The Ethics Board approved the Consultation Paper, Improving the Structure of the IESBA Code of Ethics for Professional Accountants (the Code). The paper consults on approaches that could be taken to improve the clarity and usability of the Code through revising its structure, thereby facilitating its adoption, effective implementation, and consistent application. Among other matters, the consultation is seeking stakeholders’ input on:

• restructuring the Code by more clearly distinguishing requirements from guidance;
• reorganizing the content of the Code, including rebranding it, or parts of it, as international standards;
• using simpler language and shorter sentences; and
• identifying a firm’s or an individual’s responsibility for compliance with the Code in particular circumstances to facilitate compliance and enforcement.

The paper also includes illustrative examples to show how the restructured Code might be presented. The Consultation Paper will be released in the coming week and open for public comment through early-February 2015. In connection with this project, a web-based version of the Code—to enhance accessibility and navigability—is currently in development and is expected to go live in the coming weeks.

The Ethics Board approved for exposure the following proposed changes to Part C of the Code, which addresses professional accountants in business (PAIBs):

• Section 320—revisions dealing, in particular, with misuse of discretion when preparing or presenting financial information. The revisions include enhanced guidance on how discretion can be misused in a manner intended to mislead, and the PAIB’s actions when faced with misleading information.
• Section 370—a new section to guide PAIBs on responding to pressure from superiors or others to breach the fundamental principles, and on not placing pressure on others that would result in a breach of the fundamental principles.

Conforming changes have been proposed to other sections of Part C of the Code.

The Exposure Draft is expected to be issued by mid-November 2014. Comments will be requested by mid-February 2015. As part of Phase 2 of this project, the Ethics Board will consider preliminary issues pertaining to a review of Section 350, addressing inducements, at its January 2015 meeting.

In September, following approval by the Public Interest Oversight Board that due process had been followed, the Ethics Board released its Strategy and Work Plan, 2014-2018.

The IESBA Strategy & Work Plan, 2014-2018 highlights the board’s priorities and planned actions toward achieving its objective of setting high-quality ethics standards for professional accountants that are widely adopted around the world. The Strategy and Work Plan lays out four inter-connected strategic themes that articulate the board’s vision over the medium to longer term:

• maintaining a high-quality Code for application by professional accountants globally;
• promoting and facilitating the adoption and effective implementation of the Code;
• evolving the Code for continued relevance in a changing global environment; and
• increasing engagement and cooperation with key stakeholders.

A separate Basis for Conclusions has been prepared by staff to accompany the Strategy and Work Plan. 

The Ethics Board considered the feedback received from its three global roundtables, held in Hong Kong, Brussels, and Washington DC earlier this year, on its project addressing professional accountants’ responsibilities to respond to suspected non-compliance with laws and regulations (NOCLAR). It also considered Task Force proposals regarding a revised framework for how auditors, professional accountants in public practice providing non-assurance services, senior-level PAIBs, and other PAIBs could respond to suspected NOCLAR.

The Ethics Board will discuss a revised draft of the proposed new sections (225 and 360), and related changes to other sections of the Code, at its January 2015 meeting in preparation for re-exposure by mid-2015. 

The Ethics Board considered significant comments received on its Exposure Draft, Proposed Changes to Certain Provisions of the Code Addressing Non-Assurance Services for Audit Clients, and related Task Force proposals, aimed at enhancing the independence provisions in Section 290 (Independence—Audit and Review Engagements). The discussion focused on the three areas covered by the Exposure Draft:

• the proposed withdrawal of the emergency exception provisions pertaining to bookkeeping and taxation services provided to audit clients that are public interest entities (PIEs);
• additional guidance on safeguards on and clarification regarding what constitutes management responsibility; and
• enhanced guidance and clarification on the concept of “routine or mechanical” services relating to the preparation of accounting records and financial statements for non-PIE audit clients.

The Ethics Board will seek input from its Consultative Advisory Group in November 2014 regarding the significant comments received on the Exposure Draft and the board’s indicative direction forward on the key issues. The Ethics Board will consider a revised draft of the proposed changes to the Code with a view to approval at its January 2015 meeting.

The 2014 editions of the handbooks from the following boards supported by the International Federation of Accountants^® (IFAC^®) are now available:

• International Auditing and Assurance Standards Board^® (IAASB^®);
• International Accounting Education Standards Board™ (IAESB™);
• International Ethics Standards Board for Accountants^® (IESBA^®); and
• International Public Sector Accounting Standards Board^® (IPSASB^®).

To access electronic copies of the handbooks for personal use, purchase print copies, or find information on recent developments and outstanding Exposure Drafts and Consultation Papers from each of the boards, visit their respective web pages: www.iaasb.org, www.iaesb.org, www.ethicsboard.org, and www.ipsasb.org.

