THE INSTITUTE OF CHARTERED ACCOUNTANTS OF TRINIDAD AND TOBAGO
INTERPRETATIONS OF RULES OF CONDUCT
Interpretations of the Rules of Conduct are issued by the Council to provide
guidelines as to the scope and application of such rules. Members who
depart from such guidelines shall have the burden of justifying such
departure in any disciplinary hearing.
INTERPRETATIONS UNDER RULE 101 - INDEPENDENCE
101-1 INVESTMENTS. In determining whether a member or his firm had or was
committed to acquire any material direct or indirect financial interest in the enterprise in question,
regard must be given not only to whether the interest was material in relation to the enterprise but
also to whether the interest was material in relation to the financial affairs of the member himself
and also of his firm.
101-2 DIRECTORSHIP. Members are often asked to lend the prestige of their name as
a director of a charitable, religious, civic or other similar type of nonprofit organisation whose board
is large and representative of the community's leadership. An auditor who permits his name to be
used in the manner would not be considered lacking in independence under Rule 101 so long as
he does not perform or give advice on management functions, and the board itself is sufficiency
large that a third party would conclude that his membership was honorary.
101-3 RETIRED PARTNERS AND FIRM INDEPENDENCE. A retired partner having a
relationship of a type specified in Rule 101 with a client of his former firm would not be considered
impairing the firm's independence with respect to the client provided that he is no longer active in
• the firm, and that he is not held out as being associated with this former partnership.
101-4 •
ACCOUNTING SERVICES. Members in public practice are sometimes asked to
provide manual or automated bookkeeping or data processing services to clients who are of
insufficient size to employ an adequate internal accounting staff. Computer systems design and
programming assistance are aiso rendered by members either in conjunction with data processing
services or as a separate engagement. Members who perform such services and who are
engaged in the practice of public accounting are subject to the Act, the Rules and the Rules of
Conduct.
On occasion members aiso rent "block time" on their computers to their computers to their clients but
are not involved in the processing of transactions or maintaining the client's accounting records. In such
cases the sale of block time constitutes a business rather that a professional relationship and must be
considered together with ail other relationships between the member and his client to determine if their
aggregate impact is such as to impair the member's independence.
When a member performs manual or automated bookkeeping services, concern may arise whether the
performance of such services would impair his audit independence, that the performance of such basis
accounting services would cause his audit to be lacking in a review of mechanical accuracy or that the
accounting judgements made by him in recording transactions may somehow be less reliable than if
made by him in connection to the subsequent audit.
ICATT26/11/67
INTERPRETATIONS UNDER RULE 101 - INDEPENDENCE - Cont'd 101-4 ACCOUNTING SERVICES cont'd
Members are skilled in, and well accustomed to, applying techniques to control mechanical accuracy,
and the performance of the record-keeping function should have no effect on application of such
techniques. With regard to accounting judgements, if third parties have confidence in a member's
judgement in performing an audit, it is difficult to contend that they would have less confidence where the
same judgement is applied in the process of preparing the underlying accounting records.
Nevertheless, a member performing accounting services for an audit client must meet the following
requirements to retain the appearance that he is not virtually an employee and therefore lacking in
independence in the eyes of a reasonable observer.
(a)
The CA must not have any relationship or combination of relationships with the client of any
conflict of interest which would impair his integrity and objectivity.
(b)
The client must accept the responsibility for the financial statements as his own. A small client
may not have anyone in his employ to maintain accounting records and may rely on the CA for
this purpose. Nevertheless, the client must be sufficiently knowledgeable of the enterprise's
activities and financial conditions and the applicable accounting principles so that he can
reasonably accept such responsibility, including, specifically, fairness of valuation and
presentation and adequacy of disclosure. When necessary, the CA must discuss accounting
matters with the client to be sure that the client has the required degree of understanding.
(c)
The CA, in making an examination of financial statements prepared from books and records which
he has maintained completely or in part, must conform to generally accepted auditing standards.
The fact ihat he has processed or maintained certain records does not eliminate the need to
make sufficient audit tests.
101-5 -
FURTHER EXAMPLES
(i)
If shares or other interests in an organisation, held by partners of their immediate families, are
disposed of soon after the audit appointment is assumed, there should be no question of the
firm's independence.
(ii)
A member cannot accept or hold an appointment as trustee and also hold appointment as auditor
of the related trust or estate.
(iii)
A member cannot accept or hold an appointment as trustee of a company's profit-sharing plan if
he is the auditor of the company.
(iv)
A member cannot accept or hold an appointment as trustee of a pension plan for a company for
which he is the auditor if the pension plan has any transactions in the participating company's
securities, or if the company's contributions are dependent in whole or in part on its profit
position,
ICATT-26/11/87
INTERPRETATIONS UNDER RULE 101 - INDEPENDENCE - Cont'd
101-5 -
FURTHER EXAMPLES cont'd
(v)
Where one or more close relatives of a member, even if not living under the same roof as the
member, has a material interest in any organisation, the member, and his firm, is unlikely to
have the appearance of independence. Only the facts in each case can determine whether or
not there appears to be an acceptable degree of independence.
(vi)
Holding qualifying shares in a social club, such as a golf or tennis club where the shareholding is
a prerequisite of membership, would not impair independence,
(vii)
Holding membership in an investment club is not comparable to (vi) above, and member could
not be deemed to be independent if the club has material investments in clients of his firm.
