“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.
“This Report includes my final message as IESBA Chairman and showcases the significant progress that the IESBA has made on behalf of the public interest during a time of great uncertainty,” said Dr. Stavros Thomadakis, former Chairman of the IESBA. “This includes the critical work that has been completed to strengthen the International Independence Standards, especially in relation to Non-Assurance Services, Fees, and the definition of a public interest entity; as well as timely and important milestones in projects related to Tax planning, Technology, and Independence in Group Audits. I am also proud of the extensive work that has been done jointly with certain National Standards Setters to highlight the applicability of the International Code of Ethics for Professional Accountants (including International Independence Standards) to the unique challenges posed by the COVID-19 Pandemic.”
The 2020-2021 Report provides an overview of the IESBA’s extensive stakeholder outreach efforts. It also provides information about the Board’s partnership with IFAC to promote awareness, adoption, and effective implementation of the Code.
“As evidenced by this report, the IESBA’s body of work during the years the world was engulfed in a global pandemic is as important as it is impressive,” said IESBA Chair Gabriela Figueiredo Dias. “The IESBA successfully pushed key strategic initiatives further – such as the work to strengthen the International Independence Standards – while skillfully pivoting to address the real-time issues affecting professional accountants brought on by innovations in technology and the COVID-19 pandemic.”
The Report also provides an overview of the IESBA’s Consultative Advisory Group (CAG) and includes a message from the IESBA CAG Chairman, Mr. Gaylen Hansen.
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).
Showcases Significant Milestones Reached in Elevating Ethics and Independence Standards
This IESBA Sustainability and Ethics Discussion examines the critical role that complying with ethics standards, including on independence, plays in ensuring reliable and trustworthy sustainability information. The one-hour, live-streamed conversation between IESBA Chair, Gabriela Figueiredo Dias; IESBA Sustainability Working Group Chair and UK Financial Reporting Council Executive Director, Mark Babington, and Financial Conduct Authority Director of ESG, Sacha Sadan provided key insights about the applicability of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to the preparation and presentation of sustainability information and the provision of assurance thereon.
Instilling Public Trust and Confidence in Sustainability Reporting and Assurance
As the global voice of the accountancy profession, IFAC has supported a global system for delivering consistent, comparable and assurable sustainability information. Such disclosure must become a core component of the corporate reporting ecosystem that helps stakeholders assess objectives and progress towards addressing the climate crisis and other important environmental, social, and governance matters. European Sustainability Reporting Standards can play an important part in aligning global and jurisdictional-specific goals.
IFAC supports the view that sustainability disclosure requirements should be developed to capture and measure what really matters and to facilitate adoption and implementation in an internationally compatible manner. Alignment between global and jurisdiction-specific requirements, to the extent possible, is key for companies who operate across national borders, who compete for capital globally, and who are working towards a more sustainable future.
IFAC CEO Kevin Dancey said “Collectively, we have an historic opportunity to embrace equivalency and interoperability in sustainability initiatives around the world, to leverage the work of existing high-quality sustainability frameworks, and to avoid costly regulatory fragmentation and complexity. Toward this end, IFAC strongly supports the ISSB’s recently announced working group that will establish dialogue for enhanced compatibility between the ISSB’s recent exposure drafts and ongoing jurisdictional initiatives like that of the European Union.”
The European Commission’s ambitious Corporate Sustainability Reporting Directive seeks to put sustainability-related reporting on the same footing as traditional financial reporting—addressing what sustainability information must be reported and requiring its assurance, among other important elements that can enhance corporate reporting. We hope this important work ultimately contributes to—and amplifies the impact of—an emerging global sustainability disclosure system.
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.
Welcomes EFRAG’s public consultation on European Sustainability Reporting Standards (ESRS) exposure drafts
The webinar is scheduled for May 25, 10am EDT. Click here to register.
The one-hour live-streamed event will be presented by Mike Ashley, IESBA Public Interest Entity (PIE) Task Force Chair, and Andrew Mintzer, IESBA PIE Rollout Working Group Chair.
The revised provisions extend the scope of application of additional independence requirements for audits of financial statements of PIEs through enlarging the universe of entities that are PIEs. The revised provisions recognize the essential role relevant local bodies play in identifying the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories in the expanded IESBA definition and adding any other PIE categories relevant to their environments. The revised provisions provide guidance to the local bodies in this regard. There is also a new transparency requirement for firms to publicly disclose the application of independence requirements for PIEs where they have done so.
