The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) today released for public comment the Exposure Draft (ED), Proposed Changes to Certain Provisions of the Code Addressing Non-Assurance Services for Audit Clients. The proposed changes aim to enhance the independence provisions in the Code of Ethics for Professional Accountants (the Code) by:

• Providing additional guidance and clarification regarding what constitutes management responsibility, including enhanced guidance regarding how the auditor can better satisfy itself that client management will make all judgments and decisions that are the responsibility of management, when the auditor provides non-assurance services to an audit client;
• Providing better guidance and clarification on the concept of “routine or mechanical” services relating to the preparation of accounting records and financial statements for non-public interest entity audit clients; and
• Removing the provision that permits an audit firm to provide certain bookkeeping and taxation services to public interest entity audit clients in emergency situations.

“Independence is the bedrock of all audits. It is not only about independence in mind. It is also about independence in appearance, ensuring continued public trust in the work of the audit profession,” said interim IESBA Chair Wui San Kwok. “The proposed changes further support this. Better guidance and clarification promote global consistency of application of the Code’s provisions. And we eliminated a rule-exception—intended to be used only in rare situations—that could have been perceived to provide opportunities for misuse, misinterpretation, or abuse.”

The Ethics Board is also proposing enhancements to the corresponding non-assurance services provisions in Section 291—Other Assurance Engagements with respect to assurance clients.

“In developing the proposals, the board took into account the results of a benchmarking survey of G-20 countries and a number of other jurisdictions with respect to certain types of non-assurance services,” noted IESBA Technical Director Ken Siong. “The proposals are also responsive to recommendations from a working group established by the board that looked into the unique and challenging issues professional accountants in small- and medium-sized entities and practices face when complying with the Code, and to feedback from the regulatory community.”

How to Comment
The Ethics Board invites all those with an interest in international ethics standards for the accountancy profession to respond to the Exposure Draft. To access the Exposure Draft and submit a comment, please visit the Ethics Board’s website at www.ethicsboard.org. Comments are requested by August 18, 2014. The Ethics Board encourages national and regional professional accountancy organizations to share the ED with and encourage participation from their members and employees. 

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

About IFAC
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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Highlights from the IESBA's April 7-9, 2014 meeting in Toronto, Canada.

00:29 Overview 

3:07 Long Association 

6:39 Structure of the Code

9:27 Non-Assurance Services

12:01 Part C of the Code

15:46 Conclusion and Next Meeting

International Ethics Standards Board for Accountants (IESBA, the Ethics Board) Chair Jörgen Holmquist in conversation with Accounting Professional & Ethical Standards Board (APESB) Technical Director Channa Wijesinghe following the September 2013 Ethics Board meeting in Sydney, Australia.

Used with permission from APESB.

Discussion topics include:

Opening remarks (0:00 - 0:40)

The IESBA Code's global coverage (0:40 - 5:30)

Suspected illegal acts (5:30 - 10:25)

Long association of senior personnel and rotation of key audit partners (10:25 - 15:30)

Structure of the IESBA Code (15:30 - 21:10)

Role of National Standard Setters (21:10 - 23:25)

Closing remarks (23:25 - 24:50)

The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) is holding a series of three global roundtables to gain additional feedback on its project to address professional accountants’ responsibilities regarding the disclosure to an appropriate authority of suspected non-compliance with laws and regulations (formerly called suspected illegal acts) by a client or employer:

• Hong Kong S.A.R, China, on May 20, 2014;
• Brussels, Belgium, on June 13, 2014; and
• Washington DC, USA, on July 10, 2014.

The Ethics Board initiated the project in response to regulatory concerns that the current confidentiality provisions in the Code of Ethics for Professional Accountants (the Code) are an impediment to whistleblowing in relation to non-compliance or suspected non-compliance with laws and regulations. The issues revolve around how to balance professional accountants’ responsibility to act in the public interest against confidentiality, one of the five fundamental principles in the Code. At the heart of the debate is what is reasonable to ask of auditors and other professional accountants within their public interest mandate.

These events are a follow-up to the board’s August 2012 Exposure Draft, which described the circumstances in which a professional accountant would be required or expected to breach confidentiality and disclose the matter to an appropriate authority. The roundtables will bring together representatives from a broad range of stakeholder groups around the world, including regulators, investors, preparers, audit committee members, IFAC member bodies, firms and national standard setters, to share their perspectives on the Ethics Board’s indicative direction of its revised proposals on the topic.

As space is limited, attendance is by invitation only, which will follow shortly. If you are interested in participating, we invite you to submit your expression of interest via email to KaushalGandhi@ethicsboard.org by January 31, 2014, indicating your name, job title, organization and preferred location.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the Ethics Board develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the Ethics Board are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

About IFAC
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 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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