The IPSASB voted to preliminary approve ED 77, Measurement. ED 77 provides detailed guidance on the implementation of commonly used measurement bases, including historical cost, current operational value, fair value and cost of fulfillment, and the circumstances under which these measurement bases are expected to be used. The IPSASB will finalize ED 77 at its February 2021 meeting.

The IPSASB voted to preliminary approve ED 76, Conceptual Framework – Limited Scope Update. ED 76 updates Chapter 7 of the IPSASB’s Conceptual Framework to align with measurement in IPSAS, reflect experience in use of the Framework since publication in 2014, and post-2014 developments in the International Accounting Standards Board. The IPSASB will finalize ED 76 at its February 2021 meeting.

The IPSASB voted to preliminary approve ED 78, Property, Plant, and Equipment, which will replace the requirements in IPSAS 17, Property, Plant, and Equipment. ED 78 updates the accounting principles drawn from IPSAS 17 and proposes additional guidance related to the:

• Measurement project by bringing in guidance on public sector specific measurement concepts.
• Heritage project by adding accounting requirements for heritage assets.
• Infrastructure project by introducing clarifications related to the accounting for infrastructure assets.

The IPSASB approved ED 75, Leases and the Request for Information, Concessionary Leases and Other Arrangements Similar to Leases for publication with a 4-month comment period. Both documents are planned for publication in January 2021.

The IPSASB continued its discussions on the draft Consultation Paper (CP) and:

• Considered advice from the Consultative Advisory Group (CAG) on sovereign powers and the asset recognition criteria;
• Reviewed the draft CP chapter on subsoil resources and provided input on whether subsoil resources can be controlled prior to extraction and when such resources can be reliably measured; and
• Discussed IFRS 6, Exploration for and Evaluation of Mineral Resources and its potential applicability in the public sector.

The staff presented the IPSASB with a preliminary analysis of the responses to Exposure Drafts (ED) 70-72, along with feedback from the December 2020 CAG meeting on the issues of the interrelation of the EDs and the extent of disclosures. The IPSASB provided feedback and further items for consideration at the March 2021 meeting, when staff will also provide further analysis on the responses received to the EDs, as well as a project management plan.

The IPSASB will hold a virtual check-in meeting in February 2021 and hold its next full meeting in March, 2021. For more information, or to register as an observer for either meeting, visit the IPSASB website.

The IPSASB approved a measurement hierarchy distinguishing Measurement Models, Measurement Bases and Measurement Techniques.  

• Historical Cost, Fair Value, Current Cost and Fulfillment Value (or Cost of Fulfillment) will be defined as bases. 
• Market Value and Replacement Cost will be defined as techniques. 

The IPSASB will consider additional bases, including Value in Use and Cost of Release, in September. The selection of measurement bases will be linked to the Framework’s measurement objective. 

The IPSASB considered issues raised by constituents related to measurement bases identified in the Measurement Consultation Paper (CP). These foundational discussions, along with those in the related Conceptual Framework project, will shape the draft Measurement Exposure Draft (ED) that will be reviewed in September. 

The IPSASB also discussed the impact of applying the CP Measurement definition of fair value across IPSAS and concluded that no change in terminology is required for the majority of IPSAS where the term fair value is currently applied.

The IPSASB agreed “networks or systems” and “long useful lives” should be included as characteristics of Infrastructure Assets in IPSAS 17, Property, Plant and Equipment. These characteristics distinguish Infrastructure Assets from general property, plant, and equipment and present complexities in the application and implementation of existing principles in the Standard. Illustrative Examples and/or Implementation Guidance will be developed for September 2020 to help provide clarity.  

The IPSASB agreed “irreplaceable,” “restrictions,” and “long and sometimes unspecified useful lives” should be included as characteristics of Heritage Assets in IPSAS 17. These characteristics distinguish Heritage Assets from other property, plant, and equipment and present complexities in the application and implementation of existing principles in the Standard. 

The IPSASB also approved the removal of the heritage assets scope exclusion from IPSAS 17.

