Firm Culture and Governance

The objective of the project is to develop a culture and governance framework that promotes, supports and reinforces a high standard of ethical behavior by a firm's leadership, other partners, and staff across all of the firm’s services, thereby helping the firm develop a reputation as a highly ethical firm, mitigate the risks of unethical behavior and strengthen public trust and confidence in all of its services.

PROJECT FOCUS PAGE:

Website

PROJECT TEAM

• Kam Leung (Project Lead)
• Laura Leal  
• Joanne Holt

BOARD ADVISORS

• Channa Wijesinghe 
• Hector Lehuede
• Jon Walters       

IESBA September 2026 Meeting Highlights

The IESBA considered a presentation from Professor Begoña Navallas of the Universidad Autónoma de Madrid on a comparative study of audit firm governance regulation across jurisdictions. The study was undertaken for Spain’s Instituto de Contabilidad y Auditoría de Cuentas (ICAC).

The IESBA also considered an update on coordination with the International Auditing and Assurance Standards Board (IAASB) and plans for the development of FCG-related non-authoritative materials (NAM) and other supporting materials. The NAM and other supporting materials will complement the proposed FCG provisions in the Code and include a brief joint IESBA-IAASB paper highlighting the linkages between the proposed FCG provisions and ISQM 1. (1) 

The IESBA then deliberated the Project Team’s first-read draft of the proposed FCG provisions in the Code. Topics discussed included the scope of application and the enforceability of the proposed overarching requirement; whether the requirement should refer to the intended outcome of the FCG framework; the role of governance in relation to ethical culture in the overarching requirement; the approach to describing the FCG elements in application material; whether each FCG element is intended to be mandatory; the extent to which firms could leverage their implementation of ISQM 1 in establishing and maintaining an ethical culture and related governance; the proportionality of the proposed provisions; and network-related considerations.

The IESBA will consider a revised draft of the proposed provisions at its October 2026 meeting, with a view to approving an Exposure Draft at its December 2026 meeting.

_{(1) ISQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements}