To assist professional accountants in business and in public practice in ethically navigating the challenges and opportunities brought by technological transformations, earlier today the Japanese Institute of Certified Public Accountants (JICPA) and the staff of the International Ethics Standards Board for Accountants (IESBA) jointly released Ethical Leadership In a Digital Era: Applying the IESBA Code to Selected Technology-Related Scenarios. This non-authoritative publication provides seven hypothetical scenarios to illustrate how accountants can navigate practical issues in ethical leadership when using or implementing technology.
Each scenario highlights the application of specific requirements and guidance in the IESBA Code, in particular those related to compliance with the fundamental principles of ethics, and auditor independence.
The publication was developed by the JICPA under the auspices of the IESBA’s Technology Working Group. The document is available on the IESBA’s and JICPA’s websites.
The International Ethics Standards Board for Accountants (IESBA) and International Auditing and Assurance Standards Board (IAASB) welcome today’s announcement from the International Organization of Securities Commissions (IOSCO) of its support and encouragement for the IAASB’s and IESBA’s work on developing standards relating to assurance of sustainability-related information. The IAASB and IESBA acknowledge that stakeholders are increasingly seeking assurance of sustainability-related information and that it is important to respond to market demands with robust standards applicable to all sustainability assurance providers.
IAASB Chair Tom Seidenstein said: “There is a clear need for ongoing dialogue and collaboration to ensure sustainability reporting, assurance, and regulation develop in a cohesive manner to provide decision-useful information to stakeholders. We are pleased to have IOSCO’s support for our ongoing work to enhance sustainability assurance standards and look forward to continuing our strong, fruitful relationship with IOSCO and others.”
IESBA Chair Gabriela Figueiredo Dias said: “Ethics standards, including independence requirements, are foundational to public trust in the assurance of sustainability-related information. It is crucial and in the public interest that all assurance providers, whether or not they are from the accountancy profession, adhere to the same high bar of ethical behavior and independence when engaged in such assurance work. We have given high priority to bringing to market fit-for-purpose ethics and independence standards in this area and look forward to close coordination with IOSCO and IAASB on this journey.”
The IAASB meets this week to continue discussions and vote on its sustainability assurance project proposal to develop an overarching standard for assurance engagements on sustainability. The standard will provide a global baseline for all professional assurance providers providing assurance on any sustainability information being reported, if the preconditions necessary for effective assurance are met.
The IESBA meets this week to consider possible approaches to standard setting in relation to sustainability assurance and sustainability reporting, recognizing that professional accountants in business play a “first line of defense” role in preparing and presenting trustworthy sustainability information. The IESBA will also consider the applicability of its standards to assurance providers outside of the accountancy profession. The IESBA anticipates approving a project plan by December 2022.
The IAASB and IESBA will continue to closely collaborate with IOSCO and other regulatory and standard-setting bodies to inform the development of robust standards that foster independent, high-quality engagements and globally consistent practices.
About the IAASB The International Auditing and Assurance Standards Board 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 structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
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).
The revisions to the non-assurance services (NAS) and fee-related provisions of the Code.
The revisions to address the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers.
The quality management-related conforming amendments to the Code that were issued as a result of the finalization of the International Auditing and Assurance Standards Board’s (IAASB) suite of quality management standards.
Early adoption of the above revisions is encouraged.
The back of the 2022 Handbook contains the IESBA-approved provisions related to the revised definition of a public interest entity (PIE). These revised provisions will become effective in December 2024. Early adoption will be permitted.
Reproducing and Translating the IESBA Handbook To help adoption and implementation of the IESBA standards, stakeholders are invited to submit requests for permission to reproduce or translate the IESBA Handbook online via the Online Permissions Requests or Inquiries system on the IFAC website.
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).
The International Federation of Accountants (IFAC) is seeking user feedback via a brief survey that will help shape phase two of its digital platform, e-International Standards (eIS). The anonymous survey allows users to rank which features they would like to see in future updates to the platform, and even includes a space to suggest ideas.
Since its launch in November 2021, eIS has provided over 30,000 stakeholders digital access to standards and resources developed by the International Auditing and Assurance Standards Board (IAASB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB).
IFAC intends to consistently evolve the platform to meet user needs and will take into consideration all survey responses when moving forward with the product. The survey closes on August 31, 2022.
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 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
Stakeholders’ responses will shape phase two of eIS
The Staff of the International Ethics Standards Board for Accountants (IESBA) today released a questions and answers (Q&As) publication to explain key revisions to the non-assurance services (NAS) provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). Together with the recently issued fee-related revisions to the Code, the NAS revisions significantly strengthen the International Independence Standards by addressing public interest concerns about independence when firms provide NAS to their audit clients. The development of the Q&As has been informed by the IESBA’s deliberations in the project to revise the NAS provisions and extensive consultations with a wide range of stakeholders, including regulators and audit oversight bodies, the investor and corporate governance communities, national standard setters, firms and professional accountancy organizations.
