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One of IFAC’s three strategic objectives is ‘Contributing to and promoting the development, adoption, and implementation of high-quality international standards’. Below is a summary of the forthcoming key changes to the International Ethics Standards Board for Accountants (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code), focused on those which are coming into effect from December 15, 2022.

Non-Assurance Services

In April 2021, IESBA released revisions to the Non-Assurance Services (NAS) provisions of the Code. The revised NAS provisions address circumstances in which firms and network firms may or may not provide a NAS to an audit or assurance client. IESBA published a mapping document that details the revisions to the extant Code by section, which assists in understanding the key changes. These changes include:

  • A new general prohibition on a firm or network firm to provide a NAS to an audit client that is a public interest entity (PIE) if the provision of that service might create a self-review threat to the firm’s independence.

  • New provisions to assist firms and network firms in identifying and evaluating self-review threats that might be created by the provision of a NAS to an audit client.
  • New guidance indicating that the provision of advice and recommendations might create a self-review threat and explaining the circumstances in which a firm or a network firm may provide advice and recommendations to an audit client.
  • New provisions to strengthen firm communication with those charged with governance (TCWG) about NAS-related matters, especially in the case of an audit client that is a PIE and entities within that PIE’s corporate structure.
  • Enhanced guidance to explain that the concept of materiality is not relevant in evaluating whether a self-review threat might be created by the provision of a NAS to an audit client that is a PIE.
  • Strengthened provisions to assist firms in addressing threats to independence that might be created by the provision of NAS to audit clients that are not PIEs, including new application material in relation to situations where a safeguard is not available.
  • New provisions and structural refinements to promote the consistent application of the NAS provisions. For example:
    •  The revised NAS provisions identify certain situations where a self-review threat to independence is not created.
    •  The provisions that prohibit firms and network firms from assuming a management responsibility are now more prominent as they have been repositioned to Section 400. 
    •  The provisions related to acting as a witness have been revised and include application material to explain the circumstances in which the advocacy threat created by acting as an expert witness will be at an acceptable level.

These revisions are effective for audits of financial statements for periods beginning on or after December 15, 2022.

IESBA Staff has issued a Questions and Answers (Q&A) publication to assist firms, national standard setters, IFAC member bodies and individual professional accountants in the adoption and implementation of the revised NAS provisions.


In April 2021, IESBA also released revisions to the fee-related provisions of Parts 4A and 4B of the Code. The changes include:

  • Guidance that explains and addresses the issue of threats to independence created when fees are negotiated with and paid by an audit or assurance client.
  • Enhanced guidance regarding factors to consider in evaluating the level of the threats created when fees are paid by an audit or assurance client and safeguards to address such threats.
  • Clarification that the audit fee should be a standalone fee within the spectrum of total fees from an audit client so that the provision of services other than audit does not influence the level of the audit fee.
  • Guidance for firms to evaluate and address the threats to independence created when a large proportion of total fees charged by the firm or network firms to an audit client is for services other than audit.
  • Strengthened provisions regarding fee dependency in both circumstances where an audit client is a PIE and where an audit client is not a PIE, including establishing a threshold for addressing threats in the case of a non-PIE audit client.
  • A requirement for a firm to cease to be the auditor for a PIE audit client if circumstances of fee dependency continue beyond a certain period.
  • Provisions to achieve enhanced transparency with regard to fee-related information for PIE audit clients to assist those charged with governance and the public in forming their views about the firm’s independence.

 These revisions are effective for audits of financial statements for periods beginning on or after December 15, 2022.

 IESBA Staff has issued a Q&A publication to assist firms, national standard setters, IFAC member bodies and individual professional accountants in the adoption and implementation of the revised fee-related provisions.

Quality Management

In December 2020, the International Auditing and Assurance Standards Board (IAASB) issued its suite of quality management standards (ISQM 1, ISQM 2, and ISA 220 (Revised)).

Objectivity of an Engagement Quality Reviewer and other Appropriate Reviewers

In January 2021, IESBA released revisions to the Code addressing the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers. This project was closely coordinated with the IAASB project to develop the International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews.

