The International Ethics Standards Board for Accountants^® (IESBA^®) today released for public comment the Exposure Draft, Proposed Application Material Relating to Professional Skepticism and Professional Judgment. The proposed guidance for the first time links key concepts in the IESBA Code of Ethics for Professional Accountants^™ (the Code) and clarifies their application, namely:

• how compliance with the fundamental principles in the Code supports professional skepticism by auditors and assurance practitioners for audit, review, and other assurance engagements; and
• the importance of professional accountants obtaining a sufficient understanding of the facts and circumstances known to them when exercising professional judgment in applying the conceptual framework underpinning the Code.

“Compliance with the fundamental principles and professional skepticism are essential obligations of professional accountants for audit and other assurance engagements,” said IESBA Chairman Dr. Stavros Thomadakis. “We are articulating for the first time the linkage between the two, making clear the important role that the fundamental principles play in enabling auditors and assurance practitioners to meet the public’s expectations about exercising professional skepticism.”

The proposed guidance addressing the fundamental principles and professional skepticism responds to a recommendation from the tripartite Professional Skepticism Working Group established by the IESBA, the International Auditing and Assurance Standards Board (IAASB), and the International Accounting Education Standards Board (IAESB).

“While developing this guidance, the IESBA also emphasizes the importance of professional accountants not simply accepting information at face value when exercising professional judgment,” noted IESBA Technical Director, Ken Siong.

Once finalized, this material will be included in the clarified and restructured Code that the IESBA plans to complete by the end of 2017. Beyond this, the IESBA will continue to explore further issues relating to professional skepticism in close coordination with the IAASB and IAESB, and in consultation with stakeholders.

How to Comment
The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the Ethics Board’s website at www.ethicsboard.org. Comments are requested by July 25, 2017.

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.

Gina Maldonado-Rodek is a Director of Global Independence for Grant Thornton International Ltd. In her role, she oversees the development of independence policies and training courses and advises member firms throughout the Grant Thornton network in the application of independence rules, professional standards, and regulatory requirements.

Mrs. Maldonado-Rodek is a Certified Public Accountant in New York and a member of the American Institute of CPAs. She holds an MBA in international business from Rutgers University (US) and a BS in accounting from New York University (US). 

The 2015-2016 Biennial Review summarizes the International Public Sector Accounting Standards Board’s achievements, challenges, and key developments in 2015 and 2016. This period also included substantial progress on the IPSASB’s work plan, including completion of eight new or replacement IPSAS and a number of limited scope projects. Key continuing projects on which substantial progress was made include: