Recently, IESBA provided a formal response to the Institute of Internal Auditors (IIA) on the public consultation: Proposed Global Internal Audit Standards. The IESBA commended the IIA’s efforts in making the proposed standards clearer and easier and agree that it is an important strategic priority and in the public interest to ensure international standards such as the IIA standards and IESBA Code remain fit-for-purpose and relevant in addressing key issues users of the standards face.

In IESBA’s response, the global ethics standards setting board highlighted the importance of a comprehensive framework, such as the IESBA’s conceptual framework, to assist internal auditors to identify, evaluate, and address threats to the principles set out in the proposed IIA standards when performing their internal audit function

The IESBA raised its concern in the use of well-established terms such as “independence” and “professional skepticism”, as these terms are generally used in the context of external audit and assurance engagements.

To read IESBA’s full response, click here.

About the IESBA

The International Ethics Standards Board for Accountants serves the public interest by setting ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information. Along with the International Auditing and Assurance Standards Board, the IESBA is part of the International Foundation for Ethics and Audit. The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards. For copyright, trademark, and permissions information, please visit Permissions.

Various media revelations, such as the Paradise Papers and the Pandora Papers, have highlighted the important role tax intermediaries play in facilitating tax structures that contribute to billions of euros of lost tax revenue in the EU every year. To address this issue, the European Commission has announced a proposal with the objective of preventing enablers from setting up complex structures in non-EU countries for tax evasion and aggressive tax planning purposes. This initiative would complement the Unshell Directive, which sets out criteria for identifying entities that lack minimal economic substance within the EU.

IESBA Chair Gabriela Figueiredo Dias will speak at a public hearing organized by the European Parliament’s Subcommittee on Tax Matters (FISC) on July 17, 2023 from 15:00 to 16:30 CEST in Brussels, Belgium.

The event, “Tackling the role of enablers involved in facilitating tax evasion and aggressive tax planning in the European Union (SAFE),” will be introduced by Paul Tang, FISC Chair. Other speakers include Olivier Boutellis-Taft (CEO, Accountancy Europe) and Ivan Lazarov (Research Associate, International Bureau of Fiscal Documentation (IBFD)). A question-and-answer session with Members of the FISC Subcommittee will follow. The public hearing will help inform the European Parliament's opinion on the new legislative proposal.

The hearing will be web-streamed at: https://www.europarl.europa.eu/committees/en/tackling-the-role-of-tax-enablers/product-details/20230705CHE11962.

About the IESBA

The International Ethics Standards Board for Accountants serves the public interest by setting ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information. Along with the International Auditing and Assurance Standards Board, the IESBA is part of the International Foundation for Ethics and Audit. The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards. For copyright, trademark, and permissions information, please visit Permissions.

Rapid advances in technology are transforming the way professional accountants conduct their work. To assist them in ethically navigating the challenges and opportunities brought by these advances, the Staff of the Australian Accounting Professional & Ethical Standards Board (APESB) and the Staff of the International Ethics Standards Board for Accountants (IESBA) today jointly released Applying the Code's Conceptual Framework to Independence: Practical Guidance for Auditors In Technology-related Scenarios. The publication describes key technology-related provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) and provides auditors with three practical examples involving technology-related non-assurance services to illustrate how to apply the Code's requirements with respect to independence.

“This joint APESB-IESBA Staff publication is timely and fulfills a commitment we have made to collaborate with national standard setters and others to provide helpful guidance to assist auditors in implementing and consistently applying the Code’s revised technology-related provisions,” said Gabriela Figueiredo Dias, IESBA Chair. “Over the past three years, the Board has dedicated strategic focus and significant resources to addressing the ethics and independence implications of technological innovation such as AI, blockchain, and data analytics, culminating in strengthened technology-related provisions in the Code and two comprehensive reports under Phases 1 and 2 of its fact-finding work.”

This non-authoritative publication was developed jointly by the Staff of the APESB and IESBA under the auspices of the IESBA’s Technology Task Force, initiated as part of the IESBA’s Phase 2 Technology Working Group activities.  Learn more about IESBA’s technology work here.

About the IESBA

The International Ethics Standards Board for Accountants serves the public interest by setting ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information. Along with the International Auditing and Assurance Standards Board, the IESBA is part of the International Foundation for Ethics and Audit. The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards. For copyright, trademark, and permissions information, please visit Permissions.

Recent events in a number of major jurisdictions involving professional accountants have raised concerns with many stakeholders and the public about whether the accountants’ conduct was straightforward and honest, free from conflicts of interest, in accordance with confidentiality requirements, or in the public interest. A number of these events have resulted in government inquiries, significant regulatory penalties or other adverse consequences for the professional accountants or their firms, and undermined public trust in the accountancy profession.

