The International Ethics Standards Board for Accountants^® (IESBA^®) today released new enhancements to its global ethics code which address more fully the responsibilities of professional accountants around the offering and accepting of inducements.

The revised standard sets out a comprehensive framework that more clearly delineates the boundaries of acceptable inducements, and guides the behavior and actions of professional accountants in business and in public practice in situations involving inducements.

“Incentives motivate behavior, and some inducements can be a powerful incentive to unethical behavior,” said IESBA Chairman Dr. Stavros Thomadakis. “This revised standard complements our standard on NOCLAR to offer a full system of ethical defenses that relate both to malfeasance committed by others and to accountants’ own involvement in potentially unethical behaviors.”

Central to this framework is a new intent test that prohibits the offering or accepting of inducements where there is actual or perceived intent to improperly influence the behavior of the recipient or of another individual. The framework also:

• Clarifies the meaning of an inducement;
• Establishes a requirement to understand and comply with laws and regulations that prohibit the offering or accepting of inducements in certain circumstances, such as in relation to bribery and corruption;
• Guides professional accountants in applying the enhanced conceptual framework underpinning the International Code of Ethics for Professional Accountants (including International Independence Standards) where there is no improper intent; and
• Provides enhanced guidance on the offering and accepting of inducements by professional accountants’ immediate or close family members.

The revised provisions become effective June 2019, including consequential amendments to the independence provisions of the Code addressing gifts and hospitality. The changes constitute the last piece of the recently revised and restructured Code.

About the IESBA

The 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 International Code of Ethics for Professional Accountants^TM (including International Independence Standards^TM), 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, and follow us on Twitter @Ethics_Board.

IFAC (International Federation of Accountants) and the International Bar Association (IBA) today announce their shared commitment to continue their work combating corruption in all its forms. Published ahead of the gathering of global economic leaders (G20), taking place in Buenos Aires, Argentina, the signed IBA and IFAC Anti-Corruption Mandate highlights the role of business and government in safeguarding a fair and transparent future for all.

“Grounded in a strong ethical code, professional accountants across the globe play a critical role in the fight against corruption, bringing essential transparency, relevance and integrity to the systems that underpin vibrant economies,” says IFAC CEO Fayezul Choudhury. “We are proud to partner with the IBA to highlight and advance the role of our global professions in serving the public interest now and in the future.”

According to the International Monetary Fund, bribery, which is just one aspect of corruption, costs the global economy nearly $2tn – approximately two per cent of global GDP – each year. However, where governance architecture is strong, the role played by professional accountants in tackling corruption is amplified, such as in G20 countries and in countries that have adopted anti-money laundering laws in line with international recommendations.

The presence of professional accountancy organizations is another important factor, as they advance the adoption of ethical, educational, investigation and discipline requirements that are central to the profession. According to research from IFAC, there is a strong link between the percentage of professional accountants in the workforce and more favorable scores on the main global measure of corruption.

Mark Ellis, IBA Executive Director, commented: “Corruption is a significant impediment to economic stability and development, tarnishing public trust in institutions and inhibiting citizens’ access to opportunities and prosperity. With empirical research that demonstrates the world’s poor pays the highest percentage of their income in bribes, the imminent meeting of the G20 Finance Ministers and Central Bank Governors presents an important opportunity to remind leaders that every stolen dollar, euro, lira, peso, pound, rand, real, rouble, rupee, yen or yuan robs someone of an equal opportunity in life, and that everyone has a responsibility to combat corruption. The IBA-IFAC cross-sector collaboration aims to reinforce the role and responsibility of international professions to tackle corruption, and we are delighted to be partnering with IFAC.”

In all its variations, corruption has far reaching negative consequences, including when money is misappropriated through illicit financial flows that can lead to the funding of organized high level crimes such as drug trafficking, human trafficking and terrorism.

The international accountancy and legal professions continue to promote core ethical values, facilitate national and international cooperation in the fight against corruption, and advance monitoring and enforcement systems in the public interest. With the IBA and IFAC global membership spanning more than 170 countries, they play a vital role in training, educating and supporting professionals to uphold the highest levels of integrity and ethics in business.

