• Notice of the Call for Nominations - Candidates Sought for the Independent Standard-Setting Boards

    New York English

    The Notice of the Call for Nominations for the Independent Standard-Setting Boards in 2015 was issued today. The Notice of the Call sets out the upcoming opportunities for membership on the 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 assist nominating organizations and self-nominees, the International Federation of Accountants (IFAC) has published Developing a Nominations Strategy, which was also released today. Along with the Notice of the Call, the document is issued to provide information on the relevant membership qualifications, including the required time commitment and performance expectations for volunteers and to offer strategic and practical guidance in identifying the most qualified candidate for each available position.

    For 2015, there are 22 vacancies on the independent standard-setting boards. All vacancies on the boards are open for nominations by all stakeholders, including professional accountancy and international organizations, governmental agencies, firms, and the public. Although each candidate will ultimately be selected on the basis of experience, nominations of highly-qualified candidates from Africa and the Middle East for membership on the IAASB and from Latin America for membership on the IESBA are encouraged.

    The official Call for Nominations for the Independent Standard-Setting Boards in 2015 will be issued on January 15, 2014, and nominations may be submitted from January 15 to March 15, 2014. The Notice of the Call is issued in advance of the Call for Nominations to allow sufficient time for all stakeholders to prepare for the next nominations cycle.

    The Nominating Committee follows an open and transparent process to select the best candidates for the available positions, while also aiming to achieve gender, regional, and professional balance. For more information about the Nominating Committee, its due process, or guidance in selecting the best candidate, please visit Nominating Committee webpage.

    About the IAASB
    The International Auditing and Assurance Standards Board (IAASB) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).

    About the IAESB
    The International Accounting Education Standards Board (IAESB) develops education standards, guidance, and information papers for use by IFAC member bodies under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAESB, and the IAESB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAESB are facilitated by IFAC.

    About the IESBA
    The International Ethics Standards Board for Accountants (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.

    About the IPSASB
    The International Public Sector Accounting Standards Board (IPSASB) develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

    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. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.


    #   #   #

  • Professional Accountants: A Legacy of Serving the Public Interest

    Jörgen Holmquist
    Chair, IESBA
    Accounting Professional & Ethical Standards Board (APESB) Dinner Speech
    Sydney, Australia English

    My fellow board members and I are here for a meeting of the International Ethics Standards Board for Accountants, the Ethics Board for short. It is great to be in Sydney, for many of us for the first time.

    The Ethics Board is an independent board that sets the ethical standards for all accountants who are affiliated with the International Federation of Accountants, or IFAC. That is 2.5 million accountants in 129 countries around the world and in different lines of work. Virtually all auditors are covered by our ethics standards, but also many other accountants in public practices—such as tax advisors, corporate finance specialists, and IT systems advisors—and many accountants in business.

    Twenty-three of the largest international accounting networks, including the Big 4, have also committed to following our ethics standards on transnational audits. This means that virtually all listed companies around the world are audited by a firm that has made the commitment to follow our ethics standards with respect to such audits.

    The very first sentence in our Ethics code is: “A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.” This is not a new idea. When a number of men got together in Edinburgh in 1864 to create the world’s first institute of professional accountants, they had the same idea.

    They phrased it slightly differently:

    …the Petitioners were induced to form themselves into a Society called the Institute of Accountants in Edinburgh, with a view to unite into one body those at present practicing the profession and to promote the objects which they entertain in common; and that the Petitioners conceive that it would tend to secure in the members of the profession the qualifications which are essential to the proper performance of its duties, and would consequently conduce much to the benefit of the public….. [1]

    Their brethren in England were a little bit behind, but in the Charter of the Institute of Chartered Accountants in England and Wales, it was stated that:

    That the said societies were not established for the purposes of gain nor do the members thereof derive or seek any pecuniary profit from their membership but the societies aim at the elevation of the profession of public accountants as a whole and the promotion of their efficiency and usefulness by compelling the observance of strict rules of conduct as a condition of membership and by setting up a high standard of professional and general education and knowledge … [and it] would be for the public benefit if the members thereof were incorporated as one body… [which] would … tend to gradually raise [the profession’s] character and thus to secure for the community the existence of a class of persons well qualified to be employed in the responsible and difficult duties often devolving on Public Accountants. [2]

    This commitment to serve the public interest is like a strong red thread, running throughout the profession’s history and connecting the past to the present. The public interest is as important today as it was 160 years ago in Edinburgh. Today, it is of course phrased slightly differently.