The IPSASB approved the Project Brief for the project to develop a standard aligned with IFRS 5, Accounting for Non-current Assets Held for Sale and Discontinued Operations. The IPSASB also agreed to add additional public sector disclosure requirements on the fair value of assets classified as held for sale to enhance transparency and accountability.

The IPSASB reviewed the draft Basis for Conclusion related to the history of the Leases project. The IPSASB decided to align with IFRS 16, Leases in the development of Exposure Draft on Leases. However, it also decided to exclude the IFRS 16 manufacturer or dealer lessor requirements because these are not expected to be applicable in the public sector. The IPSASB considered the structure and content of the Request for Information that will be developed for publication together with the Exposure Draft on Leases to gather information on transactions and arrangements similar to leases.

The next meeting of the IPSASB will take place in September, 2020. For more information, or to register as an observer, visit the IPSASB website (www.ipsasb.org). 

The IPSASB decided that infrastructure assets are a subset of property, plant and equipment and considered the characteristics which differentiate them. The IPSASB will agree the infrastructure assets characteristics after analyzing the remaining issues. The IPSASB also considered the issues of depreciation, spare parts and dismantling costs. The IPSASB will continue these discussions at its June meeting.
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The IPSASB considered whether heritage items are resources and controlled for financial reporting purposes. The IPSASB decided that tangible heritage items are assets when they meet the definition of property, plant and equipment and concluded they should be depreciated and tested for impairment, except under certain specific circumstances. 

Revised guidance related to these issues will be developed for the IPSASB’s consideration at its June meeting.
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The IPSASB reviewed the responses to the Measurement Consultation Paper. The IPSASB agreed that the existing accounting policy choice in IPSAS 5, Borrowing Costs, which allows borrowing costs that are directly attributed to qualifying assets to be either expensed as incurred or capitalized, should be retained. Additional guidance will be developed for the IPSASB’s consideration at its June meeting. 

The IPSASB identified several themes in its review of the responses and will further address these during its June and September meetings. 
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The IPSASB approved a project brief on the Limited Scope Update of the Conceptual Framework (the Framework) subject to minor drafting and editorial changes. The project addresses specified issues identified from the IPSASB’s experience in using the Framework, as well as considering relevant developments in the finalized Conceptual Framework of the International Accounting Standards Board, which was published in March 2018. It is not an extensive review.

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The IPSASB approved a project brief on Natural Resources subject to minor drafting and editorial changes. The first part of this project will develop a comprehensive consultation paper covering the recognition, measurement, and disclosure of subsoil resources, living resources and water. 
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The IPSASB decided to continue the project in phases, firstly, by developing an ED based on IFRS 16, followed by a second phase addressing the accounting for concessionary leases, which is a prevalent public sector issue. The IPSASB also agreed that the exposure draft based on IFRS 16 should request constituent input on concessionary leases to help with the second phase of the project. 
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The Board reviewed a proposal for a project to align with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. The IPSASB agreed that the project should proceed and identified public sector issues for further consideration. The IPSASB also recommended that the project be discussed with the Consultative Advisory Group at its June 2020 meeting. It will then be discussed with the IPSASB at its June 2020 meeting.
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A podcast highlighting key points of the March 2020 meeting is now available here.

The next meeting of the IPSASB will be in Toronto, Canada from June 23-26, 2020 with the Consultative Advisory Group Meeting on June 22, 2020. For more information, or to register as an observer, visit the IPSASB website.

IAASB and IESBA Pledge Stronger Alliance at Third Annual Joint Plenary Meeting

In September 2019, New York City played host to the Third Annual Joint IAASB/IESBA Plenary Meeting, in a coordination effort between the International Auditing and Assurance Standards Board (IAASB) and the IESBA.

Building on their overarching commitment for enhanced connectivity and coordination to better serve the public interest, the boards explored in particular how to better achieve “joined-up thinking” at a strategic level.

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The IESBA recently hosted a webinar to help stakeholders understand the recent proposed Code of Ethics changes to promote role and mindset expectations of all professional accountants. Listen to IESBA Deputy Chair Richard Fleck share an overview of the proposed revisions.

