Introduction
Originally started as a project of the Carnegie Council for Ethics in International Affairs, Global Ethics Day provides a unique opportunity for individuals and organizations around the world to reflect on ethics in a global context. Ethical conduct is an important aspect of any profession at any given time, but it is even more important now, as we collectively navigate the challenges brought on by the COVID-19 pandemic.
While this day comes around once a year for many of us, the International Ethics Standards Board for Accountants – IESBA (/I-EZ-ba) – deals with issues of professional ethics every day. That is because the stated purpose for the IESBA is to develop, in the public interest, high-quality, internationally appropriate ethics standards for professional accountants, including auditor independence requirements.
A Public Interest Commitment to Act Ethically
Conducting work ethically is an important aspect of any profession at any given time. However, for accountants, this is a requirement. Because accountants are often faced with complex situations that are not black and white. Under the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code), professional accountants have a responsibility to act in the public interest. The Code’s fundamental principles of ethics emphasize this responsibility and set out the behavior expected of professional accountants more broadly. The Code’s five fundamental principles of ethics are set out below:
- Integrity
- Objectivity
- Professional Competence & Due Care
- Confidentiality
- Professional Behavior
The IESBA’s principles-based Code is well suited to addressing the “real word” ethical dilemmas that accountants encounter as they navigate their complex and ever-changing challenges arising from the COVID-19 pandemic, advances in technology and digital solutions, climate change, calls for more sustainable business models and reporting. The Code’s fundamental principles help guide accountants in doing the right thing in all situations.
Click here to learn more about the Code’s fundamental principles, the conceptual framework that professional accountants are required to apply in order to identify, evaluate and address threats to compliance with those principles and the International Independence Standards that apply to audits, reviews, and assurance engagements.
About the IESBA Code
The IESBA Code is adopted and used by many jurisdictions around the world. In addition, members of the Forum of Firms — an independent association of international networks of accounting firms that perform transnational audits — use the Code in developing their global policies and methodologies. If a jurisdiction has provisions that differ from or go beyond those set out in the IESBA Code, the Forum of Firms is required to comply with the more stringent provisions unless prohibited by law or regulation.
The IESBA Code is subject to periodic revisions which helps to ensure that it remains relevant and fit for purpose. The 2018 Edition of the Code includes many substantive revisions and restructuring changes and came into effect in June 2019. Already, over 80 of the 134 of the International Federation of Accountants’ member jurisdictions have either adopted or have made plans and commitments to adopt the 2018 Edition of the Code.
Since June 2019, the IESBA approved two sets of revisions to the Code that will come into effect in 2021.1 The revisions are to:
- Part 4B of the Code which set out
- Elevate the importance of accountants’ societal role and to strengthen and better promote and strengthen mindset expectations. Among other matters, the role and mindset revisions:
- Reinforce aspects of the principles of integrity, objectivity, and professional behavior.
- Raise behavioral expectations of all professional accountants through requiring them to have an inquiring mind as they undertake their professional activities.
- Emphasize the need for accountants to be aware of the potential influence of bias in their judgments and decisions.
- Highlight the supportive role organizational culture can play in promoting ethical conduct and business.
The role and mindset revisions which will come into effect in December 2021.
About the IESBA Board
The 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 Code.
The IESBA’s membership consists of an independent Chairman, Dr. Stavros Thomadakis and 18 volunteer board members from around the world – Australia, Belgium, Brazil, Canada, Germany, Japan, Singapore, Uganda, the UK and the US. No more than nine of the 18 IESBA members are practitioners (e.g., accountants, auditors or other affiliated with a firm), and no less than three are public members. A public member is an individual who satisfies the requirements of a non-practitioner and is also expected to reflect, and is seen to reflect, the wider public interest.
Currently, there are seven practitioners and ten non-practitioners on the IESBA. Of the ten non-practitioners, four are public members. There was one vacant seat in 2020. Click here to learn more about the IESBA’s new board member appointments and the Deputy Chair for 2021.
As part of its day-to-day activities, the IESBA works with many global stakeholders and is pleased to celebrate Global Ethics Day 2020. IESBA welcomes this opportunity to remind our stakeholders about the important work we do to promote and elevate ethical behavior.
For more information about the IESBA, visit www.ethicsboard.org or follow them on Twitter(@ethics_board) and LinkedIn (linkedin.com/company/iesba).
[1] At its September 2020 meeting, the IESBA approved a new Section of the Code providing guidance to firms on addressing the objectivity of an engagement quality reviewer based on the conceptual framework. The revisions were closely coordinated with the International Auditing and Assurance Standards Board (IAASB) in the context of its project to develop International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews, which the IAASB also finalized in September 2020. Subject to Public Interest Oversight Board’s approval, the final pronouncement is expected to be issued in January 2021 and will be effective for audits of financial statements for periods beginning on or after December 15, 2022.