The International Ethics Standards Board for Accountants (IESBA) announces the following new appointments and re-appointments:

New appointments:

• Mrs. Laurie Endsley, United States
• Mr. Richard Huesken, United States

Re-appointments:

• Mr. Hiro Fukukawa, Japan
• Ms. Kim Gibson, United States
• Ms. Caroline Lee, Singapore

Re-appointment as Deputy Chair:

• Mr. Richard Fleck, United Kingdom

"I warmly welcome Laurie Endsley and Richard Huesken to the IESBA. I look forward to the rich experience and diverse perspectives they will bring to our discussions, starting with our March 16-18, 2020 meeting in New York. I am also pleased Richard Fleck will continue to serve as Deputy Chair for another year,” said Dr. Stavros Thomadakis, IESBA Chairman. “Finally, I want to thank our departing members, Alden Leung, Patricia Mulvaney and Sylvie Soulier. Their various contributions to the Board have been significant and we are grateful for their dedication to IESBA and their commitment to the public interest."

The IESBA also welcomes two new technical advisors, Ms. Laura Friedrich from Canada, and Ms. Kristen Wydell from Australia.

The International Ethics Standards Board for Accountants^® (IESBA^®) today released two Exposure Drafts (EDs):

• Proposed Revisions to the Non-Assurance Services Provisions of the Code
• Proposed Revisions to the Fee-Related Provisions of the Code

The EDs are aimed at strengthening the non-assurance services (NAS) and the fee-related independence provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The EDs represent a key milestone in two major strategic commitments of the IESBA in its current strategy and workplan.

Among the key changes proposed to the NAS provisions are:

• A prohibition on providing NAS to an audit client that is a public interest entity (PIE) if a self-review threat to independence will be created;
• Further tightening of the circumstances in which materiality may be considered in determining the permissibility of a NAS;
• Strengthened provisions regarding auditor communication with those charged with governance (TCWG), including, for PIEs, a requirement for NAS pre-approval by TCWG; and
• Stricter requirements regarding the provision of some NAS, including certain tax and corporate finance advice.

The NAS ED also includes enhanced guidance to assist firms in evaluating the level of threats to independence when providing NAS to audit clients. 

Among the key proposed changes to the fee-related provisions are:

•  A prohibition on firms allowing the audit fee to be influenced by the provision of services other than audit to the audit client;
• In the case of PIEs, a requirement to cease to act as auditor if fee dependency on the audit client continues beyond a specified period; and
• Communication of fee-related information to TCWG and to the public to assist their judgments about auditor independence.

The Fees ED also includes enhanced guidance on identifying, evaluating and addressing threats to independence in relation to other fee-related matters, including the proportion of fees for services other than audit to the audit fee.

“Auditor independence, in fact and in appearance, is fundamental to public confidence in the financial statement audit, and in turn in the integrity of the entire financial system,” said IESBA Chairman Dr. Stavros Thomadakis. “Our proposals are a timely response to growing public perceptions about the need to reinforce auditor independence, as well as specific concerns from the regulatory community and the Public Interest Oversight Board, especially in relation to audits of PIEs. The more stringent provisions concerning the offer of NAS to PIE audit clients, as well as  the transparency and other substantive proposals concerning fees, further raise the bar on auditor independence in the public interest.”

The development of the proposals in the two EDs has benefited from cooperation with the International Auditing and Assurance Standards Board (IAASB) within the established coordination framework of the two Boards. The IESBA is strongly committed to continuing its engagement with the IAASB in finalizing the proposals.

The IESBA will host webinars during the comment period to provide an overview of the NAS and Fees EDs. Follow the IESBA on Twitter (@Ethics_Board) for updates on how to register for these events.

The IESBA welcomes feedback on the NAS and Fees EDs from all stakeholders, including investors and other users of financial statements, the corporate governance community, the regulatory and audit oversight community, preparers, firms, national standard setters, IFAC member bodies, academics and others.

How to Comment 

The IESBA invites all stakeholders to comment on the NAS and Fees EDs by visiting the IESBA’s website. Comments are requested by June 4, 2020 (Due to the COVID-19 pandemic the original comment deadline of May 4 has been extended to June 4).

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).

Laura Friedrich is a principal of Friedrich & Friedrich corp, a professional research, standards, and education consultancy firm, and has over 20 years’ experience conducting projects worldwide. The firm focuses on building institutional capacity and developing strategic, policy, program, governance, and ethics guidance for established and emerging professional and regulatory organizations. Previous to this, she worked in education for CPA Canada (then CGA Canada) and in the Greater Vancouver assurance practice of KPMG LLP.

Ms. Friedrich is a contributing author on a number of World Bank publications in the area of competency-based education, training, and certification. She has also served as an author, lecturer, and examiner for numerous post-secondary programs in Canada and internationally, and has guided several institutions in developing and implementing ethics training programs. She has led hundreds of professional development sessions in a wide range of topic areas including ethics, governance, information systems, and curriculum development.

Ms. Friedrich has served on the Ethics Committee of CPA BC and continues to serve on its Bylaws Committee – responsible for the ongoing review of regulatory and professional standards in the jurisdiction, including the CPA Code of Professional Conduct. 

Ms. Friedrich holds a Master of Science in Business Administration (UBC) and is designated as a Certified Internal Auditor (Institute of Internal Auditors). She became a Canadian CPA in 2001, was awarded fellowship in 2011, and was granted life membership in 2014 for her service to the profession in education, ethics, and regulation.

The International Ethics Standards Board for Accountants (IESBA) today released Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised). Part 4B of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) comprises the independence standards for assurance engagements other than audit and review engagements.

The revision fulfills a commitment the IESBA announced in its Strategy and Work Plan, 2019-2023 to review and change Part 4B of the Code to make the part’s provisions  consistent with the revised assurance terms and concepts in the International Auditing and Assurance Standards Board’s (IAASB’s) International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

The main revisions, developed in coordination with the IAASB, include:

• Changes in key terminology, including a revised definition of the term “assurance client”;
• Amendments to certain independence requirements in light of the revised assurance client definition;
• Greater clarity as to the parties to an assurance engagement and their roles and responsibilities, and the related independence requirements that apply; and
• A clearer distinction between the types of assurance engagement covered in Parts 4A (addressing independence for audit and review engagements) and 4B of the Code.

“It is in the public interest that Part 4B of the Code is consistent with ISAE 3000 (Revised), clear on the applicable independence requirements and, most importantly, sufficiently robust and practicable for assurance practitioners in the field,” said IESBA Chairman Dr. Stavros Thomadakis. “The successful completion of this project reflects the IESBA’s strong commitment towards enhanced communication and coordination with the IAASB, to better serve the needs of stakeholders in today’s global economy.”

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).

Part 4B of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) comprises the independence standards for assurance engagements other than audit and review engagements.