Comments to the Exposure Draft, Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants, were due on October 31, 2019. Thank you to all who shared their insights.

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During the webinar, the IESBA representatives will explain the Code’s new structure; as well as the substantive revisions, including enhancement to the conceptual framework and provisions relating to inducements, including gifts and hospitality; pressure; and preparing and presenting information. The webinar will also touch on the new Non-compliance with Laws and Regulation (NOCLAR) and revised Long Association provisions; as well as the IESBA’s new eCode which was launched in June 2019.

Wednesday November 20, 2019 at 10:00 AM SST (Singapore Standard Time)

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You may have noticed something different during your most recent visit to ifac.org. IFAC has a new website, which includes a fresh look and tailored functionality for the IESBA.

Improved user experience was central to the new site, which features a bold new design, more engaging content and easier navigation. The Knowledge Gateway has been substantially re-imagined to include all of IFAC’s content and the key focus areas are now color-coded throughout the site, making it easier to discover new, relevant content.

In an effort to be more responsive to the needs of the boards, i’s now easier to find, follow and respond to calls for input. Also, if you’re looking for a new handbook from a standard-setting board, they’re now prominently featured and easily accessible.

The Board approved Terms of Reference for its Tax Planning and Related Services Working Group. The multi-phased initiative will focus on engaging with a broad range of stakeholders as part of information gathering activities in Phase 1.

The IESBA anticipates considering the Working Group’s final report in Q3 2020, which will inform the IESBA’s future work and deliverables in relation to this strategic initiative.

The Board unanimously approved for issuance, subject to approval by the PIOB, proposed changes to Part 4B of the Code, Independence for Assurance Engagements other than Audit and Review Engagements, to align it to changes to terms and concepts in the IAASB’s International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

IMH, in association with ICA, will hold the International Compliance Forum to discuss the latest developments and trends in corporate governance, as well as address the current challenges facing the global compliance & ethics community. The forum is intended to facilitate discussions on the benefits of compliance management in business and more importantly, the return on investment of compliance. 

The International Compliance Forum will welcome a number of high caliber international speakers who will discuss how the compliance function has progressed over the years and exchange views on how organizations can use their compliance function to enable change and enhance their competitiveness.

IESBA Chairman Dr. Stavros Thomadakis will be one of the distinguished speakers at the Forum.

December 3 - 6, 2019 | IFAC Offices, New York

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Read the minutes and working papers for all our IESBA meetings. They’re a great information source about project progress and how we support and protect the public interest.

November 2019 | China | Regulators, firms and other stakeholders

November 2019 | Webinar on the revised and restructured Code for Asia Pacific stakeholders, in association with the ASEAN Federation of Accountants

November 2019 | USA | 35th Annual SEC Reporting & FASB Forum

November 2019 | Romania | Committee of European Audit Oversight Bodies (CEAOB)

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The IPSASB reviewed responses to ED 67, Collective and Individual Services and Emergency Relief. The IPSASB noted the significant issues raised on emergency relief and decided to remove this guidance. The IPSASB agreed some minor changes to the wording of the remainder of the ED and approved Collective and Individual Services (Amendments to IPSAS 19). The IPSASB agreed an effective date of January 1, 2022, to align with the effective date of IPSAS 42, Social Benefits.

