluation is based on the

sale of such services;
(b) The role of the individual on the audit team; and
(c) Whether the sale of such non-assurance services influences

promotion decisions.
411.3 A2 Examples of actions that might eliminate such a self-interest threat include:
 Revising the compensation plan or evaluation process for that

individual.
 Removing that individual from the audit team.

interest threat is having an appropriate reviewer review the work of the audit
team member.
R411.4 A firm shall not evaluate or compensate a key audit partner based on that
partner’s success in selling non-assurance services to the partner’s audit
client. This requirement does not preclude normal profit-sharing
arrangements between partners of a firm.

SECTION 420
GIFTS AND HOSPITALITY
Introduction

420.2 Accepting gifts and hospitality from an audit client might create a self-
interest, familiarity or intimidation threat. This section sets out a specific
requirement and application material relevant to applying the conceptual
Requirement and Application Material
R420.3 A firm, network firm or an audit team member shall not accept gifts and
hospitality from an audit client, unless the value is trivial and
inconsequential.
420.3 A1 Where a firm, network firm or audit team member is offering or accepting
an inducement to or from an audit client, the requirements and application
material set out in Section 340 apply and non-compliance with these
requirements might create threats to independence.
420.3 A2 The requirements set out in Section 340 relating to offering or accepting
inducements do not allow a firm, network firm or audit team member to
accept gifts and hospitality where the intent is to improperly influence
behavior even if the value is trivial and inconsequential.

SECTION 430
ACTUAL OR THREATENED LITIGATION
Introduction

430.2 When litigation with an audit client occurs, or appears likely, self-interest
and intimidation threats are created. This section sets out specific application
circumstances.
General
430.3 A1 The relationship between client management and audit team members must
be characterized by complete candor and full disclosure regarding all aspects
of a client’s operations. Adversarial positions might result from actual or
threatened litigation between an audit client and the firm, a network firm or
an audit team member. Such adversarial positions might affect
management’s willingness to make complete disclosures and create self-
interest and intimidation threats.
 The materiality of the litigation.
 Whether the litigation relates to a prior audit engagement.
430.3 A3 If the litigation involves an audit team member, an example of an action that
might eliminate such self-interest and intimidation threats is removing that
individual from the audit team.
430.3 A4 An example of an action that might be a safeguard to address such self-

interest and intimidation threats is to have an appropriate reviewer review
the work performed.

SECTION 510
FINANCIAL INTERESTS
Introduction

510.2 Holding a financial interest in an audit client might create a self-interest

General
510.3 A1 A financial interest might be held directly or indirectly through an

intermediary such as a collective investment vehicle, an estate or a trust.
When a beneficial owner has control over the intermediary or ability to
influence its investment decisions, the Code defines that financial interest to
be direct. Conversely, when a beneficial owner has no control over the
intermediary or ability to influence its investment decisions, the Code
defines that financial interest to be indirect.
510.3 A2 This section contains references to the “materiality” of a financial interest.

In determining whether such an interest is material to an individual, the
combined net worth of the individual and the individual’s immediate family
members may be taken into account.
510.3 A3 Factors that are relevant in evaluating the level of a self-interest threat
created by holding a financial interest in an audit client include:
 The role of the individual holding the financial interest.
 Whether the financial interest is direct or indirect.
 The materiality of the financial interest.
Financial Interests Held by the Firm, a Network Firm, Audit Team Members and
Others
R510.4 Subject to paragraph R510.5, a direct financial interest or a material indirect

financial interest in the audit client shall not be held by:
(a) The firm or a network firm;

(b) An audit team member, or any of that individual’s immediate family;
(c) Any other partner in the office in which an engagement partner

practices in connection with the audit engagement, or any of that
other partner’s immediate family; or
(d) Any other partner or managerial employee who provides non-audit

services to the audit client, except for any whose involvement is
minimal, or any of that individual’s immediate family.
510.4 A1 The office in which the engagement partner practices in connection with an
audit engagement is not necessarily the office to which that partner is
assigned. When the engagement partner is located in a different office from
that of the other audit team members, professional judgment is needed to
determine the office in which the partner practices in connection with the
engagement.
R510.5 As an exception to paragraph R510.4, an immediate family member

identified in subparagraphs R510.4(c) or (d) may hold a direct or material
indirect financial interest in an audit client, provided that:
(a) The family member received the financial interest because of

employment rights, for example through pension or share option
plans, and, when necessary, the firm addresses the threat created by
the financial interest; and
(b) The family member disposes of or forfeits the financial interest as

soon as practicable when the family member has or obtains the right
to do so, or in the case of a stock option, when the family member
obtains the right to exercise the option.
Financial Interests in an Entity Controlling an Audit Client
R510.6 When an entity has a controlling interest in an audit client and the client is
material to the entity, neither the firm, nor a network firm, nor an audit team
member, nor any of that individual’s immediate family shall hold a direct or
material indirect financial interest in that entity.
Financial Interests Held as Trustee
R510.7 Paragraph R510.4 shall also apply to a financial interest in an audit client
held in a trust for which the firm, network firm or individual acts as trustee,
unless:
(a) None of the following is a beneficiary of the trust: the trustee, the
audit team member or any of that individual’s immediate family, the
firm or a network firm;

(b) The interest in the audit client held by the trust is not material to the
trust;
(c) The trust is not able to exercise significant influence over the audit
client; and
(d) None of the following can significantly influence any investment

decision involving a financial interest in the audit client: the trustee,
the audit team member or any of that individual’s immediate family,
the firm or a network firm.
Financial Interests in Common with the Audit Client
R510.8 (a) A firm, or a network firm, or an audit team member, or any of that
individual’s immediate family shall not hold a financial interest in
an entity when an audit client also has a financial interest in that
entity, unless:
(i) The financial interests are immaterial to the firm, the network
firm, the audit team member and that individual’s immediate
family member and the audit client, as applicable; or
(ii) The audit client cannot exercise significant influence over the
entity.
(b) Before an individual who has a financial interest described in

paragraph R510.8(a) can become an audit team member, the
individual or that individual’s immediate family member shall
either:
(i) Dispose of the interest; or
(ii) Dispose of enough of the interest so that the remaining interest

is no longer material.
Financial Interests Received Unintentionally
R510.9 If a firm, a network firm or a partner or employee of the firm or a network

firm, or any of that individual’s immediate family, receives a direct financial
interest or a material indirect financial interest in an audit client by way of
an inheritance, gift, as a result of a merger or in similar circumstances and
the interest would not otherwise be permitted to be held under this section,
then:
(a) If the interest is received by the firm or a network firm, or an audit

team member or any of that individual’s immediate family, the
financial interest shall be disposed of immediately, or enough of an

indirect financial interest shall be disposed of so that the remaining

interest is no longer material; or
(b) (i) If the interest is received by an individual who is not an audit

team member, or by any of that individual’s immediate
family, the financial interest shall be disposed of as soon as
possible, or enough of an indirect financial interest shall be
disposed of so that the remaining interest is no longer
material; and
(ii) Pending the disposal of the financial interest, when necessary

the firm shall address the threat created.
Financial Interests – Other Circumstances
Immediate Family
510.10 A1 A self-interest, familiarity, or intimidation threat might be created if an audit

team member, or any of that individual’s immediate family, or the firm or a
network firm has a financial interest in an entity when a director or officer
or controlling owner of the audit client is also known to have a financial
interest in that entity.
 The role of the individual on the audit team.
 Whether ownership of the entity is closely or widely held.
 Whether the interest allows the investor to control or significantly

influence the entity.
510.10 A3 An example of an action that might eliminate such a self-interest, familiarity,

or intimidation threat is removing the audit team member with the financial
interest from the audit team.

team member.
Close Family
510.10 A5 A self-interest threat might be created if an audit team member knows that a
close family member has a direct financial interest or a material indirect
financial interest in the audit client.

 The nature of the relationship between the audit team member and
the close family member.
 The materiality of the financial interest to the close family member.
 Having the close family member dispose, as soon as practicable, of

all of the financial interest or dispose of enough of an indirect
financial interest so that the remaining interest is no longer material.
 Removing the individual from the audit team.

team member.
Other Individuals
510.10 A9 A self-interest threat might be created if an audit team member knows that a
financial interest in the audit client is held by individuals such as:
 Partners and professional employees of the firm or network firm,

apart from those who are specifically not permitted to hold such
financial interests by paragraph R510.4, or their immediate family
members.
 Individuals with a close personal relationship with an audit team

member.
 The firm’s organizational, operating and reporting structure.
 The nature of the relationship between the individual and the audit
team member.
510.10 A11 An example of an action that might eliminate such a self-interest threat is
removing the audit team member with the personal relationship from the
audit team.

threat include:
 Excluding the audit team member from any significant decision-

making concerning the audit engagement.
 Having an appropriate reviewer review the work of the audit team

member.
Retirement Benefit Plan of a Firm or Network Firm
510.10 A13 A self-interest threat might be created if a retirement benefit plan of a firm
or a network firm holds a direct or material indirect financial interest in an
audit client.

SECTION 511
LOANS AND GUARANTEES
Introduction

511.2 A loan or a guarantee of a loan with an audit client might create a self-interest
General
511.3 A1 This section contains references to the “materiality” of a loan or guarantee.

In determining whether such a loan or guarantee is material to an individual,
the combined net worth of the individual and the individual’s immediate
family members may be taken into account.
Loans and Guarantees with an Audit Client
R511.4 A firm, a network firm, an audit team member, or any of that individual’s
immediate family shall not make or guarantee a loan to an audit client unless
the loan or guarantee is immaterial to:
(a) The firm, the network firm or the individual making the loan or
guarantee, as applicable; and
(b) The client.
Loans and Guarantees with an Audit Client that is a Bank or Similar Institution
immediate family shall not accept a loan, or a guarantee of a loan, from an
audit client that is a bank or a similar institution unless the loan or guarantee
is made under normal lending procedures, terms and conditions.
511.5 A1 Examples of loans include mortgages, bank overdrafts, car loans, and credit
card balances.
511.5 A2 Even if a firm or network firm receives a loan from an audit client that is a
bank or similar institution under normal lending procedures, terms and
conditions, the loan might create a self-interest threat if it is material to the
audit client or firm receiving the loan.


interest threat is having the work reviewed by an appropriate reviewer, who
is not an audit team member, from a network firm that is not a beneficiary
of the loan.
Deposits or Brokerage Accounts
immediate family shall not have deposits or a brokerage account with an
audit client that is a bank, broker or similar institution, unless the deposit or
account is held under normal commercial terms.
Loans and Guarantees with an Audit Client that is Not a Bank or Similar Institution
immediate family shall not accept a loan from, or have a borrowing
guaranteed by, an audit client that is not a bank or similar institution, unless
the loan or guarantee is immaterial to:
(a) The firm, the network firm, or the individual receiving the loan or
guarantee, as applicable; and
(b) The client

SECTION 520
BUSINESS RELATIONSHIPS
Introduction

520.2 A close business relationship with an audit client or its management might
create a self-interest or intimidation threat. This section sets out specific
General
520.3 A1 This section contains references to the “materiality” of a financial interest

and the “significance” of a business relationship. In determining whether
such a financial interest is material to an individual, the combined net worth
of the individual and the individual’s immediate family members may be
taken into account.
520.3 A2 Examples of a close business relationship arising from a commercial

relationship or common financial interest include:
 Having a financial interest in a joint venture with either the client or

a controlling owner, director or officer or other individual who
performs senior managerial activities for that client.
 Arrangements to combine one or more services or products of the

firm or a network firm with one or more services or products of the
client and to market the package with reference to both parties.
 Distribution or marketing arrangements under which the firm or a

network firm distributes or markets the client’s products or services,
or the client distributes or markets the firm or a network firm’s
products or services.

Firm, Network Firm, Audit Team Member or Immediate Family Business

Relationships
R520.4 A firm, a network firm or an audit team member shall not have a close
business relationship with an audit client or its management unless any
financial interest is immaterial and the business relationship is insignificant
to the client or its management and the firm, the network firm or the audit
team member, as applicable.
520.4 A1 A self-interest or intimidation threat might be created if there is a close

business relationship between the audit client or its management and the
immediate family of an audit team member.
Common Interests in Closely-Held Entities
immediate family shall not have a business relationship involving the
holding of an interest in a closely-held entity when an audit client or a
director or officer of the client, or any group thereof, also holds an interest
in that entity, unless:
(a) The business relationship is insignificant to the firm, the network

firm, or the individual as applicable, and the client;
(b) The financial interest is immaterial to the investor or group of

investors; and
(c) The financial interest does not give the investor, or group of
investors, the ability to control the closely-held entity.
Buying Goods or Services
520.6 A1 The purchase of goods and services from an audit client by a firm, a network
firm, an audit team member, or any of that individual’s immediate family
does not usually create a threat to independence if the transaction is in the
normal course of business and at arm’s length. However, such transactions
might be of such a nature and magnitude that they create a self-interest
threat.
 Eliminating or reducing the magnitude of the transaction.
 Removing the individual from the audit team.

SECTION 521
FAMILY AND PERSONAL RELATIONSHIPS
Introduction

521.2 Family or personal relationships with client personnel might create a self-
interest, familiarity or intimidation threat. This section sets out specific
General
521.3 A1 A self-interest, familiarity or intimidation threat might be created by family

and personal relationships between an audit team member and a director or
officer or, depending on their role, certain employees of the audit client.
 The individual’s responsibilities on the audit team.
 The role of the family member or other individual within the client,
and the closeness of the relationship.
Immediate Family of an Audit Team Member
521.4 A1 A self-interest, familiarity or intimidation threat is created when an

immediate family member of an audit team member is an employee in a
position to exert significant influence over the client’s financial position,
financial performance or cash flows.
 The position held by the immediate family member.
 The role of the audit team member.
521.4 A3 An example of an action that might eliminate such a self-interest, familiarity

or intimidation threat is removing the individual from the audit team.


interest, familiarity or intimidation threat is structuring the responsibilities
of the audit team so that the audit team member does not deal with matters
that are within the responsibility of the immediate family member.
R521.5 An individual shall not participate as an audit team member when any of that
individual’s immediate family:
(a) Is a director or officer of the audit client;
(b) Is an employee in a position to exert significant influence over the

preparation of the client’s accounting records or the financial
statements on which the firm will express an opinion; or
(c) Was in such position during any period covered by the engagement
or the financial statements.
Close Family of an Audit Team Member
521.6 A1 A self-interest, familiarity or intimidation threat is created when a close

family member of an audit team member is:
(a) A director or officer of the audit client; or
(b) An employee in a position to exert significant influence over the

statements on which the firm will express an opinion.
 The nature of the relationship between the audit team member and
the close family member.
 The position held by the close family member.


that are within the responsibility of the close family member.

Other Close Relationships of an Audit Team Member
R521.7 An audit team member shall consult in accordance with firm policies and
procedures if the audit team member has a close relationship with an
individual who is not an immediate or close family member, but who is:
(a) A director or officer of the audit client; or

521.7 A1 Factors that are relevant in evaluating the level of a self-interest, familiarity
or intimidation threat created by such a relationship include:
 The nature of the relationship between the individual and the audit
team member.
 The position the individual holds with the client.


that are within the responsibility of the individual with whom the audit team
member has a close relationship.
Relationships of Partners and Employees of the Firm
R521.8 Partners and employees of the firm shall consult in accordance with firm
policies and procedures if they are aware of a personal or family relationship
between:
(a) A partner or employee of the firm or network firm who is not an

audit team member; and
(b) A director or officer of the audit client or an employee of the audit

client in a position to exert significant influence over the preparation
of the client’s accounting records or the financial statements on
which the firm will express an opinion.

or intimidation threat created by such a relationship include:
 The nature of the relationship between the partner or employee of

the firm and the director or officer or employee of the client.
 The degree of interaction of the partner or employee of the firm with

the audit team.
 The position of the partner or employee within the firm.
521.8 A2 Examples of actions that might be safeguards to address such self-interest,

familiarity or intimidation threats include:
 Structuring the partner’s or employee’s responsibilities to reduce

any potential influence over the audit engagement.
 Having an appropriate reviewer review the relevant audit work

performed

SECTION 522
RECENT SERVICE WITH AN AUDIT CLIENT
Introduction
522.1 Firms are required to comply with the fundamental principles, be independent
and apply the conceptual framework set out in Section 120 to identify, evaluate
and address threats to independence.
522.2 If an audit team member has recently served as a director or officer, or

employee of the audit client, a self-interest, self-review or familiarity threat
might be created. This section sets out specific requirements and application
material relevant to applying the conceptual framework in such circumstances.
Service During Period Covered by the Audit Report
R522.3 The audit team shall not include an individual who, during the period covered
by the audit report:
(a) Had served as a director or officer of the audit client; or
(b) Was an employee in a position to exert significant influence over the

preparation of the client’s accounting records or the financial statements
on which the firm will express an opinion.
Service Prior to Period Covered by the Audit Report
522.4 A1 A self-interest, self-review or familiarity threat might be created if, before the
period covered by the audit report, an audit team member:
(a) Had served as a director or officer of the audit client; or

preparation of the client’s accounting records or financial statements on
For example, a threat would be created if a decision made or work performed

by the individual in the prior period, while employed by the client, is to be
evaluated in the current period as part of the current audit engagement.

 The position the individual held with the client.
 The length of time since the individual left the client.

interest, self-review or familiarity threat is having an appropriate reviewer
review the work performed by the audit team member.

SECTION 523
SERVING AS A DIRECTOR OR OFFICER OF AN AUDIT CLIENT
Introduction

523.2 Serving as a director or officer of an audit client creates self-review and self-
interest threats. This section sets out specific requirements and application
circumstances.
Service as Director or Officer
R523.3 A partner or employee of the firm or a network firm shall not serve as a
director or officer of an audit client of the firm.
Service as Company Secretary
R523.4 A partner or employee of the firm or a network firm shall not serve as
Company Secretary for an audit client of the firm, unless:
(a) This practice is specifically permitted under local law, professional

rules or practice;
(b) Management makes all relevant decisions; and
(c) The duties and activities performed are limited to those of a routine
and administrative nature, such as preparing minutes and
maintaining statutory returns.
523.4 A1 The position of Company Secretary has different implications in different

jurisdictions. Duties might range from: administrative duties (such as
personnel management and the maintenance of company records and
registers) to duties as diverse as ensuring that the company complies with
regulations or providing advice on corporate governance matters. Usually
this position is seen to imply a close association with the entity. Therefore,
a threat is created if a partner or employee of the firm or a network firm
serves as Company Secretary for an audit client. (More information on
providing non-assurance services to an audit client is set out in Section 600,
Provision of Non-assurance Services to an Audit Client).

SECTION 524
EMPLOYMENT WITH AN AUDIT CLIENT
Introduction

524.2 Employment relationships with an audit client might create a self-interest,

familiarity or intimidation threat. This section sets out specific requirements
and application material relevant to applying the conceptual framework in
such circumstances.
All Audit Clients
524.3 A1 A familiarity or intimidation threat might be created if any of the following

individuals have been an audit team member or partner of the firm or a
network firm:
 A director or officer of the audit client.
 An employee in a position to exert significant influence over the

Former Partner or Audit Team Member Restrictions
R524.4 The firm shall ensure that no significant connection remains between the
firm or a network firm and:
(a) A former partner who has joined an audit client of the firm; or
(b) A former audit team member who has joined the audit client, if either
has joined the audit client as:
(i) A director or officer; or
(ii) An employee in a position to exert significant influence

over the preparation of the client’s accounting records or
the financial statements on which the firm will express an
opinion.
A significant connection remains between the firm or a network firm and

the individual, unless:

(a) The individual is not entitled to any benefits or payments from the
firm or network firm that are not made in accordance with fixed pre-
determined arrangements;
(b) Any amount owed to the individual is not material to the firm or the
network firm; and
(c) The individual does not continue to participate or appear to

participate in the firm’s or the network firm’s business or
professional activities.
524.4 A1 Even if the requirements of paragraph R524.4 are met, a familiarity or

intimidation threat might still be created.
524.4 A2 A familiarity or intimidation threat might also be created if a former partner

of the firm or network firm has joined an entity in one of the positions
described in paragraph 524.3 A1 and the entity subsequently becomes an
audit client of the firm.
 The position the individual has taken at the client.
 Any involvement the individual will have with the audit team.
 The length of time since the individual was an audit team member
or partner of the firm or network firm.
 The former position of the individual within the audit team, firm or
network firm. An example is whether the individual was responsible
for maintaining regular contact with the client’s management or
those charged with governance.
524.4 A4 Examples of actions that might be safeguards to address such familiarity or

intimidation threats include:
 Modifying the audit plan.
 Assigning to the audit team individuals who have sufficient

experience relative to the individual who has joined the client.
 Having an appropriate reviewer review the work of the former audit

team member.