(viii)
A member could not be deemed independent if he agreed to serve, as nominee of a parent
company, on the board of directors of a subsidiary of which he or his firm is auditor.
(ix)
Where a partner resigns from a partnership to take up an appointment with a client, and the
amounts payable to such partner on retirement from the practice are determined as of the date of
retirement and will not be affected by subsequent events, the audit independence of he firm is
not impaired by the future payment of the former partner's interest in accordance with the
partnership agreements.
(x)
A member holding the position of auditor should not hold securities of the audit client in trust,
whether or not he has any beneficial interest in such securities.
101-6 •
AUDITOR AND CLIENT RELATIONSHIPS
(i)
An auditor, if dealing with a client in commercial transaction, should not receive any special benefit
which he would not receive if he were not the auditor.
(ii)
A member should not act as a director to trustee of a private charitable foundation (created by an
individual, or by an individual and members of his immediate family) which holds a controlling
interest in a company or companies for which he or his firm acts as auditor.
INTERPRETATIONS UNDER RULE 201 - COMPETENCE
201-1 COMPETENCE. A member who accepts a professional engagement implies that
he has the necessary competence to complete the engagement according to professional
standards, applying his knowledge and skill with reasonable care and diligence, but he does not
assume a responsibility for infallibility of knowledge or judgement.
ICATT26/11/87
INTERPRETATIONS UNDER RULE 201 - COMPETENCE- Cont'd
Competence in the practice of public accounting involves both the technical qualification of he member and his
staff and his ability to supervise and evaluate the quality of the work performed. Competence relatesboth to
knowledge of the profession's standards, techniques and the technical subject matter involved, and to the
capability to exercised sound judgement in applying such knowledge to each engagement.
The member may have the knowledge required to complete an engagement professionallybefore undertaking it.
In many cases, however, additional research or consultation with others may be necessaryduring the course of
the engagement This does not ordinarily represent a lack of competence, but rather is a normal part of the
professional conduct of any engagement.
However, if a CA is unable to gain sufficient competence through these means, he should suggest, in fairness
to his client and the public, the engagement of someone competent to perform the needed service, either
independently or as an associate.
INTERPRETATIONS UNDER RULE 203 - ACCOUNTING
203-1 DEPARTURES FROM ESTABLISHED ACCOUNTING PRINCIPLES. Rule 203
has been adopted to require compliance with accounting principles promulgated by the Council.
There is a strong presumption that adherence to officially established accounting principles would
in nearly all instances result in financial statements that are not misleading.
However, in the establishment of accounting principles it is difficult to anticipate all the circumstancesto which
such principles might be applied. The rule therefore recognises that upon occasion there may be unusual
circumstances where the literal application of pronouncements on accounting principleswould have the effect of
rendering financial statements misleading. In such cases, the proper accounting treatment is that which will
render the financial statements not misleading.
The question of what constitutes unusual circumstances as referred to in Rule 203 is a matter of professional
judgement involving the ability to support the position that adherence to a promulgated principle would be
regarded generally by reasonable men as producing a misleading result.
Examples of events which may justify departures from a principle are new legislation or the evolution of a new
form of business transaction. An unusual degree of materiality or the existence of conflicting industrypracticesare
example of circumstances which would not ordinarily be regarded as unusual in the context of Rule 203.
INTERPRETATIONS UNDER RULE 204 - FORECASTS
204-1 •
FORECASTS, Rule 204 does not prohibit a member from preparing or assisting a
ciient in the preparation of, forecasts of the results of future transactions. When a member's name
is associated with such forecasts, there shall be the presumption that such data may be used by
parties other than the client. Therefore, full disclosure must be made of the sources of the
information used and the major assumptions made in the preparation of the statements and
analysis, the character of the work performed by the member, and the degree of the responsibility
he is taking.
1CATT26/11/87
INTERPRETATIONS UNDER RULE 301 - CONFIDENTIAL CLIENT INFORMATION
301-1 •
CONFIDENTIAL INFORMATION AND TECHNICAL STANDARDS. The
prohibition against disclosure of confidential information obtained in the course of a professional
engagement does not apply to disclosure of such information when required to property discharge the
member's responsibility according to the profession's standards. The prohibition would not apply, for
example, to disclosure, of subsequent discovery of facts existing at the date of the auditor's reports
which would have affected the auditor's report had he been aware of such facts.
INTERPRETATIONS UNDER RULE 401 - ENCROACHMENT
401-1 RELATIONS WITH CLIENTS ALSO SERVED BY OTHER CHARTERED
ACCOUNTANTS. The unsolicited sending to a clients or firm literature of invitations to seminar
which cover service that are currently being rendered to the client by another chartered accountant
is considered a violation of Rule 401.
401-2 RELIANCE ON WORK OF OTHERS. Rule 401-2 makes clear that it is not
improper for a member expressing his opinion on combined or consolidated financial statements to
insist on auditing such components as in his judgement are necessary to warrant the expressing of
his opinion. However, the auditor's exercise of judgement in this regard is subject to review. For
example, insistence upon auditing an unreasonably large percentage of consolidated net assets or
net income may lead to the conclusion that the auditor's judgement had been made as part of a
plan or design to solicit an engagement, which action would be a violation of the rule against
enroachment.
