A Questions and Answers (Q&A) publication intended to assist professional accountancy organizations and others as they adopt and implement the Code of Ethics for Professional Accountants issued in July 2009.

In This Issue:

1. IESBA Issues Revised Code of Ethics
2. Revisions Strengthen Independence, Clarify Requirements
3. Member Bodies and Firms Encouraged to Develop Implementation Plans
4. Resources Available to Support Adoption and Implementation of Revised Code
5. Ethics Board Launches Process for Developing 2010-2012 Strategic Plan
6. Tell Others About Ethics eNews

1. IESBA Issues Revised Code of Ethics

The International Ethics Standards Board for Accountants (IESBA) issued in July, following the approval and consideration of due process by the Public Interest Oversight Board, a revised Code of Ethics for Professional Accountants (the Code). The revised Code clarifies requirements for all professional accountants and significantly strengthens the independence requirements of auditors.

The Code is effective on January 1, 2011.

The full text of the revised Code can be accessed from the Ethics section of the IFAC online bookstore at www.ifac.org/Store.

2. Revisions Strengthen Independence, Clarify Requirements

The revisions to Code of Ethics for Professional Accountants (the Code) include the following changes, among others, to strengthen the Code's independence requirements:

• Extending the independence requirements for audits of listed entities to all public interest entities;
• Requiring a cooling-off period before certain members of the firm can join public interest audit clients in certain specified positions;
• Extending partner rotation requirements to all key audit partners;
• Strengthening some of the provisions related to the provision of non-assurance services to audit clients;
• Requiring a pre- or post-issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years; and
• Prohibiting key audit partners from being evaluated on or compensated for selling non-assurance services to their audit clients.

Also included within the revisions are changes in the drafting conventions used in the Code. These changes, which include the use of the word "shall," present the Code's requirements in clearer, more precise language.

3. Member Bodies and Firms Encouraged to Develop Implementation Plans

Given the effect the revisions to Code of Ethics for Professional Accountants (the Code) will likely have on professional practice, and the fact that they will go into effect less than 18 months from now, member bodies, firms, and other relevant stakeholders are encouraged to develop plans for implementing the revised Code by the effective date of January 1, 2011.

Issues to consider while developing implementation plans would include the implications of:

• Expanded partner rotation requirements;
• New independence requirements for public interest entity audit clients; and
• Expanded requirements related to the provision of non-assurance services to audit clients

4. Resources Available to Support Adoption and Implementation of Revised Code

The IESBA has developed a number of resources to support adoption and implementation efforts for the revised Code of Ethics for Professional Accountants (the Code).

These materials include the following:

• A high-level overview of the Code
• A detailed presentation slide package and speaking notes addressing the independence requirements contained in section 290
• A presentation slide package and speaking notes addressing the independence requirements for audits of public interest entities
• Templates, both high-level and detailed, to help member bodies/firms analyze differences between the requirements in their jurisdiction and the requirements of the revised Code
• Comparisons, both high-level and detailed, to the existing Code
• A short paper describing the changes from the existing Code
• An article for member bodies describing the process of developing the Code, highlighting some key changes and emphasizing the need to start the process of implementation

All of these support materials will be available soon in the Ethics section of the IFAC website (www.ifac.org/Ethics).

5. Ethics Board Launches Process for Developing 2010-2012 Strategic Plan

In April 2009, the IESBA launched a strategic review to develop the 2010-2012 Strategic and Operational Plan.

The IESBA's terms of reference and due process require the strategic review to include a formal survey of key stakeholders' views about issues that they believe should be addressed in the immediate future. The IESBA conducted a short survey to solicit these views in July. The IESBA will consider this feedback as it develops its Strategic Plan which will be exposed for public comment.

To view the 2007-2009 Strategic and Operational Plan, please visit the Ethics section of the IFAC online bookstore at www.ifac.org/Store.

6. Tell Others About Ethics eNews

The IESBA issues regular eNews updates to keep you current on its activities and recent publications. Please forward this eNews to any interested colleagues and advise them that they can subscribe to receive this eNews by following these simple steps:

1. Go to the eNews sign-up page at https://www.ifac.org/E-news/index.tmpl.
2. Enter your email address, name, and country.
3. Select "Ethics eNews" from the checklist, as well as any other eNews alerts that you would like to receive.

The next issue of the Ethics eNews will be delivered directly to you in your inbox.

For more information about any of the items mentioned above or other information about the IESBA, please contact: communications@ifac.org.

About the IESBA and IFAC

The IESBA develops ethical standards and guidance for use by professional accountants. It encourages member bodies of IFAC to adopt high standards of ethics for their members and promotes good ethical practices globally. The Public Interest Oversight Board oversees the activities of the IESBA and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.

IESBA Staff Issues Materials to Support Adoption and Implementation of the Code

The International Ethics Standards Board for Accountants (IESBA) issued in July, following the approval and consideration of due process by the Public Interest Oversight Board (PIOB), a revised Code of Ethics for Professional Accountants (the Code).

The Code becomes effective on January 1, 2011.

The full text of the revised Code can be accessed at the Ethics section of the IFAC online bookstore at www.ifac.org/Store.

Recognizing the effect these changes will have on professional accountants in practice and business, the IESBA staff has developed a range of materials to facilitate adoption and implementation of the Code. The documents are non-authoritative and are issued for information.

The Adoption and Implementation Materials

The materials include an overview of the revised Code, additional guidance about the independence requirements and a tool to assist jurisdictions in comparing the revised Code to their existing Code.

