A global alliance of accounting organisations has found that firms that offer both audit and non-audit services are best positioned to deliver robust and reliable assurance.

The report published today by Chartered Accountants Australia and New Zealand (CA ANZ), the Association of Chartered Certified Accountants (ACCA) and the International Federation of Accountants (IFAC) provides compelling evidence that “the presence of multidisciplinary firms in a large and evolving corporate reporting system fills a valuable market need” and simultaneously commends how the rules that have evolved over the past two decades “mitigate risks associated with audit firms providing non-audit services to some audit clients.”

The report, Audit Quality in a Multidisciplinary Firm, draws its findings from leading academic literature, views of policy experts, and an in-depth study of how regulators worldwide manage risk. It is meant to contribute constructively to the international debate on the multidisciplinary firm business model and auditors providing non-audit services.

The report notes that high quality audits require “a diverse skill base” and that “the multidisciplinary model is one of the best mechanisms to develop the skills, expertise and consistency needed for quality audits.”

The narrower issue of providing non-audit services to audit clients is more nuanced. The report notes, “There continues to be concern that independence is compromised in doing so, in spite of strict rules that prohibit or restrict firms from providing such services to audit clients.

“Services that are permitted quite often are complementary to the audit, and threats to independence can be effectively mitigated. However, demonstrating to the public that perceived conflicts of interest are being appropriately managed is challenging.”

The report continues: “As this issue continues to be considered, it is important to remember that evidence cited in this paper calls into question the need for sweeping regulatory changes that could have unintended consequences on audit quality” and notes that “the vast majority of non-audit fees actually come from clients for whom firms do not provide audit services.”

Maggie McGhee, executive director - governance at ACCA, said:

“We welcome a robust debate on these issues that no doubt will continue to be important for the profession and policy makers, and encourage a conversation grounded on the facts.

“ACCA is delighted to publish this report with our colleagues from CA ANZ and IFAC. It is the latest example of the benefits which our alliance creates for our members and our students, as well as for the accountancy profession and the public interest.”

Amir Ghandar, CA ANZ Reporting & Assurance Leader, said:

“The multidisciplinary base of auditing firms is a strength that contributes to audit quality, but firms and the profession at large must continue to actively establish and demonstrate a culture of integrity through governance, transparency, and our core ethics.

“Robust independence rules have evolved over the past two decades to mitigate real or perceived risks of conflict of interest associated with audit firms providing non-audit services, and these should continue to evolve in order to keep pace with public expectations and emerging challenges.”

Kevin Dancey, IFAC CEO, said:

“Questions about audit quality, independence, and competition are always worth asking. But no one should rush to conclusions. The business case for the multidisciplinary model is strong and there is significant evidence in support of the model.

Let’s work with the facts as we continue to best serve the public interest.”

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 For media enquiries, contact:

CA ANZ: priya.kumar@charteredaccountantsanz.com
ACCA: alex.murphy@accaglobal.com
IFAC: geenaderose@ifac.org

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 CA ANZ
Chartered Accountants Australia and New Zealand (CA ANZ) is a professional body comprised of over 120,000 diverse, talented and financially astute members who utilise their skills every day to make a difference for businesses the world over.

Members are known for their professional integrity, principled judgment, financial discipline and a forward-looking approach to business which contributes to the prosperity of our nations.

We focus on the education and lifelong learning of our members, and engage in advocacy and thought leadership in areas of public interest that impact the economy and domestic and international markets.

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

To help our stakeholders understand the IESBA’s recent proposed Code of Ethics changes to promote role and mindset expectation, the IESBA hosted a webinar detailing these changes.

Listen to IESBA Deputy Chair Richard Fleck share an overview of the proposed revisions, including:

• Highlighting professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and the responsibility to act in the public interest;
• Enhancing the robustness of the fundamental principles of integrity, objectivity and professional behavior;
• Requiring an inquiring mind when applying the conceptual framework; and
• Highlighting the importance of being aware of bias and having the right organizational culture.

Comments to the Exposure Draft, Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants, are requested by October 31, 2019. For more information, please visit the Role and Expectations web page.

Dear Stakeholders:

On behalf of the IAASB, we are pleased to share our public report, Foundation for the Future, summarizing the Board’s achievements from January 1, 2016 to June 30, 2019.