401-3 AUDITOR OF A COMPANY. The proprietors of a business have an indisputable
right to choose their auditors and other professional advisors and to change to others if they so
decide. Accordingly, provided that the statutory procedure for such a purpose is followed, a
shareholder in a company is entitled to propose to its annual general meeting that the company's
auditor shall be changed from the conclusion of that meeting.
A member of the institute who is invited to accept nominated in replacement of the auditor of a company
should not accept nomination without first communication, preferably by letter, with the former or
existing auditor (hereinafter referred to as "the existing auditor") to inquire whether there is any
professional or other reason for the proposed change of which he should be aware when deciding
whether or not to accept nomination. This applies whether or not the existing auditor is a member of the
Institute.
Communication with the existing auditor is not only a question of professional courtesy. The purposes
are to enable the member to ascertain whether the circumstances in which a change of auditor is
proposed are such that he can properly accept the nomination and also whether he would wish to do so.
While it is essential that the legitimate interests of the shareholders, including their right to change the
company's auditor, if they so wish, should be protected, it is also essential that the independence of the
existing auditor should be safeguarded. The member who is invited to replace the existing auditor should
therefore endeavor to ascertain the reasons for the proposed change. He cannot effectively do so without
direct communication with the existing auditor. The need to communicate exists whether or not the
existing auditor intends to make representations to the shareholders, and whetherof not he still holds
office as auditor.
ICATT-26/11/87
When a member is first approach he should explain his duty to communicate with the existing auditor and
request authority to do so. If authority is refused, he should not accept nomination. He should make it
clear that he must not be nominated until he has informed the company in writing that he is prepared to
accept nomination.
The member should suggest that the company should inform the existing auditor of the proposed change
before the member himself communicates (making it clear that the member has not at that stage
accepted nomination) and that, at the same time, the company should give the existing auditor written
authority to discuss the company's affairs with the proposed new auditor.
The initiative in the matter of communication rests with the propose new auditor. The existing auditor
should not volunteer information in the absence of any communication.
The legal position of the existing auditor who may have to communicate to a proposed new auditor
matters damaging to the company depends not upon whether the proposed new auditor has received the
company's authority to communicate with the existing auditor but upon whether the existing auditor has
been authorised by the company to discuss the company's affairs with the proposed new auditor. If
when the proposed new auditor communicates with him, the existing auditor has not received this
authorisation, he should ask the company for authority to reply and to protect himself and should if
possible ensure that the authority is written. If he has this authority, then provided he says what he
honestly believes to be true, he can state, so far as he knows them, the reason for the proposed change
in auditors and pass on any relevant information without any fear of an action for either breach of contract
or defamation.
• The member should decline to accept nomination if the existing auditor informs him that the company
has refused to give the existing auditor authority to discuss the company's affairs with the proposed new
auditor.
The existing auditor should answer without delay the communication from the proposed new auditor,
whether or not the latter is a member of the Institute. If there are no reasons for the proposed change of
which the new auditor should be made aware, the existing auditor should write to say that this is the case.
Subject to what is said in these paragraphs If there are such reasons he should inform the proposed new
auditor of those facts of which the new auditor should be aware and if he wishes to put forward any
professional reason why the proposed new auditor should now accept nomination; it is to sufficient for
him merely to state that he has such a professional reason; he should be prepared to state the nature of
it. He may prefer to explain orally, so far as he knows them, the reason for the proposed change and in
that event the member who has been approached should be prepared to confer with the existing auditor
if the existing auditor so desires.
ICATT26/11/87
INTERPRETATIONS UNDER RULE 401 - CHANGES IN A PROFESSIONAL APPOINTMENT
401-3 -
AUDITOR OF A COMPANY - Cont'd
There (he existing auditor has unconfirmed suspicion but not actual knowledge that the company or its
directors or servants have defrauded the Inland Revenue or been guilty of some other unlawful act or
default, no general rule can be laid down as to whether and if so in what detail he should communicate
his suspicion to a proposed new auditor who communicates with him. It must rest with the individual in
the particular circumstances of the case to determine what he considers to be a proper course. Where,
however, there has been failure or refusal by the company or its directors or servants to supply him with
information properly required by him for the performance of his duties, he should in any event so inform
the proposed new auditor who communicates with him.
The member should treat in the strictest confidence any information given to him by the existing auditor.
He should give due weight to the reply of the existing auditor and to any representations which the latter
may inform him he intends to make to the shareholders. Resentment on the part of the existing auditor at
the actions taken by those who propose a change or at the possible loss of an audit is not a valid
professional reason against the change. The existing auditor should give information as to the professional
considerations which may arise. This information may indicates, for example, that the ostensible reasons
given for the change are not in accordance with the facts. It may disclose that the proposal made to
displace the existing auditor is put forward because he has stood his ground and carried out his dutiesas
auditor in the teeth of opposition or evasion on an occasion on which important differences of principle or
practice have arisen between him and the directors.
• The member who is invited to replace the existing auditor may decline the nomination if he considers
that the existing auditor is being treated unfairly; members differ in their views as to the circumstances in
which they are prepared, as a matter of personal choice, to accept nomination in the place of another
auditor but every member who is approached should consider carefully whether as a matter of
professional conduct or as one of personal inclination he can properly accept nomination in circumstances
of which he was to fully aware and also to protect shareholders who are not fully informed of the
circumstances in which the change is proposed as well as the interests of the existing auditor where the
proposed change arises from, or is an attempt to interfere with, the conscientious exercise by the
existing auditor of his duty as an independent professional man.