The publication complements the Basis for Conclusions for the final NAS pronouncement and is intended to assist national standards setters, professional accountancy organizations, and professional accountants in public practice as they adopt and/or implement the revised NAS provisions. The Q&As will also assist other stakeholders, including regulators and audit oversight bodies, those charged with governance, investors, preparers, and academics and other educators better understand the key changes to the NAS provisions of the Code. These changes include the new requirements and guidance that:
Prohibit a firm or a network firm from providing a NAS that might create a self-review threat to an audit client that is a public interest entity.
Explain how firms are to determine when a self-review threat to independence might be created, including in relation to providing advice and recommendations to an audit client.
Are relevant in applying the Code’s conceptual framework to identify, evaluate, and address threats to independence that might be created when an audit firm provides a NAS to an audit client.
Enable and promote more robust communication and engagement about independence matters relating to NAS between audit firms and those charged with governance of public interest entities.
The revised NAS provisions are effective for audits of financial statements for periods beginning on or after December 15, 2022.
Click here to access the revised NAS provisions, and the other recently approved changes to the Code.
New Guidance for Auditors of Public Interest Entities
The International Ethics Standards Board for Accountants (IESBA) has submitted a response to the International Sustainability Standards Board (ISSB) on the ISSB’s Exposure Drafts – General Sustainability-Related Disclosures and Climate-Related Disclosures.
The IESBA believes that to meet the sustainability information needs of investors, customers, employees or potential employees, government agencies and other stakeholders, the infrastructure that supports sustainability reporting and assurance must be underpinned by the highest standards of ethical behavior. Fit-for-purpose, globally applicable standards, such as those set out in the IESBA Code and future, sustainability-related standards that the IESBA has already committed to developing, alongside a robust system of quality management, oversight and enforcement, are essential for consistent, relevant and trustworthy sustainability reporting.
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).
Countries around the world are searching for ways to shift capital investments into activities that support the transition to a more sustainable, low-carbon economy. To finance that massive change, investors and regulators are looking to the sustainable debt market as an important vehicle in raising funds to finance projects that advance environmental, social and governance (ESG) objectives.
“Trust and confidence in this relatively new, still evolving, and rapidly expanding market is critical,” said Kevin Dancey, CEO of the International Federation of Accountants (IFAC). “Like any financial innovation, there are challenges. Smart regulation, standardization and external verification or assurance are needed to protect investor interests, mitigate the risk of greenwashing and enhance transparency. Verifying the details of these bond programs—both pre-issuance and in the form of annual updates for investors—is an essential part of maintaining integrity. The accountancy profession can help drive progress.”
A new, comprehensive study that delves into the challenges and opportunities that exist in the sustainable debt market – Navigating the sustainable debt market: Enhancing credibility in an evolving market – is the result of a collaborative effort by IFAC and Chartered Professional Accountants of Canada (CPA Canada), who recruited PwC Canada to conduct the underlying research.
While the sustainable debt market has evolved significantly over the last few years, the study identified a number of issues that need to be addressed for the benefit of all capital market participants. These challenges include: the proliferation of voluntary, market-driven guidance; lack of a common understanding of what projects and activities qualify as “green” or “sustainable”; and inconsistent reporting, impact measurement, external review and assurance practices.
“Sustainability is increasingly being integrated into business, investment and financing decisions,” said Pamela Steer, president and CEO, CPA Canada. “Serving the public interest is core to the global accounting profession. It has a critical role to play in advancing sustainable finance. Collectively, the profession will continue to advocate for better policy, regulation and standards in this area and the study will help inform the dialogue.”
As part of the overall push to make sustainability front and centre for business, IFAC and CPA Canada welcome the establishment of the International Sustainability Standards Board (ISSB) by the IFRS Foundation. Globally accepted sustainability standards will enhance the credibility of ESG disclosures by improving their consistency and comparability and this will help mitigate some of the challenges identified in the report.
About CPA Canada Chartered Professional Accountants of Canada (CPA Canada) works collaboratively with the provincial, territorial and Bermudian CPA bodies, as it represents the Canadian accounting profession, both nationally and internationally. This collaboration allows the Canadian profession to champion best practices that benefit business and society, as well as prepare its members for an ever-evolving operating environment featuring unprecedented change. Representing more than 220,000 members, CPA Canada is one of the largest national accounting bodies worldwide. cpacanada.ca
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 more than 180 members and associates in over 130 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
The global accountancy profession is on a journey—along with investors, companies, regulators and other stakeholders—toward a unified, coherent, global and authoritative standard-setting process for reporting on sustainability information.
IFAC welcomes the establishment of the International Sustainability Standards Board (ISSB), as well as jurisdiction or regional initiatives that can contribute toward the creation of a global system for consistent, reliable and assurable sustainability disclosure.
In a joint statement today, IFAC joins with leading capital markets participants—PRI (Principles for responsible Investment) and WBCSD (World Business Council for Sustainable Development)—in calling for simplicity and alignment in the standard-setting process. At this critical juncture, regulatory and standard-setting fragmentation must be avoided through efforts to align key concepts, terminologies, and metrics upon which disclosure requirements are built.
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