    The Institute of Certified Public Accountants of Rwanda became as associate member of IFAC last year. And the institute’s mission statement starts: “To empower our members and partner with stakeholders to serve the public interest….”

    Few other professions have voluntarily and formally taken on such a strong commitment to serve the public interest. Physicians have, obviously, but no other professions really, at least not to the same degree.

    This is a very big strength for the accountancy profession, its most important attribute for building goodwill. The general public has the sense—probably very vague and unarticulated—that accountants, and especially auditors, act in the public interest.

    This, in my view, helps to explain in large part why auditors and accountants have fared much better than bankers, rating agencies, corporate CEOs, or politicians during and after the financial crisis of the last six years.

    Our Code of Ethics is a very robust code:

    • It covers all the main ethics issues.
    • It is demanding.
    • It is regularly updated to address new concerns.
    • It is enforced.
    • And accountants abide by it—at least the vast majority of them.

    But can it really be true that almost all accountants abide by our Code? If so, why didn’t the auditors and the accountants warn about the impending financial crisis? The answer, I believe, is that many people were caught flat-footed—bankers, regulators, policy-makers, and also auditors and accountants.

    They were not skeptical enough. They hadn’t experienced anything like it before. They were swept away by the euphoria of the pre-2007 boom. They were in the same situation as most everyone else.

    When you informally talk to audit regulators about why auditors failed to see and warn about the financial crisis, these are the kind of explanations they often put forward. The view is that cases of unethical behavior were very few. The failings were of a different kind.

    Still there is a problem. The goodwill created by the profession’s commitment to act in the public interest has to be continually reinforced. My personal view is that the profession is currently slowly depleting its long-standing goodwill, not by design but by not forcefully and publicly enough making the case that it is committed to acting in the public interest.

    The accountancy profession should much more actively make the case that:

    • it has a strict Code of Ethics;
    • it is adhering to it;
    • this code is set by an independent body; and
    • it welcomes that those accountants who do not comply with the Code are disciplined.

    Surely, this is not an easy road to take. On the other hand, not making the case that the profession is committed to acting in the public interest will most likely slowly reduce the public trust in the profession and thus the profession’s standing. It will be weaker when facing problems and criticism.

    So I believe that the Ethics Board and the profession should make the case more strongly than we do today that:

    • the profession’s Ethics Code is strong; and
    • the profession does act in the public interest.

     

    [1] Institute of Chartered Accountants of Scotland, Royal Charter of 1854 and Supplementary Charter of 1951, Scotland: ICAS, 1854 and 1951, accessed October 16, 2013. https://icas.org.uk/CharterRulesRegulations-after10July/

    [2] Institute of Chartered Accountants in England and Wales, Royal and supplemental Charter, London: ICAEW, May 1880 and December 1948, accessed October 16, 2013. www.icaew.com/~/media/Files/About-ICAEW/Who-we-are/Charters-bye-laws/royal-charter-of-the-11th-may-1880.pdf.

     

     

  • IESBA eNews: September 2013 Meeting Summary

    New York, New York English

    Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA, the Ethics Board). This edition provides a summary of decisions made at the Ethics Board’s meeting held September 16-18, 2013, in Sydney, Australia. See the Meeting Page for the meeting highlights, including a podcast summary and agenda papers

    Responding to a Suspected Illegal Act

    The Ethics Board considered an alternative to the approach set out in the Exposure Draft, Responding to a Suspected Illegal Act, regarding a professional accountant’s responsibilities when encountering a suspected illegal act. Among other matters, the Ethics Board:

    • Discussed and agreed to align the term “illegal act” with the term “non-compliance with laws or regulations” used in the International Standards on Auditing (ISAs);
    • Explored the possibility of establishing a presumption, which can be rebutted, that disclosure will be made under certain conditions by professional accountants for clients that are public interest entity audit clients; and
    • Discussed documentation, changes to other sections of the Code of Ethics for Professional Accountants (the Code), and communication between successor and predecessor accounting firms.

    The Ethics Board is considering releasing a revised draft of the proposed standard for public comment and will review this draft at its December 2013 meeting

    Structure of the Code

    The Ethics Board received an update on the Structure of the Code Working Group’s preliminary analysis of research findings regarding ways to improve the usability of the Code. Among other matters, the board discussed enhancing the visibility of the Code’s requirements; clarifying responsibility for compliance with the Code’s requirements; simplifying the language in the Code; repackaging parts of the Code; and an electronic Code. The Ethics Board will receive the Working Group’s preliminary report at its December 2013 meeting.