The webinar will be held in English and available on YouTube.
The proposals in the Exposure Draft establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team―a concept central to an audit of financial statements―in the International Auditing and Assurance Standards Board's (IAASB) International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements. The proposals were developed in close coordination with the IAASB's group audits and quality management projects.
Comments to the exposure draft are requested by May 31, 2022.
The current environment of rapid technological change continues to impact the way organizations operate, presenting both opportunities and challenges. The accountancy profession is not immune to this disruption and is also in the process of being transformed. This is according to a new thought leadership publication developed by the Chartered Professional Accountants of Canada (CPA Canada), the Institute of Chartered Accountants of Scotland (ICAS), the International Ethics Standards Board for Accountants (IESBA), and the International Federation of Accountants (IFAC). The publication highlights the need for the profession to redefine its value proposition, build new skills for the future and complete a competence paradigm shift in order to remain relevant.
Mindset and Enabling Skills of Professional Accountants – A Competence Paradigm Shiftrecognizes that the accountancy profession has a strong foundation to build on, but an enhanced technological literacy is essential in the information age. A shift in professional accountants’ education and training is needed to reflect emerging opportunities, with upskilling and “evergreen” learning becoming more important than ever. The profession needs to adopt a mindset that continually challenges and leads to an evolution of skills more rapidly than in the past, to harness the opportunities of the changing world and meet the needs of society.
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 ICAS The Institute of Chartered Accountants of Scotland (ICAS) is the global professional body for Chartered Accountants. We educate, examine and lead, enabling excellence whilst always working for the wider public good. All 23,000 ICAS members have earned our world-class CA designation of Chartered Accountant, the qualification that’s shaped an international business community spanning industries and continents, full of local heroes and corporate leaders. And we continually foster the bonds between our members, so CAs at all stages of their careers can learn from shared experience and connect their ambitions to success. For further information please visit – icas.com.
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 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. Comprised of 180 members and associates in more than 130 countries and jurisdictions, IFAC represents more than 3 million accountants in public practice, education, government service, industry and commerce.
Over four decades, IFAC has represented the global profession and supported the development, adoption, and implementation of international standards that underpin the contributions of today’s global accountancy profession. IFAC has maintained a long-term approach to building and strengthening a global accountancy profession that supports transparent, accountable, and sustainable organizations, financial markets, and economies.
Mindset and Enabling Skills of Professional Accountants – A Competence Paradigm Shift explores how the accountancy profession can stay relevant in a time of unprecedented change
IMA® (Institute of Management Accountants), CalCPA (California Society of Certified Public Accountants), and IFAC (International Federation of Accountants) today released its “Diversifying Global Accounting Talent: Actionable Solutions for Progress” report. As a joint effort, the report assesses the deeply rooted issues inhibiting progress in diversity, equity, and inclusion (DE&I) within the accounting profession and offers actionable solutions to close the gap in DE&I.
The capstone in a series of regional DE&I research studies, the report exposes key factors contributing to the underrepresentation of diverse people in the profession, and particularly at leadership levels, in focus regions (Asia-Pacific, Europe and the Mediterranean, Middle East and North Africa, and North America – the U.S.). Three key catalysts for action toward DE&I progress are presented: the current state of DE&I in accountancy, the responsibility to protect the public interest, and demands for sustainable business information around DE&I.
“The voices of more than 8,000 study participants across the globe issued a call-to-action to the profession’s leaders: a call for recommended solutions and intentional, collective action to affect greater change,” said Jeff Thomson, CMA, CSCA, CAE, IMA president and CEO.
The report generated an inventory of more than 70 actionable DE&I practices, each mapped to relevant United Nations’ Sustainable Development Goals, and reflects input from dozens of leaders representing millions of accountants who can implement those practices. It offers recommended steps needed to remedy the lack of equity and inclusion as a path to improving diversity. While expanded efforts have energized DE&I, there is often a disconnect between perceived progress among leaders and progress truly felt and realized by the staff or profession at large.
“By collaborating through shared resources and efforts, leaders can learn from one another and yield long-lasting solutions,” said Denise LeDuc Froemming, CPA, CAE, president and CEO at CalCPA. “So, we are humbled and honored to be accompanied by more than 60 professional accountancy organizations who join us as DE&I advocates for progress and commit to collective action.”