Where the member decides to accept nomination in place of the existing auditor the fact that he has
communicated with the latter does not preclude the existing auditor from complaining to the Institute that
in the particular circumstances the acceptance was improper nor does it prevent to Disciplinary
Committee from considering the matter in order to decide whether, on the information placed before it,
there appears to be a question of conduct requiring consideration by the Disciplinary Committee.
ICATT26/11/87
INTERPRETATIONS UNDER RULE 401 - CHANGES IN PROFESSIONAL APPOINTMENT
401-3 -
AUDITOR OF A COMPANY -Cont'd
If the member does not receive within a reasonable time a reply to his communication to the existing auditor and
he has no reason to believe that there are any unusual circumstances surrounding the proposed change, he
should endeavor to get in touch with the existing auditor by some other means. If he is unable to do so, or is
unable to obtain a satisfactory outcome in this way he should send a further letter, preferablybyregistered post,
stating that unless he received a reply within a specified time he will assume that there is no professional reason
why he should not accept and will in fact to do so.
The foregoing paragraphs indicate the general principle by which a member should be guided when invited to act
as auditor of a company. Additional considerations on matters of detail are indicated hereafter.
(a)
Fees-scale of charges:
It is not necessarily improper for a member to charge a lower fee than has previouslybeen charged by
another auditor for similar work. However, evidence that a member has obtained professional work
through having quoted with that object a fee lower than that charged or proposed bythe accountant
previously carrying out that work, could be regarded as cause for complaint and could therefore render
the member liable for disciplinary action.
• (b)
Unpaid fees of previous auditor:
The fact that there may be fees owing to the existing auditor is not of itself a professional reason why
the member should not accept nomination. If he does accept it may be appropriate for him to assist in
any way open to him towards achieving a settlement of the fees outstanding: whether or not he doesso
is entirely a matter for his own judgement in the light of all the circumstances. He should not seekto
interfere with the exercise of any lien which the existing auditor may have.
(c)
Transfer of books and papers:
The existing auditor should transfer promptly to the new auditor after he has been dulyappointed all
books and papers of the company which are in his possession, unless he is exercising a lien thereon for
unpaid fees.
1CATT26/11/87
INTERPRETATIONS
401-3 (d)
UNDER RULE 401 - CHANGES IN A PROFESSIONAL APPOINTMENT
AUDITOR OF A COMPANY-Cont'd
Appointment of a Joint auditor or to fill a casual vacancy:
When a member is invited by the directors to accept appointment as a joint auditor or to fill a casual
vacancy, he should be guided by principles similar to those set ou! above in relation to nomination for
appointment by the company in genera! meeting. Where, however, a casual vacancyarisesthrough the
death or incapacity of the existing auditor the member will need to adapt hisprocedure in the light of the
particular circumstances, obtaining such information as he may need from the existing auditor'soffice of
partners if any.
(e)
Business acquired by a new company:
When a member is asked to accept appointment as auditor of a new company formed to acquire an
existing business and the ownership of the company is substantially the same as it wasin the acquired
business, the member should communicate with the accountant who acted for that business.
401-4 - AUDITOR OF A BODY OTHER THAN A COMPANY, When a member is invited to accept nomination
or appointment as auditor of any body other than a company, he should be guided bythe same considerationsas
those indicated above in relation to a company. This applies whether the appointment is as auditor of an
incorporated body or an unincorporated organisation or a partnership or an individual.
401-5 APPOINTMENT OTHER THAN AS AUDITOR. The considerations arising on a
change of auditor apply to a large extent also where a member is invited to undertake other
recurring professional work in place of another accountant.
A member may be invited to undertake special professional work which is additional to that alreadybeing carried
out by another accountant who will stiil continue with his existing duties, in that event, it is normallydesirable, as
a matter of professional courtesy, for the member to notify the other accountant that he isundertaking the special
work, unless the client gives a valid reason why such notice should not be given.
401-6 RESIGNATION OF AUDITORS. On occasion, the question arises of the duty of a
chartered accountant appointed to act as an auditor at the annual general meeting of a Trinidad
and Tobago company, who is asked by the director to resign before reporting.
In the Trinidad and Tobago Companies Ordinance the statutory provisions with regard to auditorsform a very
important part of the legislation. The whole background of companies' legislation makesit clear that the auditor
fulfills an essential statutory and independent function and assumes statutory duties when he accepts his
appointment. It is the Institute's view that, as a general rule, the proper course for an appointed auditor to follow
is the completion of his statutory duties; having been appointed by the shareholders he should report, as
required in the legislation. He should only lay down his duties when a successor has been properlyelected, after
he has been relieved.
ICATT26/11/87
10
INTERPRETATIONS UNDER RULE 401 - CHANGES IN A PROFESSIONAL APPOINTMENT 401-6
•
RESIGNATION OF AUDITORS-Confd
This being the proper course, the question remains whether there are exceptions when a duly
appointed auditor may resign at the request of a board of directors without fulfilling his statutory duties.
The answer depends on the circumstances. Certainly, the auditor of a company should not lightly
resign under such circumstances, and should not resign at all, before reporting to the shareholders, if he
has any reason to believe that his resignation is required by reason of any sharp practice, impropriety
or concealment which it is his duty to report upon.