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 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

About the International Bar Association
The International Bar Association (IBA), established in 1947, is the world’s leading organisation of international legal practitioners, bar associations and law societies, spanning more than 170 countries. It is comprised of specialist committees relating to practice areas of law, including the Anti-Corruption Committee and the Anti-Money Laundering Committee. Through its global membership of individual lawyers, law firms, bar associations and law societies, the IBA influences the development of international law reform and shapes the future of the legal profession throughout the world.

Small- and medium-sized practices (SMPs) may require practical support when implementing the International Standards on Auditing (ISAs) in audits of small- and medium-sized entities (SMEs). IFAC (International Federations of Accountants) has updated the Guide to Using ISAs in the Audits of SMEs, Fourth Edition (the Guide) to help firms efficiently and proportionally apply ISAs on SME audits.

This fourth edition is updated to reflect recent changes to the ISAs including International Auditing and Assurance Standards Board (IAASB) projects on:

• Auditor Reporting;
• Disclosures;
• The Auditor’s Responsibilities Relating to Other Information; and
• Using the Work of Internal Auditors.

The Guide is designed for use by all practitioners. Volume 1 covers the fundamental concepts of a risk-based audit in conformance with the ISAs. Volume 2 contains practical guidance on performing SME audits, including two illustrative case studies—one of an SME audit and one of a micro-entity audit.

Since it was first published in 2007, the Guide has been downloaded over 100,000 times and there are 22 translations completed or in progress. To help facilitate additional translations, IFAC Members can request a Word version of the Guide with tracked changes.

Many firms use the Guide for training purposes and as the basis for firm manuals. In order to help them and our member organizations maximize the Guide’s use, IFAC has also updated the Companion Manual which provides practical ‘best use’ suggestions for the Guide.

IFAC has a long history of developing implementation support for international standards. In addition to the Guide, the extensive suite of material includes:

• Guide to Quality Control for Small- and Medium-Sized Practices, Third Edition
• Guide to Review Engagements
• Guide to Compilation Engagements
• Agreed-Upon Procedures (AUP) Engagements A Growth and Value Opportunity
• Choosing the Right Service: Comparing Audit, Review, Compilation, and Agreed-Upon Procedure Services

The International Auditing and Assurance Standards Board (IAASB) seeks public comment by November 2, 2018 on Exposure Draft, ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement.

To ensure that International Standards on Auditing continue to form the basis for high-quality, valuable and relevant global audits, the IAASB proposes more robust requirements and improved guidance to:

• Drive consistent and effective identification and assessment of risks of material misstatement;
• Modernize ISA 315 to meet evolving business needs, including information technology, and how auditors use automated tools and techniques, including data analytics, to perform audit procedures;
• Improve the standard’s applicability to entities across a wide spectrum of circumstances and complexities; and
• Focus auditors on exercising professional skepticism throughout the risk identification and assessment process.

Through its ISA Implementation Monitoring Project and targeted continuing stakeholder outreach, the IAASB has received significant stakeholder input as the proposed revisions have been developed. The Exposure Draft is a key element of the IAASB’s work to address the fundamental elements of an audit and thereby enhance audit quality.

The International Auditing and Assurance Standards Board (IAASB) invites all interested stakeholders to its global series of discussions to help shape the future of assurance over emerging forms of external reporting (EER).

Save the Dates!

Please see below for event locations most convenient for you:

Why you should attend

The IAASB is developing non-authoritative guidance to address key challenges arising in the performance of assurance engagements over EER performed using its assurance standard, ISAE 3000 (Revised).

To help shape the future of IAASB’s assurance over EER, the half-day discussions will cover:

• progress in the development of the first phase of the draft guidance;
• implications of the guidance for assurance engagements; and
• assurance issues faced in your region.

Who should attend

The events are open to all. The IAASB wants to engage with those who prepare EER reports, assurance practitioners, regulators, standard-setters, investors and other users of EER reports. Accountants and non-accountants alike are encouraged to attend and participate to help shape the IAASB’s work in this area.

