6 December 2010
Jim Shannon MP
Strangford Constituency
Constituency Advice Centre
34a Frances Street
Newtownards
BT23 7DN
Dear Mr Shannon
INDEPENDENT FORENSIC INVESTIGATIONS
Michael Izza has passed to me your letter of 18 November on the above subject and asked me to respond on his behalf.
You asked us what codes of conduct, training and guidance would apply in respect of an independent forensic examination, conducted by a firm of chartered accountants.
Independent forensic investigation
‘Independent forensic investigation’ is not a defined term in law or regulation and ICAEW is not empowered by law, unlike for example for audits, insolvency work or certain investment business activities, to require that such engagements can only be carried out by certain individuals in accordance with specific regulations. The term may therefore mean different things to different firms, and it is likely that larger firms that carry out such engagements will have their own procedures manuals. I note that you have asked a question about established methodologies in your letter to a number of individual firms.
Ethical requirements
However, although we do not have specific requirements relating to the conduct of forensic engagements, the core principles and requirements of our Code of Ethics apply to all of our members’ professional and business activities (including forensic work), whether or not those activities lie within a regulated area. The Code sets out five fundamental principles: integrity; objectivity; professional competence and due care; confidentiality; and professional behaviour, the spirit ofwhich must always be complied with. It requires members toconsider whether actions or relationships might constitutethreats to adherence to those principles and where these aresignificant, requires safeguards to be implemented. The Codeincludes a number of sections and case studies coveringsituations that members might be likely to encounter andsuggests, or in some cases requires, specific courses of action.
I attach three documents, which go into this further:
1) An Overview of the Code that explains the approach in more detail. This and other information on our ethical requirements are available at
2) A copy of Parts A and B of our current Code, which contain the underlying requirements for all engagements and additional requirements for practitioners, respectively. The whole Code is available to all, on our website, at (at section 3 of the members handbook) but if you would like a hard copy of other parts of the Code, please let me know.
Although Part B of the Code does not contain specific requirements for forensic work, it is relevant in giving more guidance in section 200 on how practitioners should apply the threats and safeguards approach referred to in Part A, and may be relevant in terms of independence. Independence is not mandatory in all activities carried out by chartered accountants: objectivity is. Independence is an additional series of requirements which effectively manage or eliminate relationships so as to be able to demonstrate objectivity where needed. Independence is only required in audits (which forensic investigations would not be) or other assurance work (which they may or may not be depending on the nature of the opinion given at the end of the work). Section 290 of Part addresses independence requirements for assurance engagements.
3) A helpsheet produced by our Forensic Group (of which more below), which explores the fundamental ethical principles from the perspective of carrying out forensic work in general.
It reminds practitioners, for example, that the principle of professional behaviour includes complying with all relevant laws and regulations. While ICAEW does not set such laws, there will be a legal framework to be complied with, the details of which will depend on the engagement. For example, if expert witness work is involved, Part 35 of the Civil Procedure Rules and Part 33 of the Criminal Procedure Rules might be relevant.
Practice Assurance
As well as complying with the requirements of the ethics code, ICAEW practitioners are subject to a high-level system of Practice Assurance review. This involves periodic visits by inspectors from the ICAEW Quality Assurance Department to ensure that basic principles of quality control are maintained. These principles, derived from the ethical requirements, are: compliance with laws, regulations and professional standards; acting for a client only when it is proper to do so; competence to carry out the work; and appropriate procedures for quality control. I attach a summary of the requirements in this area.
Forensic Group
ICAEW’s Forensic Group has been established to offer resources and support to chartered accountants working as forensic accountants and expert witnesses. As noted above, forensic work is not a specifically regulated area and membership of the group is not compulsory but anyone can join (membership does not carry any special designation or privileges) and benefit from the newsletters and other information disseminated. Information on this is available at our website at
Forensic Accreditation
Last year ICAEW introduced an accreditation scheme for forensic accountants from ICAEW and a number of other professional accountancy bodies. Our purpose is to develop a specialist online register thatis an independent and reliable source of specialist forensic accountants with recent andrelevant experience.Accordingly, anyone requesting accreditation on the register needs to demonstrate their experience and good standing. However, it should be noted that it is not a formal qualification and, for the reasons noted above is not compulsory as a way of being permitted to carry put particular work.
I attach the brochure and application form, which explain the scheme in more detail, including what is required of applicants.
I hope that this has been of use to you in your enquiries but please do not hesitate to contact me if you require any further information.
Yours sincerely
Tony Bromell
Head of Integrity and Markets
T+44 (0) 1908 546284
E.