The International Federation of Accountants^® (IFAC^®) today published in the Spanish language the following guidance for professional accountancy organizations (PAOs):

• Establishing and Developing a Professional Accountancy Body
• Tools and Resources to Support the Development of the Accounting Profession

The two publications are designed to support PAOs in expanding and strengthening their role and responsibilities in representing the accountancy profession. Establishing and Developing a Professional Accountancy Body covers the roles and responsibilities of a PAO, education and examinations, and capacity development. Tools and Resources to Support the Development of the Accounting Profession includes case studies, practical illustrations, and supplementary guidance.

These Spanish translations were performed by the Federación Argentina de Consejos Profesionales de Ciencias Económicas and are a result of the Ibero-American cooperation framework, known as the IberAm project. Established in 2012, the IberAm project—which includes IFAC and its member organizations in Argentina, Mexico, and Spain—is an IFAC-authorized translation and review process that strives to achieve longer-term, sustainable processes for single, high-quality Spanish translations of international standards and other IFAC publications. The Interamerican Accounting Association, IFAC’s regional organization for Latin America and the Caribbean, is an observer to the project.  In addition, the project involves a Review Committee of technical experts representing IFAC member organizations in nine Spanish-speaking countries.

“We are extremely grateful to the Federación Argentina de Consejos Profesionales de Ciencias Económicas for the work they’ve done in completing this translation, as well as to the entire IberAm group,” said IFAC CEO Fayez Choudhury. This initiative strengthens our profession by helping to improve quality and capacity and develop strong PAOs.”

These publications also are available in Arabic and French. For an overview of publication translations, please visit the newly enhanced IFAC Translations Database.

About IFAC
The International Federation of Accountants (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 130 countries and jurisdictions, representing approximately 2.8 million accountants in public practice, education, government service, industry, and commerce. 

Peter Hughes has been a member of the International Ethics Standards Board for Accountants (IESBA, the Ethics Board) since 2010. He is currently a partner at KPMG in the UK, where he heads KPMG International's Global Independence Group. He is responsible for overseeing ethics and independence policy, guidance, and training for member firms of KPMG International.

Can you talk a little about your background?

PH: I’ve worked in the accounting profession my entire working life, initially as a trainee accountant and auditor, then involved in transactions work, and most recently professional ethics. At various stages in my career, I have been involved in technical roles within my network of firms so have had the benefit of seeing a wide range of challenges faced by accountants and auditors, relating both to technical and ethical issues. During that time I’ve seen an enormous increase in the volume and complexity of professional standards and can appreciate the challenges that professional accountants face in trying to comply with those standards. I’ve always felt though that accountants recognize the responsibilities they face as professionals and the privileged position they hold in society. However, public expectations of accountants and the technical standards they work to are continually changing, so it’s enormously challenging. I believe that accountants recognize they need to do the right thing, but exactly how to achieve that can be open to debate. So this led me to having a particular interest in ethical issues.                                        

What has been the most rewarding part of serving on the board?

PH: I would say that working on the development of professional standards with an international team and seeing how people approach the task from many different cultural and intellectual perspectives has been the most rewarding. There are few absolutes, but trying to find the common ground or the right balance is very satisfying. This was particularly true of the Conflicts of Interest project that I worked on, but has been true of all the many projects I’ve been involved with during my time on the board.

A lot of people will say that an ethical culture starts with the tone at the top. Do you have any advice for leadership to instill a culture of ethics at their company or practice?

PH: Experience has shown that one can have all the ethical codes and standards one likes in an organization, but unless the leadership “walks the talk,” they won’t make much difference. In my personal view what is crucial for setting the tone of an organization is for the leadership to be prepared to speak out on the core values of the organization—obviously to embody those values themselves, but also to have an open and consultative style and the ability to act when things aren’t right.

Do you think that ethics standards can help prevent accounting and other forms of financial fraud?

PH: I definitely think they have a significant role to play. There are no doubt ambiguous messages about the role of accountants, particularly auditors, in safeguarding the public interest and in some quarters, a significant expectation gap as to what they can achieve. It’s critical that ethical standards for accountants establish a clear expectation, and where appropriate requirements, as to how accountants should behave; and, most importantly, the part that they can also play in helping others to do the right thing. But there needs also to be an understanding of the limitations of what professional accountants can achieve and that they are most effective when operating in an environment that is responsive to public interest considerations, including, of course, an effective corporate governance framework.