    Long Association of Senior Personnel (Including Partner Rotation) with an Audit Client

    The Ethics Board is reviewing the long association provisions in Section 290 of the Code to ensure that they continue to provide robust and appropriate safeguards against the familiarity and self-interest threats arising from long association with an audit client. Following research conducted by the working group, the Ethics Board discussed preliminary issues, including:

    • Potential structural changes affecting the profession in the context of external regulatory developments relating to audit reform;
    • The involvement of those charged with governance in rotation decisions;
    • Who on the engagement team should be subject to rotation with respect to audits of public interest entities (PIEs);
    • The duration of the “time on”  and “cooling off” periods;
    • Permissible activities during the “cooling off” period;
    • Exceptions to rotation requirements; and
    • The need for rotation requirements for audits of entities that are not PIEs.

    The board will continue its deliberation of the issues at its December 2013 meeting.

    Emerging Issues and Outreach

    The Ethics Board discussed and broadly supported proposals for processes to deal with emerging issues and outreach. At its December 2013 meeting, the board will consider refinements to the proposed processes and draft Terms of Reference for a standing working group to oversee emerging issues and outreach activities going forward.

    Review of Part C of the Code

    As part of the first phase of this project, the Ethics Board discussed adding a potential new section to Part C of the Code, aimed at professional accountants in business, that would address pressure from superiors and others to engage in unethical or illegal acts and related issues. Among other matters, the board discussed the scope of the guidance, and how it would be applied using a threats and safeguards approach. As part of the same phase of the project, the board will consider issues relating to the preparation and reporting of information at its December 2013 meeting.

    Non-Assurance Services

    The Ethics Board approved a project proposal to review the non-assurance services (NAS) provisions in the independence sections of the Code (Sections 290 and 291) as these relate to the following three areas: management responsibilities; services of a routine or mechanical nature; and emergency exceptions for bookkeeping and taxation services. The board also discussed producing a paper that would set out its views and positions on NAS and related matters. The Ethics Board will review a first draft of proposed changes to the Code related to the above three areas at its December 2013 meeting.

    Future Strategy and Work Plan

    The Ethics Board discussed a number of matters arising from the International Auditing and Assurance Standards Board (IAASB)'s Audit Quality project that may have implications for the Ethics Board’s future strategy and work plan. These matters included: the need for additional guidance to expand upon some of the fundamental principles in the Code as these apply to auditors; information sharing by auditors with respect to shareholders and regulators, and between auditors when there is a change of auditors; the need for, and who should be involved in developing, guidance on audit firm governance; and the need for a process to analyze root causes of audit failures.

    The Ethics Board also discussed an initial draft of the Consultation Paper, IESBA Strategy and Work Plan 2015-2018, setting out the context for the board’s future strategy, proposed strategic themes, and potential actions and priorities. The board will consider a revised draft of the Consultation Paper for approval at its December 2013 meeting.

    Definition of Those Charged with Governance

    Last month, the Ethics Board released a revised definition of “those charged with governance” in, and related changes to, the Code. The amendment is intended to more closely align the definition in the Code with that in the International Auditing and Assurance Standards Board (IAASB)’s International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance, thereby eliminating any potential confusion. The Ethics Board does not expect any changes will be necessary to accounting firms’ systems and methodologies or common practice. 

    Next Meetings

    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, USA, on December 4-6, 2013. The next meeting of the CAG will be held via teleconference on October 10, 2013. The next physical meeting of the CAG will be held on March 10, 2014, in New York, USA.

    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. 

    2013 Handbook of the Code of Ethics Available

    The 2013 Handbook of the Code of Ethics for Professional Accountants is now available to download or purchase. The 2013 edition contains the final revised pronouncements addressing a breach of a requirement of the Code and conflicts of interest, and the revised definition of “engagement team.” These changes will be effective in 2014; see the individual pronouncements for details. To download a free electronic copy of the handbook for personal use or purchase print copies, see Handbook of the Code of Ethics for Professional Accountants.   

    Registration Now Open for World Congress of Accountants 2014; Sponsorship Opportunities Available

    The next World Congress of Accountants (WCOA) will be hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Rome, Italy in 2014. Themed 2020 Vision: Learning from the Past, Building the Future, the 2014 WCOA 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 the future of the profession. Register Now.

    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.

     

  • IESBA September 2013 Meeting Highlights

    English

    Highlights from the IESBA's September 16-18, 2013 meeting in Sydney, Australia.