However, exceptional circumstances may exist in a particular case which would justify an auditor in
acceding to a request for his resignation: one example would be where he has reason to believe that if
a special meeting of the shareholders was called to relieve him of his appointment the necessary
percentage of shareholders specified in the governing statute would require his resignation, in such a
case it would be undesirable for the auditor to insist on a special meeting being called.
in summary, the auditor of a company is appointed to represent the shareholders and has a duty to
them, he should never lightly resign his appointment before reporting and should not resign at all before
reporting if he has reason to suspect that his resignation is required by reason of any sharp practice,
impropriety or conceatment, which it is his duty to report upon. Subject to that general statement,
however, there may be exceptional circumstances in a particular case which would justify his
resignation and this will be a matter of individual judgement in each case.
INTERPRETATION UNDER RULE 502 - SOLICITATION AND ADVERTISING
Introduction
Reluctantly, Council has accepted that it now has no realistic option but to sanction a degree of freedom
wider than it continues to believe to be in the best long-term interests of either the public or the
profession, for members to advertise, promote, or publicise the professional services. Accordingly, it has
adopted the following new rules, which will come into effect on August 1", 1986. In maintaining
compliance with these rules, Council intends to ensure, as far as it can, that members continue to
recognise and to discharge their overall responsibilities to the public, to the profession, and to the
institute.
ICATT- 26/11/87
11
INTERPRETATION UNDER RULE 502 - SOLICITATION AND ADVERTISING • Confd
Advertising
1. A member may advertise his services to the public in any publication subject to the general
requirement that the medium should not, in the opinion of Council reflect adversely on the
advertiser, the Institute or the accountancy profession, nor should the advertisement itself, in
the opinion of Council:
(a)
As to content or presentation, bring the Institute into disrepute or bring discredit to the
member, firm or the accountancy profession;
(b)
Discredit the services offered by others whether by claiming superiority for the
advertiser's on services or otherwise;
(c)
Contain comparisons with other members or firms;
(d)
Be misleading, either directiy or by implications;
(e)
Fall short of the requirements of the Advertising Standards Authority as to legality,
decency, honesty, and truthfulness.
Advertising - Cont'd
2.
To safeguard the competitive position of all firms or members, regardless of their financial
resources, and to ensure that advertisements shall be intended to inform rather than to impress,
no advertisement in a newspaper shall exceed in size one-quarter of a page, nor shall
advertisements by associated firms in the same edition of a newspaper exceed in total over that
limit.
Whilst Council set no comparable limits on the maximum size of advertisements in other
media, any such advertisement shall comply with such similar degree of restraint as Council
may, in the circumstances, judge appropriate.
3.
Advertisements may no refer to the basis on which fees are calculated.
Publicity for members is acceptable subject to the general requirement that it should not bring
the Institute into disrepute nor bring discredit to the member, firm or accountancy profession.
ICATT26/11/87
INTERPRETATION UNDER RULE 502 • SOLICITATION AND ADVERTISING
Publicity - Cont'd
5.
Subject to paragraphs 1 (a) and 2 above, a member may advertise;(a)
For staff, a partnership, salaried employment or for sub-contract work;
(b)
On behalf of a client;
(c)
in a fiduciary or other capacity;
(d)
The commencement of a practice, the opening of new office, members' appointments,
changes in the membership of a firm and changes in the name, address or telephone
number of a practice or firm.
Directories
6.
A member may have an entry in any directory whether printed or available through some other
medium of communication, subject to the general requirement referred to in paragraph 4 above.
Literature
7.
(a)
(b}
A member may write or publish professional literature, whether technical or
specifying the services he provided, subject to the general requirement referred to in
paragraph 4 above. Such literature may only be provided free for existing clients or for
other persons with whom he has contact in the ordinary course of business, eg.
solicitors, bank managers, etc. or to those who ask for it. It should not be sent
unsolicited to any other non-clients.
Technical literature written or published by members may be provided, unsolicited, to
educational establishments, public libraries and other professional bodies. It may also
be sent for review in publications with an interest in the subject matter of its content.
Donations and sponsorship
8.
A member's contribution to good causes, whether by donation or sponsorship, may be publicly
acknowledged by the recipient, provided the acknowledgement conforms to the general
requirement in paragraph 4 above. Appropriate causes for support include registered charities,
education, sport and the arts. Members in doubt as to whether a prospective recipient is
acceptable should first enquire of the Council.
ICATT26/11/87
.INTERPRETATION UNDER RULE 502 - SOLICITATION AND ADVERTISING • Cont'd Exhibitions
and seminars
9.
A member may participate in exhibitions, seminars and similar activities subject to the general
requirement in paragraph 4 above.
a)
(i) A practice may take a stand at exhibitions with a business content, but the exhibition
need not be exclusively business oriented. Trade shows, and agricultural
shows are examples of those considered appropriate.
(ii)
b)
(i)
Conspicuous hospitality should not be given at exhibitions, though it may be
offered to persons seeking information at the stand and clients of the practice.
Practices may promote and advertise seminars to the general public.
Circulars publishing their seminars may only be sent to no-clients in response to
a specific request.
(ii)
Practices may participate in the presentation of seminars organised by third
parties. If such third parties send circulars promoting their seminars to
business organisations and to the general public, members may only
participate in the seminars where the organisers are a non-connected
organisation and the name of the practice does not receive such prominence to
suggest it is their seminar.
