The International Ethics Standards Board for Accountants (IESBA) today released revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) addressing the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers. This project dovetailed with the International Auditing and Assurance Standards Board’s (IAASB’s) development of International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews, which was finalized in December 2020.

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; and
• 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.

“It is in the public interest that individuals trusted to serve as engagement quality reviewers act with unquestioned objectivity, given the nature and importance of that role,” said IESBA Chairman Dr. Stavros Thomadakis. “This new guidance is intended to reinforce the guardrails around this important function. I commend the extensive coordination efforts between the IESBA and IAASB in finalizing this guidance, and acknowledge the Public Interest Oversight Board’s useful advice on this project.”

The enhanced guidance will become effective December 2022. 

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).

These revisions address the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers. This project dovetailed with the International Auditing and Assurance Standards Board’s (IAASB’s) development of International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews, which was finalized in December 2020.

Esteban serves as a member of the IFAC PAIB Advisory Group in January 2021, having been nominated by the Institute of Management Accountants (IMA).

Esteban is a Finance and Accounting Director at Procter and Gamble, where he is a global expert in source to pay applications, stewardship and controls, including global invoicing, Coupa applications and SAP.  Esteban joined Procter and Gamble in 2000 and has worked in supply chain, corporate consolidation and plant manufacturing finance roles.

Esteban has been an active member of the Institute of Management Accountants (IMA) for a number of years, working on the creation of the IMA Leadership Academy and overseeing the Strategic Finance Magazine Leadership column. Esteban also serves on the IMA board of Directors.

Esteban is an active environment sustainability advocate, lives in Costa Rica and is a proud Dad and happy husband.

Joselin R. Martin joined the IFAC PAO Development & Advisory Group in January 2021, after being nominated by Association of International Certified Professional Accountants (AICPA).

Ms. Martin is currently the CEO of True North CFO LLC, a strategic management consulting company that works with senior leadership of small & medium-sized privately-held companies to identify long-term goals and to build an organization optimized to reach those objectives. She also facilitates Continuing Professional Education courses for Certified Public Accountants for the AICPA. She retired in 2019 from Hayles and Howe, Inc, an international construction contractor, as Chief Financial Officer.

Ms. Martin is a past chair of the AICPA Americas Regional Advisory Panel, a key conduit between stakeholders and the Association. She is a past chair of the Institute for Certified Construction Industry Financial Professionals, the certifying organization for the ANSI-certified CCFIP designation which tests and certifies construction financial manager competencies, education, and ethics. She has also twice served as a member of the Board of Directors for the Maryland Association of Certified Public Accountants, where she is an active member and past chair of the Business & Industry Committee.

Ms. Martin holds an AB in Economics from Brown University, as well as Masters Degrees from both the University of South Florida and Johns Hopkins University.

The International Public Sector Accounting Standards Board^® (IPSASB^®) has today released for comment Exposure Draft (ED) 75, Leases and Request for Information, Concessionary Leases and Other Arrangements Similar to Leases. Stakeholder comments on ED 75 and Request for Information sought by May 17, 2021.

ED 75 proposes an IFRS 16, Leases aligned model for lease accounting in the public sector. For lessees, as with the IPSASB’s previous proposals in ED 64, ED 75 proposes a right-of-use model that will replace the risks and rewards incidental to ownership model in International Public Sector Accounting Standard^® (IPSAS^®) 13, Leases. For lessors, ED 75 proposes to substantially carry forward the risks and rewards incidental to ownership model in IPSAS 13 in response to ED 64 comments and practical IFRS 16 implementation experience.

Issued alongside ED 75, the Request for Information will provide the IPSASB with further information on the issues that need to be considered in accounting for concessionary leases and other arrangements similar to leases that are quite common in the public sector. This will then allow the IPSASB to determine the nature and extent of the additional guidance required in phase two of the Leases project.

“In light of the responses to ED 64, Leases, and emerging practical experience with implementing IFRS 16, the IPSASB decided to revise its overall approach to the Leases project,” said IPSASB Chair Ian Carruthers. “The proposals in ED 75 will improve the transparency of lease accounting in the public sector, while allowing it to benefit from the private sector experience in implementing IFRS 16. The Request for Information will provide the IPSASB with further background on the more complex lease-related transactions common in the public sector, enabling the Board to decide what further guidance is required.”

How to Comment
To access the Exposure Draft, its summary At-a-Glance document, and the Request for Information or to submit a comment, visit the IPSASB website, www.ipsasb.org. Comments are requested by May 17, 2021. The IPSASB encourages IFAC members, associates, and Network Partners 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.

Rachel Bleetman is a Research and Policy Manager at ACCA, focusing on issues relevant to the public sector globally. She develops and advises on a range of thought leadership initiatives while working to promote important diversity and inclusion goals in public sector finance research and policy.

She previously worked as a health and social policy analyst at The University of California, Los Angeles (UCLA) and in the UK Civil Service – engaging with a range of different policy areas. She studied at McGill University and the London School of Economics and spent a year working and studying in the Middle East.