Audit Team Members Entering Employment with a Client
R524.5 A firm or network firm shall have policies and procedures that require audit
team members to notify the firm or network firm when entering employment
negotiations with an audit client.
524.5 A1 A self-interest threat is created when an audit team member participates in

the audit engagement while knowing that the audit team member will, or
might, join the client at some time in the future.

removing the individual from the audit team.

interest threat is having an appropriate reviewer review any significant
judgments made by that individual while on the team.
Key Audit Partners
R524.6 Subject to paragraph R524.8, if an individual who was a key audit partner
with respect to an audit client that is a public interest entity joins the client
as:
(a) A director or officer; or

statements on which the firm will express an opinion,
independence is compromised unless, subsequent to the individual ceasing

to be a key audit partner:
(i) The audit client has issued audited financial statements covering a
period of not less than twelve months; and
(ii) The individual was not an audit team member with respect to the
audit of those financial statements.

Senior or Managing Partner (Chief Executive or Equivalent) of the Firm
R524.7 Subject to paragraph R524.8, if an individual who was the Senior or

Managing Partner (Chief Executive or equivalent) of the firm joins an audit
client that is a public interest entity as:

statements on which the firm will express an opinion,
independence is compromised, unless twelve months have passed since the

individual was the Senior or Managing Partner (Chief Executive or
equivalent) of the firm.
Business Combinations
R524.8 As an exception to paragraphs R524.6 and R524.7, independence is not

compromised if the circumstances set out in those paragraphs arise as a result
of a business combination and:
(a) The position was not taken in contemplation of the business

combination;
(b) Any benefits or payments due to the former partner from the firm or
a network firm have been settled in full, unless made in accordance
with fixed pre-determined arrangements and any amount owed to
the partner is not material to the firm or network firm as applicable;
(c) The former partner does not continue to participate or appear to

participate in the firm’s or network firm’s business or professional
activities; and
(d) The firm discusses the former partner’s position held with the audit
client with those charged with governance.

SECTION 525
TEMPORARY PERSONNEL ASSIGNMENTS
Introduction

525.2 The loan of personnel to an audit client might create a self-review, advocacy
or familiarity threat. This section sets out specific requirements and
circumstances.
General
525.3 A1 Examples of actions that might be safeguards to address threats created by

the loan of personnel by a firm or a network firm to an audit client include:
 Conducting an additional review of the work performed by the

loaned personnel might address a self-review threat.
 Not including the loaned personnel as an audit team member might

address a familiarity or advocacy threat.
 Not giving the loaned personnel audit responsibility for any function
or activity that the personnel performed during the loaned personnel
assignment might address a self-review threat.
525.3 A2 When familiarity and advocacy threats are created by the loan of personnel
by a firm or a network firm to an audit client, such that the firm or the
network firm becomes too closely aligned with the views and interests of
management, safeguards are often not available.
R525.4 A firm or network firm shall not loan personnel to an audit client unless:
(a) Such assistance is provided only for a short period of time;
(b) The personnel are not involved in providing non-assurance services

that would not be permitted under Section 600 and its subsections;
and
(c) The personnel do not assume management responsibilities and the

audit client is responsible for directing and supervising the activities
of the personnel.

SECTION 540
LONG ASSOCIATION OF PERSONNEL (INCLUDING PARTNER ROTATION)

WITH AN AUDIT CLIENT
Introduction

540.2 When an individual is involved in an audit engagement over a long period

of time, familiarity and self-interest threats might be created. This section
sets out requirements and application material relevant to applying the
All Audit Clients
540.3 A1 Although an understanding of an audit client and its environment is

fundamental to audit quality, a familiarity threat might be created as a result
of an individual’s long association as an audit team member with:
(a) The audit client and its operations;
(b) The audit client’s senior management; or
(c) The financial statements on which the firm will express an opinion
or the financial information which forms the basis of the financial
statements.
540.3 A2 A self-interest threat might be created as a result of an individual’s concern

about losing a longstanding client or an interest in maintaining a close
personal relationship with a member of senior management or those charged
with governance. Such a threat might influence the individual’s judgment
inappropriately.
540.3 A3 Factors that are relevant to evaluating the level of such familiarity or self-
interest threats include:
(a) In relation to the individual:
 The overall length of the individual’s relationship with the

client, including if such relationship existed while the individual
was at a prior firm.

 How long the individual has been an engagement team member,

and the nature of the roles performed.
 The extent to which the work of the individual is directed,

reviewed and supervised by more senior personnel.
 The extent to which the individual, due to the individual’s

seniority, has the ability to influence the outcome of the audit,
for example, by making key decisions or directing the work of
other engagement team members.
 The closeness of the individual’s personal relationship with

senior management or those charged with governance.
 The nature, frequency and extent of the interaction between the

individual and senior management or those charged with
governance.
(b) In relation to the audit client:
 The nature or complexity of the client’s accounting and

financial reporting issues and whether they have changed.
 Whether there have been any recent changes in senior

management or those charged with governance.
 Whether there have been any structural changes in the client’s

organization which impact the nature, frequency and extent of
interactions the individual might have with senior management
or those charged with governance.
540.3 A4 The combination of two or more factors might increase or reduce the level
of the threats. For example, familiarity threats created over time by the
increasingly close relationship between an individual and a member of the
client’s senior management would be reduced by the departure of that
member of the client’s senior management.
540.3 A5 An example of an action that might eliminate the familiarity and self-interest
threats created by an individual being involved in an audit engagement over
a long period of time would be rotating the individual off the audit team.

self-interest threats include:
 Changing the role of the individual on the audit team or the nature
and extent of the tasks the individual performs.

 Having an appropriate reviewer who was not an audit team member

review the work of the individual.
 Performing regular independent internal or external quality reviews

of the engagement.
R540.4 If a firm decides that the level of the threats created can only be addressed
by rotating the individual off the audit team, the firm shall determine an
appropriate period during which the individual shall not:
(a) Be a member of the engagement team for the audit engagement;
(b) Provide quality control for the audit engagement; or
(c) Exert direct influence on the outcome of the audit engagement.
The period shall be of sufficient duration to allow the familiarity and self-
interest threats to be addressed. In the case of a public interest entity,
paragraphs R540.5 to R540.20 also apply.
R540.5 Subject to paragraphs R540.7 to R540.9, in respect of an audit of a public

interest entity, an individual shall not act in any of the following roles, or a
combination of such roles, for a period of more than seven cumulative years
unless the law prescribes a shorter period (the “time-on” period):
(a) The engagement partner;
(b) The individual appointed as responsible for the engagement quality

control review; or
(c) Any other key audit partner role.
After the time-on period, the individual shall serve a “cooling-off” period in
accordance with the provisions in paragraphs R540.11 to R540.19.
R540.6 In calculating the time-on period, the count of years shall not be restarted
unless the individual ceases to act in any one of the roles in paragraph
R540.5(a) to (c) for a minimum period. This minimum period is a
consecutive period equal to at least the cooling-off period determined in
accordance with paragraphs R540.11 to R540.13 as applicable to the role in
which the individual served in the year immediately before ceasing such
involvement.
540.6 A1 For example, an individual who served as engagement partner for four years
followed by three years off can only act thereafter as a key audit partner on
the same audit engagement for three further years (making a total of seven

cumulative years). Thereafter, that individual is required to cool off in

accordance with paragraph R540.14.
R540.7 As an exception to paragraph R540.5, key audit partners whose continuity

is especially important to audit quality may, in rare cases due to unforeseen
circumstances outside the firm’s control, and with the concurrence of those
charged with governance, be permitted to serve an additional year as a key
audit partner as long as the threat to independence can be eliminated or
reduced to an acceptable level.
540.7 A1 For example, a key audit partner may remain in that role on the audit team
for up to one additional year in circumstances where, due to unforeseen
events, a required rotation was not possible, as might be the case due to
serious illness of the intended engagement partner. In such circumstances,
this will involve the firm discussing with those charged with governance the
reasons why the planned rotation cannot take place and the need for any
safeguards to reduce any threat created.
R540.8 If an audit client becomes a public interest entity, a firm shall take into
account the length of time an individual has served the audit client as a key
audit partner before the client becomes a public interest entity in determining
the timing of the rotation. If the individual has served the audit client as a
key audit partner for a period of five cumulative years or less when the client
becomes a public interest entity, the number of years the individual may
continue to serve the client in that capacity before rotating off the
engagement is seven years less the number of years already served. As an
exception to paragraph R540.5, if the individual has served the audit client
as a key audit partner for a period of six or more cumulative years when the
client becomes a public interest entity, the individual may continue to serve
in that capacity with the concurrence of those charged with governance for
a maximum of two additional years before rotating off the engagement.
R540.9 When a firm has only a few people with the necessary knowledge and
experience to serve as a key audit partner on the audit of a public interest
entity, rotation of key audit partners might not be possible. As an exception
to paragraph R540.5, if an independent regulatory body in the relevant
jurisdiction has provided an exemption from partner rotation in such
circumstances, an individual may remain a key audit partner for more than
seven years, in accordance with such exemption. This is provided that the
independent regulatory body has specified other requirements which are to
be applied, such as the length of time that the key audit partner may be
exempted from rotation or a regular independent external review.
Other Considerations Relating to the Time-on Period
R540.10 In evaluating the threats created by an individual’s long association with an

audit engagement, a firm shall give particular consideration to the roles

undertaken and the length of an individual’s association with the audit

engagement prior to the individual becoming a key audit partner.
540.10 A1 There might be situations where the firm, in applying the conceptual
framework, concludes that it is not appropriate for an individual who is a
key audit partner to continue in that role even though the length of time
served as a key audit partner is less than seven years.
Cooling-off Period
R540.11 If the individual acted as the engagement partner for seven cumulative years,
the cooling-off period shall be five consecutive years.
R540.12 Where the individual has been appointed as responsible for the engagement
quality control review and has acted in that capacity for seven cumulative
years, the cooling-off period shall be three consecutive years.
R540.13 If the individual has acted as a key audit partner other than in the capacities
set out in paragraphs R540.11 and R540.12 for seven cumulative years, the
cooling-off period shall be two consecutive years.
Service in a combination of key audit partner roles
R540.14 If the individual acted in a combination of key audit partner roles and served
as the engagement partner for four or more cumulative years, the cooling-
off period shall be five consecutive years.
R540.15 Subject to paragraph R540.16(a), if the individual acted in a combination of

key audit partner roles and served as the key audit partner responsible for
the engagement quality control review for four or more cumulative years,
the cooling-off period shall be three consecutive years.
R540.16 If an individual has acted in a combination of engagement partner and

engagement quality control review roles for four or more cumulative years
during the time-on period, the cooling-off period shall:
(a) As an exception to paragraph R540.15, be five consecutive years

where the individual has been the engagement partner for three or
more years; or
(b) Be three consecutive years in the case of any other combination.
R540.17 If the individual acted in any combination of key audit partner roles other
than those addressed in paragraphs R540.14 to R540.16, the cooling-off
period shall be two consecutive years.

Service at a Prior Firm
R540.18 In determining the number of years that an individual has been a key audit
partner as set out in paragraph R540.5, the length of the relationship shall,
where relevant, include time while the individual was a key audit partner on
that engagement at a prior firm.
Shorter Cooling-off Period Established by Law or Regulation
R540.19 Where a legislative or regulatory body (or organization authorized or

recognized by such legislative or regulatory body) has established a cooling-
off period for an engagement partner of less than five consecutive years, the
higher of that period or three years may be substituted for the cooling-off
period of five consecutive years specified in paragraph R540.11, R540.14
and R540.16(a) provided that the applicable time-on period does not exceed
seven years.
Restrictions on Activities During the Cooling-off Period
R540.20 For the duration of the relevant cooling-off period, the individual shall not:
(a) Be an engagement team member or provide quality control for the

audit engagement;
(b) Consult with the engagement team or the client regarding technical
or industry-specific issues, transactions or events affecting the audit
engagement (other than discussions with the engagement team
limited to work undertaken or conclusions reached in the last year
of the individual’s time-on period where this remains relevant to the
audit);
(c) Be responsible for leading or coordinating the professional services

provided by the firm or a network firm to the audit client, or
overseeing the relationship of the firm or a network firm with the
audit client; or
(d) Undertake any other role or activity not referred to above with
respect to the audit client, including the provision of non-assurance
services that would result in the individual:
(i) Having significant or frequent interaction with senior

management or those charged with governance; or
(ii) Exerting direct influence on the outcome of the audit

engagement.
540.20 A1 The provisions of paragraph R540.20 are not intended to prevent the
individual from assuming a leadership role in the firm or a network firm,
such as that of the Senior or Managing Partner (Chief Executive or
equivalent).

SECTION 600
PROVISION OF NON-ASSURANCE SERVICES TO AN AUDIT CLIENT
Introduction

independent, and apply the conceptual framework set out in Section 120 to
600.2 Firms and network firms might provide a range of non-assurance services to
their audit clients, consistent with their skills and expertise. Providing non-
assurance services to audit clients might create threats to compliance with
the fundamental principles and threats to independence.
applying the conceptual framework to identify, evaluate and address threats
to independence when providing non-assurance services to audit clients. The
subsections that follow set out specific requirements and application
material relevant when a firm or network firm provides certain non-
assurance services to audit clients and indicate the types of threats that might
be created as a result. Some of the subsections include requirements that
expressly prohibit a firm or network firm from providing certain services to
an audit client in certain circumstances because the threats created cannot be
addressed by applying safeguards.
General
R600.4 Before a firm or a network firm accepts an engagement to provide a non-

assurance service to an audit client, the firm shall determine whether
providing such a service might create a threat to independence.
600.4 A1 The requirements and application material in this section assist the firm in
analyzing certain types of non-assurance services and the related threats that
might be created if a firm or network firm provides non-assurance services
to an audit client.
600.4 A2 New business practices, the evolution of financial markets and changes in
information technology, are among the developments that make it
impossible to draw up an all-inclusive list of non-assurance services that
might be provided to an audit client. As a result, the Code does not include
an exhaustive list of all non-assurance services that might be provided to an
audit client.

Evaluating Threats
600.5 A1 Factors that are relevant in evaluating the level of threats created by
providing a non-assurance service to an audit client include:
 The nature, scope and purpose of the service.
 The degree of reliance that will be placed on the outcome of the

service as part of the audit.
 The legal and regulatory environment in which the service is

provided.
 Whether the outcome of the service will affect matters reflected in

the financial statements on which the firm will express an opinion,
and, if so:
o The extent to which the outcome of the service will have a

material effect on the financial statements.
o The degree of subjectivity involved in determining the

appropriate amounts or treatment for those matters reflected in
the financial statements.
 The level of expertise of the client’s management and employees

with respect to the type of service provided.
 The extent of the client’s involvement in determining significant

matters of judgment.
 The nature and extent of the impact of the service, if any, on the
systems that generate information that forms a significant part of the
client’s:
o Accounting records or financial statements on which the firm

will express an opinion.
o Internal controls over financial reporting.
 Whether the client is a public interest entity. For example, providing

a non-assurance service to an audit client that is a public interest
entity might be perceived to result in a higher level of a threat.
600.5 A2 Subsections 601 to 610 include examples of additional factors that are
relevant in evaluating the level of threats created by providing the non-
assurance services set out in those subsections.

Materiality in Relation to Financial Statements
600.5 A3 Subsections 601 to 610 refer to materiality in relation to an audit client’s

financial statements. The concept of materiality in relation to an audit is
addressed in ISA 320, Materiality in Planning and Performing an Audit, and
in relation to a review in ISRE 2400 (Revised), Engagements to Review
Historical Financial Statements. The determination of materiality involves
the exercise of professional judgment and is impacted by both quantitative
and qualitative factors. It is also affected by perceptions of the financial
information needs of users.
Multiple Non-assurance Services Provided to the Same Audit Client
600.5 A4 A firm or network firm might provide multiple non-assurance services to an

audit client. In these circumstances the consideration of the combined effect
of threats created by providing those services is relevant to the firm’s
evaluation of threats.
Addressing Threats
600.6 A1 Subsections 601 to 610 include examples of actions, including safeguards,

that might address threats to independence created by providing those non-
assurance services when threats are not at an acceptable level. Those
examples are not exhaustive.
600.6 A2 Some of the subsections include requirements that expressly prohibit a firm
or network firm from providing certain services to an audit client in certain
circumstances because the threats created cannot be addressed by applying
safeguards.
600.6 A3 Paragraph 120.10 A2 includes a description of safeguards. In relation to

providing non-assurance services to audit clients, safeguards are actions,
individually or in combination, that the firm takes that effectively reduce
threats to independence to an acceptable level. In some situations, when a
threat is created by providing a non-assurance service to an audit client,
safeguards might not be available. In such situations, the application of the
conceptual framework set out in Section 120 requires the firm to decline or
end the non-assurance service or the audit engagement.
Prohibition on Assuming Management Responsibilities
R600.7 A firm or a network firm shall not assume a management responsibility for
an audit client.
600.7 A1 Management responsibilities involve controlling, leading and directing an

entity, including making decisions regarding the acquisition, deployment
and control of human, financial, technological, physical and intangible
resources.

600.7 A2 Providing a non-assurance service to an audit client creates self- review and
self-interest threats if the firm or network firm assumes a management
responsibility when performing the service. Assuming a management
responsibility also creates a familiarity threat and might create an advocacy
threat because the firm or network firm becomes too closely aligned with
the views and interests of management.
600.7 A3 Determining whether an activity is a management responsibility depends on

the circumstances and requires the exercise of professional judgment.
Examples of activities that would be considered a management
responsibility include:
 Setting policies and strategic direction.
 Hiring or dismissing employees.
 Directing and taking responsibility for the actions of employees in

relation to the employees’ work for the entity.
 Authorizing transactions.
 Controlling or managing bank accounts or investments.
 Deciding which recommendations of the firm or network firm or

other third parties to implement.
 Reporting to those charged with governance on behalf of

management.
 Taking responsibility for:
o The preparation and fair presentation of the financial statements

in accordance with the applicable financial reporting
framework.
o Designing, implementing, monitoring or maintaining internal

control.
600.7 A4 Providing advice and recommendations to assist the management of an audit

client in discharging its responsibilities is not assuming a management
responsibility. (Ref: Para. R600.7 to 600.7 A3).
R600.8 To avoid assuming a management responsibility when providing any non-

assurance service to an audit client, the firm shall be satisfied that client
management makes all judgments and decisions that are the proper
responsibility of management. This includes ensuring that the client’s
management:

(a) Designates an individual who possesses suitable skill, knowledge

and experience to be responsible at all times for the client’s decisions
and to oversee the services. Such an individual, preferably within
senior management, would understand:
(i) The objectives, nature and results of the services; and
(ii) The respective client and firm or network firm responsibilities.
However, the individual is not required to possess the expertise to

perform or re-perform the services.
(b) Provides oversight of the services and evaluates the adequacy of the
results of the service performed for the client’s purpose.
(c) Accepts responsibility for the actions, if any, to be taken arising from
the results of the services.
Providing Non-Assurance Services to an Audit Client that Later Becomes a Public Interest
Entity
R600.9 A non-assurance service provided, either currently or previously, by a firm

or a network firm to an audit client compromises the firm’s independence
when the client becomes a public interest entity unless:
(a) The previous non-assurance service complies with the provisions of

this section that relate to audit clients that are not public interest
entities;
(b) Non-assurance services currently in progress that are not permitted

under this section for audit clients that are public interest entities are
ended before, or as soon as practicable after, the client becomes a
public interest entity; and
(c) The firm addresses threats that are created that are not at an
acceptable level.
Considerations for Certain Related Entities
R600.10 This section includes requirements that prohibit firms and network firms
from assuming management responsibilities or providing certain non-
assurance services to audit clients. As an exception to those requirements, a
firm or network firm may assume management responsibilities or provide
certain non-assurance services that would otherwise be prohibited to the
following related entities of the client on whose financial statements the firm
will express an opinion:
(a) An entity that has direct or indirect control over the client;

(b) An entity with a direct financial interest in the client if that entity has
significant influence over the client and the interest in the client is
material to such entity; or
(c) An entity which is under common control with the client,
provided that all of the following conditions are met:
(i) The firm or a network firm does not express an opinion on the
financial statements of the related entity;
(ii) The firm or a network firm does not assume a management

responsibility, directly or indirectly, for the entity on whose financial
statements the firm will express an opinion;
(iii) The services do not create a self-review threat because the results of
the services will not be subject to audit procedures; and
(iv) The firm addresses other threats created by providing such services
that are not at an acceptable level.
SUBSECTION 601
ACCOUNTING AND BOOKKEEPING SERVICES
Introduction
601.1 Providing accounting and bookkeeping services to an audit client might

create a self-review threat.
601.2 In addition to the specific requirements and application material in this

subsection, the requirements and application material in paragraphs 600.1 to
R600.10 are relevant to applying the conceptual framework when providing
an audit client with accounting and bookkeeping services. This subsection
includes requirements that prohibit firms and network firms from providing
certain accounting and bookkeeping services to audit clients in some
circumstances because the threats created cannot be addressed by applying
safeguards.
All Audit Clients
601.3 A1 Accounting and bookkeeping services comprise a broad range of services

including:
 Preparing accounting records and financial statements.