Please register on the IPSASB website to ensure that you receive updates when this document and others are published: https://www.ifac.org/user/register
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The IPSASB approved the comprehensive list and categorization of issues identified by stakeholders for accounting for infrastructure assets. The IPSASB instructed staff to refine the flowchart that will be used to analyze these issues, noting that it is a positive development with broader potential.  The revised flowchart and draft additional guidance prepared by staff to address the selected infrastructure assets issues will be considered by the IPSASB at the December 2019 Board meeting.
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The IPSASB approved the staff proposals to add disclosure requirements dealing with materiality and aggregation, to ED 70, Revenue with Performance Obligations, as well as disclosure requirements for transactions arising from the statutorily required provision of services where collection of revenue is not probable. The staff also provided the IPSASB with an update on the Revenue Task Force’s activities, which resulted in revisions to the illustrative examples and other minor amendments to ED 70. These changes will be presented to the IPSASB in December 2019.
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The IPSASB decided that binding arrangements without performance obligations (as defined in draft ED 70) will give rise to a present obligation of the recipient if they contain requirements for enforceable activities or eligible expenditure. Revenue will be recognized either as enforceable activities are completed or eligible expenditure is incurred. The IPSASB also agreed that revenue from capital transfers should be recognized as for any other transfer - that is in accordance with the details of the binding arrangement. The IPSASB also tentatively agreed that transfers that are subject to appropriations of the transfer provider should not be recognized by the transfer recipient until the recipient has control of resources.  Accounting will be subject to jurisdictional and entity- specific factors.
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The IPSASB considered the authoritative sections of ED 72, Transfer Expenses. Subject to minor amendments, the IPSASB agreed the definitions. Accounting for transfer expenses with performance obligations will mirror the treatment in ED 70, Revenue with Performance Obligations. Entities will recognize transfer expenses without performance obligations at the earlier of the point at which they have a present obligation to transfer resources, or the point at which they lose control of the resources they transfer.
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he Leases Task Force Chair reported back to the IPSASB on the Task Force’s discussions in the third quarter of 2019. The IPSASB tentatively formed a view that departure from the lessor accounting requirements of IFRS 16, Leases, would be justified on conceptual grounds. The IPSASB began its consideration of the practical and cost-benefit implications of departing from IFRS 16 by receiving presentations on the implementation of IFRS 16 in the public and private sectors and the statistical accounting perspective. The IPSASB will continue this phase of its deliberations in December.
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The IPSASB considered four issues with a potential impact on accounting - different usages of heritage assets, heritage assets held in trust and the implications of stewardship, depreciation/amortization and impairment, and the treatment of subsequent expenditure on heritage. The IPSASB instructed staff to provide further analysis of these issues at the December meeting. The IPSASB also approved a plan for development of guidance on heritage-related financial reporting issues.
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The next meeting of the IPSASB will be in Abu Dhabi, United Arab Emirates from December 10-13, 2019. For more information, or to register as an observer, visit the IPSASB website.

Recognition as Global Leader
In the special July edition of the Institute of Chartered Accountants of India’s Journal, IESBA Chairman Dr. Stavros Thomadakis was recognized as one of the seven Global Accounting Leaders in celebration of the special Chartered Accountant Day in India. He joins the list of six other rarefied individuals who are commended for their relentless efforts to emphasize the public interest perspective that should guide the work of all professional accountants worldwide.

The International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) is critical to reinvigorating public trust in the work of professional accountants especially in the post-crisis world we live in. The continuing spate of corporate scandals in jurisdictions around the world have created or added to a trust deficit in businesses and financial and government institutions, and to some extent the profession. The Code establish the standards of behavior expected of professional accountants – the fundamental principles reflect professional accountants' commitment to act in the public interest.

The IESBA congratulates India on honoring Chartered Accountants (CAs) with a special CA Day.

Responding to Brydon Review 
Together with Former International Auditing and Assurance Standards Board (IAASB) Chair, Prof. Arnold Schilder, Dr. Thomadakis submit a response to the independent report of Sir Donald Brydon based on his review of the quality and effectiveness of UK audits. 

In addition to responding to the proposals in the report, the joint response letter highlights how the IESBA and the IAASB act in the public interest to support public confidence in audits of financial statements and other assurance engagements and serve to reinforce the important ethical responsibilities of professional accountants in business (PAIBs) in the external reporting ecosystem.

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The Board approved for exposure proposed revisions to the Code aimed at promoting the role, mindset and behavioral characteristics expected of all professional accountants. 

The Exposure Draft is expected to be released by the end of July 2019 and will be open for public comment for 90 days.

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The IESBA received an update on the Technology Working Group’s Q2 2019 information gathering activities and the Working Group’s preliminary observations from its analysis to date. 