The 2014 Handbook of the Code of Ethics for Professional Accountants incorporates several revised pronouncements that are now effective—addressing a breach of a requirement of the Code, conflicts of interest, and the definition of “those charged with governance.” It also contains the revised definition of “engagement team” (effective for audits of financial statements for periods ending on or after December 15, 2014). In connection with the Structure of the Code project (see above), a web-based version of the Code—with enhanced accessibility and navigability—is currently in development and expected to go live in the coming weeks. 

Earlier this year, the International Federation of Accountants (IFAC) launched the Global Knowledge Gateway™, a new digital hub for the global accountancy profession: www.ifac.org/global-knowledge-gateway. The Gateway serves professional and aspiring accountants in all sectors by providing streamlined access to relevant resources, news, discussions, and thought leadership in nine different areas, including ethics. Resources in this area, designed to serve both accountants in business and in practice, include surveys and reports on business ethics issues, as well as practical guidance on implementing the IESBA Code and other codes of conduct.

We invite you to explore and contribute your views to the discussions, recommend content that you find the most useful, suggest new resources, and subscribe to receive customized updates on new content added to the Gateway. Register to take full advantage of all of these features. 

Several months ago, the Ethics Board launched a Twitter handle to increase engagement with the public and with professional accountants worldwide, enhance its profile and brand, and increase the transparency and timeliness of its communications. Stay current on the Ethics Board’s projects, publications, and meeting decisions, as well as the latest accounting and business ethics news, trends, and resources from around the world. We hope you’ll stay connected and join us: @Ethics_Board.

Meetings of the Ethics Board and the Ethics Board’s Consultative Advisory Group (CAG) are open to the public. The next meeting of the board will be held in London, United Kingdom, on January 12–14, 2015. The next CAG teleconference will be held on November 18, 2014, and the next physical CAG meeting will be held in New York, New York, USA, on March 10–11, 2015.

For more information and to register to attend an Ethics Board or Ethics Board CAG meeting as an observer, visit Ethics Board Meetings and Ethics Board CAG Meetings respectively.

The 2014 World Congress of Accountants (WCOA) will be hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Rome, Italy, November 10-13. Themed 2020 Vision: Learning from the Past, Building the Future, the WCOA 2014 will be held at the Auditorium Parco della Musica. Almost 4,000 professionals from around the world will convene at this quadrennial IFAC event. WCOA 2014 will look back to explore the evolution of the accountancy profession and forward to showcase the innovations that will shape its future. Days 2 and 3 feature sessions on ethics: “Fighting Corruption and Fraud: The Role of Professional Accountants” and “Code of Ethics: Shaping Behavior.” View the full agenda and register here.

Online registration closes October 31, 2014. If you are unable to register on the website, please contact the WCOA Secretariat: wcoa2014@adriapoint.it.

In mid-July, the IESBA^® launched a Twitter handle to increase engagement with the public and with professional accountants worldwide, enhance its profile and brand, and increase the transparency and timeliness of its communications. Stay current on the IESBA’s projects, publications, and meeting decisions, as well as the latest accounting and business ethics news, trends, and resources from around the world. We hope you’ll stay connected and join us at @Ethics_Board.

The 2014 Handbook of the Code of Ethics for Professional Accountants™ is now available. The 2014 edition incorporates several revised pronouncements that were published previously and are now effective—addressing a breach of a requirement of the Code, conflicts of interest, and the definition of “those charged with governance.” It also contains the revised definition of “engagement team” (effective for audits of financial statements for periods ending on or after December 15, 2014).

To access the handbook for personal use or to purchase print copies (US $65.00, plus shipping & handling), see Handbook of the Code of Ethics for Professional Accountants.  In connection with the Structure of the Code project (see below), a web-based version of the Code—with enhanced accessibility and navigability—is currently in development and expected to go live in Q4. 

The Ethics Board approved, subject to confirmation by the Public Interest Oversight Board (PIOB) that due process has been followed, its Strategy and Work Plan, 2014-2018, expected for publication by early October 2014. As part of its due process to seek stakeholder input in the plan’s development, the board previously issued a draft of the strategy and work plan for public consultation. View the Consultation Paper and 38 comment letters.

The Ethics Board approved for public comment changes to the provisions in Section 290 of the Code of Ethics for Professional Accountants (the Code) dealing with long association of senior personnel with an audit client. The Exposure Draft (ED) responds to several issues raised by stakeholders, including issues of independence in appearance. The ED broadly covers the following areas:

• Strengthening the general provisions that apply to all audit engagements;
• Increasing the mandatory cooling-off period for the engagement partner on the audit of a client that is a public interest entity;
• Strengthening the restrictions on the type of activities that can be undertaken by any former key audit partner during the cooling-off period; and
• Ensuring the concurrence of those charged with governance with respect to the application of certain exception paragraphs.

The ED also includes corresponding changes to Section 291 of the Code dealing with long association of senior personnel with an assurance client. The ED is expected for release in mid-August with a 90-day comment period.