 Recording transactions.
 Payroll services.
601.3 A2 Management is responsible for the preparation and fair presentation of the
financial statements in accordance with the applicable financial reporting
framework. These responsibilities include:
 Determining accounting policies and the accounting treatment in

accordance with those policies.
 Preparing or changing source documents or originating data, in

electronic or other form, evidencing the occurrence of a transaction.
Examples include:
o Purchase orders.
o Payroll time records.
o Customer orders.
 Originating or changing journal entries.
 Determining or approving the account classifications of

transactions.
601.3 A3 The audit process necessitates dialogue between the firm and the
management of the audit client, which might involve:
 Applying accounting standards or policies and financial statement

disclosure requirements.
 Assessing the appropriateness of financial and accounting control

and the methods used in determining the stated amounts of assets
and liabilities.
 Proposing adjusting journal entries.
These activities are considered to be a normal part of the audit process and
do not usually create threats as long as the client is responsible for making
decisions in the preparation of accounting records and financial statements.
601.3 A4 Similarly, the client might request technical assistance on matters such as
resolving account reconciliation problems or analyzing and accumulating
information for regulatory reporting. In addition, the client might request
technical advice on accounting issues such as the conversion of existing

financial statements from one financial reporting framework to another.

Examples include:
 Complying with group accounting policies.
 Transitioning to a different financial reporting framework such as

International Financial Reporting Standards.
Such services do not usually create threats provided neither the firm nor
network firm assumes a management responsibility for the client.
Accounting and Bookkeeping Services that are Routine or Mechanical
601.4 A1 Accounting and bookkeeping services that are routine or mechanical in

nature require little or no professional judgment. Some examples of these
services are:
 Preparing payroll calculations or reports based on client-originated

data for approval and payment by the client.
 Recording recurring transactions for which amounts are easily

determinable from source documents or originating data, such as a
utility bill where the client has determined or approved the
appropriate account classification.
 Calculating depreciation on fixed assets when the client determines

the accounting policy and estimates of useful life and residual
values.
 Posting transactions coded by the client to the general ledger.
 Posting client-approved entries to the trial balance.
 Preparing financial statements based on information in the client-

approved trial balance and preparing related notes based on client-
approved records.
Audit Clients that are Not Public Interest Entities
R601.5 A firm or a network firm shall not provide to an audit client that is not a
public interest entity accounting and bookkeeping services including
preparing financial statements on which the firm will express an opinion or
financial information which forms the basis of such financial statements,
unless:
(a) The services are of a routine or mechanical nature; and

(b) The firm addresses any threats that are created by providing such
services that are not at an acceptable level.
601.5 A1 Examples of actions that might be safeguards to address a self-review threat

created when providing accounting and bookkeeping services of a routine
and mechanical nature to an audit client include:
service.
 Having an appropriate reviewer who was not involved in providing

the service review the audit work or service performed.
R601.6 Subject to paragraph R601.7, a firm or a network firm shall not provide to
an audit client that is a public interest entity accounting and bookkeeping
services including preparing financial statements on which the firm will
express an opinion or financial information which forms the basis of such
R601.7 As an exception to paragraph R601.6, a firm or network firm may provide

accounting and bookkeeping services of a routine or mechanical nature for
divisions or related entities of an audit client that is a public interest entity if
the personnel providing the services are not audit team members and:
(a) The divisions or related entities for which the service is provided are
collectively immaterial to the financial statements on which the firm
will express an opinion; or
(b) The service relates to matters that are collectively immaterial to the
financial statements of the division or related entity.
SUBSECTION 602
ADMINISTRATIVE SERVICES
Introduction
602.1 Providing administrative services to an audit client does not usually create a
threat.
602.2 In addition to the specific application material in this subsection, the

requirements and application material in paragraphs 600.1 to R600.10 are
relevant to applying the conceptual framework when providing
administrative services.

All Audit Clients
602.3 A1 Administrative services involve assisting clients with their routine or

mechanical tasks within the normal course of operations. Such services
require little to no professional judgment and are clerical in nature.
602.3 A2 Examples of administrative services include:
 Word processing services.
 Preparing administrative or statutory forms for client approval.
 Submitting such forms as instructed by the client.
 Monitoring statutory filing dates, and advising an audit client of

those dates.
SUBSECTION 603
VALUATION SERVICES
Introduction
603.1 Providing valuation services to an audit client might create a self-review or

advocacy threat.

valuation services to an audit client. This subsection includes requirements
that prohibit firms and network firms from providing certain valuation
services to audit clients in some circumstances because the threats created
cannot be addressed by applying safeguards.
All Audit Clients
603.3 A1 A valuation comprises the making of assumptions with regard to future

developments, the application of appropriate methodologies and techniques,
and the combination of both to compute a certain value, or range of values,
for an asset, a liability or for a business as a whole.

603.3 A2 If a firm or network firm is requested to perform a valuation to assist an audit

client with its tax reporting obligations or for tax planning purposes and the
results of the valuation will not have a direct effect on the financial
statements, the application material set out in paragraphs 604.9 A1 to 604.9
A5, relating to such services, applies.
603.3 A3 Factors that are relevant in evaluating the level of self-review or advocacy
threats created by providing valuation services to an audit client include:
 The use and purpose of the valuation report.
 Whether the valuation report will be made public.
 The extent of the client’s involvement in determining and approving

the valuation methodology and other significant matters of
judgment.
 The degree of subjectivity inherent in the item for valuations

involving standard or established methodologies.
 Whether the valuation will have a material effect on the financial

statements.
 The extent and clarity of the disclosures related to the valuation in

 The degree of dependence on future events of a nature that might

create significant volatility inherent in the amounts involved.
603.3 A4 Examples of actions that might be safeguards to address threats include:
service might address self-review or advocacy threats.

the service review the audit work or service performed might
address a self-review threat.
R603.4 A firm or a network firm shall not provide a valuation service to an audit
client that is not a public interest entity if:
(a) The valuation involves a significant degree of subjectivity; and
(b) The valuation will have a material effect on the financial statements

603.4 A1 Certain valuations do not involve a significant degree of subjectivity. This

is likely to be the case when the underlying assumptions are either
established by law or regulation, or are widely accepted and when the
techniques and methodologies to be used are based on generally accepted
standards or prescribed by law or regulation. In such circumstances, the
results of a valuation performed by two or more parties are not likely to be
materially different.
R603.5 A firm or a network firm shall not provide a valuation service to an audit
client that is a public interest entity if the valuation service would have a
material effect, individually or in the aggregate, on the financial statements
SUBSECTION 604
TAX SERVICES
Introduction
604.1 Providing tax services to an audit client might create a self-review or

advocacy threat.

a tax service to an audit client. This subsection includes requirements that
prohibit firms and network firms from providing certain tax services to audit
clients in some circumstances because the threats created cannot be
addressed by applying safeguards.
All Audit Clients
604.3 A1 Tax services comprise a broad range of services, including activities such
as:
 Tax return preparation.
 Tax calculations for the purpose of preparing the accounting entries.
 Tax planning and other tax advisory services.
 Tax services involving valuations.

 Assistance in the resolution of tax disputes.
While this subsection deals with each type of tax service listed above under
separate headings, in practice, the activities involved in providing tax
services are often inter-related.
providing any tax service to an audit client include:
 The particular characteristics of the engagement.
 The level of tax expertise of the client’s employees.
 The system by which the tax authorities assess and administer the
tax in question and the role of the firm or network firm in that
process.
 The complexity of the relevant tax regime and the degree of

judgment necessary in applying it.
Tax Return Preparation
All Audit Clients
604.4 A1 Providing tax return preparation services does not usually create a threat.
604.4 A2 Tax return preparation services involve:
 Assisting clients with their tax reporting obligations by drafting and

compiling information, including the amount of tax due (usually on
standardized forms) required to be submitted to the applicable tax
authorities.
 Advising on the tax return treatment of past transactions and

responding on behalf of the audit client to the tax authorities’
requests for additional information and analysis (for example,
providing explanations of and technical support for the approach
being taken).
604.4 A3 Tax return preparation services are usually based on historical information
and principally involve analysis and presentation of such historical
information under existing tax law, including precedents and established
practice. Further, the tax returns are subject to whatever review or approval
process the tax authority considers appropriate.

Tax Calculations for the Purpose of Preparing Accounting Entries
All Audit Clients
604.5 A1 Preparing calculations of current and deferred tax liabilities (or assets) for
an audit client for the purpose of preparing accounting entries that will be
subsequently audited by the firm creates a self-review threat.
604.5 A2 In addition to the factors in paragraph 604.3 A2, a factor that is relevant in
evaluating the level of the threat created when preparing such calculations
for an audit client is whether the calculation might have a material effect on
the financial statements on which the firm will express an opinion.
604.5 A3 Examples of actions that might be safeguards to address such a self-review

threat when the audit client is not a public interest entity include:
service.

the service review the audit work or service performed.
R604.6 A firm or a network firm shall not prepare tax calculations of current and
deferred tax liabilities (or assets) for an audit client that is a public interest
entity for the purpose of preparing accounting entries that are material to the
financial statements on which the firm will express an opinion.
604.6 A1 The examples of actions that might be safeguards in paragraph 604.5 A3 to

address self-review threats are also applicable when preparing tax
calculations of current and deferred tax liabilities (or assets) to an audit client
that is a public interest entity that are immaterial to the financial statements
Tax Planning and Other Tax Advisory Services
All Audit Clients
604.7 A1 Providing tax planning and other tax advisory services might create a self-
review or advocacy threat.
604.7 A2 Tax planning or other tax advisory services comprise a broad range of
services, such as advising the client how to structure its affairs in a tax
efficient manner or advising on the application of a new tax law or
regulation.

604.7 A3 In addition to paragraph 604.3 A2, factors that are relevant in evaluating the
level of self-review or advocacy threats created by providing tax planning
and other tax advisory services to audit clients include:
 The degree of subjectivity involved in determining the appropriate

treatment for the tax advice in the financial statements.
 Whether the tax treatment is supported by a private ruling or has

otherwise been cleared by the tax authority before the preparation of
For example, whether the advice provided as a result of the tax

planning and other tax advisory services:
o Is clearly supported by a tax authority or other precedent.
o Is an established practice.
o Has a basis in tax law that is likely to prevail.
 The extent to which the outcome of the tax advice will have a
material effect on the financial statements.
 Whether the effectiveness of the tax advice depends on the

accounting treatment or presentation in the financial statements and
there is doubt as to the appropriateness of the accounting treatment
or presentation under the relevant financial reporting framework.
 Having an appropriate reviewer, who was not involved in providing

 Obtaining pre-clearance from the tax authorities might address self-

review or advocacy threats.
When Effectiveness of Tax Advice Is Dependent on a Particular Accounting Treatment or

Presentation
R604.8 A firm or a network firm shall not provide tax planning and other tax
advisory services to an audit client when the effectiveness of the tax advice
depends on a particular accounting treatment or presentation in the financial
statements and:

(a) The audit team has reasonable doubt as to the appropriateness of the
related accounting treatment or presentation under the relevant
financial reporting framework; and
(b) The outcome or consequences of the tax advice will have a material
effect on the financial statements on which the firm will express an
opinion.
Tax Services Involving Valuations
All Audit Clients
604.9 A1 Providing tax valuation services to an audit client might create a self-review
or advocacy threat.
604.9 A2 A firm or a network firm might perform a valuation for tax purposes only,
where the result of the valuation will not have a direct effect on the financial
statements (that is, the financial statements are only affected through
accounting entries related to tax). This would not usually create threats if the
effect on the financial statements is immaterial or the valuation is subject to
external review by a tax authority or similar regulatory authority.
604.9 A3 If the valuation that is performed for tax purposes is not subject to an external
review and the effect is material to the financial statements, in addition to
paragraph 604.3 A2, the following factors are relevant in evaluating the level
of self-review or advocacy threats created by providing those services to an
audit client:
 The extent to which the valuation methodology is supported by tax

law or regulation, other precedent or established practice.
 The degree of subjectivity inherent in the valuation.
 The reliability and extent of the underlying data.

 Obtaining pre-clearance from the tax authorities might address self-

review or advocacy threats.

604.9 A5 A firm or network firm might also perform a tax valuation to assist an audit
client with its tax reporting obligations or for tax planning purposes where
the result of the valuation will have a direct effect on the financial
statements. In such situations, the requirements and application material set
out in Subsection 603 relating to valuation services apply.
Assistance in the Resolution of Tax Disputes
All Audit Clients
604.10 A1 Providing assistance in the resolution of tax disputes to an audit client might
create a self-review or advocacy threat.
604.10 A2 A tax dispute might reach a point when the tax authorities have notified an
audit client that arguments on a particular issue have been rejected and either
the tax authority or the client refers the matter for determination in a formal
proceeding, for example, before a public tribunal or court.
604.10 A3 In addition to paragraph 604.3 A2, factors that are relevant in evaluating the
level of self-review or advocacy threats created by assisting an audit client
in the resolution of tax disputes include:
 The role management plays in the resolution of the dispute.
 The extent to which the outcome of the dispute will have a material
effect on the financial statements on which the firm will express an
opinion.
 Whether the advice that was provided is the subject of the tax
dispute.
 The extent to which the matter is supported by tax law or regulation,

other precedent, or established practice.
 Whether the proceedings are conducted in public.

the service review the audit work or the service performed might

Resolution of Tax Matters Involving Acting as an Advocate
R604.11 A firm or a network firm shall not provide tax services that involve assisting
in the resolution of tax disputes to an audit client if:
(a) The services involve acting as an advocate for the audit client before
a public tribunal or court in the resolution of a tax matter; and
(b) The amounts involved are material to the financial statements on

604.11 A1 Paragraph R604.11 does not preclude a firm or network firm from having a
continuing advisory role in relation to the matter that is being heard before
a public tribunal or court, for example:
 Responding to specific requests for information.
 Providing factual accounts or testimony about the work performed.
 Assisting the client in analyzing the tax issues related to the matter.
604.11 A2 What constitutes a “public tribunal or court” depends on how tax

proceedings are heard in the particular jurisdiction.
SUBSECTION 605
INTERNAL AUDIT SERVICES
Introduction
605.1 Providing internal audit services to an audit client might create a self- review
threat.

an internal audit service to an audit client. This subsection includes
requirements that prohibit firms and network firms from providing certain
internal audit services to audit clients in some circumstances because the
threats created cannot be addressed by applying safeguards.

All Audit Clients
605.3 A1 Internal audit services involve assisting the audit client in the performance
of its internal audit activities. Internal audit activities might include:
 Monitoring of internal control – reviewing controls, monitoring their

operation and recommending improvements to them.
 Examining financial and operating information by:
○ Reviewing the means used to identify, measure, classify and

report financial and operating information.
○ Inquiring specifically into individual items including detailed

testing of transactions, balances and procedures.
 Reviewing the economy, efficiency and effectiveness of operating

activities including non-financial activities of an entity.
 Reviewing compliance with:
○ Laws, regulations and other external requirements.
○ Management policies, directives and other internal

requirements.
605.3 A2 The scope and objectives of internal audit activities vary widely and depend
on the size and structure of the entity and the requirements of management
and those charged with governance.
R605.4 When providing an internal audit service to an audit client, the firm shall be
satisfied that:
(a) The client designates an appropriate and competent resource,

preferably within senior management, to:
(i) Be responsible at all times for internal audit activities; and
(ii) Acknowledge responsibility for designing, implementing,

monitoring and maintaining internal control.
(b) The client’s management or those charged with governance reviews,

assesses and approves the scope, risk and frequency of the internal
audit services;

(c) The client’s management evaluates the adequacy of the internal

audit services and the findings resulting from their performance;
(d) The client’s management evaluates and determines which

recommendations resulting from internal audit services to
implement and manages the implementation process; and
(e) The client’s management reports to those charged with governance

the significant findings and recommendations resulting from the
internal audit services.
605.4 A1 Paragraph R600.7 precludes a firm or a network firm from assuming a

management responsibility. Performing a significant part of the client’s
internal audit activities increases the possibility that firm or network firm
personnel providing internal audit services will assume a management
responsibility.
605.4 A2 Examples of internal audit services that involve assuming management

responsibilities include:
 Setting internal audit policies or the strategic direction of internal

audit activities.
 Directing and taking responsibility for the actions of the entity’s

internal audit employees.
 Deciding which recommendations resulting from internal audit

activities to implement.
 Reporting the results of the internal audit activities to those charged
with governance on behalf of management.
 Performing procedures that form part of the internal control, such as

reviewing and approving changes to employee data access
privileges.
 Taking responsibility for designing, implementing, monitoring and

maintaining internal control.
 Performing outsourced internal audit services, comprising all or a

substantial portion of the internal audit function, where the firm or
network firm is responsible for determining the scope of the internal
audit work; and might have responsibility for one or more of the
matters noted above.
605.4 A3 When a firm uses the work of an internal audit function in an audit
engagement, ISAs require the performance of procedures to evaluate the
adequacy of that work. Similarly, when a firm or network firm accepts an

engagement to provide internal audit services to an audit client, the results

of those services might be used in conducting the external audit. This creates
a self-review threat because it is possible that the audit team will use the
results of the internal audit service for purposes of the audit engagement
without:
(a) Appropriately evaluating those results; or
(b) Exercising the same level of professional skepticism as would be

exercised when the internal audit work is performed by individuals
who are not members of the firm.
605.4 A4 Factors that are relevant in evaluating the level of such a self-review threat
include:
 The materiality of the related financial statement amounts.
 The risk of misstatement of the assertions related to those financial

statement amounts.
 The degree of reliance that the audit team will place on the work of
the internal audit service, including in the course of an external audit.

review threat is using professionals who are not audit team members to
perform the service.
R605.5 A firm or a network firm shall not provide internal audit services to an audit
client that is a public interest entity, if the services relate to:
(a) A significant part of the internal controls over financial reporting;
(b) Financial accounting systems that generate information that is,

individually or in the aggregate, material to the client’s accounting
records or financial statements on which the firm will express an
opinion; or
(c) Amounts or disclosures that are, individually or in the aggregate,

material to the financial statements on which the firm will express
an opinion.