The authors classified their actionable practices into two main categories: attract diverse talent and retain and promote the diverse talent. Leaders must welcome and value diverse employees to sustain the accounting workforce in the years to come.
Kevin Dancey, CEO at IFAC, said: “Professional accountants are bound by ethical commitments, which should extend into DE&I efforts. The solutions recommended in this report can and should be leveraged by professional accountants and leaders across the profession, to move our workplaces around the world toward a culture of belonging and fulfill our obligation to protect the public interest.”
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.
About IMA® (Institute of Management Accountants)
IMA® is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) and CSCA® (Certified in Strategy and Competitive Analysis) programs, continuing education, networking, and advocacy of the highest ethical business practices. Twice named Professional Body of the Year by The Accountant/International Accounting Bulletin, IMA has a global network of about 140,000 members in 150 countries and 350 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe and Middle East/India. For more information about IMA, please visit www.imanet.org.
About CalCPA CalCPA traces its heritage to 1903 when the California State Society of Certified Public Accountants was organized. In 1909, it merged with two other state CPA associations to form CalCPA. CalCPA serves more than 43,000 members in public practice, private industry, students, academia and government, and has 14 chapters across California. CalCPA also offers more than 1,400 live courses, conferences, webcasts and on-demand self-study courses annually.
Report offers solutions to closing the diversity gap
The International Ethics Standards Board for Accountants (IESBA) today released a public survey seeking broad stakeholder input to inform the development of its Strategy and Work Plan (SWP) 2024-2027. The survey can be downloaded from the IESBA’s website. Responses are requested by Friday, July 8, 2022.
“The accountancy profession plays a critically important role in supporting economic growth and stability worldwide in these uncertain and rapidly changing times,” said IESBA Chair Gabriela Figueiredo Dias. “The IESBA must therefore be open, agile and proactive in evolving the Code so that it remains robust and relevant in safeguarding public trust and confidence in the work of professional accountants as the context and the challenges change. The ultimate purpose of IESBA’s future SWP is to actively respond to the changing needs of the economic system by providing appropriate and relevant standards for professional accountants as they adapt their professional activities and work methods and evolve their services to meet those changing needs.”
The survey seeks input from all stakeholders on what key trends, developments or issues the IESBA should consider as it begins the process of developing its SWP 2024 – 2027. The SWP is expected to be finalized by the end of 2023 for release in early 2024.
“The concept of a PIE is central to the application of the IIS and determines how far an auditor must go in meeting the fundamental requirement to be independent,” said IESBA Chair Gabriela Figueiredo Dias. “The revised definition and related provisions represent the third pillar in our package of measures to significantly strengthen auditor independence in the public interest, following the release of our revised Non-Assurance Services and Fees standards last year.”
To recognize diversity in jurisdictional contexts, the IESBA has taken a novel approach of expanding the PIE definition globally at a high level while providing guidance to regulators, national standard setters and other relevant local bodies on tailoring the broad definition for jurisdictional specificities. Among other matters, the revisions also:
Articulate an overarching objective for additional independence requirements for audits of financial statements of PIEs.
Provide guidance on factors to consider when determining the level of public interest in an entity.
Replace the term “listed entity” with a new term “publicly traded entity,” providing a definition of the latter term.
Recognize the essential role local bodies responsible for the adoption of the Code play in delineating the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories and adding any other categories relevant to their environments.
Introduce a transparency requirement for firms to publicly disclose the application of independence requirements for PIEs where they have done so.
The IESBA coordinated the development of these revisions closely with the International Auditing and Assurance Standards Board (IAASB) given that some of the terms and concepts that were considered are common to both Boards’ standards. The IAASB is pursuing a project to consider a number of matters relevant to its standards arising from the finalization of the IESBA’s PIE provisions, including whether and how to address the transparency requirement noted above in the IAASB’s standards.
The revised PIE definition and related provisions become effective for audits of financial statements for periods beginning on or December 15, 2024. Early adoption is permitted and encouraged.
The IESBA is also releasing a number of conforming amendments to the Code as a result of the issuance of the IAASB’s suite of quality management standards in December 2020. These conforming amendments will be effective as of December 15, 2022.
Expanded Public Interest Entity (PIE) Definition Complements Recently Strengthened International Independence Standards (IIS) in Relation to Non-Assurance Services and Fees Paid by Audit Clients