The Ethics Board considered the Task Force’s preliminary draft Consultation Paper, setting out proposals for improving the clarity and usability of the Code. Among other matters, the board discussed:  

• The approach to coordinating a review of safeguards in the Code (see non-assurance services below) with the work on restructuring the Code;
• The approach to clarifying responsibility for compliance with the Code in particular circumstances;
• Alignment of the timing of deliverables on other projects in progress with the restructuring work; and
• General structure and reorganization matters.

In connection with this project, a web-based version of the current 2014 Code is currently being developed to improve its accessibility and navigability. The IESBA will consider a revised draft of the Consultation Paper with a view to approval at its October 2014 meeting.

The Ethics Board considered and provided input on proposed changes to the following sections of Part C—Professional Accountants in Business of the Code:

• Section 320—an existing section addressing the preparation and reporting of information; and
• Section 370—a proposed new section addressing the topic of pressure by superiors and others to breach the fundamental principles.

Among other matters, the board also discussed Task Force proposals addressing the misuse of discretion under the applicable reporting framework in order to mislead. At its October 2014 meeting, the board will consider revised drafts of the proposed changes to Part C with a view to approval for public exposure.

In May, the Ethics Board released an Exposure Draft (ED), Proposed Changes to Certain Provisions of the Code Addressing Non-Assurance Services for Audit Clients, aimed at enhancing the independence provisions in Section 290 (Independence—Audit and Review Engagements) by:

• Giving auditors providing non-assurance services to an audit client additional guidance and clarification on what constitutes management responsibility, including enhanced guidance on how auditors can better satisfy themselves that client management will make all the judgments and decisions that are its responsibility;
• With respect to the preparation of accounting records and financial statements for non-public interest entity (non-PIE) audit clients, offering better guidance and clarification regarding the concept of “routine or mechanical” services; and
• Removing the provision that permits an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations.

The ED also includes proposed enhancements to corresponding non-assurance services provisions in Section 291 of the Code with respect to assurance clients. Comments are requested by August 18.

Please note: An editorial correction has been made to the ED. The mark-up section now shows the proposed deletion of paragraphs, 290.164, 290.174, and 291.145, which had inadvertently been omitted in the original file.

In advance of the final pronouncement addressing non-assurance services, the Ethics Board had considered developing a position paper on the topic, but agreed at its July meeting that a work stream on safeguards should be completed before determining the nature, scope, and timing of such a paper. The board asked the Task Force to present a project proposal on safeguards for board consideration as soon as possible. The board will consider the significant comments received on the ED at its October 2014 meeting.

In May and June, the Ethics Board held its first two global roundtables, in Hong Kong and Brussels, and met with its national standard setter liaison group to gain feedback from stakeholders on the project addressing professional accountants’ responsibilities regarding suspected non-compliance with laws and regulations. The roundtables were very successful, with active participation and engagement from over 50 invited senior-level delegates at each event.

At its July meeting, the board received an update on these discussions and it will receive an update on the third and final global roundtable (Washington, DC on July 10) at its next meeting in October. Based on the input received and other considerations, the board will decide whether to produce and issue a revised Exposure Draft on responding to suspected non-compliance with laws and regulations in 2015.

Earlier this year, the International Federation of Accountants (IFAC) launched the Global Knowledge Gateway, a new digital hub for the global accountancy profession: www.ifac.org/gateway. The Gateway serves professional and aspiring accountants in all sectors by providing streamlined access to relevant resources, news, discussions, and thought leadership in nine different areas, including ethics. Resources in this area, designed to serve both accountants in business and in practice, include surveys and reports on business ethics issues, as well as practical guidance on implementing the IESBA Code and other codes of conduct.

We invite you to explore and contribute your views to the discussions, recommend content that you find the most useful, suggest new resources, and subscribe to receive customized updates on new content added to the Gateway. Register to take full advantage of all of these features. 

Meetings of the Ethics Board and the Ethics Board’s Consultative Advisory Group (CAG) are open to the public. The next meeting of the board will be held in New York, New York, USA, on October 13-15, 2014. The next CAG meeting will be held in New York, New York, USA, on September 9-10, 2014.

For more information and to register to attend an Ethics Board or Ethics Board CAG meeting as an observer, visit Ethics Board Meetings  and Ethics Board CAG Meetings respectively.

The 2014 World Congress of Accountants (WCOA) will be hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Rome, Italy, later this year. Themed 2020 Vision: Learning from the Past, Building the Future, the WCOA 2014 will be held November 10-13 at the Auditorium Parco della Musica. More than 4,000 professionals from around the world will convene at this quadrennial IFAC event. WCOA 2014 will look back to explore the evolution of the accountancy profession and forward to showcase the innovations that will shape its future. Day 3 features a session on ethics: “Code of Ethics: Shaping Behavior.”  View the full agenda and register here.

The WCOA also provides a global platform for organizations and firms to share their projects and visions via various sponsorship opportunities. For more information, please contact info@wcoa2014rome.com or Dimarco@wcoa2014rome.com.