SUBSECTION 606
INFORMATION TECHNOLOGY SYSTEMS SERVICES
Introduction
606.1 Providing information technology (IT) systems services to an audit client

might create a self-review threat.

an IT systems service to an audit client. This subsection includes
IT systems services to audit clients in some circumstances because the
All Audit Clients
606.3 A1 Services related to IT systems include the design or implementation of

hardware or software systems. The IT systems might:
(a) Aggregate source data;
(b) Form part of the internal control over financial reporting; or
(c) Generate information that affects the accounting records or financial

statements, including related disclosures.
However, the IT systems might also involve matters that are unrelated to the
audit client’s accounting records or the internal control over financial
reporting or financial statements.

management responsibility. Providing the following IT systems services to
an audit client does not usually create a threat as long as personnel of the
firm or network firm do not assume a management responsibility:
(a) Designing or implementing IT systems that are unrelated to internal

control over financial reporting;
(b) Designing or implementing IT systems that do not generate

information forming a significant part of the accounting records or
financial statements;

(c) Implementing “off-the-shelf” accounting or financial information

reporting software that was not developed by the firm or network
firm, if the customization required to meet the client’s needs is not
significant; and
(d) Evaluating and making recommendations with respect to an IT

system designed, implemented or operated by another service
provider or the client.
R606.4 When providing IT systems services to an audit client, the firm or network
firm shall be satisfied that:
(a) The client acknowledges its responsibility for establishing and

monitoring a system of internal controls;
(b) The client assigns the responsibility to make all management

decisions with respect to the design and implementation of the
hardware or software system to a competent employee, preferably
within senior management;
(c) The client makes all management decisions with respect to the
design and implementation process;
(d) The client evaluates the adequacy and results of the design and
implementation of the system; and
(e) The client is responsible for operating the system (hardware or

software) and for the data it uses or generates.
606.4 A1 Factors that are relevant in evaluating the level of a self-review threat created
by providing IT systems services to an audit client include:
 The nature of the service.
 The nature of IT systems and the extent to which they impact or

interact with the client’s accounting records or financial statements.
 The degree of reliance that will be placed on the particular IT

systems as part of the audit.

review threat is using professionals who are not audit team members to
perform the service.

R606.5 A firm or a network firm shall not provide IT systems services to an audit
client that is a public interest entity if the services involve designing or
implementing IT systems that:
(a) Form a significant part of the internal control over financial

reporting; or
(b) Generate information that is significant to the client’s accounting

records or financial statements on which the firm will express an
opinion.
SUBSECTION 607
LITIGATION SUPPORT SERVICES
Introduction
607.1 Providing certain litigation support services to an audit client might create a
self-review or advocacy threat.
607.2 In addition to the specific application material in this subsection, the

requirements and application material in paragraphs 600.1 to R600.10 are
relevant to applying the conceptual framework when providing a litigation
support service to an audit client.
All Audit Clients
607.3 A1 Litigation support services might include activities such as:
 Assisting with document management and retrieval.
 Acting as a witness, including an expert witness.
 Calculating estimated damages or other amounts that might become

receivable or payable as the result of litigation or other legal dispute.
threats created by providing litigation support services to an audit client
include:


provided, for example, whether an expert witness is chosen and
appointed by a court.
 The nature and characteristics of the service.
 The extent to which the outcome of the litigation support service will
have a material effect on the financial statements on which the firm

review or advocacy threat is using a professional who was not an audit team
member to perform the service.
607.3 A4 If a firm or a network firm provides a litigation support service to an audit

client and the service involves estimating damages or other amounts that
affect the financial statements on which the firm will express an opinion, the
requirements and application material set out in Subsection 603 related to
valuation services apply.
SUBSECTION 608
LEGAL SERVICES
Introduction
608.1 Providing legal services to an audit client might create a self-review or

advocacy threat.

a legal service to an audit client. This subsection includes requirements that
prohibit firms and network firms from providing certain legal services to
audit clients in some circumstances because the threats cannot be addressed
by applying safeguards.
All Audit Clients
608.3 A1 Legal services are defined as any services for which the individual providing
the services must either:
(a) Have the required legal training to practice law; or

(b) Be admitted to practice law before the courts of the jurisdiction in

which such services are to be provided.
Acting in an Advisory Role
608.4 A1 Depending on the jurisdiction, legal advisory services might include a wide
and diversified range of service areas including both corporate and
commercial services to audit clients, such as:
 Contract support.
 Supporting an audit client in executing a transaction.
 Mergers and acquisitions.
 Supporting and assisting an audit client’s internal legal department.
 Legal due diligence and restructuring.
threats created by providing legal advisory services to an audit client
include:
 The materiality of the specific matter in relation to the client’s

 The complexity of the legal matter and the degree of judgment

necessary to provide the service.
service might address a self-review or advocacy threat.

the service review the audit work or the service performed might
Acting as General Counsel
R608.5 A partner or employee of the firm or the network firm shall not serve as
General Counsel for legal affairs of an audit client.
608.5 A1 The position of General Counsel is usually a senior management position

with broad responsibility for the legal affairs of a company.

Acting in an Advocacy Role
R608.6 A firm or a network firm shall not act in an advocacy role for an audit client
in resolving a dispute or litigation when the amounts involved are material
to the financial statements on which the firm will express an opinion.
608.6 A1 Examples of actions that might be safeguards to address a self-review threat

created when acting in an advocacy role for an audit client when the amounts
involved are not material to the financial statements on which the firm will
express an opinion include:
service.

the service review the audit work or the service performed.
SUBSECTION 609
RECRUITING SERVICES
Introduction
609.1 Providing recruiting services to an audit client might create a self-interest,

familiarity or intimidation threat.

a recruiting service to an audit client. This subsection includes requirements
that prohibit firms and network firms from providing certain types of
recruiting services to audit clients in some circumstances because the threats
created cannot be addressed by applying safeguards.
All Audit Clients
609.3 A1 Recruiting services might include activities such as:
 Developing a job description.
 Developing a process for identifying and selecting potential

candidates.
 Searching for or seeking out candidates.

 Screening potential candidates for the role by:
o Reviewing the professional qualifications or competence of

applicants and determining their suitability for the position.
o Undertaking reference checks of prospective candidates.
o Interviewing and selecting suitable candidates and advising on

candidates’ competence.
 Determining employment terms and negotiating details, such as

salary, hours and other compensation.

management responsibility. Providing the following services does not
usually create a threat as long as personnel of the firm or network firm does
not assume a management responsibility:
 Reviewing the professional qualifications of a number of applicants

and providing advice on their suitability for the position.
 Interviewing candidates and advising on a candidate’s competence

for financial accounting, administrative or control positions.
R609.4 When a firm or network firm provides recruiting services to an audit client,
the firm shall be satisfied that:
(a) The client assigns the responsibility to make all management

decisions with respect to hiring the candidate for the position to a
competent employee, preferably within senior management; and
(b) The client makes all management decisions with respect to the hiring
process, including:
 Determining the suitability of prospective candidates and

selecting suitable candidates for the position.
 Determining employment terms and negotiating details, such as

salary, hours and other compensation.
609.5 A1 Factors that are relevant in evaluating the level of self-interest, familiarity or
intimidation threats created by providing recruiting services to an audit
client include:
 The nature of the requested assistance.
 The role of the individual to be recruited.

 Any conflicts of interest or relationships that might exist between

the candidates and the firm providing the advice or service.

interest, familiarity or intimidation threat is using professionals who are not
audit team members to perform the service.
Recruiting Services that are Prohibited
R609.6 When providing recruiting services to an audit client, the firm or the network
firm shall not act as a negotiator on the client’s behalf.
R609.7 A firm or a network firm shall not provide a recruiting service to an audit
client if the service relates to:
(a) Searching for or seeking out candidates; or
(b) Undertaking reference checks of prospective candidates, with

respect to the following positions:
(i) A director or officer of the entity; or
(ii) A member of senior management in a position to exert

significant influence over the preparation of the client’s
accounting records or the financial statements on which the firm
SUBSECTION 610
CORPORATE FINANCE SERVICES
Introduction
610.1 Providing corporate finance services to an audit client might create a self-
review or advocacy threat.

a corporate finance service to an audit client. This subsection includes
corporate finance services in some circumstances to audit clients because the

All Audit Clients
610.3 A1 Examples of corporate finance services that might create a self-review or

advocacy threat include:
 Assisting an audit client in developing corporate strategies.
 Identifying possible targets for the audit client to acquire.
 Advising on disposal transactions.
 Assisting in finance raising transactions.
 Providing structuring advice.
 Providing advice on the structuring of a corporate finance

transaction or on financing arrangements that will directly affect
amounts that will be reported in the financial statements on which
the firm will express an opinion.
610.3 A2 Factors that are relevant in evaluating the level of such threats created by
providing corporate finance services to an audit client include:
 The degree of subjectivity involved in determining the appropriate

treatment for the outcome or consequences of the corporate finance
advice in the financial statements.
 The extent to which:
○ The outcome of the corporate finance advice will directly affect

amounts recorded in the financial statements.
○ The amounts are material to the financial statements.
 Whether the effectiveness of the corporate finance advice depends

on a particular accounting treatment or presentation in the financial
statements and there is doubt as to the appropriateness of the related
accounting treatment or presentation under the relevant financial
reporting framework.


Corporate Finance Services that are Prohibited
R610.4 A firm or a network firm shall not provide corporate finance services to an
audit client that involve promoting, dealing in, or underwriting the audit
client’s shares.
R610.5 A firm or a network firm shall not provide corporate finance advice to an
audit client where the effectiveness of such advice depends on a particular
accounting treatment or presentation in the financial statements on which the
firm will express an opinion and:
(a) The audit team has reasonable doubt as to the appropriateness of the
related accounting treatment or presentation under the relevant
financial reporting framework; and
(b) The outcome or consequences of the corporate finance advice will

have a material effect on the financial statements on which the firm

SECTION 800
REPORTS ON SPECIAL PURPOSE FINANCIAL STATEMENTS THAT

INCLUDE A RESTRICTION ON USE AND DISTRIBUTION (AUDIT AND
REVIEW ENGAGEMENTS)
Introduction

800.2 This section sets out certain modifications to Part 4A which are permitted in
certain circumstances involving audits of special purpose financial
statements where the report includes a restriction on use and distribution. In
this section, an engagement to issue a restricted use and distribution report
in the circumstances set out in paragraph R800.3 is referred to as an “eligible
audit engagement.”
General
R800.3 When a firm intends to issue a report on an audit of special purpose financial
statements which includes a restriction on use and distribution, the
independence requirements set out in Part 4A shall be eligible for the
modifications that are permitted by this section, but only if:
(a) The firm communicates with the intended users of the report
regarding the modified independence requirements that are to be
applied in providing the service; and
(b) The intended users of the report understand the purpose and
limitations of the report and explicitly agree to the application of the
modifications.
800.3 A1 The intended users of the report might obtain an understanding of the
purpose and limitations of the report by participating, either directly, or
indirectly through a representative who has authority to act for the intended
users, in establishing the nature and scope of the engagement. In either case,
this participation helps the firm to communicate with intended users about
independence matters, including the circumstances that are relevant to
applying the conceptual framework. It also allows the firm to obtain the
agreement of the intended users to the modified independence requirements.
R800.4 Where the intended users are a class of users who are not specifically
identifiable by name at the time the engagement terms are established, the

firm shall subsequently make such users aware of the modified

independence requirements agreed to by their representative.
800.4 A1 For example, where the intended users are a class of users such as lenders in
a syndicated loan arrangement, the firm might describe the modified
independence requirements in an engagement letter to the representative of
the lenders. The representative might then make the firm’s engagement letter
available to the members of the group of lenders to meet the requirement for
the firm to make such users aware of the modified independence
requirements agreed to by the representative.
R800.5 When the firm performs an eligible audit engagement, any modifications to
Part 4A shall be limited to those set out in paragraphs R800.7 to R800.14.
The firm shall not apply these modifications when an audit of financial
statements is required by law or regulation.
R800.6 If the firm also issues an audit report that does not include a restriction on
use and distribution for the same client, the firm shall apply Part 4A to that
audit engagement.
Public Interest Entities
R800.7 When the firm performs an eligible audit engagement, the firm does not need
to apply the independence requirements set out in Part 4A that apply only to
public interest entity audit engagements.
Related Entities
R800.8 When the firm performs an eligible audit engagement, references to “audit
client” in Part 4A do not need to include its related entities. However, when
the audit team knows or has reason to believe that a relationship or
circumstance involving a related entity of the client is relevant to the
evaluation of the firm’s independence of the client, the audit team shall
include that related entity when identifying, evaluating and addressing
threats to independence.
Networks and Network Firms
R800.9 When the firm performs an eligible audit engagement, the specific
requirements regarding network firms set out in Part 4A do not need to be
applied. However, when the firm knows or has reason to believe that threats
to independence are created by any interests and relationships of a network
firm, the firm shall evaluate and address any such threat.

Financial Interests, Loans and Guarantees, Close Business Relationships, and Family
and Personal Relationships
R800.10 When the firm performs an eligible audit engagement:
(a) The relevant provisions set out in Sections 510, 511, 520, 521, 522,
524 and 525 need apply only to the members of the engagement
team, their immediate family members and, where applicable, close
family members;
(b) The firm shall identify, evaluate and address any threats to
independence created by interests and relationships, as set out in
Sections 510, 511, 520, 521, 522, 524 and 525, between the audit
client and the following audit team members:
(i) Those who provide consultation regarding technical or industry

specific issues, transactions or events; and
(ii) Those who provide quality control for the engagement,

including those who perform the engagement quality control
review; and
(c) The firm shall evaluate and address any threats that the engagement
team has reason to believe are created by interests and relationships
between the audit client and others within the firm who can directly
influence the outcome of the audit engagement.
800.10 A1 Others within a firm who can directly influence the outcome of the audit
engagement include those who recommend the compensation, or who
provide direct supervisory, management or other oversight, of the audit
engagement partner in connection with the performance of the audit
engagement including those at all successively senior levels above the
engagement partner through to the individual who is the firm’s Senior or
Managing Partner (Chief Executive or equivalent).
R800.11 When the firm performs an eligible audit engagement, the firm shall evaluate
and address any threats that the engagement team has reason to believe are
created by financial interests in the audit client held by individuals, as set
out in paragraphs R510.4(c) and (d), R510.5, R510.7 and 510.10 A5 and A9.
R800.12 When the firm performs an eligible audit engagement, the firm, in applying
the provisions set out in paragraphs R510.4(a), R510.6 and R510.7 to
interests of the firm, shall not hold a material direct or a material indirect
financial interest in the audit client.

Employment with an Audit Client
R800.13 When the firm performs an eligible audit engagement, the firm shall evaluate
and address any threats created by any employment relationships as set out
in paragraphs 524.3 A1 to 524.5 A3.
Providing Non-Assurance Services
R800.14 If the firm performs an eligible audit engagement and provides a non-
assurance service to the audit client, the firm shall comply with Sections 410
to 430 and Section 600, including its subsections, subject to paragraphs
R800.7 to R800.9.


Section 900 Applying the Conceptual Framework to Independence for Assurance

Engagements Other than Audit and Review Engagements ....................... 211
Section 905 Fees ........................................................................................................... 220
Section 906 Gifts and Hospitality ................................................................................. 222
Section 907 Actual or Threatened Litigation ................................................................ 223
Section 910 Financial Interests ..................................................................................... 224
Section 911 Loans and Guarantees ............................................................................... 228
Section 920 Business Relationships .............................................................................. 230
Section 921 Family and Personal Relationships ........................................................... 232
Section 922 Recent Service with an Assurance Client .................................................. 236
Section 923 Serving as a Director or Officer of an Assurance Client ........................... 238
Section 924 Employment with an Assurance Client ..................................................... 239
Section 940 Long Association of Personnel with an Assurance Client ........................ 242
Section 950 Provision of Non-Assurance Services to Assurance Clients Other than Audit
and Review Engagement Clients ............................................................... 245
Section 990 Reports that Include a Restriction on Use and Distribution (Assurance
Engagements Other than Audit and Review Engagements) ...................... 249
Page 210 of 263 INDEX OF PART 4B


SECTION 900
APPLYING THE CONCEPTUAL FRAMEWORK TO INDEPENDENCE FOR

ASSURANCE ENGAGEMENTS OTHER THAN AUDIT AND REVIEW
ENGAGEMENTS
Introduction
General
900.1 This Part applies to assurance engagements other than audit and review
engagements (referred to as “assurance engagements” in this Part).
Examples of such engagements include:
 An audit of specific elements, accounts or items of a financial

statement.
 Performance assurance on a company’s key performance indicators.
900.3 ISQC 1 requires a firm to establish policies and procedures designed to

provide it with reasonable assurance that the firm, its personnel and, where
applicable, others subject to independence requirements maintain
independence where required by relevant ethics standards. ISAEs establish
responsibilities for engagement partners and engagement teams at the level
of the engagement. The allocation of responsibilities within a firm will
depend on its size, structure and organization. Many of the provisions of Part
4B do not prescribe the specific responsibility of individuals within the firm
for actions related to independence, instead referring to “firm” for ease of
reference. Firms assign responsibility for a particular action to an individual
or a group of individuals (such as an assurance team) in accordance with
ISQC 1. In addition, an individual chartered accountant remains responsible
for compliance with any provisions that apply to that accountant’s activities,
interests or relationships.
900.4 Independence is linked to the principles of objectivity and integrity. It

comprises:
of a conclusion without being affected by influences that
compromise professional judgment, thereby allowing an individual

to act with integrity, and exercise objectivity and professional

skepticism.

third party would be likely to conclude that a firm’s or an assurance
team member’s integrity, objectivity or professional skepticism has
been compromised.
In this Part, references to an individual or firm being “independent” mean

that the individual or firm has complied with the provisions of this Part.
900.5 When performing assurance engagements, the Code requires firms to

comply with the fundamental principles and be independent. This Part sets
out specific requirements and application material on how to apply the
conceptual framework to maintain independence when performing such
engagements. The conceptual framework set out in Section 120 applies to
independence as it does to the fundamental principles set out in Section 110.
900.6 This Part describes:
(a) Facts and circumstances, including professional activities, interests

and relationships, that create or might create threats to
independence;
(b) Potential actions, including safeguards, that might be appropriate to

address any such threats; and
(c) Some situations where the threats cannot be eliminated or there can
be no safeguards to reduce the threats to an acceptable level.
Description of Other Assurance Engagements
900.7 Assurance engagements are designed to enhance intended users’ degree of

confidence about the outcome of the evaluation or measurement of a subject
matter against criteria. In an assurance engagement, the firm expresses a
conclusion designed to enhance the degree of confidence of the intended
users (other than the responsible party) about the outcome of the evaluation
or measurement of a subject matter against criteria. The Assurance
Framework describes the elements and objectives of an assurance
engagement and identifies engagements to which ISAEs apply. For a
description of the elements and objectives of an assurance engagement, refer
to the Assurance Framework.
900.8 The outcome of the evaluation or measurement of a subject matter is the

information that results from applying the criteria to the subject matter. The
term “subject matter information” is used to mean the outcome of the
evaluation or measurement of a subject matter. For example, the Assurance

Framework states that an assertion about the effectiveness of internal control

(subject matter information) results from applying a framework for
evaluating the effectiveness of internal control, such as COSO or CoCo
(criteria), to internal control, a process (subject matter).
900.9 Assurance engagements might be assertion-based or direct reporting. In

either case, they involve three separate parties: a firm, a responsible party
and intended users.
900.10 In an assertion-based assurance engagement, the evaluation or measurement

of the subject matter is performed by the responsible party. The subject
matter information is in the form of an assertion by the responsible party that
is made available to the intended users.
900.11 In a direct reporting assurance engagement, the firm:
(a) Directly performs the evaluation or measurement of the subject

matter; or
(b) Obtains a representation from the responsible party that has

performed the evaluation or measurement that is not available to the
intended users. The subject matter information is provided to the
intended users in the assurance report.
Reports that Include a Restriction on Use and Distribution
900.12 An assurance report might include a restriction on use and distribution. If it

does and the conditions set out in Section 990 are met, then the independence
requirements in this Part may be modified as provided in Section 990.
Audit and Review Engagements
900.13 Independence standards for audit and review engagements are set out in Part
4A – Independence for Audit and Review Engagements. If a firm performs
both an assurance engagement and an audit or review engagement for the
same client, the requirements in Part 4A continue to apply to the firm, a
network firm and the audit or review team members.
General
R900.14 A firm performing an assurance engagement shall be independent.
R900.15 A firm shall apply the conceptual framework set out in Section 120 to
identify, evaluate and address threats to independence in relation to an
assurance engagement.

