- Analysis explains linkages and key differences between IESBA’s FCG viewpoints and ISQM 1.
- Highlights their mutually supportive nature and key differences in their objectives, scope, output, and focus.
- Developed in close coordination with the IAASB, responding to calls from stakeholders.
The International Ethics Standards Board for Accountants (IESBA) has released the complete analysis of the linkages between the International Standard on Quality Management (ISQM) 1 and the IESBA’s Firm Culture and Governance (FCG) viewpoints.
Developed in close coordination with the International Auditing and Assurance Standards Board (IAASB), the paper responds to calls from stakeholders as well as IESBA and IAASB members to recognize and clarify the linkages between the two.
The analysis explains, at a high level, how the FCG viewpoints and ISQM 1 could interact, demonstrating their mutually supportive nature while recognizing the clear distinctions in their objectives, scope, output, and level of specificity as regards firm culture and governance:
- ISQM 1 requires firms that perform engagements within the scope of IAASB’s engagement standards to establish a system of quality management to enable the consistent performance of quality engagements and issuance of appropriate reports. It requires that the firm demonstrates a commitment to quality through a culture that exists throughout the firm, which recognizes and reinforces, among others, the importance of professional ethics, values, and attitudes.
- The IESBA FCG viewpoints focus on how firms can develop a strong ethical culture by embedding and prioritizing ethical values within the whole firm through eight elements of firm culture and governance.
While this paper seeks to explain the linkages between the FCG viewpoints and ISQM 1, it does not purport to be a like-for-like assessment. ISQM 1 is a standard already in effect. By contrast, the IESBA FCG viewpoints represent high-level, principles-based perspectives on key elements of firm culture and governance developed to support stakeholder engagement on advancing the development of a global FCG framework. The FCG viewpoints do not constitute a standard.
The IESBA will continue outreach and consultation with stakeholders in the coming months, with a view to informing a Board decision on the approach to the development, structure, and authority of such a FCG framework.
About IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
Along with the International Auditing and Assurance Standards Board (IAASB), the IESBA is part of the International Foundation for Ethics and Audit (IFEA). The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.
Contact Information:
Rui Peres Jorge
Director, Strategy and Communications
International Ethics Standards Board for Accountants (IESBA)
ruiperesjorge@ethicsboard.org | Direct: +351 966-301-383
Zsolt Bobis
Lead, Communications
International Ethics Standards Board for Accountants (IESBA)
zsoltbobis@ethicsboard.org