Obtaining professional work
10.
a)
b)
c)
A member may not obtain or seek professional work by any direct approach to a
prospective client nor may he instigate such an approach by a third party.
A practicing member may not give any commission, fee or reward to a third party, not
being either his employee or another public accountant, in return for the introduction of
a client.
A member may inform others in the provision of financial services to the public in the same
locality of the services he himself can offer.
Invitations to events
11.
A member may invite holders of public office, as well as others engaged in the provision of
financial service to the public, to attend specific events of relevance and importance to the
community they serve,
ICATT 26/11/87
INTERPRETATION UNDER RULE 502 - SOLCITATION AND ADVERTISING - Cont'd Work for other
organisations
12.
Where a member in practice is retained by an organisation which offers advice to its members on
accountancy matters, the member may, in relation to matters referred to him by that
organisation, only deal with the organisation itself and not directly with any of its members. The
member is responsible for ensuring that any literature issued by the organisation, in which his
name or his firm's name is mentioned, conforms with the above rules.
Claims to superiority
13.
a)
b)
14.
a)
Members may claim expertise in specific fields of service, but to claim "we are the best
at........,...." is a claim to superiority and, therefore, not permissible.
Members may not claim "we are Chartered Accountants and Chartered
Accountants are the best".
Members are not permitted to quote hourly or other charging rates in an
advertisement. This does not preclude full discussion or such matters with a client or
potential client,
b)
In the event of business arising as a result of the advertisement, the member should, for
the avoidance of misunderstanding, send to the client an engagement letter specifying
and precise range of services covered by the fee.
Free consultation
15.
Members are not permitted to advertise free advice.
Coupon advertising
16.
Members may advertise by means of a coupon which the public are invited to complete and tear-off,
requesting literature and /or advice,
Phone-in invitation
17.
Members may participate in phone-in advisory programme, but are not permitted to offer the public
the facility to telephone or invite to their office for free advisory services.
Posters and hoardings
18.
Members are not permitted to advertise on posters, hoardings and shop-corner displays.
1CATT26/11/87
INTERPRETATION UNDER RULE 502 - SOLICITATION AND ADVERTISING - Cont'd Road
Vehicles
19. Members are not permitted to advertise on road vehicles.
20.
The name of a practice may be displayed on sportswear, but sportswear may not be distributed
other than to staff.
Give-aways
21. Pencils, calendars, office accessories and carrier bags, for transporting client date and books,
may bear the name of the practice and be supplied only to staff.
22.
a)
Members may have the name of the practice on a fascia board above the office window.
Members are permitted to exhibit a list of services on a board at the entrance to the
office or in the window, subject to the general requirement in paragraph 4.
b
)
As a general rule, members may not have an illuminated sign outside the practice.
c)
Members are permitted to have an illuminated display inside the office window
indicating the name of the practice, services available, topical information etc. A small
single-line mobile sign is also acceptable.
d
}
22.
Brochures:
Brochures may be supplied to clients and to others engaged in the provision of financial
services to the public within the locality of the practice and to other third parties in
response to a specific request. Providers of financial services who specifically request
them may also distribute the brochures to their clients but this channel of distribution
may not be used to circumnavigate the general limitation on distribution to third parties.
Brochures may name members of staff, including those who are not themselves
Chartered Accountants. But any practice describing itself as "Chartered Accountants"
should avoid any implication that non-members named in the brochure are Chartered
Accountants.
ICATT-26/11/87
INTERPRETATION UNDER RULE 502 - SOLICITATION AND ADVERTISING - Confd Technical
booklets:
b)
Technical booklets may e supplied to those to whom members may supply the practice
brochure, and, in addition to educational establishments, public libraries and other
professional bodies and to the press for purposes of press criticism.
Members are not permitted to sponsor sporting events such as.horse shows, horse
races, football matches and snooker competitions. This extends to sponsoring teams
and naming horses.
c)
Members may not present cups in the name of the practice or in their own name at trade
shows, local horticultural society shows, etc.
Contract with others
25. a)
A practice may only send brochures or invite functions providers of financial
services operating within the locality of the practice office and whose services are
relevant to the local community.
b)
Representatives of the local press may be invited to functions such as anniversaries of
office openings and may be supplies with biographical notes and photographs of the
principals of the practice.
Professional stationery
26.
A practice may include on its professional stationery a list of the services it provides, provided
these are set out in such a way as not to appear to form part of the description of the practice.
INTERPRETATIONS UNDER RULE 505 - DESCRIPTIONS
505-1 - CHARTERED ACCOUNTANT. Under Rule 7 members are entitled to describe themselves as
chartered accountants and to use after their names the initials C.A.
505-2 - FIRMS. A member of the Institute practising under the title of a firm in partnership with any
persons not a member of the Institute or of any institute or society of chartered accountants approved by
the Council shall not use after the title of that firm the initials C.A. or describe the firm in any way whatever
as chartered accountants.
Where a member is a partner in a firm which includes any partner who is not a member the firm should
be described simply as "accountant".
ICATT26/11/87
INTERPRETATIONS UNDER RULE 505 - DESCRIPTIONS - Cont'd
505-3 - MEMBERS IN OVERSEAS COUNTRIES. Outside Trinidad and Tobago ihe right of members to
use the description and letters to which they are entitled as members of the institute depends upon the
law of the country concerned. In some countries the description " chartered accountants" ahs been
adopted by accountancy bodies in those countries and the use of it may be confined to members of such
accountancy bodies.