These materials include:

• PowerPoint Presentations: High level and in-depth that can be used to explain the content of the Code
• Overview of Independence Requirements: A short document providing an overview of the independence requirements contained in Section 290 of the Code of Ethics relating to rotation, cooling off period, provision of non-assurance services, fees and compensation and evaluation policies
• Comparisons: A high level and more detailed comparison that will help people understand the differences between the July 2009 Code and the previous Code
• Template: A comparison template containing the complete text of the Code which can assist individuals who want to understand how the provisions in their jurisdiction match up to the Code.

All of these support materials can be accessed at the Resources section of the IESBA website at www.ifac.org/Ethics/Resources.php.

For more information about any of the items mentioned above or other information about the IESBA, please contact: communications@ifac.org.

The IESBA develops ethical standards and guidance for use by professional accountants. It encourages member bodies of IFAC to adopt high standards of ethics for their members and promotes good ethical practices globally. The Public Interest Oversight Board oversees the activities of the IESBA and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

In This Issue:

1. IESBA Seeks Comment on Proposed Strategy and Work Plan for 2010-2012
2. Adoption and Implementation Material Available
3. IESBA Convergence Objective
4. 2010 Ethics Handbook Available in Print and Electronic Formats
5. Upcoming Meetings
6. Share Ethics eNews with Your Colleagues

1. IESBA Seeks Comment on Proposed Strategy and Work Plan for 2010-2012

The IESBA has released an exposure draft of its proposed Strategy and Work Plan 2010-2012. This plan focuses on proposed new projects and activities that the board will undertake over the next three years.

In the draft 2010-2012 plan, the IESBA states that it intends to continue work and complete two projects that had been a high priority in the previous work plan:

• Conflicts of Interest - The IESBA will reconsider the nature and extent of the guidance in the Code of Ethics for Professional Accountants (the Code) on conflicts of interest and revise Sections 220 Conflicts of Interest and 310 Potential Conflicts as appropriate; and
• Responding to Fraud or Illegal Acts - The IESBA will reconsider the nature and extent of the guidance currently in the Code on how professional accountants should respond in situations where they encounter a suspected fraud or illegal act. The board will then revise the Code as appropriate.

The IESBA also intends to commence a project that will consider which entities should be considered to be a "related entity" of a collective investment vehicle, including mutual funds, and whether the existing definition of related entity should be revised when applied to collective investment vehicles.

In addition to its standard-setting activities, the IESBA plans to continue to assess its activities supporting those professionals, organizations and other stakeholders who are working to adopt and implement the revised Code. The board will consider whether additional support materials and activities would be useful.

The plan also outlines intended activities related to the IESBA's convergence objective.

Comments are due on June 15, 2010. To access the exposure draft, visit: https://www.ifac.org/Guidance/EXD-Details.php?EDID=0137.

2. Adoption and Implementation Material Available

The IESBA staff has prepared materials to support the adoption and implementation of the Code of Ethics for Professional Accountants (the Code).

These materials include:

• PowerPoint presentations that can be used to explain the content of the Code;
• Comparisons of the revised Code with the previous Code;
• A template that can assist individuals in understanding how the provisions in a particular jurisdiction compare to the Code, and
• An overview of the independence requirements in the Code.

The IESBA will continue to assess what additional material or activities would be useful to further the adoption and implementation of the Code.

The adoption and implementation support materials are available at https://www.ifac.org/Ethics/Resources.php#implementation-and-adoption.

3. IESBA Convergence Objective

Promoting international convergence of independence requirements for accountancy professionals is a major priority for the IESBA. To that end, the IESBA will liaise closely with national standard setters and regulators to identify and understand their perspectives on convergence, and to obtain their views on how the Code can be used as a catalyst to achieve greater convergence. In particular, the IESBA will be seeking input on:

(a) Whether in a group audit situation, where the national independence standards in the jurisdiction of the parent auditor contain requirements that are more stringent than those contained in the Code, the parent auditor would accept foreign auditors of foreign subsidiaries complying with the independence requirements in the Code; and
(b) The types of improvements to the Code that standard setters and regulators believe should be made in order for the Code to gain acceptance and recognition in their jurisdictions. The IESBA will consider input it has received from stakeholders, such as the need to identify more clearly the independence provisions related to public interest entities. Accordingly, it will prepare a document identifying those provisions, which it will use in discussions with national standard setters and regulators.

4. 2010 Ethics Handbook Available in Print and Electronic Formats

The 2010 edition of the Handbook of the Code of Ethics for Professional Accountants is now available for download free-of-charge from IFAC's Publications and Resources site (web.ifac.org/publications). Print copies of the handbook, together with the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, can be ordered for US $185.00 plus shipping by calling IFAC at +1 (212) 471-8722.

5. Upcoming Meetings

The IESBA next meets on June 23-24, 2010 in Paris, France. For more information and to register to attend an IESBA meeting as a public observer, visit: https://www.ifac.org/Ethics/Meetings.php.

Meetings of the IESBA Consultative Advisory Group are also open to public observers. Its next meeting will be held on September 13, 2010 in London, United Kingdom. For more information, visit: https://www.ifac.org/Ethics/ConsultativeAdvisoryGroup.php.

6. Share Ethics eNews with Your Colleagues

The IESBA issues regular eNews updates to keep you current on its activities and recent publications. Please forward this eNews to any interested colleagues and advise them that they can subscribe to receive IESBA eNews by following these simple steps:

1. Go to the eNews sign-up page at https://www.ifac.org/E-news/index.tmpl.
2. Enter your email address, first name, last name and country.
3. Select "Ethics eNews" from the check list, as well as any other electronic newsletters that you would like to receive.

You will receive the next issue of the IESBA eNews directly to your inbox.



For more information about any of the items mentioned above or other information about the IESBA, please contact: communications@ifac.org.

About the IESBA and IFAC

The IESBA develops ethical standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IESBA, and the IESBA Consultative Advisory Group, which provides public interest input into the development of the Code.

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 159 members and associates in 124 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.