The revisions provide guidance that supports ISQM 2 in addressing the eligibility of an individual to serve in an EQR role, focusing on the critical attribute of objectivity. Among other matters, the guidance:

  • Elaborates on the need to identify, evaluate, and address threats to compliance with the fundamental principle of objectivity that might arise in the appointment of an individual as an EQR for a given engagement.
  • Explicitly refers to and supports the requirement in ISQM 2 for a firm to establish, as a condition for eligibility, a cooling-off period of two years before an engagement partner can assume the EQR role on the same engagement.
  • Emphasizes that this cooling-off requirement in ISQM 2 serves the dual objective of supporting compliance with the fundamental principle of objectivity and the high quality of engagements.

The guidance may also apply in situations where, as a safeguard to address identified threats to compliance with the fundamental ethics principles, an individual is appointed as an appropriate reviewer for work performed. The enhanced guidance becomes effective December 15, 2022.

Conforming Amendments

In April 2022 IESBA announced conforming amendments to the Code because the Code refers to ISQC 1, which ISQM 1 replaces, as well as concepts and terminology in ISQC 1. These conforming amendments become effective December 15, 2022.

Note: IFAC has a dedicated webpage on quality management, which includes multiple articles, videos, resources and guides to support implementation of the quality management standards.

Revisions to the Definitions of Listed Entity and PIE (not effective until December 2024, early adoption is permitted and encouraged)

In April 2022 IESBA released a revised definition of a PIE and related provisions. The revised PIE definition specifies a broader list of categories of entities as PIEs whose audits should be subject to additional independence requirements. The revisions:

  • 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.


It is critical that stakeholders, and in particular firms, keep up with all the above upcoming changes to the Code. The IESBA also has a number of current projects covering changes to the definition of an engagement team, independence in a group audit context, technology, tax planning and related services, and sustainability reporting and assurance, which will result in further changes. In addition, a consultation will be issued in Q2 2023 on the IESBA’s future strategy and work plan for 2024-2027.

IFAC will continue to support the adoption and implementation of international standards and develop and facilitate the sharing of resources to assist stakeholders as they navigate these changes. Please see the Exploring the Code Series, with 13 installments (as well as audio-versions) focusing on specific aspects of the Code using real-world situations in a manner that is relatable and practical, as well Ethical Leadership in a Digital Age, with four thought leadership publications developed by CPA Canda, ICAS, IESBA and IFAC. 

Naofumi Higuchi

Naofumi Higuchi became a member of the IFAC SMP Advisory Group (SMPAG) in January 2017. He was nominated by the Japanese Institute of Certified Public Accountants (JICPA).

Mr. Higuchi is a Technical Director at JICPA, the organization for the CPA profession in Japan. He assists member CPAs working in SMPs to implement International Financial Reporting Standards (IFRS) by providing a series of seminars and workshops. JICPA also provides tools, guidelines, and special training sessions for members in SMPs to be utilized when supporting start-ups, new business development, and business revitalization.

Mr. Higuchi is a professor (part-time) specializing in IFRS at Tohoku University Accounting School in Japan since 2018. 

Mr. Higuchi received his CPA qualification in 2001 while working as a manager in financial services with ChuoAoyama PricewaterhouseCoopers in Japan.

Mr. Higuchi holds a bachelor of economics degree from Keio University, Japan, and a master's degree (Master of Laws) from University of Tsukuba, Business Science School.  

Christopher Arnold


Christopher Arnold is a Director at the International Federation of Accountants (IFAC). He leads activities on contributing to and promoting the development, adoption and implementation of high-quality international standards, including the Member Compliance Program, Intellectual Property and Translations. Christopher is also responsible for IFAC’s SME (small- and medium-sized entities), SMP (small- and medium-sized practices) and research initiatives, which include developing thought leadership, public policy and advocacy. He was previously an Audit Manager for Deloitte and qualified as a professional accountant in a mid-tier accountancy practice in London (now called PKF-Littlejohn LLP). Christopher started his career as a Small Business Policy Adviser at the Association of Chartered Certified Accountants (ACCA).