There is nothing in the Act and Rules which wouid prevent a member in an overseas country from adding
the words "(Trinidad and Tobago}" after the description "chartered accountant" or after the lettersCA, if
he so desires and local regulations permit.
505-4 ADDITIONAL DESCRIPTIONS. The Council wishes to draw the attention of
members of the Institute to the desirability of adopting and using without additional words the title
chartered accountant. It is comprehensive in its meaning and is now well understood as covering
all branches of work entrusted to members. Any addition to it is apt to depreciate its character and
value, and to draw special attention to details of qualifications and experience may appear to take
a form of advertising. It is not permissable for members of the Institute to use, on business
stationery and plates, any additional descriptions such as "and auditors" or any words which may
be read as implying that they have special ability for carrying out some particular kind of work of a
chartered accountant in practice; words indicating membership of the Institute of Taxation and
membership of the Institute of Cost and Management Accountants are regarded as falling in this
category though a member may, if he wishes to do so, show after his name the designatory letters
which signify membership of these bodies.
Members of the Institute who have been placed in order of merit in Institute examinations are not
permitted to add "(Hon)" after their designatory letters or description. The Institute has no honours
qualification. No references to the taking of prizes or places of merit are included in the Institute's LIST
OF MEMBERS, nor should they appear on the stationery of members.
505-5 MISUSE OF THE DESCRIPTION "CHARTERED ACCOUNTANT". A person
who has ceased to be a member of the Institute is not entitled to use the description or the initials
to which he was entitled as a member. If he did so the Council would, if necessary, apply for an
injunction restraining him from so doing. Similar action would be taken in the case of a person who
had never been a member.
505-6 USE OF THE WORD "CONSULTANT" ON LETTER HEADING. The Council
wishes to draw the attention of members for their guidance to the following note on the use of the
word "consultant" on letter headings:
On the letter heading used by a sole practitioner or by a partnership, the word "consultant"
should not be used to describe the sole practitioner or, as the case may be, any partner not to
describe any member of the staff.
ICATT26/11/S7
505-5 (b)
ADDITIONAL DESCRIPTIONS • Conf d
The word "consultant" may however be shown against the name of a person on the letter heading of a
member or firm if that person is retained as a consultant to the member or firm and was previously
either:
(i)
a partner or member of the staff of the member or firm; or
(ii)
a person who carried on as a public accountant the practice or part of the practice carried on by
the member or firm or was a member of the staff of, or retained as a consultant by, such a
person.
(c)
The name of any other person similarly retained may be shown provided that it must not be accompanied
by designatory letters which refer to a qualification or professional description other than an accountancy
qualification.
(d)
Where a member acquires the practice of a person who is not a chartered accountant (or where such a
person retires from a partnership which thereafter describes itself on its letter heading as"chartered
accountants" and that person is retained as a consultant or as an employee care must be taken to
ensure that the letter heading is not likely to lead anyone to assume that the person is a chartered
accountant.
505-7 out
below:
MANAGEMENT CONSULTANCY. The Council's guidance to members is set
(a)
A member or firm in which is a partner (hereinafter referred to as the member's firm)
may, with the approval of the Council, operate in accordance with the provisions of this
section, a iimited or unlimited company or separate firm (hereinafter referred to as "the
consultants") whether or not associated with non-members, to provide management
consultancy services.
(b)
The consultants may have the same, or a similar, name and operate from the same
address as the member's firm.
(c)
The consultants may use the description "management consultants", or other
appropriate description (but not the description "chartered accountants").
(d)
The consultants should not advertise or solicit for work, but publicity for the consultants in
the Press, or on radio or television, for assignments carried out or to be carried out is
permitted. The issue of a brochure to a non-client in response to an unsolicited request
is also permitted.
(e)
(f)
A partner in the member's firm may be a director or partner of the consultants.
A member who is a director, partner or employee of the consultants may describe himself personallyasa
chartered accountant and use the designatory letters to which he isentitled; he maymention the name of
the consultants in connection with any particles in the Press or any lectures which he maybe asked to
write or deliver.
ICATT26/11/87
INTERPRETATIONS UNDER RULE 505 • DESCRIPTIONS - Confd 5057 -
MANAGEMENT CONSULTANCY - Confd
(g)
Before accepting an assignment the consultants should communicate, as a matter of
professional courtesy, with the auditor or accountant concerned, except in cases where the
client advances valid reasons to the contrary (cases of doubt may be referred to the Institute)
and thereafter should keep such auditor or accountant informed as to the general nature of the
work which the consultants are doing.
(h)
Consultants called upon io render management consultancy services to the client of an
accountancy practitioner who is continuing in his relationship with that client have not merely
the negative duty of refraining from soliciting any work which is being performed by that other
practitioner but the positive duty of taking all steps reasonably open to them to support the other
practitioner in retaining his relationship. The latter has an equivalent duty to his professional
colleagues to support the relationship between the client and the consultants.
(i)
The consultants should not be used to attract audit or conventional accountancy work to the
member's firm. In the event of a complaint the onus would be on the consultants to satisfy the
Institute that they had not been instrumental in attracting work from an existing accountant. If the
consultants are unable so to satisfy the institute, members of the institute who are directors or
partners therein or partners in the member's firm could render themselves liable to disciplinary
action.