Network firms
R900.16 When a firm has reason to believe that interests and relationships of a
network firm create a threat to the firm’s independence, the firm shall
evaluate and address any such threat.
900.16 A1 Network firms are discussed in paragraphs 400.50 A1 to 400.54 A1.
Related Entities
R900.17 When the assurance team knows or has reason to believe that a relationship
or circumstance involving a related entity of the assurance client is relevant
to the evaluation of the firm’s independence from the client, the assurance
team shall include that related entity when identifying, evaluating and
addressing threats to independence.
Types of Assurance Engagements
Assertion-based Assurance Engagements
R900.18 When performing an assertion-based assurance engagement:
(a) The assurance team members and the firm shall be independent of
the assurance client (the party responsible for the subject matter
information, and which might be responsible for the subject matter)
as set out in this Part. The independence requirements set out in this
Part prohibit certain relationships between assurance team members
and (i) directors or officers, and (ii) individuals at the client in a
position to exert significant influence over the subject matter
information;
(b) The firm shall apply the conceptual framework set out in Section
120 to relationships with individuals at the client in a position to
exert significant influence over the subject matter of the
engagement; and
(c) The firm shall evaluate and address any threats that the firm has
reason to believe are created by network firm interests and
relationships.
R900.19 When performing an assertion-based assurance engagement where the

responsible party is responsible for the subject matter information but not
the subject matter:
the party responsible for the subject matter information (the
assurance client); and

(b) The firm shall evaluate and address any threats the firm has reason
to believe are created by interests and relationships between an
assurance team member, the firm, a network firm and the party
responsible for the subject matter.
900.19 A1 In the majority of assertion-based assurance engagements, the responsible

party is responsible for both the subject matter information and the subject
matter. However, in some engagements, the responsible party might not be
responsible for the subject matter. An example might be when a firm is
engaged to perform an assurance engagement regarding a report that an
environmental consultant has prepared about a company’s sustainability
practices for distribution to intended users. In this case, the environmental
consultant is the responsible party for the subject matter information but the
company is responsible for the subject matter (the sustainability practices).
Direct Reporting Assurance Engagements
R900.20 When performing a direct reporting assurance engagement:
the assurance client (the party responsible for the subject matter);
and
(b) The firm shall evaluate and address any threats to independence the
firm has reason to believe are created by network firm interests and
relationships.
Multiple Responsible Parties
900.21 A1 In some assurance engagements, whether assertion-based or direct reporting,

there might be several responsible parties. In determining whether it is
necessary to apply the provisions in this Part to each responsible party in
such engagements, the firm may take into account certain matters. These
matters include whether an interest or relationship between the firm, or an
assurance team member, and a particular responsible party would create a
threat to independence that is not trivial and inconsequential in the context
of the subject matter information. This determination will take into account
factors such as:
(a) The materiality of the subject matter information (or of the subject
matter) for which the particular responsible party is responsible.
(b) The degree of public interest associated with the engagement.
If the firm determines that the threat created by any such interest or
relationship with a particular responsible party would be trivial and
inconsequential, it might not be necessary to apply all of the provisions of
this section to that responsible party.

Period During which Independence is Required
R900.30 Independence, as required by this Part, shall be maintained during both:
(a) The engagement period; and
(b) The period covered by the subject matter information.
900.30 A1 The engagement period starts when the assurance team begins to perform
assurance services with respect to the particular engagement. The
engagement period ends when the assurance report is issued. When the
engagement is of a recurring nature, it ends at the later of the notification by
either party that the professional relationship has ended or the issuance of
the final assurance report.
R900.31 If an entity becomes an assurance client during or after the period covered
by the subject matter information on which the firm will express a
conclusion, the firm shall determine whether any threats to independence are
created by:
(a) Financial or business relationships with the assurance client during

or after the period covered by the subject matter information but
before accepting the assurance engagement; or
(b) Previous services provided to the assurance client.
R900.32 Threats to independence are created if a non-assurance service was provided

to the assurance client during, or after the period covered by the subject
matter information, but before the assurance team begins to perform
assurance services, and the service would not be permitted during the
engagement period. In such circumstances, the firm shall evaluate and
address any threat to independence created by the service. If the threats are
not at an acceptable level, the firm shall only accept the assurance
engagement if the threats are reduced to an acceptable level.
 Using professionals who are not assurance team members to perform

the service.
 Having an appropriate reviewer review the assurance and non-

assurance work as appropriate.
R900.33 If a non-assurance service that would not be permitted during the

engagement period has not been completed and it is not practical to complete
or end the service before the commencement of professional services in
connection with the assurance engagement, the firm shall only accept the
assurance engagement if:

(a) The firm is satisfied that:
(i) The non-assurance service will be completed within a short

period of time; or
(ii) The client has arrangements in place to transition the service to

another provider within a short period of time;
(b) The firm applies safeguards when necessary during the service
period; and
(c) The firm discusses the matter with those charged with governance.
General Documentation of Independence for Assurance Engagements Other than

Audit and Review Engagements
R900.40 A firm shall document conclusions regarding compliance with this Part, and
the substance of any relevant discussions that support those conclusions. In
particular:
(a) When safeguards are applied to address a threat, the firm shall
document the nature of the threat and the safeguards in place or
applied; and
(b) When a threat required significant analysis and the firm concluded
that the threat was already at an acceptable level, the firm shall
document the nature of the threat and the rationale for the
conclusion.
900.40 A1 Documentation provides evidence of the firm’s judgments in forming

conclusions regarding compliance with this Part. However, a lack of
documentation does not determine whether a firm considered a particular
matter or whether the firm is independent.

Breach of an Independence Provision for Assurance Engagements Other than Audit

and Review Engagements
When a Firm Identifies a Breach
R900.50 If a firm concludes that a breach of a requirement in this Part has occurred,
the firm shall:
(a) End, suspend or eliminate the interest or relationship that created the
breach;
(b) Evaluate the significance of the breach and its impact on the firm’s
objectivity and ability to issue an assurance report; and
(c) Determine whether action can be taken that satisfactorily addresses

the consequences of the breach.
In making this determination, the firm shall exercise professional judgment

and take into account whether a reasonable and informed third party would
be likely to conclude that the firm’s objectivity would be compromised, and
therefore, the firm would be unable to issue an assurance report.
R900.51 If the firm determines that action cannot be taken to address the
consequences of the breach satisfactorily, the firm shall, as soon as possible,
inform the party that engaged the firm or those charged with governance, as
appropriate. The firm shall also take the steps necessary to end the assurance
engagement in compliance with any applicable legal or regulatory
requirements relevant to ending the assurance engagement.
R900.52 If the firm determines that action can be taken to address the consequences
of the breach satisfactorily, the firm shall discuss the breach and the action
it has taken or proposes to take with the party that engaged the firm or those
charged with governance, as appropriate. The firm shall discuss the breach
and the proposed action on a timely basis, taking into account the
circumstances of the engagement and the breach.
R900.53 If the party that engaged the firm does not, or those charged with governance
do not concur that the action proposed by the firm in accordance with
paragraph R900.50(c) satisfactorily addresses the consequences of the
breach, the firm shall take the steps necessary to end the assurance
engagement in compliance with any applicable legal or regulatory
requirements relevant to ending the assurance engagement.

Documentation
R900.54 In complying with the requirements in paragraphs R900.50 to R900.53, the

firm shall document:
(a) The breach;
(b) The actions taken;
(c) The key decisions made; and
(d) All the matters discussed with the party that engaged the firm or
those charged with governance.
R900.55 If the firm continues with the assurance engagement, it shall document:
(a) The conclusion that, in the firm’s professional judgment, objectivity

has not been compromised; and
(b) The rationale for why the action taken satisfactorily addressed the
consequences of the breach so that the firm could issue an assurance
report.

SECTION 905
FEES
Introduction

905.2 The nature and level of fees or other types of remuneration might create a
self-interest or intimidation threat. This section sets out specific
Fees―Relative Size
905.3 A1 When the total fees generated from an assurance client by the firm
expressing the conclusion in an assurance engagement represent a large
proportion of the total fees of that firm, the dependence on that client and
concern about losing the client create a self-interest or intimidation threat.
 The operating structure of the firm.
 Whether the firm is well established or new.

the firm.

interest or intimidation threat is increasing the client base in the firm to
reduce dependence on the assurance client.
905.3 A4 A self-interest or intimidation threat is also created when the fees generated
by the firm from an assurance client represent a large proportion of the
revenue from an individual partner’s clients.

or intimidation threat include:
 Increasing the client base of the partner to reduce dependence on the

assurance client.

 Having an appropriate reviewer who was not an assurance team

member review the work.
Fees―Overdue
905.4 A1 A self-interest threat might be created if a significant part of fees is not paid
before the assurance report, if any, for the following period is issued. It is
generally expected that the firm will require payment of such fees before any
such report is issued. The requirements and application material set out in
Section 911 with respect to loans and guarantees might also apply to
situations where such unpaid fees exist.

threat include:
 Obtaining partial payment of overdue fees.
 Having an appropriate reviewer who did not take part in the

assurance engagement review the work performed.
R905.5 When a significant part of fees due from an assurance client remains unpaid
for a long time, the firm shall determine:
(a) Whether the overdue fees might be equivalent to a loan to the client;
and
(b) Whether it is appropriate for the firm to be re-appointed or continue

the assurance engagement.
Contingent Fees
905.6 A1 Contingent fees are fees calculated on a predetermined basis relating to the
outcome of a transaction or the result of the services performed. A
contingent fee charged through an intermediary is an example of an indirect
contingent fee. In this section, a fee is not regarded as being contingent if
established by a court or other public authority.
R905.7 A firm shall not charge directly or indirectly a contingent fee for an
R905.8 A firm shall not charge directly or indirectly a contingent fee for a non-
assurance service provided to an assurance client if the outcome of the non-
assurance service, and therefore, the amount of the fee, is dependent on a
future or contemporary judgment related to a matter that is material to the
subject matter information of the assurance engagement.

SECTION 906
GIFTS AND HOSPITALITY
Introduction

906.2 Accepting gifts and hospitality from an assurance client might create a self-
interest, familiarity or intimidation threat. This section sets out a specific
requirement and application material relevant to applying the conceptual
Requirement and Application Material
R906.3 A firm or an assurance team member shall not accept gifts and hospitality
from an assurance client, unless the value is trivial and inconsequential.
906.3 A1 Where a firm or assurance team member is offering or accepting an

inducement to or from an assurance client, the requirements and application
material set out in Section 340 apply and non-compliance with these
requirements might create threats to independence.
906.3 A2 The requirements set out in Section 340 relating to offering or accepting
inducements do not allow a firm or assurance team member to accept gifts
and hospitality where the intent is to improperly influence behavior even if
the value is trivial and inconsequential.

SECTION 907
ACTUAL OR THREATENED LITIGATION
Introduction

907.2 When litigation with an assurance client occurs, or appears likely, self-
interest and intimidation threats are created. This section sets out specific
circumstances.
General
907.3 A1 The relationship between client management and assurance team members
must be characterized by complete candor and full disclosure regarding all
aspects of a client’s operations. Adversarial positions might result from
actual or threatened litigation between an assurance client and the firm or an
assurance team member. Such adversarial positions might affect
management’s willingness to make complete disclosures and create self-
interest and intimidation threats.
 The materiality of the litigation.
 Whether the litigation relates to a prior assurance engagement.
907.3 A3 If the litigation involves an assurance team member, an example of an action

that might eliminate such self-interest and intimidation threats is removing
that individual from the assurance team.
907.3 A4 An example of an action that might be a safeguard to address such self-

interest and intimidation threats is having an appropriate reviewer review the
work performed.

SECTION 910
FINANCIAL INTERESTS
Introduction

910.2 Holding a financial interest in an assurance client might create a self-interest

General
910.3 A1 A financial interest might be held directly or indirectly through an

intermediary such as a collective investment vehicle, an estate or a trust.
When a beneficial owner has control over the intermediary or ability to
influence its investment decisions, the Code defines that financial interest to
be direct. Conversely, when a beneficial owner has no control over the
intermediary or ability to influence its investment decisions, the Code
defines that financial interest to be indirect.
910.3 A2 This section contains references to the “materiality” of a financial interest.

In determining whether such an interest is material to an individual, the
combined net worth of the individual and the individual’s immediate family
members may be taken into account.
910.3 A3 Factors that are relevant in evaluating the level of a self-interest threat
created by holding a financial interest in an assurance client include:
 The role of the individual holding the financial interest.

Financial Interests Held by the Firm, Assurance Team Members and Immediate
Family
R910.4 A direct financial interest or a material indirect financial interest in the

assurance client shall not be held by:
(a) The firm; or
(b) An assurance team member or any of that individual’s immediate

family.
Financial Interests in an Entity Controlling an Assurance Client
R910.5 When an entity has a controlling interest in the assurance client and the client
is material to the entity, neither the firm, nor an assurance team member, nor
any of that individual’s immediate family shall hold a direct or material
indirect financial interest in that entity.
Financial Interests Held as Trustee
R910.6 Paragraph R910.4 shall also apply to a financial interest in an assurance

client held in a trust for which the firm or individual acts as trustee unless:
(a) None of the following is a beneficiary of the trust: the trustee, the
assurance team member or any of that individual’s immediate
family, or the firm;
(b) The interest in the assurance client held by the trust is not material
to the trust;
(c) The trust is not able to exercise significant influence over the
assurance client; and
(d) None of the following can significantly influence any investment

decision involving a financial interest in the assurance client: the
trustee, the assurance team member or any of that individual’s
immediate family, or the firm.
Financial Interests Received Unintentionally
R910.7 If a firm, an assurance team member, or any of that individual’s immediate

family, receives a direct financial interest or a material indirect financial
interest in an assurance client by way of an inheritance, gift, as a result of a
merger, or in similar circumstances and the interest would not otherwise be
permitted to be held under this section, then:

(a) If the interest is received by the firm, the financial interest shall be
disposed of immediately, or enough of an indirect financial interest
shall be disposed of so that the remaining interest is no longer
material; or
(b) If the interest is received by an assurance team member, or by any

of that individual’s immediate family, the individual who received
the financial interest shall immediately dispose of the financial
interest, or dispose of enough of an indirect financial interest so that
the remaining interest is no longer material.
Financial Interests – Other Circumstances
Close Family
910.8 A1 A self-interest threat might be created if an assurance team member knows

that a close family member has a direct financial interest or a material
indirect financial interest in the assurance client.
 The nature of the relationship between the assurance team member

and the close family member.
 The materiality of the financial interest to the close family member.
 Having the close family member dispose, as soon as practicable, of

all of the financial interest or dispose of enough of an indirect
financial interest so that the remaining interest is no longer material.
 Removing the individual from the assurance team.

interest threat is having an appropriate reviewer review the work of the
assurance team member.

Other Individuals
910.8 A5 A self-interest threat might be created if an assurance team member knows

that a financial interest is held in the assurance client by individuals such as:
 Partners and professional employees of the firm, apart from those

who are specifically not permitted to hold such financial interests by
paragraph R910.4, or their immediate family members.
 Individuals with a close personal relationship with an assurance

team member.

removing the assurance team member with the personal relationship from
the assurance team.

threat include:
 Excluding the assurance team member from any significant

decision-making concerning the assurance engagement.
 Having an appropriate reviewer review the work of the assurance

team member.

SECTION 911
LOANS AND GUARANTEES
Introduction

911.2 A loan or a guarantee of a loan with an assurance client might create a self-
interest threat. This section sets out specific requirements and application
circumstances.
General
911.3 A1 This section contains references to the “materiality” of a loan or guarantee.

In determining whether such a loan or guarantee is material to an individual,
the combined net worth of the individual and the individual’s immediate
family members may be taken into account.
Loans and Guarantees with an Assurance Client
R911.4 A firm, an assurance team member, or any of that individual’s immediate

family shall not make or guarantee a loan to an assurance client unless the
loan or guarantee is immaterial to both:
(a) The firm or the individual making the loan or guarantee, as

applicable; and
(b) The client.
Loans and Guarantees with an Assurance Client that is a Bank or Similar Institution

family shall not accept a loan, or a guarantee of a loan, from an assurance
client that is a bank or a similar institution unless the loan or guarantee is
made under normal lending procedures, terms and conditions.
911.5 A1 Examples of loans include mortgages, bank overdrafts, car loans and credit
card balances.

911.5 A2 Even if a firm receives a loan from an assurance client that is a bank or
similar institution under normal lending procedures, terms and conditions,
the loan might create a self-interest threat if it is material to the assurance
client or firm receiving the loan.

interest threat is having the work reviewed by an appropriate reviewer, who
is not an assurance team member, from a network firm that is not a
beneficiary of the loan.
Deposit or Brokerage Accounts

family shall not have deposits or a brokerage account with an assurance
client that is a bank, broker, or similar institution, unless the deposit or
account is held under normal commercial terms.
Loans and Guarantees with an Assurance Client that is not a Bank or Similar
Institution
R911.7 A firm or an assurance team member, or any of that individual’s immediate

family, shall not accept a loan from, or have a borrowing guaranteed by, an
assurance client that is not a bank or similar institution, unless the loan or
guarantee is immaterial to both:
(a) The firm, or the individual receiving the loan or guarantee, as

applicable; and
(b) The client.

SECTION 920
BUSINESS RELATIONSHIPS
Introduction

920.2 A close business relationship with an assurance client or its management

might create a self-interest or intimidation threat. This section sets out
specific requirements and application material relevant to applying the
General
920.3 A1 This section contains references to the “materiality” of a financial interest

and the “significance” of a business relationship. In determining whether
such a financial interest is material to an individual, the combined net worth
of the individual and the individual’s immediate family members may be
taken into account.
920.3 A2 Examples of a close business relationship arising from a commercial

relationship or common financial interest include:
 Having a financial interest in a joint venture with either the client or

a controlling owner, director or officer or other individual who
performs senior managerial activities for that client.
 Arrangements to combine one or more services or products of the

firm with one or more services or products of the client and to market
the package with reference to both parties.
 Distribution or marketing arrangements under which the firm

distributes or markets the client’s products or services, or the client
distributes or markets the firm’s products or services.
Firm, Assurance Team Member or Immediate Family Business Relationships
R920.4 A firm or an assurance team member shall not have a close business
relationship with an assurance client or its management unless any financial
interest is immaterial and the business relationship is insignificant to the
client or its management and the firm or the assurance team member, as
applicable.

920.4 A1 A self-interest or intimidation threat might be created if there is a close

business relationship between the assurance client or its management and
the immediate family of an assurance team member.
Buying Goods or Services
920.5 A1 The purchase of goods and services from an assurance client by a firm, or
an assurance team member, or any of that individual’s immediate family
does not usually create a threat to independence if the transaction is in the
normal course of business and at arm’s length. However, such transactions
might be of such a nature and magnitude that they create a self-interest
threat.
 Eliminating or reducing the magnitude of the transaction.
 Removing the individual from the assurance team.

SECTION 921
FAMILY AND PERSONAL RELATIONSHIPS
Introduction

921.2 Family or personal relationships with client personnel might create a self-
General
921.3 A1 A self-interest, familiarity or intimidation threat might be created by family

and personal relationships between an assurance team member and a director
or officer or, depending on their role, certain employees of the assurance
client.
 The individual’s responsibilities on the assurance team.
 The role of the family member or other individual within the client,
and the closeness of the relationship.
Immediate Family of an Assurance Team Member
921.4 A1 A self-interest, familiarity or intimidation threat is created when an

immediate family member of an assurance team member is an employee in
a position to exert significant influence over the subject matter of the
engagement.
 The position held by the immediate family member.
 The role of the assurance team member.

or intimidation threat is removing the individual from the assurance team.


of the assurance team so that the assurance team member does not deal with
matters that are within the responsibility of the immediate family member.
R921.5 An individual shall not participate as an assurance team member when any
of that individual’s immediate family:
(a) Is a director or officer of the assurance client;
(b) Is an employee in a position to exert significant influence over the

subject matter information of the assurance engagement; or
(c) Was in such a position during any period covered by the engagement
or the subject matter information.
Close Family of an Assurance Team Member
921.6 A1 A self-interest, familiarity or intimidation threat is created when a close

family member of an assurance team member is:
(a) A director or officer of the assurance client; or

 The nature of the relationship between the assurance team member

and the close family member.
 The position held by the close family member.


matters that are within the responsibility of the close family member.

