The IESBA’s Technology Task Force launched two online surveys with questions seeking stakeholder feedback to inform its consideration of issues related to two key recommendations in the February 2020 Phase 1 report of its Technology work stream, Technology Working Group Phase 1 Final Report.

Ladies and gentlemen, dear colleagues:

It is an honor and a great pleasure to be with you today on Global Ethics Day. I congratulate the ACCA/SINGAPORE for hosting for the fourth year, and virtually for the first time, the Ethics Film Festival, an engaging and significant event.

Today, I am speaking to you in my capacity as Chairman of IESBA, the global standard setter of the International Code of Ethics for Professional Accountants, including the International Independence Standards. I am pleased that Singapore is among the 80 jurisdictions around the world that have adopted the 2018 edition of the Restructured Code which came into effect last year, in its substantively revised form.

Ethics is a social endeavor that permeates our mindset and orients our judgments. Events as this Film Festival offer an innovative and enticing way to bring together accounting professionals for discussion, and cultivation of awareness of ethical challenges that continuously accompany professional practice. And unfortunately, the COVID-19 pandemic makes awareness of ethical values a pressing need. We, at IESBA, perceive demand for ethical guidance to be clearly on the rise globally. We are doing much work at IESBA to explore new themes, for example in the areas of technology and tax planning.

The role ethics plays in the accounting profession cannot be overstated. Accountants are no strangers to dealing with complex and challenging situations. The Code’s provisions – the fundamental principles, the conceptual framework, the requirements, the application material – require individual accountants and firms to behave ethically and uphold their responsibility to the public interest.

The role of leaders of organizations is paramount in guiding, incentivizing, and shaping a professional culture. That is why the conversations among leaders, as among today’s distinguished panelists, provide individual accountants with insights and inspiration. So, I have been looking forward very much to tonight’s event.

THE ESG AGENDA AND THE GLOBAL PUBLIC INTEREST

The broad commitment of the profession to the public interest is of course reflected on our responsibilities as global standard setters. We have a strong commitment to crafting our standards with clear public interest objectives. The Ethics Code has long been a source of public interest education and practice by the profession.

For many years, I have encountered a persistent request: define the global public interest. It has been hard to offer a satisfactory answer. As commonly understood public interest is a concept varying across jurisdictions and across time, reflected in variety of laws and regulations. Yet today, with all the vicissitudes of crises, a global notion of the public interest has emerged. It is embedded in the environmental, social and governance (ESG) agenda. This makes the vector of objectives for both global standard-setters and global practitioners very definitive. There are surely complexities to be ironed out, but the value system built around sustainability is stable, foundational, and global. This is indeed a very exciting time. A time for work, vision, and restructuring.

How does ethics precisely relate to an agenda about sustainable environment, society, and governance? How does ethics fit into a discussion about Troubled Water?

Ethics and sustainability are close relatives. Ethics is crucial for the sustainability of human relationships, based on trust. There are ethics involved in every facet making up the ESG agenda. How do the policies and decisions of public and private entities and of professionals affect the ESG matrix for shareholders, employees, taxpayers, society at large? Sustainability will be by construction ethical, or it will not prevail. Sustainability standards must acknowledge and embody ethical values.

International organizations, public authorities, and private entities in many countries – including Singapore – are crafting policies for sustainable operations and investments. Capital markets are also affected. In January 2020, Blackrock’s Chairman Larry Fink stated “... companies have a responsibility … to give shareholders a clear picture of their preparedness. And in the future, greater transparency on … sustainability will be a persistently important component of every company’s ability to attract capital.” The big 4 accounting firms, and others as well, are focusing on ESG matters. I note with interest the recently released ESG metrics by the World Economic Forum. We look forward to a standardization of a common approach for measuring and reporting ESG metrics.

THE UNIQUE ROLE OF ACCOUNTANTS

The longstanding expectation of accountants to prioritize the public interest and commitment to the Code of Ethics fits very well with the role of measuring and reporting on ESG objectives. Transparency on sustainability metrics will require strong application of ethical provisions both in the preparation and in the assurance of ESG. The accounting profession is uniquely positioned to lead in this space, as ethics forms part of its value-proposition.

