IESBA eNews: December Meeting Highlights; Restructuring the Code

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IESBA Meeting, December 12–15, 2016, in New York, New York

The December meeting highlights feature updates on the IESBA’s current projects and initiatives, including: Long Association, Structure of the Code of Ethics for Professional Accountants (the Code), Safeguards, Part C, Professional Skepticism, and the IESBA’s future strategy and work plan. The IESBA also received a final report on a review of academic research and other literature on the topic of fees, and provided input on proposed IESBA Staff Questions & Answers (Q&As) addressing responding to non-compliance with laws and regulations (NOCLAR) (see below).

The IESBA approved three Exposure Drafts, and agreed in principle the new structure and drafting conventions of the Code, the restructured text of Phase 1 of its Structure project, and the revised text of Phase 1 of its Safeguards project. The latter comprises revisions to the provisions in the extant Code relating to the conceptual framework (Section 120) and the application of the conceptual framework to professional accountants in public practice (Section 300). See Restructuring the Code for the status of all the component pieces of the Structure project, set for completion at the end of the year, along with numerous support materials including an Update from the board, Mapping Table, and Compilation of the Proposed Restructured Code.

Listen to December Highlights >> | Read December Meeting Summary >>

Structure Phase 2 Exposure Draft

The Structure Phase 2 proposals restructure select sections of the Code, including recently finalized provisions addressing accountants’ response to NOCLAR, long association of firm personnel with an audit or assurance client, and ethical issues that professional accountants in business often face.

Comment by May 25 >>

Safeguards Phase 2 Exposure Draft

The proposals address safeguards-related provisions in the Code’s independence sections pertaining to non-assurance services provided to audit and assurance clients. The document also explains the rationale for the revisions to the non-assurance services section of the extant Code; and the proposed conforming amendments arising from the Safeguards project as these relate to the text of Phase 1 of the Structure project.

Comment by April 25 >>

Applicability Part C Exposure Draft

The proposals clarify the applicability of the requirements and application material in the Code’s extant Part C—Professional Accountants in Business—to professional accountants in public practice.

Comment by April 25 >>

Implementation Support—NOCLAR Q&As

The IESBA’s final pronouncement, Responding to Non-Compliance with Laws and Regulations, comes into effect July 15, 2017. To support implementation, IESBA staff have released two Q&A documents: one for professional accountants in practice; and one for professional accountants in business. For additional resources, see the IESBA NOCLAR page. The text of the NOCLAR pronouncement is being redrafted as part of the Structure project (See Structure Phase 2 above). The restructuring work is not intended to change the substance of the NOCLAR provisions. Additional implementation support resources will be made available on the IESBA NOCLAR page in due course.

Access Q&As >>

Professional Skepticism

The IESBA considered a proposal for a short-term project and proposed enhancements to more strongly emphasize professional skepticism in the Code. The IESBA will consider a revised project plan and proposals at its March 2017 meeting. The IESBA also received an update on the recent activities of the tripartite Professional Skepticism Working Group (PSWG) comprising representatives of the International Auditing and Assurance Standards Board (IAASB), IESBA, and International Accounting Education Standards Board (IAESB).

See Agenda Papers >>

IESBA Strategy and Work Plan 2019-2023

The IESBA began developing its next Strategy and Work Plan (SWP) with initial consideration of matters to include in a survey, to be issued as part of an extensive due process at the end of March, followed by a consultation paper by Q1 2018. As part of this process, the IESBA will hear a presentation at its next meeting about transformation of the accounting and finance functions, including disruptions from technological advances and innovation.

See Agenda Papers >>

IESBA CAG Teleconferences

The Consultative Advisory Group (CAG) met twice by phone: once in January to receive a report-back on the outcome of the IESBA’s deliberations regarding the Long Association project in the light of comments raised by the Public Interest Oversight Board (PIOB), and in December to consider a proposal for a short-term IESBA project to respond to stakeholder calls for greater emphasis on professional skepticism in the Code.

Access Jan 11 Meeting Papers >>

Access Dec 7 Meeting Papers >>

Recent PIOB Activity

At its December 1-2, 2016, meeting, the Public Interest Oversight Board (PIOB) discussed the IESBA task force's response to the PIOB’s feedback on the Long Association project. In January 2017, the PIOB concluded that the Long Association close-off document was approved by the IESBA in accordance with due process and with proper regard for the public interest.

Access PIOB Update >>

Handbook Code of Ethics for Professional Accountants

Register or log in for access to current Handbook of the Code of Ethics for Professional Accountants for personal use or to purchase print copies.

Access Handbook >>

Overview of the IAESB 2017-2021 Strategy

The International Accounting Education Standards Board (IAESB) 2017-2021 Strategy and 2017-2018 Work Plan, approved by the Board at its November meeting, has now been approved by the Public Interest Oversight Board. The Strategy puts accounting education standards development at the center of the board’s work for the next five years, to ensure the accounting profession has the skills it needs to meet the ever-changing demands of business and the public sector.

