IESBA’s snapshots provide short, non-technical overviews of IESBA projects. They explain the purpose, direction, and current focus in clear and accessible terms, alongside more detailed technical materials.
This Snapshot focuses on IESBA’s Firm Culture and Governance Project.
Q1. Why is the IESBA working on firm culture and governance?
Accounting firms and professional accountants play a critical public interest role in the global economy by fostering public trust in the financial and non-financial reporting ecosystem.
To meet these expectations, firms are increasingly addressing the need to build and sustain firm-wide ethical culture that supports a consistent, high level of ethical behavior across all service lines.
These efforts underscore an important observation that ethical failures within firms are rarely due to a lack of rules or standards alone. Often, they reflect deeper issues relating to the firm’s ethical culture.
In fact, extensive research demonstrates that ethical behavior in organizations is strongly influenced by firm culture, including elements such as leadership, governance, incentives, and accountability.
At present, there is no comprehensive global ethics baseline against which firms of different sizes and operating in different contexts can assess their ethical culture and governance practices across all activities.
Stakeholders have therefore expressed clear support for the IESBA to explore the development of a global, firm-level framework that complements the existing requirements in the IESBA Code — which focus primarily on individual professional conduct and independence requirements at individual and firm levels, rather than cultural or governance factors.
The Firm Culture and Governance (FCG) project responds to this public interest matter by examining how a global framework could support firms in strengthening the key elements that underpin a strong ethical culture.
Q2. What is the objective of the Firm Culture and Governance project?
The objective of the project is to develop a global culture and governance framework that can help firms build and sustain a strong ethical culture across the whole firm.
In the framework, the IESBA aims:
- To establish a global and consistent point of reference for firms to assess their ethical culture and governance practices;
- For the framework to be principles-based, rather than prescriptive;
- For it to be applicable to firms of different sizes, structures, and other characteristics;
- To promote long-term trust, ethical conduct, and the public interest, by complementing existing requirements.
Q3. What has the IESBA done so far?
In 2024, a dedicated Working Group carried out extensive research and outreach on accounting firm culture and governance and published a report identifying eight key interconnected elements that drive ethical culture in firms.
Based on this work, IESBA agreed to pursue a standard-setting project to develop a Firm Culture and Governance Framework comprising the eight elements (FCG Framework). The project also includes the development of practical non-authoritative guidance and other supporting materials or initiatives.
In June 2025, informed by further stakeholder engagement that followed the publication of the report, including six global roundtables, IESBA agreed to develop:
- Guidance materials and other initiatives during 2025 and 2026; and
- A set of IESBA Viewpoints on each of the eight elements that drive ethical culture in firms to be used for further discussion with stakeholders in 2026.
This further stakeholder engagement informed IESBA’s decision, taken at its June 2026 board meeting, on how best to approach the development of the FCG Framework.
Q4. What are the eight elements of a Firm Culture and Governance Framework?
The eight elements that form the structure of an FCG Framework and that are covered by the IESBA Viewpoints are:
- Ethical leadership,
- Oversight and governance,
- Independent input,
- Accountability across the firm,
- Incentives and disincentives,
- Open discussion and challenge,
- Education and training,
- Transparency.
Together, these elements influence how ethical values are embedded into everyday decisions and behaviors within firms, helping to shape an organizational culture that embeds ethical values in decision-making at all levels and across all service lines of a firm.
Q5. What did the IESBA decide in June 2026?
Following two and a half years of research and stakeholder engagement, the IESBA decided at its June 2026 board meeting in New York to pursue a targeted, principles-based update to the Code. The way forward aims at the development of a single overarching requirement in the Code, supported by limited application material referencing all eight FCG elements.
This targeted approach is designed to:
- Avoid prescriptive provisions by keeping the framework principles-based and anchored in the Code without reducing culture to a compliance exercise;
- Complement International Standard on Quality Management 1 (ISQM 1) by reinforcing the firm’s quality objective to demonstrate a commitment to quality through a culture that recognizes and reinforces the importance of professional ethics, values, and attitudes;
- Ensure internal Code coherence by bringing all eight FCG elements together holistically, replacing the Code’s current partial and fragmented references;
- Apply globally and proportionately to firms of all sizes and across all service lines.
Q6. What are the next steps?
The IESBA will now develop specific Code drafting through its established due process. The next steps include:
- An exposure draft planned in December 2026 for public consultation;
- Final approval of any Code changes targeted at the end of 2027;
- Practical guidance and educational materials developed in parallel, in collaboration with firms, jurisdictional standard setters, and professional accountancy organizations.
Stakeholders will have further opportunities for input before any changes are finalized.
Q7. How does the forward direction on the FCG project affect the IESBA Code?
The IESBA agreed to pursue a targeted Code update that will introduce a single overarching requirement supported by limited application material. The update will:
- Anchor all eight FCG elements in a coherent firm-level framework within the Code;
- Provide global consistency and authority that a standards-based approach delivers, while remaining principles-based;
- Bring together the FCG elements holistically, addressing gaps in the Code’s current partial and fragmented coverage of these elements.
The project aims to provide a clear, simple, globally consistent framework setting out what it takes for an accounting firm to build and sustain a strong ethical culture, thereby helping to enhance public trust in firms, promote the attractiveness of the global accountancy profession, and protect the profession’s reputation.
Annex: Further information and resources
Those interested in additional context, background, and technical details about the project may wish to refer to:
The booklet presents the IESBA Viewpoints on the eight elements of the FCG Framework and sets out the objectives of the project and the stakeholder engagement undertaken in the first half of 2026.
Detailed background on the project; its objectives; and the context, nature, and purpose of the IESBA Viewpoints and stakeholder engagement questions.
A paper explaining at a high-level how the IESBA Viewpoints relate to the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Quality Management 1 (ISQM 1), highlighting the linkages between the two, as well as their differences such as their differing scopes and objectives.
A summary of insights from six global roundtables held in New York, Melbourne, Brussels, Kuala Lumpur, and virtually for Africa and Latin America, involving more than 150 stakeholders from the regulatory, investor, standard-setting, firm, academic, and professional communities.
Research, fact-finding, outreach, and early insights that informed the development of the FCG project, including the identification of the eight fundamental elements of firm culture and governance.
A synthesis of academic research examining how organizational culture shapes ethical behavior within organizations.
Regular updates on the FCG project and the ongoing engagement with stakeholders.
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.