In this connection, I read with special interest the ACCA’s global report: Mainstreaming Impact: Scaling a Sustainable Recovery, launched this month. A large majority surveyed agreed that professional accountants should be involved in understanding social and environmental impacts and dependencies, prioritising the creation of positive social impact alongside financial returns and improving risk management of social and environmental issues.[1] This is a very encouraging finding.

The Code has many lessons for these novel tasks in non-financial reporting. Highlighting the Code I would remind that:

• Accountants are required to be honest and competent and should not associate themselves with misleading or fraudulent information.
• To follow the pace of innovation and technology, accountants must be agile, alert, and open to continuous learning and upskilling.
• Accountants cannot cave under pressure nor can they turn a blind eye when they witness or suspect illegal or illicit behaviors and activities.

Today’s Netflix film, Troubled Water, is a dramatic reminder of the importance of this pair, ethics and sustainability, as technological and social change are unfolding at breakneck speed.

Change is inevitable. Professional standards must be modernized to remain fit-for-purpose. We understand this well at IESBA. Our work program includes projects that enhance transparency and improve communications, among other goals. Earlier this month, we released a new comprehensive pronouncement on “Role and Mindset” that elevates accountants’ societal role and strengthens the mindset and expected public interest orientation.

The drive for sustainable economies and societies will depend very much on building transparency, accountability, and trust in private and public organizations and among the financial professions. Accountants have a central responsibility in this construction for recovery and future well-being. And already, from ACCAs work, it appears that the new generations in the profession are ready and eager to move in that direction. That is the most encouraging sign of all. Keep going!

Thank you very much.

Earlier today, the IESBA’s Technology Task Force launched two online surveys with questions seeking stakeholder feedback to inform its consideration of issues related to two key recommendations in the February 2020 Phase 1 report of its Technology work stream, Technology Working Group Phase 1 Final Report. The topics addressed by these two recommendations are:

• Technology and complexity in the professional environment; and
• The impact of technology on auditor independence.

Stakeholder responses to the surveys will help guide the IESBA’s consideration of next steps in relation to those two topics at its December 2020 Board meeting.

The IESBA is seeking views and input from all categories of stakeholders, including investors and other users of financial statements, the corporate governance community, the regulatory and audit oversight community, preparers, firms, national standard setters, professional accountancy organizations, academics and others. Don’t miss this unique opportunity to contribute to international standard setting.

How to Participate in the Survey

Click on the links below to respond to each survey by November 10, 2020.

1. Technology and complexity in the professional environment; and
2. Impact of Technology on Auditor Independence.

If you are experiencing difficulty in submitting your completed questionnaire online, please contact KamLeung@ethicsboard.org.

Alternatively, you may also complete the PDF versions of the survey by November 10, 2020 and e-mail them to KamLeung@ethicsboard.org. Click below to access these versions.

• PDF versions of technology surveys

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves 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 IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board.

The International Ethics Standards Board for Accountants (IESBA) is pleased to announce new appointments and re-appointments to take effect on January 1, 2021.

The four new Board Members are:

• Ms. Saadiya Adam (Senior Professional Manager: Standards, Independent Regulatory Board for Auditors (IRBA), South Africa)
• Prof. Vania Borgerth (Retired accountant and a PhD Candidate in Accountancy, Fucape Business School, Brazil)
• Mr. Sung-Nam Kim (Non-partner advisor, EY Korea, Korea)
• Mrs. Yaoshu Wu (Director of Professional Standards and Technical Guidance Dept., the Chinese Institute of Certified Public Accountants (CICPA), China)

The following three current Board Members will continue their service for a second term:

• Mr. Brian Friedrich (Principal, friedrich & friedrich corp., Canada)
• Prof. Winifred Kiryabwire (Associate Professor of Law, Makerere University, Uganda)
• Prof. Jens Poll (Audit Committee Chair, Non-Executive/Supervisory Board Member, Germany)

"I welcome such an accomplished group of volunteers to the IESBA,” said Stavros Thomadakis, IESBA Chairman. “As an international standard setter, it is critical we incorporate voices from different cultures and professional backgrounds. Our new Board makeup expands our reach in both areas, and advances our commitment towards gender parity.”

