Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA). This edition of IESBA eNews provides a summary of decisions made at the IESBA’s meeting held December 10-12, 2012, in New York, USA. See the Meeting Page for more information.
IN THIS ISSUE:
1. Emerging Issues and Strategic Plan
2. Breach of a Provision of the Code
3. Conflicts of Interest
4. Definition of Engagement Team
5. Long Association of Senior Personnel with an Audit Client
6. Non-Assurance Services
7. Review of Part C of the Code
8. Suspected Illegal Acts
9. Next Meetings
10. New Technical Director
11. 2013 IESBA Handbook
1. Emerging Issues and Strategic Plan
IESBA members shared information and views about significant national and international developments or emerging issues of potential relevance to the IESBA’s current and future strategy and work plan.
In addition, the IESBA agreed to the scope of, and general approach to, the survey of stakeholders to be used to facilitate the development of its Strategy and Work Plan, 2014-2016.
The survey is now open through March 15, 2013. The IESBA encourages all stakeholders to participate. For the strategy and work plan currently in effect, see Strategy and Work Plan, 2011–2012, and the additional work streams added in mid-2012.
2. Breach of a Provision of the Code
The IESBA approved for issuance, subject to due process confirmation by the Public Interest Oversight Board (PIOB), changes to the Code of Ethics for Professional Accountants (the Code) related to provisions addressing a breach of a requirement of the Code.
The changes will be effective approximately one year after issuance of the final pronouncement, which is expected by the end of March 2013. The final pronouncement will be included in the 2013 Handbook of the Code of Ethics for Professional Accountants (see below).
3. Conflicts of Interest
The IESBA approved for issuance, subject to due process confirmation by the PIOB, changes to the Code addressing conflicts of interest. The final pronouncement is expected to be released by the end of March 2013, with the changes becoming effective on July 1, 2014. The final pronouncement will be included in the 2013 Handbook of the Code of Ethics for Professional Accountants (see below).
4. Definition of Engagement Team
The IESBA considered the significant comments received on the Exposure Draft (ED) of its proposed change to the definition of the term “engagement team.” The IESBA also considered further amendments to the proposed definition, taking into account limited amendments proposed by the International Auditing and Assurance Standards Board (IAASB) to the material in ISA 610 (Revised), Using the Work of Internal Auditors, dealing with the use of internal auditors to provide direct assistance on the external audit (Direct Assistance).
The IESBA will consider approving the revised definition of “engagement team” after consulting with its Consultative Advisory Group (CAG) on January 21, 2013.
5. Long Association of Senior Personnel (Including Partner Rotation) with an Audit Client
The IESBA approved a project proposal to review 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.
The IESBA will consider preliminary issues relating to the project at its March 2013 meeting, including the approach to the project.
6. Non-Assurance Services
The IESBA approved in principle, subject to confirmation of scope, a project proposal to review the non-assurance services provisions in Sections 290 and 291 of the Code to ensure that they continue to support a rigorous approach to independence for assurance services, particularly audits of financial statements.
The IESBA will consider the outcome of a benchmarking exercise for purposes of narrowing the scope of the project at its March 2013 meeting.
7. Review of Part C of the Code
Part C of the Code addresses how the conceptual framework of threats and safeguards in Part A of the Code applies in certain situations to professional accountants in business (PAIBs). The IESBA agreed to the recommendations of the Part C Working Group, including that priority attention be given to the following areas in a review of Part C of the Code:
- Pressure by superiors and others to engage in unethical or illegal acts;
- The responsibility of PAIBs to produce financial reports that are faithful representations of the economics of transactions, and associated matters; and
- Facilitation of payments and bribes.
The IESBA agreed that the Part C work stream should proceed on an accelerated basis under the current strategy and work plan rather than be subject to further consideration of relative prioritization as part of the upcoming consultation on its Strategy and Work Plan, 2014-2016. Accordingly, the IESBA directed the Working Group to develop a project proposal for its consideration at the March 2013 IESBA meeting.
8. Suspected Illegal Acts
The IESBA received a brief update on initial stakeholder reactions to its August 2012 Exposure Draft (ED), Responding to a Suspected Illegal Act, which closed on December 15, 2012.
The IESBA will consider the significant comments from the nearly 70 responses received on the ED at its March 2013 meeting.
9. Next Meetings
Meetings of the IESBA and the IESBA CAG are open to the public. The IESBA CAG will next meet via teleconference on January 21, 2013. The IESBA is expected to next meet via teleconference in the latter part of January 2013. The next face-to-face IESBA meeting will be held in New York, USA, on March 11–13, 2013. For more information and to register to attend an IESBA meeting as an observer, visit IESBA Meetings. For more information and to register to attend an IESBA CAG meeting as an observer, visit IESBA CAG Meetings.
10. New Technical Director
Ken Siong has assumed the role of technical director of the IESBA effective January 1, 2013. Ken brings over 10 years of experience working with the International Auditing and Assurance Standards Board (IAASB), most recently as deputy director. In that capacity, his responsibilities included managing a number of key IAASB standard-setting projects and other initiatives—including audit quality, quality control, and related parties—overseeing the IAASB’s liaison with major national standard setters, and coordinating the IAASB’s strategic and operational activities. Prior to joining the IAASB, Ken worked as a senior manager in the assurance practice of PwC in Hong Kong. He is a member of the Institute of Chartered Accountants in England and Wales.
11. 2013 IESBA Handbook
The IESBA is developing the 2013 Handbook of the Code of Ethics for Professional Accountants. It will contain the final pronouncements addressing breaches of provisions in the Code and conflicts of interest. It is also expected to contain the revised definition of “engagement team.” The 2013 Handbook is expected to be released in the second quarter of 2013. For the current edition, see 2012 IESBA Handbook.