INTERPRETATIONS UNDER RULE 505 • ACTIVITIES THROUGH COMPANIES
505-8 PRACTICE.
ETHICAL ASPECTS OF THE USE OF COMPANIES BY MEMBERS IN
(a)
The Council emphasises the personal responsibility of every member of the institute for his
professional conduct; this applies regardless of the way in which the work of the member is
organised and of the medium through which it is performed,
(b)
A member is not permitted to do under the guise or through the medium of a company or firm
anything which he is not allowed to do as an individual.
(c)
There is no ethical reason which would preclude an member's performance through the medium
of an unlimited company of which he is a member of any of his functions as a public accountant
which a company is permitted by law to perform. (Members are reminded that some functions
may not lawfully be so performed, for example acting as auditor, receiver or liquidator of a
company.) There is also no ethical reason which would preclude a member form using a limited
or unlimited company of which he is a member to provide him with assistance (such as the
provision of staff, accommodation and equipment) which he may require in the performance of
any of his functions as a public accountant. In all cases the following provisions apply;
ICATT26/11/87
INTERPRETATIONS UNDER RULE 505 • ACTIVITIES THROUGH COMPANIES - Cont'd
(d)
(i)
the company shall at all times observe all the rules, and conform to all the standardsof
conduct, which apply to a member in practice.
(ii)
while it shall be permissible for the name of the company to be similar to that of a member or firm,
it shall not be indicative of the activities of the company.
(iii)
from the standpoint of ethics the member shall be responsible for the conduct of the company
and its directors and officers as if the company were a firm in which
{iv}
nothing in this statement shall be taken to authorise the use of the designation "chartered
accountants" by any company.
(iv)
the company shall not be used directly or indirectly as a means of sharing profitsor remuneration
of a member or firm in a manner contrary to the Rules.
This statement is limited to matters of ethics and does not imply any view on the desirabilityor otherwise of
the use of companies for the purposes indicated. It is of general application subject onlyto anyspecial
conditions which may exist anywhere outside Trinidad and Tobago.
505-9 -
MECHANISED ACCOUNTING OR COMPUTER SERVICES.
(a)
Members should be encouraged in the interests of clients and of the profession as a
whole to provide mechanised accounting and computer services, it being recognised that
the opportunity to do so will be taken in increasing degree by others.
(b)
Such services should not be advertised, nor should soliciting be allowed, other than by direct
communication with other members of the profession who are in practice.
(c)
Such services may be offered through an unlimited company but not, in the case of practicing members,
through limited companies.
{d}
A member offering such services should not normally accept auditing, taxation, or other conventional
accountancy work from any client introduced to him by the client's own professional accountant for the
provision of mechanised accounting or compute services.
505-9 (e)
MECHANISED ACCOUNTING OR COMPUTER SERVICES - Cont'd
In the event of an introduction for mechanised accounting or computer services other than through the
existing accountant it is desirable that the member should communicate as a matter of professional
courtesy with the existing accountant notifying him of the special work he has been asked to undertake.
ICATT26/1I/87
INTERPRETATIONS UNDER RULE 505 • ACTIVITIES THROUGH COMPANIES - Cont'd
505-10 -
COMPANY REGISTRAR AND DATA PROCESSING SERVICES. A member or firm of public
accountants in which a member is a partner (hereinafter referred to as "the member's firm") may, subject with
(he institute, operate a limited or unlimited company or firm (hereinafter referred to as "the specialist firm"),
whether or not associated with non-members, to provide company registrar and/or data processing services.
A member may be a partner or director of the specialist firm.
The specialist firm may use a name and/or description indicative of its activities-but should not use the description
"chartered accountants'. A member who is a director of or partner in the specialist firm may, however, use after his
name the designatory letters to which he is entitled.
A member may mention the name of the name of the specialist firm in connection with any articles in the Press or in
lectures which he may be asked to write or deliver. The issue of a brochure to a non-client in response to an
unsolicited request is also permitted.
When the specialist firm is called upon to render services to the client of a member or firm of public accountants it is
normally desirable as a matter of professional courtesy for the specialist firm to notify such member or firm of the nature
of the services to be rendered, unless the client give a valid reason why such notice should not be given.
The specialist firm should not be used to attract work to the member's firm (if any) or an associated firm or company. In
the event of a complaint the onus would be on each member who is a director of, or partner in, or proprietor of (i) the
specialist firm, and (ii) the member's firm or associated firm to satisfy the Council that the had not solicited the work. If
any such member were unable so to satisfy the Council he could render himself liable to disciplinary action.
It is recognised that some members offering company registrar and data processing services feel at a disadvantage in
competition with organisation not subject to restrictions on advertising and solicitation.
Accordingly:
(a)
The specialist firm may, with the approval of the Council, advertise to the public the services it offers and solicit
business, provided that it does not have a name or address which associates it with the member's firm or an
associated firm: OR
(b)
The specialist firm may have the same or a similar name and/or address as the member's firm but may not
advertise or solicit for work. Publicity for the specialist firm and its services is, however, permitted.
Members may be employed by firm or companies, whether or not registered under this statement, which offer company
registrar and data processing services. Such members should not accept other accountancy work which might be
offered to them as a result of such employment.
ICATT