The IESBA also welcomes the appointment of Caroline Lee from Singapore as Deputy Chair for 2021. Ms. Lee has over 30 years of experience in the public accountancy profession and is a partner at KPMG and Asia Pacific Head of Quality & Risk Management. She is also a member of the Singapore Public Accountants Oversight Committee’s Ethics Committee. She has been a Board member of IESBA since January 2017 and of its Planning Committee since January 2019, and has played an instrumental role on its projects to revise the fee-related provisions and Part 4B of the International Code of Ethics for Professional Accountants (including International Independence Standards).

“Ms. Lee has shown an unwavering commitment to the IESBA and to the development of international standards in the public interest,” said Dr. Thomadakis. “I value her insights, expertise and strategic thinking.  I look forward to working together with Caroline in her new role. I also want to thank our departing Deputy Chair Richard Fleck, who has been my close associate and friend and who has contributed decisively and generously to IESBA’s most ambitious projects such as NOCLAR, Long Association, Role and Mindset, and Non-Assurance services.”

About the Nominating Committee

The Nominating Committee makes recommendations to the International Federation of Accountants® (IFAC®) Board and Public Interest Oversight Board (PIOB) on the composition of the IAASB and IESBA.

The Nominating Committee is guided in its work by the principle of selecting the most suitable person for the position. In doing so, it endeavors to balance the nominee’s abilities and professional qualifications with the representational needs of the board, such as broad regional and professional representation and gender balance. The PIOB representative observes the selection process for IAASB and IESBA memberships with regular updates to the PIOB. To learn more about the Nominating Committee, visit their website here.

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves 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 IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

Earlier today, the Staff of the American Institute of Certified Public Accountants (AICPA), the International Ethics Standards Board for Accountants (IESBA) and the International Auditing and Assurance Standards Board (IAASB) jointly released the publication, Using Specialists in the COVID-19 Environment: Including Considerations for Involving Specialists in Audits of Financial Statements.

The publication provides guidance to assist professional accountants in business and in public practice determine when there might be a need to use the services of a specialist to assist in performing specific tasks and other professional activities within their employing organizations, and in serving their clients in the COVID-19 environment. The publication also highlights relevant ethical considerations for accountants when thinking about using a specialist, as well as circumstances that indicate a need for a specialist during an audit of financial statements.

The publication was developed by the Staff of the AICPA under the auspices of a Working Group formed by the IESBA and national ethics standard setters (NSS) from Australia, Canada, China, South Africa, the UK and the US. Chaired by Mr. Richard Fleck, IESBA Deputy Chair, the Working Group’s mandate is to develop implementation support resources to assist accountants effectively apply the International Code of Ethics for Professional Accountants (including International Independence Standards) when facing circumstances created by the COVID-19 pandemic. The publication benefited from input from IESBA and IAASB Staff.

The publication can be found on the IESBA’s and IAASB’s COVID-19 resource pages. The Working Group has committed to developing additional COVID-19 guidance in the coming weeks.

About the IESBA-NSS Working Group

The Working Group organizations comprise: APESB (Australia); Chartered Professional Accountants of Canada; the Chinese Institute of Certified Public Accountants; the Independent Regulatory Board for Auditors (South Africa); the UK Financial Reporting Council; and the American Institute of Certified Public Accountants (US).

About AICPA

The American Institute of Certified Public Accountants (AICPA) is the world’s largest member association representing the accounting profession. The AICPA’s history of serving the public interest stretches back to 1887. Today, you’ll find 431,000+ members in 130 countries and territories, representing many areas of practice, including business and industry, public practice, government, education and consulting.

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).

About IAASB

The International Auditing and Assurance Standards Board (IAASB) develops auditing and assurance 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 IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance.

The International Ethics Standards Board for Accountants (IESBA) today released revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to better promote the role and mindset expected of all professional accountants.

The revisions explicitly recognize that the accountancy profession is entrusted with public confidence in the wide-ranging roles it plays in society and that such confidence is based on the skills and values it brings to its professional activities. Importantly, they reaffirm the profession’s responsibility to act in the public interest and the fundamental role of the Code in meeting that responsibility.

Among other matters, the revisions:

• Reinforce aspects of the principles of integrity, objectivity and professional behavior;
• Raise behavioral expectations of all professional accountants through requiring them to have an inquiring mind as they undertake their professional activities;
• Emphasize the importance of accountants being aware of the potential influence of bias in their judgments and decisions; and
• Highlight the supportive role the right organizational culture can play in promoting ethical conduct and business.