Have you in your professional life ever faced an ethical dilemma that you weren’t sure how to handle?

PH: In my technical advisory role, in particular, I’ve seen cases where auditors have felt compromised by the conduct of management of the companies that they audit. For me, the challenge is how auditors can act in the public interest while at all times acting in accordance with professional standards. Sometimes the dilemma has been that simply walking away from an audit engagement might be the easiest thing to do and might even be the response suggested by ethical standards. But is this always the best way to protect the interests of shareholders? I think it’s important that ethical standards recognize that resignation does not always serve the public interest. I certainly think that improvements in corporate governance standards and greater opportunity for transparency have helped auditors in meeting their responsibilities, while also being seen to act in the public interest.

A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. What does this mean to you?

PH: This question has been one of the most interesting, but also most challenging, issues that I’ve faced in my time on the IESBA and particularly so when working on the Non-compliance with Laws and Regulations (NOCLAR) project. In the case of NOCLAR, our proposed guidance is intended to help the accountant to see clearly the role they can play to help company management and those charged with governance to address the situation. Our proposed guidance would also help accountants when determining whether disclosure to an external authority would be the proper an appropriate course of action in some cases. We have to recognize though that the responsibility cannot just fall on the shoulders of accountants. They have a part to play—and a significant one—in the whole system of corporate governance, which is designed to protect the interests of stakeholders and the wider public, but they can’t do it alone. 

You are also deeply involved in the board’s project to improve the structure of the Code. What are some of the challenges for that one?

PH: The project to simplify and clarify the language and presentation of the IESBA Code of Ethics for Professional Accountants (the Code) is a fascinating one. Working on the structure and the drafting conventions of the Code brings home just how complex it is, and potentially how ambiguous it might be, particularly when it’s translated into other languages and read by different audiences. But the task of trying to come up with the “mot juste” for a particular word in the Code (in English of course), has taught me the truth of the adage that the US and the UK are two countries divided by a common language! And, I’m sure the same applies no matter which two English-speaking countries you are comparing. Fortunately the task force can draw on the skills of a multi-lingual Board as well as our editor whom we’ve hired as a plain English expert. Together we’re drawing up a list of preferred terms whose meaning we can all agree on. These terms will be used consistently in the Code to facilitate accurate translations. It will be critical that we receive input to our Exposure Draft, which we anticipate will be approved and published for comment in Q4 this year, from as wide a group of stakeholders as possible.

Stavros Thomadakis became chair of the International Ethics Standards Board for Accountants (IESBA, the Ethics Board) in January 2015. Dr. Thomadakis is emeritus professor of financial economics at the University of Athens. He was the first chair of the Public Interest Oversight Board (PIOB, 2005-2011), which oversees the activities of the IESBA and other standard setters.

How will your previous work as Public Interest Oversight Board (PIOB) chair and your background in academia influence how you approach your role as IESBA chair?

ST: As a long-time academic, I've learned to be patient and to synthesize many different points of view using a constructive approach. I think that has become part of what I would call my style of operating, not only as an academic, but also as a regulator, as PIOB chair, and now IESBA chair.

Of course, as a former chair of the PIOB I am familiar with the Ethics Board. I have been committed to the public interest for many years and in various capacities during my career, and I bring this strong commitment to the IESBA. I can already see that the members of the IESBA share a similar commitment, so I look forward to working with them to continue to strengthen the relevance of the board’s work to the public interest.

Many parties associated with the capital markets have been criticized as a result of the global financial crisis. How has the IESBA been affected by the crisis?

ST: I think the accounting profession is still facing residual distrust and reputational damage that was directed at many professionals associated with the capital markets as a result of the global financial crisis, including auditors and accountants in both practice and business.

Ethics has become a central issue in the post-crisis world. Expectations for ethical behavior and for the ethics standard setter have been raised. That is why the regulatory community and the wider public are more closely following our work. And that is why our attention must be directed to expectations and to the risk that a prominent ethical failure in the world of auditing may adversely affect our reputation.