Among all professions, the global accountancy profession stands apart in having a comprehensive and robust code of ethics in the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that it must apply. The Code is developed in accordance with a rigorous due process and under the oversight of the Public Interest Oversight Board (PIOB). The strength and global acceptance of the Code are evidenced by its adoption or use in over 130 jurisdictions, and adoption by the 34 largest international networks of accounting firms for transnational audits.

“Ethics is fundamental to public trust in the work of all professional accountants and it must always be at the heart of their judgments, decisions, and actions when performing professional activities or services,” said Gabriela Figueiredo Dias, IESBA Chair. “The high-quality ethics standards in the Code are a cornerstone to ethical behavior in business and organizations, and they underpin the accountancy profession’s longstanding good reputation. It is therefore crucial that all accountants fully understand and comply with all their ethical obligations under the Code.”

Professional accountants must act in all business and professional dealings or relationships in accordance with the five fundamental principles of the Code:

• Integrity by being straightforward and honest;
• Objectivity by not being compromised by bias, conflict of interest, or undue influence of, or undue reliance on, individuals, organizations, technology or other factors;
• Professional competence and due care by maintaining professional knowledge and skill at the level necessary to competently perform their work, and acting diligently;
• Confidentiality by respecting the confidentiality of information acquired as a result of professional and business relationships; and
• Professional behavior by complying with relevant laws and regulations, behaving in a manner consistent with the profession’s responsibility to act in the public interest, and avoiding any conduct that might discredit the profession.

The fundamental principles clearly establish the standard of behavior expected of all professional accountants. The Code also contains detailed provisions specifying the conduct and mindset expected of all professional accountants, including demonstrating an inquiring mind and having the strength of character to act appropriately, even when facing pressure or potential adverse personal or organizational consequences.

Importantly, the Code sets a clear expectation for professional accountants, especially those in leadership or managerial roles, to promote an ethical culture within their organizations.

Upholding the fundamental principles and complying with the specific requirements of the Code enable professional accountants to meet their responsibility to act in the public interest. These obligations are in no way lightened or diminished by the types of activities or services they undertake. The Code applies to professional accountants in all their professional activities, whether it is audit, tax, consulting or other advisory services, or in business. Non-compliance with ethical requirements not only creates a risk of adverse consequences for accountants from a professional or regulatory standpoint, but also may result in profound negative consequences for firms, employing organizations, clients, other stakeholders, and the public at large. Ethical failures can also damage the profession’s reputation.

Ethics is central to the proper functioning of organizations, financial markets, and economies worldwide. The fundamental principles are the foundation to ethical behavior within organizations and underpin the integrity and credibility of financial and non-financial information. An organizational culture that integrates an ethical approach strengthens public trust in professional accountants’ work, safeguards the well-being and sustainability of organizations, and ultimately serves to protect the public interest.

The Public Interest Oversight Board’s (PIOB) Standard-Setting Nominations Committee has opened the Invitations for Application [https://bit.ly/PIOB-SAC] period for the new Stakeholder Advisory Council. This newly established global forum will provide strategic advice to the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board (IESBA). The SAC will replace the IAASB Consultative Advisory Group (IAASB CAG) and the IESBA Consultative Advisory Group (IESBA CAG), which complete their remits in late 2023.

The Invitation for Application outlines the opportunity for experienced individuals from various relevant stakeholder groups and the expectations for SAC members. Through the open and interactive forum, SAC members will have the opportunity to actively participate in providing strategic input and shape the future of global standard setting. The PIOB encourages applications from candidates with diverse backgrounds, including different geographic regions, genders, and professional backgrounds.

Full details of the Invitation for Applications and the SAC’s role are available on the PIOB website. Applications are welcome until September 30, 2023.

The Public Interest Oversight Board’s (PIOB) Standard-Setting Nominations Committee has opened the Invitations for Application period for the new Stakeholder Advisory Council. This prestigious global council, a key element of recent governance reforms, will provide strategic advice to both the IAASB and International Ethics Standards Board for Accountants (IESBA) in developing standards. It replaces the IAASB and IESBA Consultative Advisory Groups.

The Invitation for Application outlines the opportunity for experienced individuals from various relevant stakeholder perspectives and the expectations for SAC members. Through the open and interactive forum, SAC members will have a chance to actively participate and shape the future of standard setting. The PIOB encourages applications from candidates with diverse backgrounds, including different geographic regions, genders, and professional backgrounds.

Full details of the Invitation for Applications and the SAC’s role are available on the PIOB website. Applications are welcome until September 30, 2023.

As the global voice of the accountancy profession, the International Federation of Accountants (IFAC) supports corporate reporting that better addresses a company’s ability to create long-term value and is decision useful for investors and other stakeholders. Specific regulatory requirements are necessary to harmonize reporting practice and deliver consistent, comparable, assurable, and decision useful sustainability information.

