Compliance

How will the new ethical standard – NOCLAR – affect you?

How will the new ethical standard – NOCLAR – affect you?

Responding to Non-Compliance with Laws and Regulations (NOCLAR) is an international ethics standard for auditors and other professional accountants (PAs). It sets out a first-of-its-kind framework to guide auditors and PAs in what actions to take in the public interest when they become aware of a potentially illegal act, known as NOCLAR, committed by a client or employer.

What is it?

NOCLAR is any act of omission or commission, intentional or unintentional, committed by a client or employer, by those charged with governance (‘TCWG’), by management or individuals working for or under direction of a client or employer which is contrary to the prevailing laws or regulations.

Why is it relevant?

The standard will stimulate greater accountability among organizations & will help protect stakeholders and the general public from substantial harm resulting from violation of laws and regulations, and strengthen the reputation of the profession.

When will it take effect?

The standard will be effective July 15, 2017.

Relevant Streams

Auditor:

The onus is on the practicing auditor to report on NOCLAR as soon as he/she becomes aware of an infringement in terms thereof.

The Code provides guidance in this regard and the following steps are to be taken:

  • Become aware of the matter
  • Understand the matter
  • Discuss the matter
  • Determine further action
  • Decide on the matter
  • Conclude and document

PA in business:

The onus is on the PA to report on NOCLAR as soon as he/she becomes aware of an infringement in terms thereof.

The Code provides guidance in this regard and the following steps are to be taken:

  • Understand the matter
  • Address the matter
  • Take further action
  • Disclose the matter
  • Conclude and document

Thus, a professional accountant (in a South African context: CA(SA)/ AGA, SAIPA and CIMA) has an ethical duty to report NOCLAR in terms of compliance with their respective code of conduct.

For more information please contact us to take you through the requirements and relevance to you in your position as TCWG.