Other Close Relationships of an Assurance Team Member
R921.7 An assurance team member shall consult in accordance with firm policies
and procedures if the assurance team member has a close relationship with
an individual who is not an immediate or close family member, but who is:
(a) A director or officer of the assurance client; or

or intimidation threat created by such relationships include:
 The nature of the relationship between the individual and the



matters that are within the responsibility of the individual with whom the
assurance team member has a close relationship.
Relationships of Partners and Employees of the Firm
921.8 A1 A self-interest, familiarity or intimidation threat might be created by a

personal or family relationship between:
(a) A partner or employee of the firm who is not an assurance team

member; and
(b) A director or officer of the assurance client or an employee in a

position to exert significant influence over the subject matter
information of the assurance engagement.

 The nature of the relationship between the partner or employee of

the firm and the director or officer or employee of the client.
 The degree of interaction of the partner or employee of the firm with

the assurance team.
 The position of the partner or employee within the firm.
 The role of the individual within the client.
921.8 A3 Examples of actions that might be safeguards to address such self-interest,

familiarity or intimidation threats include:
 Structuring the partner’s or employee’s responsibilities to reduce

any potential influence over the assurance engagement.
 Having an appropriate reviewer review the relevant assurance work

performed.

SECTION 922
RECENT SERVICE WITH AN ASSURANCE CLIENT
Introduction

922.2 If an assurance team member has recently served as a director or officer or

employee of the assurance client, a self-interest, self-review or familiarity
threat might be created. This section sets out specific requirements and
circumstances.
Service During the Period Covered by the Assurance Report
R922.3 The assurance team shall not include an individual who, during the period
covered by the assurance report:
(a) Had served as a director or officer of the assurance client; or

Service Prior to the Period Covered by the Assurance Report
922.4 A1 A self-interest, self-review or familiarity threat might be created if, before

the period covered by the assurance report, an assurance team member:
(a) Had served as a director or officer of the assurance client; or

For example, a threat would be created if a decision made or work performed

by the individual in the prior period, while employed by the client, is to be
evaluated in the current period as part of the current assurance engagement.

 The position the individual held with the client.
 The length of time since the individual left the client.

interest, self-review or familiarity threat is having an appropriate reviewer
review the work performed by the assurance team member.

SECTION 923
SERVING AS A DIRECTOR OR OFFICER OF AN ASSURANCE CLIENT
Introduction

923.2 Serving as a director or officer of an assurance client creates self-review and

self-interest threats. This section sets out specific requirements and
circumstances.
Service as Director or Officer
R923.3 A partner or employee of the firm shall not serve as a director or officer of
an assurance client of the firm.
Service as Company Secretary
R923.4 A partner or employee of the firm shall not serve as Company Secretary for
an assurance client of the firm unless:
(a) This practice is specifically permitted under local law, professional

rules or practice;
(b) Management makes all decisions; and
(c) The duties and activities performed are limited to those of a routine
and administrative nature, such as preparing minutes and
maintaining statutory returns.
923.4 A1 The position of Company Secretary has different implications in different

jurisdictions. Duties might range from: administrative duties (such as
personnel management and the maintenance of company records and
registers) to duties as diverse as ensuring that the company complies with
regulations or providing advice on corporate governance matters. Usually
this position is seen to imply a close association with the entity. Therefore,
a threat is created if a partner or employee of the firm serves as Company
Secretary for an assurance client. (More information on providing non-
assurance services to an assurance client is set out in Section 950, Provision
of Non-assurance Services to an Assurance Client).

SECTION 924
EMPLOYMENT WITH AN ASSURANCE CLIENT
Introduction

924.2 Employment relationships with an assurance client might create a self-

General
924.3 A1 A familiarity or intimidation threat might be created if any of the following

individuals have been an assurance team member or partner of the firm:
 A director or officer of the assurance client.
 An employee who is in a position to exert significant influence over

the subject matter information of the assurance engagement.
Former Partner or Assurance Team Member Restrictions
R924.4 If a former partner has joined an assurance client of the firm or a former
assurance team member has joined the assurance client as:

subject matter information of the assurance engagement,
the individual shall not continue to participate in the firm’s business or

professional activities.
924.4 A1 Even if one of the individuals described in paragraph R924.4 has joined the
assurance client in such a position and does not continue to participate in the
firm’s business or professional activities, a familiarity or intimidation threat
might still be created.

924.4 A2 A familiarity or intimidation threat might also be created if a former partner

of the firm has joined an entity in one of the positions described in paragraph
924.3 A1 and the entity subsequently becomes an assurance client of the
firm.
 The position the individual has taken at the client.
 Any involvement the individual will have with the assurance team.
 The length of time since the individual was an assurance team

member or partner of the firm.
 The former position of the individual within the assurance team or

firm. An example is whether the individual was responsible for
maintaining regular contact with the client’s management or those
charged with governance.
924.4 A4 Examples of actions that might be safeguards to address such a familiarity

or intimidation threat include:
 Making arrangements such that the individual is not entitled to any

benefits or payments from the firm, unless made in accordance with
fixed pre-determined arrangements.
 Making arrangements such that any amount owed to the individual

is not material to the firm.
 Modifying the plan for the assurance engagement.
 Assigning to the assurance team individuals who have sufficient

experience relative to the individual who has joined the client.
 Having an appropriate reviewer review the work of the former

Assurance Team Members Entering Employment Negotiations with a Client
R924.5 A firm shall have policies and procedures that require assurance team
members to notify the firm when entering employment negotiations with an
assurance client.

924.5 A1 A self-interest threat is created when an assurance team member participates

in the assurance engagement while knowing that the assurance team member
will, or might, join the client sometime in the future.

removing the individual from the assurance engagement.

interest threat is having an appropriate reviewer review any significant
judgments made by that assurance team member while on the team.

SECTION 940
LONG ASSOCIATION OF PERSONNEL WITH AN ASSURANCE CLIENT
Introduction

940.2 When an individual is involved in an assurance engagement of a recurring

nature over a long period of time, familiarity and self-interest threats might
be created. This section sets out requirements and application material
General
940.3 A1 A familiarity threat might be created as a result of an individual’s long

association with:
(a) The assurance client;
(b) The assurance client’s senior management; or
(c) The subject matter and subject matter information of the assurance
engagement.
940.3 A2 A self-interest threat might be created as a result of an individual’s concern

about losing a longstanding assurance client or an interest in maintaining a
close personal relationship with a member of senior management or those
charged with governance. Such a threat might influence the individual’s
judgment inappropriately.
940.3 A3 Factors that are relevant to evaluating the level of such familiarity or self-
interest threats include:
 The nature of the assurance engagement.
 How long the individual has been an assurance team member, the
individual’s seniority on the team, and the nature of the roles
performed, including if such a relationship existed while the
individual was at a prior firm.

 The extent to which the work of the individual is directed, reviewed

and supervised by more senior personnel.
 The extent to which the individual, due to the individual’s seniority,

has the ability to influence the outcome of the assurance
engagement, for example, by making key decisions or directing the
work of other engagement team members.
 The closeness of the individual’s personal relationship with the

assurance client or, if relevant, senior management.
 The nature, frequency and extent of interaction between the

individual and the assurance client.
 Whether the nature or complexity of the subject matter or subject

matter information has changed.
 Whether there have been any recent changes in the individual or

individuals who are the responsible party or, if relevant, senior
management.
940.3 A4 The combination of two or more factors might increase or reduce the level
of the threats. For example, familiarity threats created over time by the
increasingly close relationship between an individual and the assurance
client would be reduced by the departure of the individual who is the
responsible party.
940.3 A5 An example of an action that might eliminate the familiarity and self- interest
threats in relation to a specific engagement would be rotating the individual
off the assurance team.

self-interest threats include:
 Changing the role of the individual on the assurance team or the

nature and extent of the tasks the individual performs.
 Having an appropriate reviewer who was not an assurance team

member review the work of the individual.
 Performing regular independent internal or external quality reviews

of the engagement.

R940.4 If a firm decides that the level of the threats created can only be addressed
by rotating the individual off the assurance team, the firm shall determine an
appropriate period during which the individual shall not:
(a) Be a member of the engagement team for the assurance engagement;
(b) Provide quality control for the assurance engagement; or
(c) Exert direct influence on the outcome of the assurance engagement.
The period shall be of sufficient duration to allow the familiarity and self-
interest threats to be addressed.

SECTION 950
PROVISION OF NON-ASSURANCE SERVICES TO ASSURANCE CLIENTS

OTHER THAN AUDIT AND REVIEW ENGAGEMENT CLIENTS
Introduction

independent, and apply the conceptual framework set out in Section 120 to
950.2 Firms might provide a range of non-assurance services to their assurance

clients, consistent with their skills and expertise. Providing certain non-
assurance services to assurance clients might create threats to compliance
with the fundamental principles and threats to independence. This section
sets out specific requirements and application material relevant to applying
the conceptual framework in such circumstances.
General
R950.3 Before a firm accepts an engagement to provide a non-assurance service to

an assurance client, the firm shall determine whether providing such a
service might create a threat to independence.
950.3 A1 The requirements and application material in this section assist firms in
analyzing certain types of non-assurance services and the related threats that
might be created when a firm accepts or provides non- assurance services to
an assurance client.
950.3 A2 New business practices, the evolution of financial markets and changes in
information technology are among the developments that make it impossible
to draw up an all-inclusive list of non-assurance services that might be
provided to an assurance client. As a result, the Code does not include an
exhaustive listing of all non-assurance services that might be provided to an
assurance client.
Evaluating Threats
providing a non-assurance service to an assurance client include:
 The nature, scope and purpose of the service.
 The degree of reliance that will be placed on the outcome of the

service as part of the assurance engagement.


provided.
 Whether the outcome of the service will affect matters reflected in

the subject matter or subject matter information of the assurance
engagement, and, if so:
○ The extent to which the outcome of the service will have a

material or significant effect on the subject matter of the
○ The extent of the assurance client’s involvement in determining

significant matters of judgment.
 The level of expertise of the client’s management and employees

with respect to the type of service provided.
Materiality in Relation to an Assurance Client’s Information
950.4 A2 The concept of materiality in relation to an assurance client’s information is

addressed in International Standard on Assurance Engagements (ISAE)
3000 (Revised), Assurance Engagements other than Audits or Reviews of
Historical Financial Information. The determination of materiality involves
the exercise of professional judgment and is impacted by both quantitative
and qualitative factors. It is also affected by perceptions of the financial or
other information needs of users.
Multiple Non-assurance Services Provided to the Same Assurance Client
950.4 A3 A firm might provide multiple non-assurance services to an assurance client.

In these circumstances the combined effect of threats created by providing
those services is relevant to the firm’s evaluation of threats.
Addressing Threats
950.5 A1 Paragraph 120.10 A2 includes a description of safeguards. In relation to

providing non-assurance services to assurance clients, safeguards are
actions, individually or in combination, that the firm takes that effectively
reduce threats to independence to an acceptable level. In some situations,
when a threat is created by providing a service to an assurance client,
safeguards might not be available. In such situations, the application of the
conceptual framework set out in Section 120 requires the firm to decline or
end the non-assurance service or the assurance engagement.

Prohibition on Assuming Management Responsibilities
R950.6 A firm shall not assume a management responsibility related to the subject
matter or subject matter information of an assurance engagement provided
by the firm. If the firm assumes a management responsibility as part of any
other service provided to the assurance client, the firm shall ensure that the
responsibility is not related to the subject matter or subject matter
information of the assurance engagement provided by the firm.
950.6 A1 Management responsibilities involve controlling, leading and directing an

entity, including making decisions regarding the acquisition, deployment
and control of human, financial, technological, physical and intangible
resources.
950.6 A2 Providing a non-assurance service to an assurance client creates self-review

and self-interest threats if the firm assumes a management responsibility
when performing the service. In relation to providing a service related to the
subject matter or subject matter information of an assurance engagement
provided by the firm, assuming a management responsibility also creates a
familiarity threat and might create an advocacy threat because the firm
becomes too closely aligned with the views and interests of management.
950.6 A3 Determining whether an activity is a management responsibility depends on

the circumstances and requires the exercise of professional judgment.
Examples of activities that would be considered a management
responsibility include:
 Setting policies and strategic direction.
 Hiring or dismissing employees.
 Directing and taking responsibility for the actions of employees in

relation to the employees’ work for the entity.
 Authorizing transactions.
 Controlling or managing bank accounts or investments.
 Deciding which recommendations of the firm or other third parties

to implement.
 Reporting to those charged with governance on behalf of

management.
 Taking responsibility for designing, implementing, monitoring and

maintaining internal control.

950.6 A4 Providing advice and recommendations to assist the management of an

assurance client in discharging its responsibilities is not assuming a
management responsibility. (Ref: Paras. R950.6 to 950.6 A3).
R950.7 To avoid assuming a management responsibility when providing non-

assurance services to an assurance client that are related to the subject matter
or subject matter information of the assurance engagement, the firm shall be
satisfied that client management makes all related judgments and decisions
that are the proper responsibility of management. This includes ensuring that
the client’s management:
(a) Designates an individual who possesses suitable skill, knowledge

and experience to be responsible at all times for the client’s decisions
and to oversee the services. Such an individual, preferably within
senior management, would understand:
(i) The objectives, nature and results of the services; and
(ii) The respective client and firm responsibilities.
However, the individual is not required to possess the expertise to

perform or re-perform the services.
(b) Provides oversight of the services and evaluates the adequacy of the
results of the service performed for the client’s purpose; and
(c) Accepts responsibility for the actions, if any, to be taken arising from
the results of the services.
Other Considerations Related to Providing Specific Non-Assurance Services
950.8 A1 A self-review threat might be created if the firm is involved in the

preparation of subject matter information which is subsequently the subject
matter information of an assurance engagement. Examples of non-assurance
services that might create such self-review threats when providing services
related to the subject matter information of an assurance engagement
include:
(a) Developing and preparing prospective information and subsequently

providing assurance on this information.
(b) Performing a valuation that forms part of the subject matter

information of an assurance engagement.

SECTION 990
REPORTS THAT INCLUDE A RESTRICTION ON USE AND DISTRIBUTION

(ASSURANCE ENGAGEMENTS OTHER THAN AUDIT AND REVIEW
ENGAGEMENTS)
Introduction

990.2 This section sets out certain modifications to Part 4B which are permitted in
certain circumstances involving assurance engagements where the report
includes a restriction on use and distribution. In this section, an engagement
to issue a restricted use and distribution assurance report in the
circumstances set out in paragraph R990.3 is referred to as an “eligible
assurance engagement.”
General
R990.3 When a firm intends to issue a report on an assurance engagement which

includes a restriction on use and distribution, the independence requirements
set out in Part 4B shall be eligible for the modifications that are permitted
by this section, but only if:
(a) The firm communicates with the intended users of the report
regarding the modified independence requirements that are to be
applied in providing the service; and
(b) The intended users of the report understand the purpose, subject
matter information and limitations of the report and explicitly agree
to the application of the modifications.
990.3 A1 The intended users of the report might obtain an understanding of the
purpose, subject matter information, and limitations of the report by
participating, either directly, or indirectly through a representative who has
authority to act for the intended users, in establishing the nature and scope
of the engagement. In either case, this participation helps the firm to
communicate with intended users about independence matters, including the
circumstances that are relevant to applying the conceptual framework. It also
allows the firm to obtain the agreement of the intended users to the modified
independence requirements.

R990.4 Where the intended users are a class of users who are not specifically
identifiable by name at the time the engagement terms are established, the
firm shall subsequently make such users aware of the modified
independence requirements agreed to by their representative.
990.4 A1 For example, where the intended users are a class of users such as lenders in
a syndicated loan arrangement, the firm might describe the modified
independence requirements in an engagement letter to the representative of
the lenders. The representative might then make the firm’s engagement letter
available to the members of the group of lenders to meet the requirement for
the firm to make such users aware of the modified independence
requirements agreed to by the representative.
R990.5 When the firm performs an eligible assurance engagement, any

modifications to Part 4B shall be limited to those modifications set out in
paragraphs R990.7 and R990.8.
R990.6 If the firm also issues an assurance report that does not include a restriction
on use and distribution for the same client, the firm shall apply Part 4B to
that assurance engagement.
Financial Interests, Loans and Guarantees, Close Business, Family and Personal
Relationships
R990.7 When the firm performs an eligible assurance engagement:
(a) The relevant provisions set out in Sections 910, 911, 920, 921, 922
and 924 need apply only to the members of the engagement team,
and their immediate and close family members;
(b) The firm shall identify, evaluate and address any threats to
independence created by interests and relationships, as set out in
Sections 910, 911, 920, 921, 922 and 924, between the assurance
client and the following assurance team members;
(i) Those who provide consultation regarding technical or industry

specific issues, transactions or events; and
(ii) Those who provide quality control for the engagement,

review; and
(c) The firm shall evaluate and address any threats that the engagement
team has reason to believe are created by interests and relationships
between the assurance client and others within the firm who can
directly influence the outcome of the assurance engagement, as set
out in Sections 910, 911, 920, 921, 922 and 924.

990.7 A1 Others within the firm who can directly influence the outcome of the
assurance engagement include those who recommend the compensation, or
who provide direct supervisory, management or other oversight, of the
assurance engagement partner in connection with the performance of the
R990.8 When the firm performs an eligible assurance engagement, the firm shall not
hold a material direct or a material indirect financial interest in the assurance
client.

GLOSSARY, INCLUDING LISTS OF ABBREVIATIONS
In the Code of Ethics for Chartered Accountants, the singular shall be construed as
including the plural as well as the reverse, and the terms below have the following meanings
assigned to them.
In this Glossary, explanations of defined terms are shown in regular font; italics are used
for explanations of described terms which have a specific meaning in certain parts of the
Code or for additional explanations of defined terms. References are also provided to terms
described in the Code.
Acceptable A level at which a chartered accountant using the reasonable and

level informed third party test would likely conclude that the accountant
complies with the fundamental principles.
Advertising The communication to the public of information as to the services or

skills provided by chartered accountants in practice with a view to
procuring professional business.
Appropriate An appropriate reviewer is a professional with the necessary

reviewer knowledge, skills, experience and authority to review, in an objective
manner, the relevant work performed or service provided. Such an
individual might be a chartered accountant.
This term is described in paragraph 300.8A4.
Assurance The responsible party that is the person (or persons) who:
client
(a) In a direct reporting engagement, is responsible for the subject
matter; or
(b) In an assertion-based engagement, is responsible for the subject

matter information and might be responsible for the subject
matter.
Assurance An engagement in which a chartered accountant in practice expresses

engagement a conclusion designed to enhance the degree of confidence of the
intended users other than the responsible party about the outcome of
the evaluation or measurement of a subject matter against criteria.
(For guidance on assurance engagements, see the International

Framework for Assurance Engagements issued by the International
Auditing and Assurance Standards Board. The International
Framework for Assurance Engagements describes the elements and
objectives of an assurance engagement and identifies engagements to
which International Standards on Auditing (ISAs), International
Standards on Review Engagements (ISREs) and International
Standards on Assurance Engagements (ISAEs) apply.)
Page 252 of 263 GLOSSARY

Assurance (a) All members of the engagement team for the assurance
team engagement;
(b) All others within a firm who can directly influence the outcome
of the assurance engagement, including:
(i) Those who recommend the compensation of, or who provide

direct supervisory, management or other oversight of the
assurance engagement partner in connection with the
performance of the assurance engagement;
(ii) Those who provide consultation regarding technical or

industry specific issues, transactions or events for the
assurance engagement; and
(iii) Those who provide quality control for the assurance

engagement, including those who perform the engagement
quality control review for the assurance engagement.
Audit In Part 4A, the term “audit” applies equally to “review.”
Audit client An entity in respect of which a firm conducts an audit engagement.