How to register

To express initial interest, please email IAASBmeetings@iaasb.org with your name, organization, country and the event you would like to attend. We will then notify you when registration opens. For updates, please visit our website and follow us at @IAASB_News and #EERassurance.

What is EER?

EER encapsulates many different forms of reporting, including, but not limited to, integrated reporting, sustainability reporting and non-financial reporting about environmental, social and governance matters. Such reports may be prepared under legislative or regulatory requirements and established frameworks, standards and guidance issued by international or national standard setters.

Further details can be found in a discussion paper, the related feedback statement, and the project proposal.

High-quality reporting should transparently demonstrate how organizations preserve and create value over time. As a global advocate for integrated reporting, IFAC’s 2017 annual review is designed to offer information on our financial, human, social and intellectual capitals alongside our strategic objectives, governance arrangements and financial highlights. It also describes how we strengthen organizations and enhance economies by supporting and empowering our member organizations and the global accountancy profession in the public interest.

This review is part of our 2017 suite of reporting, which also comprises our Financial Statements for the year ended December 31, 2017. With this annual review, we are continuing a journey of more fully implementing the integrated reporting principles and concepts IFAC advocates for globally—those set out in the International Integrated Reporting Council’s Integrated Reporting Framework.

The International Auditing and Assurance Standards Board (IAASB) has started the consultation process about its future strategy. Today it releases a Strategy Survey to seek views and insights from its stakeholders on emerging developments and trends that are likely to be important to its 2020-2023 strategy.

The survey serves as an important tool to help identify key issues for consideration in developing its future strategy in the context of the IAASB’s broad strategic focus and the changing environment, and with the overriding objective of serving the public interest.

The input from the survey will help inform the development of a Consultation Paper on the IAASB’s 2020-2023 strategy, expected to be published at the end of 2018. 

The IAASB is looking to obtain the views of its stakeholders on areas of future focus as the IAASB continues its work on current projects, including revisions of the standards on auditing accounting estimates; identifying and assessing risks of material misstatement; and quality control for firms and audit engagements, and undertakes work on agreed upon procedures engagements and emerging forms of external reporting. 

The IAASB seeks input from all interested stakeholders. The survey will remain open until July 24, 2018. French and Spanish translations will be available on the IAASB's website next week.

Small- and medium-sized practices (SMPs) in a digital, globalized world need to adopt "good practices" to best serve their clients. IFAC (International Federations of Accountants) has released an updated publication—the Guide to Practice Management for Small- and Medium-Sized Practices Fourth Edition (the Guide) to help SMPs meet this challenge. The Guide will help SMPs improve their management and operational efficiency and support their sustainability and success.

Now in its fourth edition, the Guide is organized into eight stand-alone modules, including a new module on Leveraging Technology. The revised Guide addresses a comprehensive range of topics including:

• Strategic planning;
• Managing staff;
• Client relationship management;
• Risk management; and
• Succession planning.

The new Leveraging Technology module covers how technology developments are fundamentally changing the way organizations operate and recognizes that SMPs must adapt to service their clients that utilize technology. Included are topics such as developing a technology strategy, hardware and software options, technology risks, new and emerging technologies, and leveraging technology for practice innovation.

In order to help IFAC member organizations and practices maximize the Guide’s use, IFAC has updated the Companion Manual, which provides suggestions on making best use of the Guide.

The International Ethics Standards Board for Accountants^® (IESBA^®) seeks public comment by August 15, 2018 on its consultation paper, Professional Skepticism – Meeting Public Expectations.

In response to regulatory and other stakeholder feedback on the topic, the paper explores:

1. 1. The behavioral characteristics comprised in professional skepticism;
   2. Whether all professional accountants should apply these behavioral characteristics; and
   3. Whether the International Code of Ethics for Professional Accountants (including International Independence Standards) should be further developed to address behaviors associated with the exercise of appropriate professional skepticism.

Through this initiative, the IESBA also aims to reinforce the effective exercise of professional skepticism by auditors.

The consultation paper was developed following close coordination with the International Auditing and Assurance Standards Board (IAASB) and the International Accounting Education Standards Board (IAESB), and with advice from the IESBA Consultative Advisory Group.