“The ethical principles and behavioral expectations embodied in the Code are the bedrock of the accountancy profession,” said Dr. Stavros Thomadakis, IESBA Chairman. “The profession is a major player in the global financial ecosystem and an indispensable facilitator of economic growth. The enhancements we have made to the Code speak to the importance of protecting and strengthening public trust in it across its varied roles and activities.”

Throughout this project, the IESBA has benefited from coordination with the International Auditing and Assurance Standards Board (IAASB) and the former International Accounting Education Standards Board (IAESB) on issues common to their standards, and especially in developing the provisions addressing the mindset expected of professional accountants.

The “role and mindset” revisions will become effective on December 31, 2021.

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves 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 IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

Congratulations to the PIOB for the organization’s 15^th anniversary. The PIOB has fulfilled successfully a demanding mandate: to build and operate an oversight framework; to ensure that international standards for audit and ethics embody clear public interest objectives; and respond to the needs of global users, while maintaining clarity and high quality.

The content and influence of the international standards have extended considerably over the period. The PIOB deserves a good share of credit for this achievement. It has followed proactively the planning and execution of standard setting, the due process, the sharpening of public interest language, and objectives. It has been alert and communicative, but at arms-length from the technical work of standard setting.

Looking at the whole system since 2005, I would certainly assess its performance as an overall success—a success premised on a collaborative stance of the PIOB and the Standard Setting Boards in their respective roles.   We should now build on this success as we move onto a new phase with the recommendations for reform that the Monitoring Group has issued, which we welcome.  This seminar is a unique opportunity to discuss ideas and directions for the future. I thank the PIOB for the opportunity.

The deeper challenge underlying the PIOB’s and the Standard Setting Boards’ missions has been to keep abreast of a dynamic public interest—a set of concepts and values varying across space and changing across time. This dynamic has taught both the Boards and the PIOB to remain open to new and evolving needs and perceptions. Corporate failures, financial turbulences, technological disruptions, looming crises such as Climate Change and the COVID-19 pandemic, have spearheaded new and broader perceptions of the public interest.

The Environmental, Social, and Corporate Governance (ESG) agenda defines clear objectives and expectations underpinning the global public interest. This is a development that informs also our more particular notions of public interest. It is all the more critical as we observe new forces towards economic nationalism. These developments create repercussions for international standards, which we need to reflect and strategize on, both as standard setters and overseers of standard setting.

My thinking, taking especially into account the technological disruptions, is that all of us should work to ensure broader adoption and more comprehensive use of the international standards. For that to happen, those standards must be globally applicable. Applicability is an overarching desideratum. International standards must respond to emerging objectives but also push for tangible improvement in practical outcomes. It is important to see the actual positive effects of the standards in real time. In my conversations with many stakeholders, I have realized how pressing and precious this is.

Examples of recent actions that focus on applicability: 

• Closer link between the Standard Setting Boards and National Standard Setters
• Systematic adoption of post-implementation reviews for impactful standards.
• Coordinated initiatives (among the Standard Setting Boards, International Federation of Accountants and the PIOB) aimed at awareness raising, facilitating adoption and providing ease of access and clarity to support effective implementation.
• Widening use of surveys of “users and beneficiaries” of the international standards as a global public good.

In closing, I want to share thoughts on coordination between the IESBA and the International Auditing and Assurance Standards Board (IAASB).

From occasional collaboration, we have moved over the last 4 years to systematic coordination of work. Collaboration at the level of leadership, task forces, staff, and joint meetings of the two Boards. These efforts were initiated with Prof. Arnold Schilder, former IAASB Chairman, and are now being actively pursued under the leadership of Chairman Tom Seidenstein.

In substantive terms, we are moving from seeking “consistency” to building “synergy” of the standards. Our ambition is that our respective standards are not just consistent and non-conflicting, but that they are increasingly becoming mutually reinforcing. This is real progress and creates a strong incentive for users to adopt both sets of standards. This also has implications on future practice including

(a) on how strategies of standard setting are crafted; and

(b) on how oversight is practiced.

In summary, we have to reflect on achieving public interest contributions not of independent parts, as if they were unrelated, but of autonomous parts that are consciously coordinated.

Thank you.

Dr. Stavros Thomadakis

IESBA Chairman