When the client is a listed entity, audit client will always include its
related entities. When the audit client is not a listed entity, audit client
includes those related entities over which the client has direct or
indirect control. (See also paragraph R400.20.)
In Part 4A, the term “audit client” applies equally to “review client.”
Audit A reasonable assurance engagement in which a chartered accountant

engagement in practice expresses an opinion whether financial statements are
prepared, in all material respects (or give a true and fair view or are
presented fairly, in all material respects), in accordance with an
applicable financial reporting framework, such as an engagement
conducted in accordance with International Standards on Auditing.
This includes a Statutory Audit, which is an audit required by
legislation or other regulation.
In Part 4A, the term “audit engagement” applies equally to “review

engagement.”
Audit report In Part 4A, the term “audit report” applies equally to “review report.”
Audit team (a) All members of the engagement team for the audit engagement;
of the audit engagement, including:
GLOSSARY Page 253 of 263

(i) Those who recommend the compensation of, or who provide

engagement partner in connection with the performance of
the audit engagement, including those at all successively
senior levels above the engagement partner through to the
individual who is the firm’s Senior or Managing Partner
(Chief Executive or equivalent);
(ii) Those who provide consultation regarding technical or

industry-specific issues, transactions or events for the
engagement; and
(iii) Those who provide quality control for the engagement,

review for the engagement; and
All those within a network firm who can directly influence the
outcome of the audit engagement.
In Part 4A, the term “audit team” applies equally to “review team.”
Chartered “Chartered accountant” means a person who is a member of the

accountant Institute.
In Part 1, the term “chartered accountant” refers to individual chartered

accountants in business and to chartered accountants in practice and
their firms.
In Part 2, the term “chartered accountant” refers to chartered

accountants in business.
In Parts 3, 4A and 4B, the term “chartered accountant” refers to

chartered accountants in practice and their firms.
Chartered A chartered accountant working in areas such as commerce, industry,

accountant in service, the public sector, education, the not-for-profit sector, or in
business regulatory or professional bodies, who might be an employee,
contractor, partner, director (executive or non-executive), owner-
manager or volunteer.
Chartered As defined in the Chartered Accountants Ordinance, 1961.

accountant in
practice The term “chartered accountant in practice” is also used to refer to a
firm of chartered accountants in practice.
Close family A parent, child or sibling who is not an immediate family member.

Code of As embodied in the Listing Regulations of the Pakistan Stock

Corporate Exchange.
Governance
Company Any entity or person(s), whether organized for profit or not, including
a parent company and all of its subsidiaries.
Conceptual This term is described in Section 120.

framework
Contingent fee A fee calculated on a predetermined basis relating to the outcome of a

transaction or the result of the services performed by the firm. A fee
that is established by a court or other public authority is not a
contingent fee.
Cooling-off This term is described in paragraph R540.5 for the purposes of

period paragraphs R540.11 to R540.19.
Direct A financial interest:

financial
interest (a) Owned directly by and under the control of an individual or entity
(including those managed on a discretionary basis by others); or
(b) Beneficially owned through a collective investment vehicle,

estate, trust or other intermediary over which the individual or
entity has control, or the ability to influence investment decisions.
Director or Those charged with the governance of an entity, or acting in an

officer equivalent capacity, regardless of their title, which might vary from
jurisdiction to jurisdiction.
Eligible audit This term is described in paragraph 800.2 for the purposes of Section
engagement 800.
Eligible This term is described in paragraph 990.2 for the purposes of Section
assurance 990.
engagement
Engagement The partner or other person in the firm who is responsible for the
partner engagement and its performance, and for the report that is issued on
behalf of the firm, and who, where required, has the appropriate
authority from a professional, legal or regulatory body.
Engagement The engagement period starts when the audit team begins to perform
period (Audit the audit. The engagement period ends when the audit report is issued.
and Review When the engagement is of a recurring nature, it ends at the later of
Engagements) the notification by either party that the professional relationship has
ended or the issuance of the final audit report.

Engagement The engagement period starts when the assurance team begins to
period perform assurance services with respect to the particular engagement.
(Assurance The engagement period ends when the assurance report is issued.
Engagements When the engagement is of a recurring nature, it ends at the later of
Other than the notification by either party that the professional relationship has
Audit and ended or the issuance of the final assurance report.
Review
Engagements)
Engagement A process designed to provide an objective evaluation, on or before

quality control the report is issued, of the significant judgments the engagement team
review made and the conclusions it reached in formulating the report.
Engagement All partners and staff performing the engagement, and any individuals
team engaged by the firm or a network firm who perform assurance
procedures on the engagement. This excludes external experts engaged
by the firm or by a network firm.
The term “engagement team” also excludes individuals within the

client’s internal audit function who provide direct assistance on an
audit engagement when the external auditor complies with the
requirements of ISA 610 (Revised 2013), Using the Work of Internal
Auditors.
Existing A chartered accountant in practice currently holding an audit

accountant appointment or carrying out accounting, tax, consulting or similar
professional services for a client.
External An individual (who is not a partner or a member of the professional

expert staff, including temporary staff, of the firm or a network firm) or
organization possessing skills, knowledge and experience in a field
other than accounting or auditing, whose work in that field is used to
assist the chartered accountant in obtaining sufficient appropriate
evidence.
Financial An interest in an equity or other security, debenture, loan or other debt

interest instrument of an entity, including rights and obligations to acquire
such an interest and derivatives directly related to such interest.
Financial A structured representation of historical financial information,

statements including related notes, intended to communicate an entity’s economic
resources or obligations at a point in time or the changes therein for a
period of time in accordance with a financial reporting framework. The
related notes ordinarily comprise a summary of significant accounting
policies and other explanatory information. The term can relate to a
complete set of financial statements, but it can also refer to a single
financial statement, for example, a balance sheet, or a statement of
revenues and expenses, and related explanatory notes.

Financial In the case of a single entity, the financial statements of that entity. In
statements on the case of consolidated financial statements, also referred to as group
which the firm financial statements, the consolidated financial statements.
will express an
opinion
Firm (a) A sole practitioner, partnership or corporation of chartered

accountants;
(b) An entity that controls such parties, through ownership,

management or other means; and
(c) An entity controlled by such parties, through ownership,

management or other means.
Paragraphs 400.4 and 900.3 explain how the word “firm” is used to
address the responsibility of chartered accountants and firms for
compliance with Parts 4A and 4B, respectively.
Fundamental This term is described in paragraph 110.1 A1. Each of the fundamental
principles principles is, in turn, described in the following paragraphs:
Integrity R111.1
Objectivity R112.1
Professional competence and due care R113.1
Confidentiality R114.1
Professional behavior R115.1
Historical Information expressed in financial terms in relation to a particular

financial entity, derived primarily from that entity’s accounting system, about
information economic events occurring in past time periods or about economic
conditions or circumstances at points in time in the past.
Immediate A spouse (or equivalent) or dependent.

family
Independence Independence comprises:
(a) Independence of mind – the state of mind that permits the

expression of a conclusion without being affected by influences
that compromise professional judgment, thereby allowing an
individual to act with integrity, and exercise objectivity and
professional skepticism.

circumstances that are so significant that a reasonable and
informed third party would be likely to conclude that a firm’s, or

an audit or assurance team member’s, integrity, objectivity or

professional skepticism has been compromised.
As set out in paragraphs 400.5 and 900.4, references to an individual

or firm being “independent” mean that the individual or firm has
complied with Parts 4A and 4B, as applicable.
Indirect A financial interest beneficially owned through a collective investment

financial vehicle, estate, trust or other intermediary over which the individual or
interest entity has no control or ability to influence investment decisions.
Inducement 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 (for chartered accountants in business), or
between chartered accountants and existing or prospective clients (for
chartered accountants in practice), to acts that result in non-
compliance with laws and regulations. An inducement can take many
different forms, for example:
 Gifts.
 Hospitality.
 Entertainment.
Key audit The engagement partner, the individual responsible for the
partner engagement quality control review, and other audit partners, if any, on
the engagement team who make key decisions or judgments on
significant matters with respect to the audit of the financial statements
on which the firm will express an opinion. Depending upon the
circumstances and the role of the individuals on the audit, “other audit
partners” might include, for example, audit partners responsible for
significant subsidiaries or divisions.
Listed entity An entity whose shares, stock or debt are quoted or listed on a
recognized stock exchange, or are marketed under the regulations of a
recognized stock exchange or other equivalent body.
May This term is used in the Code to denote permission to take a particular
action in certain circumstances, including as an exception to a
requirement. It is not used to denote possibility.

Might This term is used in the Code to denote the possibility of a matter
arising, an event occurring or a course of action being taken. The term
does not ascribe any particular level of possibility or likelihood when
used in conjunction with a threat, as the evaluation of the level of a
threat depends on the facts and circumstances of any particular
matter, event or course of action.
Network A larger structure:
(a) That is aimed at co-operation; and
(b) That is clearly aimed at profit or cost sharing or shares common

ownership, control or management, common quality control
policies and procedures, common business strategy, the use of a
common brand-name, or a significant part of professional
resources.
Network firm A firm or entity that belongs to a network.
For further information, see paragraphs 400.50 A1 to 400.54 A1.
Non- Non-compliance with laws and regulations (“non-compliance”)

compliance comprises acts of omission or commission, intentional or
with laws and unintentional, which are contrary to the prevailing laws or regulations
regulations committed by the following parties:
(Chartered
Accountants in (a) The chartered accountant’s employing organization;
Business) (b) Those charged with governance of the employing organization;
(c) Management of the employing organization; or
This term is described in paragraph 260.5 A1.
Non- Non-compliance with laws and regulations (“non-compliance”)

compliance comprises acts of omission or commission, intentional or
with laws and unintentional, which are contrary to the prevailing laws or regulations
regulations committed by the following parties:
(Chartered
Accountants in (a) A client;
Practice) (b) Those charged with governance of a client;
(c) Management of a client; or
(d) Other individuals working for or under the direction of a client.
Office A distinct sub-group, whether organized on geographical or practice

lines.

Predecessor A chartered accountant in practice who most recently held an audit

accountant appointment or carried out accounting, tax, consulting or similar
professional services for a client, where there is no existing accountant.
Professional An activity requiring accountancy or related skills undertaken by a

activity chartered accountant, including accounting, auditing, tax,
management consulting, and financial management.
Professional Professional activities performed for clients.

services
Proposed A chartered accountant in practice who is considering accepting an

accountant audit appointment or an engagement to perform accounting, tax,
consulting or similar professional services for a prospective client (or
in some cases, an existing client).
Public interest
(a) (a) A listed entity; or
entity
(b) (b) An entity:
(i) Defined by regulation or legislation as a public interest

entity; or
(ii) For which the audit is required by regulation or legislation

to be conducted in compliance with the same independence
requirements that apply to the audit of listed entities. Such
regulation might be promulgated by any relevant regulator,
including an audit regulator.
Other entities might also be considered to be public interest entities,

as set out in paragraph 400.8.
Publicity The communication to the public of facts about a chartered accountant

which are not designed for the deliberate promotion of that chartered
accountant.
Reasonable The reasonable and informed third party test is a consideration by the
and informed chartered accountant about whether the same conclusions would likely
third party be reached by another party. Such consideration is made from the
perspective of a reasonable and informed third party, who weighs all
Reasonable the relevant facts and circumstances that the accountant knows, or
and informed could reasonably be expected to know, at the time that the conclusions
third party test are made. The reasonable and informed third party does not need to
be an accountant, but would possess the relevant knowledge and
experience to understand and evaluate the appropriateness of the
accountant’s conclusions in an impartial manner.
These terms are described in paragraph R120.5 A4.

Related entity An entity that has any of the following relationships with the client:
(a) An entity that has direct or indirect control over the client if the
client is material to such entity;
(b) An entity with a direct financial interest in the client if that entity
has significant influence over the client and the interest in the
client is material to such entity;
(c) An entity over which the client has direct or indirect control;
(d) An entity in which the client, or an entity related to the client under
(c) above, has a direct financial interest that gives it significant
influence over such entity and the interest is material to the client
and its related entity in (c); and
(e) An entity which is under common control with the client (a “sister
entity”) if the sister entity and the client are both material to the
entity that controls both the client and sister entity.
Review client An entity in respect of which a firm conducts a review engagement.
Review An assurance engagement, conducted in accordance with

engagement International Standards on Review Engagements or equivalent, in
which a chartered accountant in practice expresses a conclusion on
whether, on the basis of the procedures which do not provide all the
evidence that would be required in an audit, anything has come to the
accountant’s attention that causes the accountant to believe that the
financial statements are not prepared, in all material respects, in
accordance with an applicable financial reporting framework.
Review team (a) All members of the engagement team for the review engagement;
and
of the review engagement, including:
i) Those who recommend the compensation of, or who provide

engagement partner in connection with the performance of
the review engagement, including those at all successively
senior levels above the engagement partner through to the
individual who is the firm’s Senior or Managing Partner
(Chief Executive or equivalent);
ii) Those who provide consultation regarding technical or

industry specific issues, transactions or events for the
engagement; and

iii) Those who provide quality control for the engagement,

review for the engagement; and
All those within a network firm who can directly influence the
outcome of the review engagement.
Safeguards Safeguards are actions, individually or in combination, that the

chartered accountant takes that effectively reduce threats to
compliance with the fundamental principles to an acceptable level.
Senior Senior chartered accountants in business are directors, officers or

chartered senior employees able to exert significant influence, over, and make
accountant in decisions regarding, the acquisition, deployment and control of the
business employing organization’s human, financial, technological, physical
and intangible resources.
Substantial This term is described in paragraphs 260.5 A3 and 360.5 A3.

harm
Special Financial statements prepared in accordance with a financial reporting

purpose framework designed to meet the financial information needs of
financial specified users.
statements
Those charged The person(s) or organization(s) (for example, a corporate trustee)

with with responsibility for overseeing the strategic direction of the entity
governance and obligations related to the accountability of the entity. This includes
overseeing the financial reporting process. For some entities in some
jurisdictions, those charged with governance might include
management personnel, for example, executive members of a
governance board of a private or public sector entity, or an owner-
manager.
Threats This term is described in paragraph 120.6 A3 and includes the

following categories:
Self interest 120.6 A3(a)

Self-review 120.6 A3(b)
Advocacy 120.6 A3(c)
Familiarity 120.6 A3(d)
Intimidation 120.6 A3(e)
Time-on period This term is described in paragraph R540.5.

LISTS OF ABBREVIATIONS AND STANDARDS REFERRED TO IN

THE CODE
LIST OF ABBREVIATIONS
Abbreviation Explanation
Assurance Framework International Framework for Assurance Engagements
COSO Committee of Sponsoring Organizations of the Treadway
Commission
CoCo Chartered Professional Accountants of Canada Criteria of
Control
IAASB International Auditing and Assurance Standards Board
IESBA International Ethics Standards Board for Accountants
IFAC International Federation of Accountants
ISAs International Standards on Auditing
ISAEs International Standards on Assurance Engagements
ISQCs International Standards on Quality Control
ISREs International Standards on Review Engagements
LIST OF STANDARDS REFERRED TO IN THE CODE
Standard Full Title

ISA 320 Materiality In Planning and Performing an Audit
ISA 610 (Revised Using the Work of Internal Auditors
2013)
ISAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of
Historical Financial Information
ISQC 1 Quality Control for Firms that Perform Audits and Reviews of
Financial Statements, and Other Assurance and Related
Services Engagements
ISRE 2400 (Revised) Engagements to Review Historical Financial Statements
EFFECTIVE DATE
The Code is effective for audits of financial statements for periods beginning on or after
July 1, 2020.

MEMBERS' HANDBOOK
PART IV
7. MEMBER’S CONDUCT-GENERALLY
THE INSTITUTE OF
7.0 Members’ Conduct Generally
CONTENTS
7.01 Use of designations and designatory letters
7.02 Communicate change in address promptly
7.03 Compulsory admission as fellow members (Withdrawn)
Members permitted to mark Tick or Cross in Election Ballot

7.04
Papers
ICAP Code of conduct policy for general membership
7.05
usage of social media
7.01
USE OF DESIGNATIONS AND DESIGNATORY LETTERS
"It was decided that there should be no objection to use any qualification and
designatory letters against the names of members provided these denoted the
qualifications of Universities and Institutes duly recognized by the *Central
Government or the Council of the Institute. The members were, however, advised to
use only highest degree in a particular time awarded by a University or an
Institute".
(1st meeting of Council - August 17, 1961)
Only designation 'Chartered Accountants' to be used, “in accordance with Section

5 of the Ordinance, members of the Institute could put the words 'ACA' or 'FCA'
against their names. Section 7 of the Ordinance, however, provided that every
member of the Institute in practice shall and any other member may use the
designation of 'CHARTERED ACCOUNTANT' and no member using such
designation shall use any other designation, whether in addition thereto or in
substitution therefore, except as laid down in the proviso to that section by which
any such person was not prohibited from adding any other description or
designatory letters to his name, if entitled thereto the indicate membership of such
other Institute of Accountancy, whether in Pakistan or elsewhere, as may be
recognized in this behalf by the Council, or any other qualification that he may
possess. There is also nothing to prohibit a firm, all the partners of which are
members of the Institute and in practice, from being known by its firm name as
Chartered Accountants. Cases were brought to the notice of the Council where
members of firms of Chartered Accountants were styling themselves as Chartered
Accountants (England & Wales) and Chartered Accountants, (Pakistan). The use
of the words 'CHARTERED ACCOUNTANTS'(ENGLAND & WALES) with the
name of a firm was not considered desirable. The Council resolved that a general
directive may be issued to members that:
* Now Federal Government

7.01
(a) a firm practicing in Pakistan may use the designation

'CHARTERED ACCOUNTANTS' but without any explanatory
words or letters.
(b) A member may add after his own name any description or
designatory letters to which he is entitled provided that his Pakistani
professional qualification shall appear first without any explanatory
word.
The Council reconsidered the question of allowing the use of designatory letters
against members' names and decided to issue the following revised directive to the
members:-
(a) only the designation 'Chartered Accountants' should be used
against the name of practicing firm in Pakistan. No explanatory
words or letters should be used after this designation.
(b) a member may add after this own name any description or
designatory letter to which he is entitled provided that his Pakistani
qualifications shall appear first 'without any explanatory words.
(c) Where a partner signs in his individual name on behalf of a firm

there would be no objection to his adding recognized foreign
qualifications or designatory letters to his personal name (not the
name of the firm) but such qualifications or designatory letters may
be added after Pakistani qualifications which will appear first
without the use of the word "Pakistan".
(4th meeting of Council August 25, 1962.