The paper will form the basis for discussion with a wide range of stakeholders at a series of three global roundtables in Washington, DC, USA on June 11; Paris, France on June 15; and Tokyo, Japan on July 12.

To access the consultation paper and submit a comment by August 15^th, please visit.

IFAC (International Federation of Accountants) commissioned Gibson Dunn, a leading global law firm, to perform an independent qualitative and quantitative analysis of the public responses to the Consultation Paper published by the Monitoring Group: Strengthening the Governance and Oversight of the International Audit-related Standard-setting Boards in the Public Interest.

A large number of responses were received from stakeholders from around the world.

• The 179 responses included investors, standard setters, government auditors, regulators, researchers, individuals, accounting firms and professional organizations from a wide range of geographies.
• In any consultation, the input from all respondents must be considered. It should be noted that 74 professional accountancy organizations, or 41 percent of all respondents, felt strongly enough to provide comments. Notably, the overall, main conclusions from the report remained intact even when responses from these accountancy organizations were removed from the analysis.

The Gibson Dunn analysis highlighted marked differences of opinion across geographies and stakeholder groups on key proposals, but included several overall, main conclusions:

• Respondents generally criticized the premise of the Consultation Paper, namely that there are major concerns with the current standard-setting process. Respondents also expressed concern that a Public Interest Framework to evaluate change has not yet been issued and agreed.
• Respondents generally expressed skepticism regarding the broader governance changes proposed by the Consultation Paper.
• Respondents provided significant support for some operational changes proposed in the Consultation Paper.

After carefully reviewing the report IFAC has the following observations:

Broad support and agreement for any Public Interest Framework is necessary before any of the broader governance changes proposed can be properly assessed.

• While there was virtually universal agreement that any changes must be in the public interest, there was significant criticism that the proposed Public Interest Framework has not been released for consultation.
• The Public Interest Framework, agreed by stakeholders, should include multi stakeholder composition of both the standards boards and their oversight bodies, and should provide the umbrella within which all significant proposals can be evaluated and agreed as an integrated package by key stakeholders.

Seeking consensus on proposals which could have a significant global impact depends not only on the merits of the proposals but also on the way the process is conducted; a new multi stakeholder approach is needed.

• The way forward should be under the direction of a multi stakeholder group that will engage all key stakeholders in a broad, open and collaborative dialogue.
• The need for this multi stakeholder group is reinforced not only by the multi stakeholder elements that should undoubtedly form part of the Public Interest Framework but also by the differences of opinion that currently exist across geographies and stakeholder groups.
• Without this approach global agreement and international acceptance is unlikely.

Change and transition can bring significant disruption and risk that must be mitigated.

• Any steps taken must not jeopardize the existing widespread adoption of the International Auditing and Assurance Standards Board (IAASB) and International Ethics Standards Board for Accountants (IESBA) standards, their acknowledged high quality, or the standard boards’ current work plans.
• This concern is particularly relevant at a time when the standard-setting process must deal in a timely way with the impact of changes to complex accounting standards, as well as a rapidly changing technology and audit environment.
• Any changes proposed must be justified on a cost/benefit basis and have widespread international support, particularly as there is general agreement among respondents on the absence of significant problems with the current standard-setting processes.
• Forming a multi stakeholder group to take the process forward should assist in mitigating disruption and risk.

Steps to improve operational processes can and should be taken quickly.

• There is strong support for some operational changes.
• IFAC takes its responsibility to support the operations of the independent standard-setting boards very seriously.
• IFAC is reviewing identified operational areas with IAASB and IESBA leadership and other stakeholders to determine the actions they would agree can be taken now to improve the efficiency and effectiveness of the operations of the two boards in the public interest.

IFAC intends to actively engage with all stakeholders to seek a revised approach to improve the standard-setting process, that responds constructively to the feedback received, and that is:

• Grounded in a Public Interest Framework that needs to be agreed as a first step in the process.
• Under the direction of a multi stakeholder group.
• Designed to minimize disruption and risk.
• Focused on making agreed operational improvements.

IFAC welcomes stakeholders’ reactions to these observations.

Please send any comments to communications@ifac.org.