As standards and standard setting are instruments of the profession’s self-commitment, they can be used to rebuild confidence in the profession in all quarters—with users, regulators, and the general public. The oversight arrangements that are in place for standard setting will also contribute to this outcome.

What are some of your goals as you begin your tenure as chair of the board?

ST: My primary goal as chair is simple and practical: to lead the IESBA to produce results from our various projects that will raise the quality of the Code [Code of Ethics for Professional Accountants] and enhance the reputation of the IESBA as an independent international standard setter.

The implementation of the Code by many jurisdictions and the ability of the Code to inspire accountants and auditors, regulators, and policy-makers, around the world in their work, will be sure signs of our leadership in ethical thinking and practice. My predecessor, Jörgen Holmquist, had a very keen sense of this and it informed his pursuit of an active outreach and communication agenda. I plan to continue in his steps and consolidate our standing among important stakeholders.

Our strong public interest commitment must remain constantly visible and relevant. Among the various standard-setting activities that surround the accounting profession, ethics is the one most focused on mindsets, culture, and behavior. As we seek to influence and reshape the mindsets of others by offering high-quality standards and an overall ethical framework, we must also constantly improve and raise our own. No matter if we are practitioners or non-practitioners, professionals or academics, our mindset in this board must remain fully compatible with our public interest mission.

What would you say in response to the implied criticism of those who have asked if the IESBA Code represents the “lowest common denominator”?

ST: The answer is, and should be, a resounding: “No, it does not.” Given our international aspiration, we must produce a Code that is global in its perspective and has global applicability. If the standards that we propose inconvenience existing practices in certain parts or certain activities of the profession, this is no reason for stepping back. It is reason for ensuring that they are efficient, functional, and effective in achieving an ethical outcome.

This can only be achieved by remaining principles based. There are notable areas, auditor independence being the foremost example, where regulations in important jurisdictions have forged ahead of the Code and specified explicit rules that are more stringent than our standards. This is not a failure of the Code, as some say, since specific needs will always arise in one or the other jurisdiction that will necessitate specific requirements or prohibitions.

Needless to say, there are some cases where major jurisdictions may follow dissimilar or even opposing solutions to ethical issues. In those cases, the Code must seek adjustments that will embody principled synthesis. In such areas, especially, the assistance and guidance of our oversight body, the Public Interest Oversight Board, will be sought and valued. 

How can the IESBA Code remain relevant in a rapidly changing world?

ST: In a dynamic and changing world, we must also be dynamic and forward looking. Every project that we undertake, every standard that we produce, and every pronouncement that we make, must be put to the test. Are we responding effectively to new challenges? This is our challenge because what needs to be done is not always what is convenient or comfortable, for us or our stakeholders.

To achieve its goal, standard setting has to be sensitive to changes in the environment, and that is something that the IESBA is already doing in the context of its strategic plan. Wide consultation with all stakeholders is important. This is where serving the public interest comes in again. The public interest is not a fixed set of rules written in stone. It depends on the circumstances and can be adjusted as new challenges arise. Certainly after the financial crisis, we need to reflect anew on public interest requirements, in particular their international aspect, which is critical for any global standard-setting body.

There will be times when we must follow the directional signs implied by the examples of more advanced jurisdictions, which have after all experienced the crisis deeply, and seek adjustments that will bring the Code to compatible modes with the implied trends. And, of course, we also need to be sensitive to the challenges that arise in parts of the world where regulations are not as advanced. But the real question is whether we can set principles and requirements that disturb the status quo in areas where ethical practice needs to be elevated. And, those are the areas to which we will direct our efforts and attention in order to remain effective and relevant. 

Wui San Kwok became a member of the International Ethics Standards Board for Accountants (IESBA) in 2010, and is currently serving as its Deputy Chair, having served as its Interim Chair in 2014. He is a Partner at PricewaterhouseCoopers LLP in Singapore. 

What made you interested in serving on the IESBA?

WK: I didn't volunteer. I didn’t also know what the IESBA was then. I run a consulting unit in my firm. Ethics standards setting is far removed from what I do day to day.

It began when a retiring IESBA member was looking for a successor. He is Irish and very supportive of geographical diversity at IESBA. He said half-jokingly, “The IESBA needs an Asian but also to continue the Irish heritage.” He knew that I had spent about 10 years in Northern Ireland. He was rather persuasive.