The IESBA will receive a further update from the Working Group at its September 2019 meeting and will consider the Working Group’s final report in December 2019.

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The IESBA considered a first-read draft of proposed revisions to Section 600, Provision of Non-Assurance Services to an Audit Client, including the subsections.
At its September 2019 meeting, the IESBA will consider a revised set of proposals with a view to approving an exposure draft.

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At its March meeting, the IESBA also considered initial proposals for possible revisions to the fee-related provisions in the Code, in particular International Independence Standards Section 410, Fees.

The IESBA will progress these deliberations at its June 2019 meeting as well, including proposed changes to fee-related provisions in the Code.

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The IESBA was briefed on recent IAASB-IESBA coordination activities. Under the leadership of the Boards’ Coordination Liaisons, staff of the IAASB and IESBA jointly developed and implemented a more systematic way to record, inventory and monitor the various coordination work streams. IESBA members exchanged views about the progress made over the last three years with respect to coordination with the IAASB.

The IESBA also received an update on the joint IAASB-IESBA-National Standard Setters (NSS) session which was held in May 2019 in Paris, France. Among other matters, the discussion with the NSS explored how the two Boards might furtherincrease collaboration with the NSS.

The third joint meeting with the IAASB has been scheduled for September 2019.

Revised and Restructured Code Rollout
The 2018 International Code of Ethics which was revised and restructured is now effective. The IESBA received an update on the “rollout” initiatives aimed at promoting awareness and adoption and implementation of the Code, including webinars (March and April 2019) and other significant outreach activities conducted in Q2 2019.

IESBA Collaboration with IFAC
The IESBA was briefed by senior Staff of the International Federation of Accountants (IFAC) and the IESBA on efforts to strengthen and deepen the collaboration between the IFAC and the IESBA to promote adoption and implementation of the Code. Similar efforts are being pursued by IFAC staff with the staff of the other standard-setting Boards that are supported by IFAC.

eCode 
Just days before launch, the IESBA received a final report on Phase 1 of the eCode initiative.The eCode is a web-based tool which includes features and functionalities that emphasize the “building blocks” approach of the Code and its scalability.

The eCode is available free-of-charge at www.IESBAeCode.org. Click here to access tutorial-styled video on the features of the eCode. Read more about the objectives of the eCode initiative, in the April 2019  publication, Preparing for the IESBA eCode. Email us with your views about the eCode at: IESBAeCode@ethicsboard.org.

Stay tuned to learn more about the scope and approach to Phase 2 of the eCode at future IESBA meetings.  

September 16 - 19 | AICPA Offices, New York
December 3 - 6, 2019 | IFAC Offices, New York
Register to attend the IESBA Meeting

Read the minutes and working papers for all our IESBA meetings. They’re a great information source about project progress and how we support and protect the public interest.

August 2019 | San Francisco | American Accounting Association (AAA) Conference
August 2019 | Cape Town | South Africa Institute of Professional Accountants (SAIPA) Conference
August 2019 | Singapore | Institute of Singapore Chartered Accountants (ISCA) Ethics Seminar
August 2019 | Colombia | Instituto Nacional de Concurso Público (INCP) Conference
September 2019 | Baku | Eurasian Accountants and Auditors Forum
October 2019 | China | Meeting with representatives of all stakeholders, including regulators and firms
November 2019 | Romania | Meeting with the Committee of European Auditing Oversight Bodies (CEAOB)
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The IESBA’s multi-stakeholder Consultative Advisory Group (CAG) is an integral and important part of the IESBA's formal process of consultation. Representatives of CAG member organizations provide advice on numerous areas, including the IESBA’s agenda, project timetable, priorities, and technical advice on projects and other matters of relevance to the activities of the IESBA.

Newly appointed CAG Chair, Gaylen R. Hansen, who has served on the CAG representing the US National Association of State Boards of Accountancy (NASBA) since 2010, will chair the next CAG meeting. The next CAG meeting will be held at the IFAC Offices in New York on September 9, 2019.  Visit the CAG webpage to register as an observer and to access the minutes and working papers for all the CAG meetings.