The International Ethics Standards Board for Accountants (IESBA) has unanimously resolved to take timely action to develop fit-for-purpose, globally applicable ethics and independence standards as a critical part of the infrastructure needed to support transparent, relevant and trustworthy sustainability reporting. This recognizes the need to respond at pace to match the speed of transformation in the corporate reporting landscape. Demand for sustainability information has risen substantially and rapidly in recent years, and such information is increasingly used to support capital allocation or other decisions by investors, customers, current or potential employees, and other stakeholders. It also recognizes the essential role ethics and independence play in the production, reporting and assurance of sustainability information.

The IESBA has tasked its recently established Sustainability Working Group to develop a strategic vision to guide the IESBA’s standard-setting actions in relation to sustainability reporting and assurance. The Working Group will prepare a project plan by December 2022 as a launchpad for commencement of standard-setting work soon after. This work will proceed in tandem with the development of IFRS Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB), and sustainability-related International Standards on Assurance Engagements (ISAEs) by the International Auditing and Assurance Standards Board (IAASB). The IESBA recognizes the importance of coordinating this work closely with the ISSB and IAASB so that coherent, mutually reinforcing building blocks of standards can be put in place around the same time to support the necessary regulatory infrastructure for sustainability reporting.

“Sustainability has risen to the top of our strategic agenda as societal expectations have unquestionably changed towards the need for companies and organizations to pursue more sustainable business goals, capital has flowed in substantial waves towards Environmental, Social and Governance (ESG)-focused investments, and concerns about market integrity have triggered regulatory mobilizations and actions,” said IESBA Chair Gabriela Figueiredo Dias. “Time is of the essence and it is critical that the ethics standards pillar of the infrastructure be strong and ready to support the sustainability information supply chain. Stakeholder expectations are high and we are determined to take the necessary actions to meet the market needs.”

The IESBA has been proactively engaged in outreach to stakeholders to exchange views and insights on the emerging issues in sustainability reporting and assurance, and is actively involved in discussions with the International Organization of Securities Commissions (IOSCO) and the IAASB on coordinated plans and actions to respond to the developments.

Pending finalization of the IESBA’s plan of work for sustainability-related ethics and independence standard-setting, IESBA Staff will issue in the near term guidance to draw the attention of professional accountants and other market participants to the fundamental principles and key provisions of the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards) that already apply broadly to sustainability reporting and assurance.

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 ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).

Bruno Tesnière became a Technical Advisor for Christelle Martin in May 2022. A former partner at PwC in France, Mr. Tesnière was also the Chief Risk Officer, Partner Responsible for Independence and member of the leadership team, with experience in financial and IT audit. He is a member of the Ethics Group of the Compagnie National des Commissaires aux Comptes. Mr. Tesnière has also been involved in digitalization of financial reporting especially through promoting XBRL as Chair of XBRL Advisory Committee for the IFRS Foundation (2008 to 2013) and as chair of XBRL Europe (until 2016) a non-for profit organization for the development of the XBRL Standard in Europe and an affiliate of XBRL International.

Mr. Tesnière is a Certified Public Accountant and CISA, member of the Compagnie National des Commissaires aux Comptes and of the Ordre des Experts-Comptables in France. He has an MBA from Neoma (France).

The International Ethics Standards Board for Accountants (IESBA) is reminding stakeholders and encouraging the public to act soon and submit comments on their two open exposure drafts.

The Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The exposure draft landing page linked above includes a webinar explaining the proposed revisions.

Comments are requested by May 31, 2022.

The Proposed Technology-related Revisions to the Code seeks to enhance the Code’s robustness and expand its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide. The exposure draft landing page linked above includes a webinar explaining the proposed revisions. 

Comments are requested by June 20, 2022. (For stakeholders who are unable to submit a formal response, an online survey has been created for the Tech ED.)

Public input is a critical component of the standards setting process. The IESBA encourages all stakeholders to comment on both important exposure drafts. Learn more about the IESBA at www.ethicsboard.org

Today, the Staff of the International Ethics Standards Board for Accountants (IESBA) released the report, Benchmarking International Independence Standards Phase 1 Report: Comparison of IESBA and US SEC/PCAOB Frameworks. The publication details the findings of a study comparing the provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code)—in particular the independence provisions applicable to audits of financial statements of public interest entities (PIEs)—with the relevant rules of the U.S. Securities and Exchange Commission (SEC) and the US Public Company Accounting Oversight Board (PCAOB).

“Considerable advances have been made in recent years to strengthen the International Independence Standards, further reinforcing the important role of the independent audit to the integrity of financial markets worldwide,” said IESBA Chair Gabriela Figueiredo Dias. “This timely benchmarking analysis answers many questions we have received and provides much insight into how the provisions in the Code compare with those of a major jurisdiction like the U.S., and will ultimately instill greater public confidence in the robustness of the Code.”

The IESBA launched the benchmarking study to promote awareness and further adoption of the Code. Without making judgments as to the relative merits of the two independence frameworks, the report highlights the similarities and key differences between the Code and the U.S. SEC and PCAOB rules in areas of greatest interest to stakeholders, including the permissibility of non-assurance services to audit clients, fees, long association with an audit client, and business and financial relationships. The IESBA will consider the findings of the benchmarking analysis in developing its 2024-2027 Strategy and Work Plan.

Alongside the detailed report, the IESBA Staff has published an abridged report that provides an overview of the main similarities and differences, as well as an additional publication with further information on the background and objectives of the initiative.  

Learn more on the IESBA website.

The staff of the International Ethics Standards Board for Accountants’ (IESBA) has completed a study comparing the provisions of International Code of Ethics for Professional Accountants (including International Independence Standards) — in particular the independence provisions applicable to audits of financial statements of public interest entities (PIEs)—with the relevant rules of the U.S.

The International Ethics Standards Board for Accountants (IESBA) invites all stakeholders to join its webinar discussing the critical role that complying with ethics standards, including on independence, play in ensuring reliable and trustworthy sustainability information.