So I took this up, and am so glad I did. It's been a journey of personal learnings—tremendously interesting and challenging, as a member and then Interim Chair—that I won’t ever forget.

What particular perspectives or experiences do you bring to the board?

WK: As a consultant, probably big picture and pragmatism.

The IESBA deals with so many things. We must, however, always keep sight of the big picture. We can't pursue idealism to solve complex problems in what is an imperfect world. A good Code has to be operable in the real world. It must be balanced and proportionate. Conversely, one cannot constantly get hung up on the status quo. We must be keenly aware of issues of significant public interests, and unavoidable winds of change. We must know when to let go and move on.

What is the most challenging part of setting international ethics standards?

WK: Interesting question. It doesn’t matter which culture you come from. Good ethical principles are universal. I doubt you need to be convinced that you ought to be honest, behave professionally and with due care, and so on.

Therefore, the challenge is not defining acceptable ethical principles, but rather defining the acceptable practices to meet those principles, and that is where people having widely differing opinions. These are often influenced by culture, changes in societal expectations, and even politics.

For example, people argue day and night about where to draw the line on gifts and entertainment, what services auditors may provide to audit clients, and so on.

Hence, if you ask me, the often long and arduous process of bringing consensus and in determining where to draw those lines has to be the most challenging aspect of standard setting. We are striving for global convergence. Challenging, but so satisfying when we get it done. And right.

A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. What does this mean to you?

WK: I will leave public interest for another day. Otherwise, we’ll be here for a very long time! 

For now, I would say trust and relevance. Our existence and importance to the public is linked very closely to us being a trusted profession, and doing things that are most relevant to our stakeholders.  These two words guide me whenever I think about an issue concerning the public interest.   

They are mutually exclusive. We can deliver relevant work of outstanding quality, but if the public does not trust our output, we fail. And, once trust is lost, it's very difficult to regain it.

Similarly, we can be completely trusted, but if we do not do the things that are the most relevant to our stakeholders, we will have a problem. We will become irrelevant in time, and fail.

We serve many unique public interest roles, and trust is central to all of these. Many of these are with captive audiences. Eyes are always on our actions. So we must continue to proactively self-regulate and self-innovate to preserve public trust and relevance in what we do. We must anticipate emerging areas of significant interest to our stakeholders, including changing needs and expectations. We must manage them ahead of time.

What pressures or challenges do accounting professionals face today in terms of acting ethically?

WK: Not easy to answer. The profession is diverse: SMPs and large firms; professionals in business, in government, and public practice; varied businesses and job roles. They face very different challenges.

For now, I think the one common challenge many will not dispute is managing the fast and significant, sometimes unclear, changes in ethical standards and expectations: reporting suspected illegal acts; independence requirements; conflicts of interest; public and regulator expectations, such as tax morality; dealing with complex jurisdictional differences.

Many forget that there is often a human face to all of this. These issues can impact personal lives. Families are involved. Ethical requirements can have consequences on opportunities and priorities. These challenges and pressures can impact talent attraction and retention to particular fields, such as auditing.

The human face behind SMPs is also worth mentioning. The pressures and challenges arising from changes in standards can be immense. Let’s be real. These are businesses, and people’s livelihoods are concerned. One can’t, for example, expect a change in a business model, or diversification of client portfolios and revenue, overnight. The market structure may also make it more challenging for change to take place.

What do you see as the key factors influencing the development of global ethics standards in the future?

WK: Two areas are worth mentioning: more and better research is one. This includes the assessment of incremental benefits to the public interest and the trade-offs of policy change. I feel that sometimes, we are having to make important decisions that have widespread implications based on perception. Like the principles of good regulation, evidenced-based standards are always more credible and persuasive in gaining acceptance.

Secondly, I would like to see better understanding and collaboration between the profession and regulators in standard setting at the global level. I still sense distance, and possibly some distrust, too.  We need to work on that. Standard setters and regulators are equally important stakeholders in this process. Though differences in views will arise, in the end, both are on the same side.

The world badly needs convergence to a common global ethical code, not more divergence. The IESBA has and must continue to occupy this leadership position. I retire in December 2015 and will be watching the progress of the IESBA with high expectations.