This period, chaired by Professor Arnold Schilder, was one of great productivity for our Board and staff. Five new and revised standards were approved. Six exposure drafts were issued and we consulted with stakeholders on five key areas. The IAASB also published nine project proposals, project updates and feedback statements. To help our stakeholders better understand and implement our standards, the IAASB developed 31 implementation and support resources.

In line with the 2015-2019 strategy, the IAASB’s activities have focused on enhancing audit quality and addressing engagements other than audits of financial statements. The IAASB has also increasingly focused on what more can be done to better understand and address the challenges some users face in applying the International Standards on Auditing in audits of less complex entities.

In addition, the IAASB has remained true to our commitment to a rigorous program of international outreach (IAASB members and staff engaging with stakeholders by way of personal visits and meetings, participation in conferences, discussion groups and forums, as well as webinars and other methods of communication to inform and engage on technical topics). From 2016 to 2019, almost 400 outreach activities across 44 countries were conducted with key stakeholder groups. By working with our stakeholders and strengthening our relationships, we are better able to understand issues affecting our standards and promote their adoption and implementation.

As we enter a new phase for the IAASB, we are proud of the broad reach of our standards and recognize the significant responsibilities that come with this. During the period covered by this report, the number of jurisdictions worldwide that use or are committed to using the International Standards on Auditing increased from 111 to 130.

We are now completing the development of a new strategy and work plan in the knowledge that there is a strong foundation in place. At the same time, we accept the need to identify and respond to emerging challenges to ensure that we continue to deliver international standards that are relevant, robust and operable.

 
Yours sincerely,


Tom Seidenstein                                               Willie Botha
Chair (Effective July 2019)                                 Technical Director

The International Public Sector Accounting Standards Board^® (IPSASB^®) has released an Exposure Draft (ED), Public Sector Financial Instruments, Amendments to IPSAS 41, Financial Instruments, for comment. The ED provides guidance on how to account for a number of important categories of financial instruments that are unique to the public sector.

The proposed new Standard will augment existing guidance in IPSAS 41, Financial Instruments, and improves that Standard’s requirements by introducing guidance on:

• Monetary gold;
• Currency in circulation;
• IMF quota subscriptions; and
• Special Drawing Rights.

“The topics addressed in this Exposure Draft are unique to the public sector and have a significant impact on government finances,” said IPSASB Chair Ian Carruthers. “The final guidance will ensure users of IPSAS-based financial statements have the information they need about these important items for accountability and decision-making purposes.”

How to Comment

To access the Exposure Draft and its summary At-a-Glance document, or to submit a comment, visit the IPSASB website, www.ipsasb.org. Comments on the Consultation Paper are requested by December 31, 2019. The IPSASB encourages IFAC® members, associates, and regional accountancy organizations to promote the availability of this Consultation Paper to their members and employees.

About the IPSASB

The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

IFAC submitted a comment letter to further highlight the importance of the issues covered in the IAASB’s Discussion Paper, Audits of Less Complex Entities. 

Notwithstanding significant efforts by many stakeholders, including the IAASB and IFAC, concerns remain about the application of International Standards on Auditing (ISAs) to less complex entities (LCEs).  IFAC applauds the IAASB’s initiative to consider the situation holistically and chart the best way forward, and believes that these challenges will be best resolved through thoughtful and constructive input and engagement from the largest possible number of diverse global stakeholders. 

Click here to access the Audits of Less Complex Entities discussion paper.

IFAC strongly encourages all stakeholders to respond directly to the Discussion Paper or to participate in IFAC’s Audits of Less Complex Entities Survey by September 12, 2019. The survey is available in English, French and Spanish. 

The IESBA recently proposed changes to its Code of Ethics to promote the role and mindset expected of all professional accountants. To learn more about the key proposed changes, we invite you to our 60-minute webinar on Tuesday, September 10, 2019 at 8 am EST.

• Register Now

During the webinar, IESBA Deputy Chair Richard Fleck will provide an overview of the proposed revisions, which include:

• Highlighting professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and a professional accountant’s responsibility to act in the public interest;

• Enhancing the robustness of the fundamental principles of integrity, objectivity and professional behavior;

• Requiring professional accountants to have an inquiring mind when applying the conceptual framework; and

• Highlighting the importance of being aware of bias and having the right organizational culture.

Comments to the Exposure Draft, Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants, are requested by October 31, 2019.

If you have any questions about this webinar, please email IESBA.

The International Public Sector Accounting Standards Board (IPSASB) today published its Biennial Review, Delivering for the Future, which summarizes the Board’s successes, challenges, and key outputs during 2017 and 2018.

