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The mission of the International Federation of Accountants (IFAC), as set out in its constitution, is “to serve the public interest by contributing to the development, adoption and implementation of high-quality international standards and guidance; contributing to the development of strong professional accountancy organizations and accounting firms, and to high quality practices by professional accountants; promoting the value of professional accountants worldwide; and speaking out on public interest issues where the accountancy profession’s expertise is most relevant.” In pursuing this mission, the IFAC Board has established the International Ethics Standards Board for Accountants (IESBA) to function as an independent standard-setting body under the auspices of IFAC and subject to the oversight of the Public Interest Oversight Board (PIOB).
The IESBA develops and issues, in the public interest and under its own authority, high-quality ethics standards and other pronouncements for professional accountants for use around the world. The IFAC Board has determined that designation of the IESBA as the responsible body, under its own authority and within its stated terms of reference, best serves the public interest in achieving this aspect of its mission.
The IESBA’s objective is to serve the public interest by setting high-quality ethics standards for professional accountants and by facilitating the convergence of international and national ethics standards, thereby enhancing the quality and consistency of services provided by professional accountants throughout the world and strengthening public confidence in the global accounting profession.
In fulfilling the above objective, the IESBA develops and issues the following authoritative pronouncements:
- The Code of Ethics for Professional Accountants, which establishes a principle-based standard of professional ethics for public accountants and provides a conceptual framework for applying these principles. A Member Body of IFAC or firm shall not apply less stringent standards than those stated in the Code. However, if an IFAC Member Body or firm is prohibited by law or regulation from complying with certain paragraphs of the Code, they should comply with all other parts of the Code.
- Code of Ethics Interpretations which assist in the application of the Code. The IESBA also publishes other pronouncements on ethics related matters, thereby advancing public understanding of the ethical requirements of professional accountants.
The official text of the Code and Interpretations and other pronouncement is that published by the IESBA in the English language.
The members of the IESBA, including the Chair and Deputy Chair, are appointed by the IFAC Board on the recommendation of the Nominating Committee and with the approval of the PIOB. The appointment as Deputy Chair does not imply that the individual concerned is the Chair-elect.
The IESBA has 18 members comprising practitioners and non-practitioners of whom no more than nine shall be practitioners and no less than three shall be public members. One of those public members would preferably be a specialist in business ethics. A public member is an individual who satisfies the requirements of a non-practitioner and is also expected to reflect, and is seen to reflect, the wider public interest. Not all non-practitioners are therefore eligible to be public members. The three public members may be members of IFAC Member Bodies.
The selection process is based on the principle of “the best person for the job;” the primary criterion being the individual qualities and abilities of the nominee in relation to the position for which they are being nominated. However, the selection process also seeks a balance between the personal and professional qualifications of a nominee and representational needs, including gender balance of the IESBA. Accordingly, consideration will be given to other factors including geographic representation, sector of the accountancy profession, size of organization, and level of economic development.
IESBA members may be accompanied at meetings by a technical advisor. A technical advisor has the privilege of the floor with the consent of the IESBA member he or she advises, and may participate in projects. Technical advisors are expected to possess the technical skills to participate, as appropriate, in IESBA debates and attend IESBA meetings regularly to maintain an understanding of current issues relevant to their role.
The IESBA may also include up to three observers, appointed at the discretion of the IFAC Board, in consultation with the PIOB. Observers may attend IESBA meetings, have the privilege of the floor, and may participate in projects. Observers are expected to possess the technical skills to participate fully in IESBA debates and attend IESBA meetings regularly to maintain an understanding of current issues.
The Chair of the IESBA Consultative Advisory Group (CAG) is expected to attend IESBA meetings, or to appoint a representative of a CAG member organization to attend. The Chair of the IESBA CAG, or appointed representative, has the privilege of the floor at IESBA meetings.
IESBA members are required to sign an annual statement declaring they will act in the public interest and with integrity in discharging their roles within IFAC. Nominating organizations of members of the IESBA and the employing organization of the chair of the IESBA (as applicable) are asked to sign independence declarations
The Chair is selected by the Nominating Committee and recommended to the IFAC Board for its agreement and to the PIOB for subsequent approval.
The IESBA Chair must agree to be bound by independence requirements in order to assume the position. The independence requirements are outlined in The Independence Requirements of the Part-Time IESBA Chair.
The standard term for IESBA members is three years, with approximately one-third of the membership rotating each year. A member may serve up to two consecutive terms, for an aggregate term of six years.
The Chair ordinarily may serve three consecutive terms (as Chair or as a member for one or two terms preceding the appointment as Chair), for an aggregate of nine years. In exceptional circumstances, to be specified by the Nominating Committee, the Chair may serve for one additional consecutive term, for an aggregate term of twelve years.
Each IESBA meeting requires the presence, in person or by simultaneous telecommunications link, of at least twelve of the appointed members.
IESBA meetings shall be chaired by the Chair or, in his or her absence, by the Deputy Chair. In the event of the absence of both, the members present shall select one of their number to take the chair for the duration of the meeting, or of the absence of the Chair and Deputy Chair.
Each member of the IESBA has one vote which can be exercised only by the appointed member. The affirmative vote of at least twelve of those present at a meeting in person or by simultaneous telecommunications link is required to approve changes to the Code, Interpretations and exposure drafts.
IESBA meetings to discuss the development and to approve the issuance of changes to the Code, Interpretations, exposure drafts and other pronouncements are open to the public. Matters of a general administrative nature or with privacy implications may be dealt with in closed sessions of the IESBA; no decisions that would affect the content of the Code, Interpretations, and other pronouncements issued by the IESBA are made in a closed session. Agenda papers for open sessions, including minutes of the meetings of the IESBA, are published on the IFAC website. The IESBA meetings and agenda papers are in English, which is the official working language of IFAC.
The PIOB has the right to attend, or be represented at, all meetings and closed sessions of the IESBA.
The IESBA is required to be transparent in its activities, and in developing the Code and Interpretations, to adhere to due process as approved by the PIOB.
In setting its strategy and work program, the IESBA obtains the PIOB’s conclusion as to whether the due process used to develop the IESBA’s strategy and work program has been followed effectively and with proper regard for the public interest. The IESBA also obtains the PIOB’s opinion, as at the date of that opinion, on the appropriateness of the items on the work program, and its approval of the completeness of the strategy and work program from a public interest perspective. The IESBA adds to its work program those items that the PIOB resolves should, from a public interest perspective, form part of the IESBA’s work program.
The objective of the IESBA CAG is to provide input to and assist the IESBA through consultation with the CAG member organizations and their representatives at the CAG meetings, in order to obtain advice on the IESBA’s agenda and project timetable (work program), including project priorities, technical advice on projects and advice on other matters of relevance to the activities of the IESBA.
The IESBA will annually report on its work program, activities and progress made in achieving its objectives during the year. This information is normally included as part of the IFAC annual report.
The IFAC Board will review the terms of reference of the IESBA at least every three years.