    00:32 Overview

    1:04 Part C of the Code (Professional Accountants in Business)

    2:52 Suspected Illegal Acts

    6:54 Long Association

    9:44 Structure of the Code

    Meeting Highlights Listen & Subscribe in iTunes
    IESBA September 2013 Meeting Highlights

  • IESBA Clarifies Definition of "Those Charged With Governance"

    New York, New York English

    The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) today released final changes to the definition of “those charged with governance” in its Code of Ethics for Professional Accountants (the Code).

    The changes are intended to more closely align the definition of “those charged with governance” in the Code with that in the International Auditing and Assurance Standards Board (IAASB)’s International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance, thereby eliminating any potential confusion. The Ethics Board does not expect any changes will be necessary to accounting firms’ systems and methodologies or common practice.

    The changes clarify that a subgroup of those charged with governance of an entity, such as an audit committee, may assist the governing body in meeting its responsibilities. In those cases, if a professional accountant or firm communicates with such a subgroup, the Code requires the professional accountant or firm to determine whether communication with all of those charged with governance is also necessary so that they are adequately informed.

    “The changes to the definition reflect the Ethics Board’s ongoing commitment to eliminate unnecessary differences with the IAASB’s standards, which serves to enhance our shared stakeholders’ understanding of our standards and guidance,” said Jörgen Holmquist, chair of the IESBA. “Furthermore, by clarifying the definition, the Ethics Board aims to promote more consistent application of the Code, which is critical to its mission to ultimately foster a consistent and high level of ethical behavior by professional accountants around the world.”

    As with all revisions to the Code, the changes have been approved following confirmation by the Public Interest Oversight Board that due process in developing the changes was followed. The changes, effective on July 1, 2014, will be printed in the 2014 Handbook of the Code of Ethics for Professional Accountants. The 2013 Handbook is currently available to download or purchase.

    About the IESBA
    The International Ethics Standards Board for Accountants (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.

    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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

     

    #   #   #

  • Change to the Definition of “Those Charged with Governance” in, and Related Changes to, the Code of Ethics for Professional Accountants

    The changes to this pronouncement are intended to more closely align the definition of “those charged with governance” in the Code of Ethics for Professional Accountants with that in the International Auditing and Assurance Standards Board (IAASB)'s International Standard on Auditing (ISA) 260, Communication with Those Charged with Governance, thereby eliminating any potential confusion. The Ethics Board does not expect any changes will be necessary to accounting firms’ systems and methodologies or common practice.

    IESBA
    English

  • IESBA Releases 2012 Annual Report

    New York, New York English

    The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) today released its 2012 Annual Report, Connecting and Engaging with Our Global Stakeholders.

    The report introduces Jörgen Holmquist, the first independent chair of the Ethics Board, and details the board’s ongoing commitment to developing high-quality ethics standards for the global accountancy profession. It emphasizes the board’s further commitment to promoting and facilitating the adoption and effective implementation of these standards around the world, thus supporting professional accountants in their commitment to act in the public interest within their diverse roles in business and practice.

    The report summarizes the progress made on the IESBA's Work Plan, which in 2012 included finalizing three pronouncements—breach of a requirement of the Code of Ethics for Professional Accountants (the Code), conflicts of interest, and a revised definition of the term “engagement team.” The report also highlights the board’s efforts in exploring appropriate ethics standards for professional accountants in one of the most challenging projects the board has undertaken so far—responding to a suspected illegal act.

    “The Annual Report is one of the ways through which the board demonstrates the transparency of its activities. This year’s report focuses on our activities in further building on the strong base of ethics standards contained in the revised Code released in 2009. Additionally, it elaborates on the renewed focus we’ve placed on stakeholder outreach,” said Mr. Holmquist. “As the first independent chair of the board, I see it as an important priority to increase the trust of stakeholders, particularly the regulatory community, in the board’s work, and extending and deepening the board’s engagement with them.”

    The Annual Report also includes a report from Richard Fleck, outgoing chair of the IESBA Consultative Advisory Group (CAG), which outlines the work of the CAG in providing input to the IESBA.

    To access and download the 2012 IESBA Annual Report, visit www.ethicsboard.org.

    About the IESBA
    The International Ethics Standards Board for Accountants (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.

    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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

     

    ###

  • 2012 IESBA Annual Report

    Connecting and Engaging with Our Global Stakeholders

    The 2012 IESBA Annual Report  introduces Jörgen Holmquist, the first independent chair of the Ethics Board, and details the board’s ongoing commitment to developing high-quality ethics standards for the global accountancy profession. It also emphasizes the board’s further commitment to promoting and facilitating the adoption and effective implementation of these standards around the world.

    IESBA
    English
Subscribe to IESBA