IAESB
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IAASB Data Analytics Project Update

Bob Dohrer
IAASB Member and Chair of the IAASB Data Analytics Working Group
English

Bob Dohrer, International Auditing and Assurance Standards Board (IAASB) Member and Chair of the IAASB Data Analytics Working Group, provides an update of the IAASB’s data analytics project, including the highlights of the feedback received on the request for input issued September 2016 Exploring the Growing Use of Technology in the Audit, with a Focus on Data Analytics as well as the activities performed to date and the vision for the Working Group in its way forward. Also refer to the Feedback Statement issued on the responses received from the aforementioned request for input here.

IESBA Staff Release New Q&As—Responding to Non-Compliance with Laws & Regulations

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International Ethics Standards Board for Accountants (IESBA) staff today released two Q&A publications to support the adoption and implementation of the IESBA’s NOCLAR pronouncement, which will come into effect July 15, 2017.

The Q&As for professional accountants in public practice (PAIPPs) cover issues related to applicability, audits of financial statments, and professional services other than financial statement audits, among others.

The Q&As for professional accountants in business (PAIBs) cover issues related to scope, PAIB responsibilities (for senior vs. other PAIBs), organizational culture, and NOCLAR disclosure, among others.

See also the IESBA's NOCLAR web page for access to the pronouncement and support materials including videos, fact sheet, and more. 

Regional SMO Workshop Highlights Opportunities for Collaboration

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Opportunities, lessons learned, and ongoing challenges in the adoption and implementation of international standards and best practices across the Middle East and North Africa (MENA) region were recently explored during a Statements of Membership Obligations (SMOs) workshop held in Sweimeh, Jordan, on January 21. A number of common concerns highlighted the importance of, and clear opportunities for, collaboration to drive solutions that benefit current and future auditors and accountants.

The workshop facilitated a cross-border exchange of experiences, ideas, and solutions, and highlighted the possibilities for regional cooperation to address challenges such as:

  • fragmented and outdated legal frameworks;
  • a need to define small- and medium-sized entities and implement suitable standards;
  • keeping adopted international standards up to date;
  • a lack of unified and timely translations;
  • insufficient technical and financial resources; and
  • inadequate resources for independent quality assurance and investigation and discipline systems.

The workshop, held in cooperation with the Jordanian Association of Certified Public Accountants (JACPA) and the World Bank Group’s Global Governance Practice, included more than 55 representatives from 27 organizations in the MENA region, including 20 professional accountancy organizations. Representatives from the Gulf Cooperation Council Accounting and Auditing Organization, Pan African Federation of Accountants, and the Arab Federation of Accountants and Auditors also participated to discuss regional issues and share their experiences.

Workshop presentations are available below. 

  • Strengthening Quality and Support for IFAC Membership (English)
  • Yemen Association for Certified Public Accountants: Proactivity in IFRS Adoption and Implementation (English)
  • Promoting the Adoption of IPSAS in Palestine ­– PACPA’s Experience (English)
  • La régulation indépendante de l’audit en Tunisie: le débat continue (French)
  • Kuwait Association of Accountants and Auditor’s Involvement with Government Regulators to Support an Investigation and Discipline System (Arabic)
  • Lebanese Association of Certified Public Accountants: Supporting Implementation of IESBA Code of Ethics during the Adoption Process (English)
  • JACPA’s Professional Development and Certification of Accountants and Auditors (English)

 

Detailed discussion notes, including challenges and solutions in a number of different areas, are also available.

IFAC staff will soon publish an article on the Knowledge Gateway detailing the workshop and learnings.













IPSAS 40, Public Sector Combinations, Improves Reporting of Government Restructurings

New York, New York English

The International Public Sector Accounting Standards Board® (IPSASB®) today issued a new accounting standard—IPSAS 40, Public Sector Combinations. IPSAS 40 provides the first international accounting requirements that specifically address the needs of the public sector when accounting for combinations of entities and operations.

Public sector combinations—for example, reorganizations of government departments or restructurings of municipalities—occur frequently. In the public sector, these transactions raise different accounting issues from those encountered in the private sector.

“In the past, governments either had to develop their own approach for combinations, or refer to private sector accounting standards. Yet our stakeholders have told us that these private sector standards are not suitable for the public sector,” said IPSASB Chair Ian Carruthers. “IPSAS 40 responds to our stakeholders’ concerns, and fills an important gap in the IPSASB’s literature. Governments now have appropriate, public sector-specific requirements they can apply. This ensures they can provide users of financial statements with relevant information about combinations.”

IPSAS 40 recognizes two types of public sector combinations: amalgamations and acquisitions. By contrast, International Financial Reporting Standards, used by private sector entities, treat all combinations as acquisitions, which requires obtaining fair value information. Amalgamations, which are much more common in the public sector, do not require this information. The accounting requirements for amalgamations in IPSAS 40 are based on existing information, which enables public sector entities to avoid unnecessary valuation costs, while still meeting users’ needs.

IPSAS 40 applies from January 1, 2019, with earlier adoption encouraged. To help governments understand the new requirements, IPSASB staff have developed an At-a-Glance summary and an introductory webinar.

 

About the IPSASB

The IPSASB develops accounting standards and guidance for use by public sector entities. It receives support (both direct financial and in-kind) from the Government Accounting Standards Board, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, the New Zealand External Reporting Board, and the governments of Canada, New Zealand, and Switzerland.

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.

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.

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