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IESBA Redefines Accountants’ Ethical Role When Laws and Regulations Broken

Jul 14, 2016 | New York, New York | English

The International Ethics Standards Board for Accountants® (IESBA®, the Ethics Board) today released a new standard, Responding to Non-Compliance with Laws and Regulations. The standard sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or NOCLAR, committed by a client or employer.

The standard applies to all categories of professional accountants, including auditors, other professional accountants in public practice, and professional accountants in organizations, including those in businesses, government, education, and the not-for-profit sector. It addresses breaches of laws and regulations that deal with matters such as fraud, corruption and bribery, money laundering, tax payments, financial products and services, environmental protection, and public health and safety.

“This standard not only raises the ethical bar for the global accountancy profession but also provides an opportunity for it to demonstrate its unflagging commitment to act in the public interest,” said IESBA Chairman Dr. Stavros Thomadakis. “The standard reinforces the public interest role that professional accountants play in stimulating more trustworthy and accountable organizations, and in helping to protect stakeholders and the general public from substantial harm that may stem from breaches of laws and regulations.”

Among other matters, the new standard provides a clear pathway for auditors and other professional accountants to disclose potential non-compliance situations to appropriate public authorities in certain situations without being constrained by the ethical duty of confidentiality. It also places renewed emphasis on the role of senior-level accountants in business in promoting a culture of compliance with laws and regulations and prevention of non-compliance within their organizations.

“The board carefully calibrated the standard based on the rich and diverse input from a wide range of stakeholders to ensure that it is proportionate and, importantly, globally operable,” said IESBA Technical Director Ken Siong, adding, “The standard fills a gap in jurisdictions where legislation or regulation does not address professional accountants’ responsibilities in these situations, and by providing helpful guidance it may well complement legislation or regulation in jurisdictions that do address it. This has been a long journey, and now it’s time for national standard setters, professional accountancy organizations, and accounting firms to adopt and implement the standard.”

The standard is the result of an extensive six-year consultative process, including two Exposure Drafts, three global roundtables in Hong Kong, Brussels, and Washington, DC, and extensive outreach to the global regulatory community, international policy-making organizations, investors, preparers, the corporate governance community, national standard setters, accounting firms, professional accountancy organizations, and other stakeholders. In developing the standard, the Ethics Board also liaised closely with the International Auditing and Assurance Standards Board (IAASB) so that the new standard and the IAASB’s International Standards on Auditing are aligned.

For an overview of the standard, see the At-a-Glance document. For a summary of the board’s decisions in response to significant comments from respondents on the May 2015 Exposure Draft, see the Basis for Conclusions. Additional resources, including a fact sheet and video Q&A series, are available on the NOCLAR web page.

To access the standard, visit the IESBA website: The standard will be effective July 15, 2017, with early adoption permitted.

About the IESBA
The IESBA is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit for more information.

About IFAC
The International Federation of Accountants® (IFAC®) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.