The majority of the Board’s projects during the review period were public sector-specific in nature and aimed at closing perceived gaps in the IPSASB’s suite of standards, while maintaining alignment with International Financial Reporting Standards, when appropriate.

During 2017 and 2018, the IPSASB finalized IPSAS 40, Public Sector Combinations; IPSAS 41, Financial Instruments; and the landmark standard, IPSAS 42, Social Benefits. In addition, the Board approved two major Exposure Drafts (ED) 64, Leases, and ED 67, Collective and Individuals Services and Emergency Relief (Amendments to IPSAS 19).

“After celebrating the twentieth anniversary of the IPSAS program in 2017, these are exciting times for the IPSASB, with significant increases projected in the global adoption and implementation of IPSAS by governments in the short to medium term,” said IPSASB Chair Ian Carruthers. “The hard work, dedication, and commitment of my fellow IPSASB members and their technical advisors, all of whom are volunteers, together with the support of IPSASB staff, have been critical to the Board’s notable achievements during 2017 and 2018.”

The IPSASB Strategy and Work Plan 2019-2023 was also developed during the review period, which will guide the Board’s future activities toward its strategic objective.

To ensure it delivers in the public interest, the IPSASB’s strategic objective is: strengthening Public Financial Management (PFM) globally through increasing adoption of accrual-based IPSAS.

This will be delivered through two main areas of activity, both of which have a public interest focus:

• Developing and maintaining IPSAS and other high-quality financial reporting guidance for the public sector; and
• Raising awareness of IPSAS and the benefits of accrual adoption. 

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

The International Ethics Standards Board for Accountants (IESBA) today proposes changes to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to promote the role and mindset expected of all professional accountants. The Exposure Draft, Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants, puts forward changes that further strengthen the Code.

The proposed revisions respond to stakeholder calls for the IESBA to explore whether and how the Code could contribute to strengthening the application of concepts underlying professional skepticism by all professional accountants.

Among other matters, the proposals:

• Highlight professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and a professional accountant’s responsibility to act in the public interest;
• Include enhancements to the robustness of the fundamental principles of integrity, objectivity and professional behavior;
• Further strengthen the Code through requiring professional accountants to have an inquiring mind when applying the conceptual framework; and
• Highlight the importance of being aware of bias and having the right organizational culture.

The proposals were developed in coordination with the International Auditing and Assurance Standards Board and the International Accounting Education Standards Board.

The IESBA will host a webinar in September 2019 to provide an overview of the proposed revisions. Follow the IESBA on Twitter (@Ethics_Board) for updates on how to register for this event.

How to Comment 
The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the Ethics Board’s website. Comments are requested by October 31, 2019.

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).

The International Ethics Standards Board for Accountants (IESBA) is pleased to announce the reappointment of Dr. Stavros Thomadakis as IESBA Chairman for a further one-year renewable term commencing 1 January, 2020, which was recently approved by the Public Interest Oversight Board (PIOB).

Dr. Thomadakis has chaired the IESBA since 2015. His dedication to high quality, fit-for-purpose ethics standards for the global accountancy profession is reflected in the IESBA’s ambitious Strategy and Work Plan 2019–2023.

Under his leadership, the IESBA has revised and restructured the International Code of Ethics for Professional Accountants (including International Independence Standards), which became effective in June 2019. In addition, the IESBA recently launched the eCode – a web-based tool that delivers the Code on a digital platform.

“The IESBA continues to address challenging issues affecting the accounting profession with high-quality future-ready ethics and independence standards. That very goal underpins our ongoing coordination with the International Auditing and Assurance Standards Board (IAASB). The IESBA is committed to supporting global adoption and implementation of the Code with innovative tools that increase the Code’s accessibility and usability,” said Dr. Thomadakis. “I look forward to working further with board colleagues, IESBA staff, our Consultative Advisory Group and our global stakeholders to elevate ethics and advance the IESBA’s multiple projects in the public interest.”

Dr. Thomadakis is Emeritus Professor of financial economics at the University of Athens and an active member of the Hellenic Council for Corporate Governance. He was Chairman of the Hellenic Capital Market Commission from 1996 to 2004. From 2005 to 2011, he served as the first Chairman of the Public Interest Oversight Board. Until late 2015, Dr. Thomadakis was a member of the Securities and Markets Stakeholders Group of the European Securities and Markets Authority (ESMA).

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 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, and follow us on Twitter @Ethics_Board. 

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.