Re-affirmed in 7th meeting - August 30, 1963)
''The Council approved the qualification of the following organizations for

the purpose of Section 7 of the Chartered Accountants Ordinance, 1961 (X
of 1961):
7.01
(i) The Institute of Chartered Accountants in England &

Wales;
(ii) The Institute of Chartered Accountants in Ireland;
(iii) The Institute of Chartered Accountants in Scotland;
(iv) The Institute of Chartered Accountants in Australia; and
(v) The Canadian Institute of Chartered Accountants.
This means that only the qualifications of the above accountancy bodies can
be used against the names of the members in the manner as specified on
preceding page.
(7th meeting of Council - August 30, 1963)
Use of designatory letters ACMA, ACIS (UK), ACCA: "The Council allowed the
members to use designatory letters of their professional qualifications like
ACMA, ACIS (UK),' ACCA with their names."
(64th meeting of Council - December 24, 1981)

7.02
COMMUNICATE CHANGE IN ADDRESS PROMPTLY
"Recently, there have been growing complaints about postal mishap and mis-
communication of Institute's circulars and notifications to members. In order to
serve better the members' interest by making available promptly all
communications dispatched from the Institute, the Secretariat will appreciate if the
members would keep the Institute informed in writing about any change in
addresses. Attention of the members is also invited to Bye-Law 7 of Chartered
Accountants Bye-Laws, 1961 which requires the members to inform the Institute of
any change of address of place or places of business or employment".
(Newsletter - December 1981)

7.04
Members permitted to mark 'Tick' or 'Cross' on election ballot papers
"The Election Committee appointed for Council's election held in January 1985 had
recommended that for future elections both 'CROSS’ and 'TICK' marks on the
Ballot papers should be acceptable against the existing 'CROSS' marks only. The
Council accepted the suggestion".
(75th meeting of the Council - February 12, 1985)

Directive 7.05
ICAP CODE OF CONDUCT POLICY FOR GENERAL MEMBERSHIP

USAGE OF SOCIAL MEDIA
Communication is an important aspect of our personal and professional lives. Technology has
given a different dimension to this aspect today. Advent of social media has minimised the
distinction among personal, social and professional communication.
As a result, sometimes we face situations that create confusions and due to inappropriate
communications, sometimes ethical and legal problems are created, that are contrary to the
expectations of the society from the members of a profession known for its high ethical and
professional standards. To uphold the high ethical conduct of the members of the Institute that
serve public interest and to maintain the reputation of the Institute and the profession, it is
considered appropriate to form a policy for the conduct of members of the Institute in this
regard.
Therefore, this directive is being issued to ensure decency in communication, confidentiality and
prevent infringement of intellectual property of the Institute in relation to the activities carried
out by the members on social media forums such as Facebook, WhatsApp, etc.
1) Communication in good taste
While posting messages on social media, members have to keep the boundaries of decent
and respectful communication. The basic principle of respecting the core value of the
profession is not to be compromised.
2) Use of ICAP logo on Social Media
2.1 Groups and pages are being made on Facebook, WhatsApp and social media platforms
which display ICAP’s logos, name and distinctive initials giving the impression that they
originate from or are approved by the Institute.
2.2 Members are advised to respect the Institute’s intellectual property rights by ensuring
that the pages and groups do not use the ICAP logos or create the impression of being
affiliated or appear to be like an official page / group of the Institute.
3) Confidentiality
Disclosure of any proceedings of the Council or its Committees/Boards or any official
working papers, minutes of meetings, and documents on social media forums which are
relating to the affairs of the Institute and are confidential and not publicly available is
strictly prohibited.
4.) Be Respectful
All the Members are advised not to post false or defamatory material on ICAP or any of
its Committees, Boards and Council, such as personal attacks, derogatory and
disparaging remarks, statements or content that is threatening.
Members are advised to comply with the above requirements while exchanging correspondence
and posting messages at social media forums. In case of violation of any of the provisions
contained herein, cognizance of the same may be taken for necessary disciplinary action by the
Institute under the Code of Ethics for Chartered Accountants and the Chartered Accountants
Ordinance, 1961.
(311th meeting of the Council – March 21-22, 2019)

MEMBERS' HANDBOOK
PART IV
THE INSTITUTE OF
Directive 8.01
(Revised)
CONTENTS
8.01 Continuing Professional Development (CPD) Revised 2022
Compulsory Attendance of Practicing Members in Seminars on

8.02 International Accounting Standards, International Standards on
Auditing and Quality Control
CONTINUING
PROFESSIONAL
DEVELOPMENT (CPD)
CONTINUING PROFESSIONAL DEVELOPMENT (CPD) 1

CONTINUING PROFESSIONAL
DEVELOPMENT (CPD) DIRECTIVE 8.01
(Revised 2022)
Table of Contents Page #
Preamble 3
Effective Date 3
CPD Approach 3
Organization 4
Requirement 4
Measurement of CPD Credit Hours 5
Exemption to CPD 7
Verification 7
Recording and Monitoring 7
CPD Declaration 8
Non-compliance 8
Annexure 9

CONTINUING PROFESSIONAL DEVELOPMENT
Preamble
1. The International Federation of Accountants (IFAC) has made it mandatory for its member
bodies to design and implement a Continuing Professional Development (CPD)
mechanism in such a way that it becomes a component of continued membership for the
professional accountants.
2. CPD provides continuing development of the (a) professional knowledge (b) professional
skills (c) professional values, ethics and attitudes, and (d) competence achieved during
Initial Professional Development (IPD), refined appropriately for the professional activities
and responsibilities of the professional accountant.
3. In addition to education, practical experience and training, CPD also includes learning and
development activities, such as (a) coaching and mentoring (b) networking (c)
observation, feedback and reflective activities and (d) the self-development activities.
4. The objective of this directive is to have chartered accountants develop and maintain
professional competence subsequent to IPD through the undertaking of relevant CPD that
is necessary, in the public interest, to provide high quality services to meet the needs of
clients, employers and other stakeholders.
5. This directive prescribes that members to:
a. demonstrate a commitment to CPD and maintain professional competence; and
b. undertake and record relevant CPD to contribute to the development and

maintenance of professional competence that is necessary to perform their role as a
professional accountant.
6. Effective date
This directive is effective from 05 January, 2023.
CPD Approach
7. The IES‐7 states that CPD can be achieved by at least three different approaches:
a. Input based approach – by requiring professional accountants to develop and

maintain professional competence demonstrated by completing a specified amount
of learning and development activity relevant to performing their role as a
professional accountant.
b. Output based approach – by requiring professional accountants to develop and

maintain professional competence demonstrated, by achieving way of learning
outcomes, relevant to performing their role as a professional accountant.

c. Combination approach – by effectively and efficiently combining elements of the

input and output based approaches, setting the amount of learning activity required
and measuring the outcomes achieved.
8. The Institute has adopted a combination approach before moving towards a

comprehensive output-based system.
Organization
9. The CPD Committee of the Institute has the responsibility of adopting prescribed CPD
requirements relating to development and implementation of appropriate measurement
monitoring and compliance procedures, promoting the importance of and commitment
to lifelong learning and facilitating access to CPD opportunities and resources.
10. Regional Committees are responsible to hold the CPD activities and should update the
CPD Central Committee with progress.
Requirement
11. Every member is required to:
a. complete at least 120 hours or equivalent learning units of relevant professional

development activity in each rolling three-year period, of which 60 hours or
equivalent learning units should be verifiable;
b. complete at least 20 hours or equivalent learning units in each year; and
c. measure and record learning activities to meet the above requirements.
Explanation: “Rolling Periods” under this directive are periods of three year each, of which
first commences from July 1, 2012 till the June of 2015, and so forth:
i. On July 1, 20221 the short fall in the CPD account maintained at the Institute shall be
deemed zero.
ii. For all other members, proportionate rolling period will commence on first day of the
month following the date of admission of a member and will complete on its
scheduled date explained in this paragraph. The CPD requirement will be prorated on
the basis of 120 hours for three-year period.
iii. At the end of the rolling period, only 30 hours out of the total shortfall hours will be
carried forward to the next rolling period. Members will be required to complete their
shortfall hours to avoid any sanctions, as prescribed by the Council. However, the
excess hours will not be completely nullified, rather the excess hours
accumulated/reported in the last year of the rolling period will be carried forward to
the next rolling period not exceeding more than 30 hours.
1 First amendments approved by the Council in its 234th meeting held on June 15 & 16, 2012 and later amendments approved by the Council in
its 362nd meeting held on October 28-29, 2022

Measurement of CPD Credit Hours

12. The CPD credit hours are to be measured as follows:
S. # Activity Evidence to be kept CPD Credit Hours
a. Participation in short courses, Certificates of Actual classroom time. For a full day
seminars, conferences, lectures* attendance/course session, a credit of 8 hours and for a
and trainings relevant to the roles contents in case it is a half-day session 4 hours, subject to
of professional accountant non-ICAP course maximum 120 hours in a rolling
*Excluding classes of degree period.3
courses.2
b. Completing degree courses and Degree/ Certification Professional Qualifications

studying professional certifications Members bodies of IFAC, CISA, CIA
5 times of the examination hours,
subject to a maximum of 120 hours
in a rolling period.
Degree Courses
As accredited by the HEC approved
or Foreign Institute/ University. On
completion of a certification/course,
1/3 of actual contact hours.
4
However, the maximum CPD hours
that can be given under this head
shall be subject to maximum of 120
hours in a rolling period.
c. Relevant research paper/article Original copy of 08 hours per article/paper

(at least 4000 words) published journal/publication Should not exceed more than 72
in a peer reviewed journal hours in a rolling period.
including
ICAP’s publication
d. Self-development and Virtual Self‐Certification, Actual hours determined by Service

Learning (includes E-learning Computer generated providers, subject to maximum of
Courses, webinars/watching 120 hours in a rolling period.
Certificate,
videos/CDs of ICAP CPD
programs, videos on ICAP DLH) Any other third-party
Professional Ethics App ICAP, evidence,
Mentoring, providing feedback Attendance/topic(s)
(including reviewing international to be communicated
sponsorship applications) etc. to the CPD
Directorate within 2
weeks of watching
CD/Videos
2 Amendments approved by the Council in its 269th Meeting held on October 14 2015
3
Amendments approved by the Council in its 362nd Meeting held on October 28-29, 2022

e. Presenter or session chairman/ To be declared on the Twice the actual time of the
moderator in short courses, Reporting Form presentation, subject to maximum of
seminars, conferences, trainings 120 hours in a rolling period.
and media including interviews
in print media.
f. Preparation for teaching relevant To be declared on the Actual time consumed in preparation,
professional or degree courses Reporting Form subject to a maximum of 120 hours in
including reading, developing a rolling period.
presentations,
developing teaching notes and
workbooks5.
g. Participation in Council, To be declared on the Actual time of the meeting, subject to

Committees, working groups of Reporting Form a maximum of 120 hours in a rolling
ICAP/other regulatory bodies, period.
participation as Non-Executive
Director in Board and Board
Committee of listed companies,6
professional groups, technical
committees, sector activities,
communities of practice,
information network.
h. Writing of books on professional Copy of the publication 3 hours per page of technical
interest, technical and reference content. Maximum 60 hours per
manuals including study pack release, subject to maximum of 120
hours in a rolling period.
i. General/Self certified readings Reasonable details to Actual reading time, subject to

(relevant to current or future be kept maximum of 30 hours per rolling
development needs) e.g. journal period.
articles, reports, subscriptions,
etc., including visit to ICAP
Libraries for such readings.
j. On Job learning7 Confirmation of Half of the actual hours spent on the

Assignments and new initiatives employer and details assignments and initiatives, subject
that provide new learning for of learning outcomes. to maximum of 60 credit hours in
professionals while on job. three year rolling period.
k. Specific learning for Engagement Certificates of Option A

partners8 attendance Atleast 30 hours in each rolling
period in the area of Audit, Financial
reporting and Accounting,
5
8 Amendments approved by the Council in its 362nd Meeting held on October 28-29, 2022

Governance & Risk, Ethics, Corporate

Laws, ISA & IFRS.
Option B
In compliance with IES 8, specific
learning outcomes for Engagement
Partners to be covered as mentioned
in Table A, Refer Annexure B, page
10
Exemption to CPD
13. This directive does not apply to the members who fall in following categories:
a. ill or incapacitated so that he/she cannot perform normal work, however if they do
hold the practice license or MRS status then they need to surrender the same before
asking for CPD waiver;
b. Retired from whole time business also life time members;
c. Career breaks;
d. Members holding public offices such as Federal Ministers, Provincial Ministers,

Advisors to Ministers, Senators, MNAs, MPAs etc., during the currency of their offices;
or
e. for any other which is considered justifiable by the CPD Committee, for the reasons
duly recorded. The exemption is only based for the period mentioned, it cannot be
given on perpetual basis.
Verification
A “Verifiable CPD Activity” undertaken by the member must be supported by documentary
evidences required to be maintained by the member for one year after the close of rolling
period.
A” Non‐verifiable CPD Activity” is an activity where a member is unable to prove that the CPD
learning activity has taken place. Ordinarily, non‐verifiable CPD does not have a defined
learning outcome and is not designed to address a specific learning need.
General reading, as defined in paragraph 12(i), is an example of non‐verifiable CPD.
Recording and Monitoring

14. Each member is responsible for maintaining and retaining his CPD records and related
evidences. A member may update member’s record maintained by the Institute online
or he may keep the information through any other medium. The records maintained by
the member should demonstrate that the member understands and complies with the

Regulations. Additionally, CPD Directorate will maintain CPD records only of CPD
activities organized by the Institute.
i. Any Committee within maximum of two weeks of holding the activity, will send the
attendance sheet, to the CPD department.
The CPD Directorate will only be responsible for maintaining and uploading record in
respect of:
 members participating in CPD activities arranged by Institute;
 member’s participation in Institute’s Standing and other committees; and
 uploading such CPD data on the website for members to review.
CPD Declaration
i. A member shall be required to submit annually to the Institute a declaration in a specified
format online, confirming member’s compliance with this Directive. When requested by
the Institute, provide such evidence of compliance as required by the Institute.
ii. In addition, Engagement Partners will be required to submit the annual declaration of
achievements of the Learning Outcome’s specified by them confirming their compliance
with this Directive.9 Refer Annexure B, Table A, page 10
iii. Sample audit will be carried out therefore members are responsible for retaining
appropriate records and supporting documents related to their CPD activities10.
Non-compliance
15. On non-compliance with the CPD requirement at the end of each year and at the end of
three-year rolling period the members will sign a declaration form of non-compliance with
a firm commitment to make up the deficit within 120 days11.
16. Sanctions
On failure to comply with the requirements of this Directive, the CPD Committee may
recommend appropriate sanctions to the Council against the noncompliant members.12
(234th meeting of the Council held on June 15 and 16, 2012)

(269th meeting of the Council held on October 14, 2015)
(362nd meeting of the Council held on October 28-29, 2022)
11

Annexure A
Annual Continuing Professional Development (CPD) Declaration

Form
Member Name
Member Number
Rolling Period
Declaration:
I declare that I comply with the CPD requirements. I have completed a total of _________
hours for the rolling period____ to _____. I understand that it is my responsibility to maintain
professional competence and my record may be called in for review for which I will provide
the requested information.
_____________________ ______________________ ______________________

Name Signature Date (MM/DD/YY)

Annexure B
Table A: Learning Outcomes for the Professional Competence of

an Engagement Partner as per IES 8
Form
Competence Area (IES 8) Learning Outcomes
(a) Audit (i) Lead the audit through active involvement during all phases of
the audit engagement.
(ii) Lead the identification and assessment of the risks of material
misstatement.
(iii) Develop an audit plan that responds to the risks of material
misstatement identified.
(iv) Evaluate responses to the risks of material misstatement.
(v) Conclude on the appropriateness and sufficiency of all relevant
audit evidence, including contradictory evidence, to support the
audit opinion.
(vi) Evaluate whether the audit was performed in accordance with
International Standards on Auditing or other relevant auditing
standards, laws, and regulations applicable to an audit of the
(vii) Develop an appropriate audit opinion and related auditor’s
report, including a description of key audit matters as applicable.
(b) Financial accounting and (i) Evaluate whether an entity has prepared, in all material respects,
reporting financial statements in accordance with the applicable financial
reporting framework and regulatory requirements.
(ii) Evaluate the recognition, measurement, presentation, and
disclosure of transactions and events within the financial
statements in accordance with the applicable financial reporting
framework and regulatory requirements.
(iii) Evaluate accounting judgments and estimates, including fair
value estimates, made by management.
(iv) Evaluate the fair presentation of financial statements relative to
the nature of the business, the operating environment, and the
entity’s ability to continue as a going concern.
(c) Governance and risk (i) Evaluate corporate governance structures and risk assessment
management processes affecting the financial statements of an entity as part
of the overall audit strategy.
(d) Business environment (i) Analyze relevant industry, regulatory, and other external factors
that are used to inform audit risk assessments including, but not
limited to, market, competition, product technology, and
environmental requirements.
(e) Taxation (i) Evaluate procedures performed to address the risks of material
misstatement in the financial statements in respect of taxation,
and the effect of the results of these procedures on the overall
audit strategy.

(f) Information and (i) Evaluate the information and communication technologies (ICT)
communication environment to identify controls that relate to the financial
technologies statements to determine the impact on the overall audit
strategy.
(g) Business laws and (i) Evaluate identified or suspected non-compliance with laws and
regulations regulations to determine the effect on the overall audit strategy
and audit opinion.
(h) Finance and financial (i) Evaluate the various sources of financing available to, and
management financial instruments used by, an entity to determine the impact
on the overall audit strategy.
(ii) Evaluate an entity’s cash flow, budgets, and forecasts, as well as
working capital requirements to determine the impact on the
overall audit strategy.
(i) Interpersonal and (i) Communicate effectively and appropriately with the engagement
communication team, management, and those charged with governance of the
entity.
(ii) Evaluate the potential impact of cultural and language
differences on the performance of the audit.
(iii) Resolve audit issues through effective consultation when
necessary.
(j) Personal (i) Promote lifelong learning.

(ii) Act as a role model to the engagement team.
(iii) Act in a mentoring or coaching capacity to the engagement team.
(iv) Promote reflective activity.
(k) Organizational (i) Evaluate whether the engagement team, including auditor’s
experts, collectively has the appropriate objectivity and
competence to perform the audit.
(ii) Manage audit engagements by providing leadership and project
management of engagement teams.
(l) Commitment to the public (i) Promote audit quality in all activities with a focus on protecting
interest the public interest.
(m) Professional skepticism and (i) Apply professional judgment in planning and performing an
professional judgment audit and reaching conclusions on which to base an audit
opinion.
(ii) Promote the importance of the application of professional
skepticism during all phases of the audit engagement.
(iii) Apply professional skepticism to critically assess audit evidence
obtained during the course of an audit and reach well-reasoned
conclusions.
(iv) Evaluate the impact of individual and organizational bias on the
ability to apply professional skepticism.
(v) Apply professional judgment to evaluate management's
assertions and representations.


(vi) Resolve audit issues using critical thinking to consider
alternatives and analyze outcomes.
(n) Ethical principles (i) Promote the importance of compliance with the fundamental
principles of ethics.13
(ii) Evaluate and respond to threats to objectivity and independence
that can occur during an audit.
13
The Fundamental Principles, IESBA Handbook of the International Code of Ethics for Professional Accountants (including International
Independence Standards) – 2018 Edition, Section 110.

8.02
COMPULSORY ATTENDANCE OF A PRACTISING

MEMBER INSEMINARS ON INTERNATIONAL
ACCOUNTING STANDARDS, INTERNATIONAL
STANDARDS ON AUDITING AND QUALITY CONTROL
On the recommendation of the Professional Standards & Technical Advisory

Committee, the Council in its 127th meeting held on July 5, 1998, has decided to
issue the following directive:-
With immediate effect there would be compulsory attendance of at least one

partner of practising firm or the sole proprietor himself or an employee
member of such firms, as the case may be, in the seminars/workshops on
International Accounting Standards, International Standards on Auditing and
Quality Control arranged by the CPD Committees or Quality Control Review
Committees of the Institute.
(127the meeting of the Council-July 5,1998)

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MEMBERS' HANDBOOK

DIRECTIVES AND IMPORTANT DECISIONS OF

DIRECTIVES AND IMPORTANT DECISIONS

1. STUDENTS’ TRAINING EDUCATION

1.01 Education and Training Scheme-2021 (Revised-2021)

1.02 Education Delivery System

Training Regulations and Guidelines:

1.11 Withdrawn-Refund of Examination Fee

1.20 Qualifying Assessment Test and Pre-Requisite Competencies

1.22 Assessment of Fundamental Competencies (superseded)

1.23 Criteria for Approved Course Providers (ACP) for Hands-on

Education and Training Scheme 2021 2

EDUCATION AND TRAINING SCHEME 2021

1. SHORT TITLE AND COMMENCEMENT

Education and Training Scheme 2021 3

(x) Member means a member of the Institute;

Education and Training Scheme 2021 4

4. CURRICULUM AND SYLLABUS

Education and Training Scheme 2021 5

CFAP-4 Business Finance Decisions

Education and Training Scheme 2021 6

6. FEES AND REFUNDS

Education and Training Scheme 2021 7

Education and Training Scheme 2021 8

Paper Permitted book

Education and Training Scheme 2021 9

Paper Permitted book

Education and Training Scheme 2021 10

Paper Permitted book

 Whispering/speaking both on and off-camera

 Use of electronic communication devices (e.g. Cancellation of

Education and Training Scheme 2021 11

Level Offences under unfair means Disciplinary Action

 Attempt to write on paper, desk, table, etc. during

 Repeating offence(s) of Level 1 (both under in-

 Other offences of similar nature and intensity

 Use of materials of all kind (including paper slips)

 Any information written on hands, arms, dress,

 Leaving the examination room without the Cancellation of

Education and Training Scheme 2021 12

Level Offences under unfair means Disciplinary Action

S. No. Offences under unfair means Disciplinary Action

Education and Training Scheme 2021 13

(6) Review of answer scripts

(7) Special arrangements

Education and Training Scheme 2021 14

9. TRANSITION TO THE SCHEME 2021

S. No. Education and Training Scheme 2013 The Scheme 2021

Certificate in Accounting and Finance Certificate in Accounting and

Subjects before the commencement of the

Education and Training Scheme 2021 15

Business Writing and

(ii) Credit for CAF passed or exempted papers

Subjects before the commencement of the

(iii) Credit for CFAP and MSA passed papers

Subjects before the commencement of the

Education and Training Scheme 2021 16

Audit, Assurance and Related Audit, Assurance and

(iv) Credit for Hands-on Courses

Presentation and Communication Presentation and Personal