To this end, IFAC has submitted feedback in response to the European Commission’s European Sustainability Reporting Standards (ESRS). In its response, IFAC welcomes the standards while noting significant concerns regarding the need for interoperability that supports a global system for reporting. In addition to the ESRS, IFAC has also welcomed the International Sustainability Standards Board’s (ISSB) new standards and other important jurisdiction or regional initiatives, notably the U.S. SEC’s proposed climate disclosure rule. However, these approaches must align key concepts, terminologies, and metrics to avoid regulatory fragmentation, especially on matters of materiality.

“We strongly support efforts by the European Commission and ISSB to find areas of interoperability in their standards, starting with climate. However, substantive differences remain, so collaboration must continue. This is crucial for investors and all stakeholders who want interoperable ESRS and ISSB standards and connectivity between sustainability and financial information,” said IFAC CEO Kevin Dancey. “ISSB standards should function as a global baseline for all jurisdictions, including the EU for financial materiality, to adopt or align with. This is also why we need transparency—a navigation tool to help stakeholders know where the areas of alignment exist.”

Implementation by companies and enforcement by regulators of the new standards are essential to ESRS success. IFAC urges additional transitional reliefs to allow companies sufficient time to implement governance, processes, reporting capacity, and internal controls—all essential for high quality disclosure and its assurance.

As assurance brings trust and confidence to corporate reporting, IFAC encourages the European Commission to participate in ongoing stakeholder engagement with the International Auditing and Assurance Standards Board (IAASB) toward the goal of requiring use of the IAASB’s forthcoming new International Standard on Sustainability Assurance (ISSA) 5000 under the Corporate Sustainability Reporting Directive. The International Ethics Standards Board for Accountants’ (IESBA) work on establishing ethics and independence requirements for sustainability assurance practitioners is also vital to producing high-quality, reliable 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 180 members and associates in more than 135 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

The International Ethics Standards Board for Accountants (IESBA) today announced that a Sustainability Reference Group (SRG) has been established to support the work of its Sustainability Task Force. 

The SRG members have been selected based on a series of criteria, including their background, experience or expertise in sustainability reporting or assurance, stakeholder groups, and geographical location. The members will act as a “sounding board” to the Sustainability Task Force, providing insights, expertise, or advice relating to the development of global ethics and independence standards for sustainability reporting and assurance. 

The SRG will be chaired by Mr. Channa Wijesinghe, IESBA Member and Sustainability Task Force Member. The SRG Members are: 

• Kenneth Amaeshi, European University Institute, Africa
• Antonio Astone, DNV, Europe 
• Michael Bray, Deakin University, Oceania 
• Charlotte Drain, Deloitte LLP, Europe 
• Dongsoo Kim, AccountAbility, Asia 
• Kristian Koktvedgaard, Confederation of Danish Industry and EFRAG Sustainability Reporting Board Member, Europe
• Olga Rivas, Independent International Organisation for Certification, Global 
• Samantha Ross, AssuranceMark, North America 
• Michael Tang, SGX Group, Asia 

To learn more about IESBA’s work on sustainability, please refer to our focus page. 

The IAASB is excited to announce that it has approved by unanimous vote the draft International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, for public consultation. The consultation will be open by early August until early December 2023.

With the increasing global demand for corporate reporting and disclosure on sustainability, ESG (environmental, sustainability, and governance), and climate-related information, we are proud to have risen to the occasion by developing this new proposed standard. This proposed standard aims to enhance confidence in sustainability reporting, responds to IOSCO recommendations, and complements the work of other standard setters, including the International Ethics Standards Board for Accountants, EFRAG, International Sustainability Standards Board and IFRS Foundation, Global Reporting Initiative, and others.

Once finalized, ISSA 5000 will serve as a comprehensive, stand-alone standard suitable for limited and reasonable sustainability assurance engagements. It will apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks. Moreover, the standard will be profession-agnostic, enabling its use by professional accountants and other professionals performing sustainability assurance engagements.

As the IAASB works toward the release of the draft standard in the coming weeks, it is also in the process of finalizing extensive outreach plans. These plans include a series of four roundtable discussions, as well as virtual, regional, and national events held in partnership with other organizations throughout the consultation period. To stay updated on the latest information and upcoming events, please follow us on Twitter and LinkedIn and consider registering or subscribing to our mailing list via the IAASB website.

Today, the International Federation of Accountants (IFAC) released the second installment in a three-part publication series to help small- and medium-sized practices implement the International Auditing and Assurance Standards Board’s (IAASB) quality management standards. Installment Two: Developing a Detailed Implementation Plan provides a step approach to identifying your quality objectives; completing your quality risk assessment process; identifying existing, or creating new, responses to those quality risks; and implementing, documenting, and communicating your system of quality management.

Installment Two also:

• Addresses the eight components of the IAASB’s International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
• Contains an example case study to illustrate the transition from the International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements; and
• Includes multiple documentation aids covering independence, acceptance and continuance of clients and engagements, resources, and outside consultation, as well as a sample checklist for engagement quality reviews.

Installment One of the series addressed the mindset change the new standards require and the shift in focus from quality control to quality management. Installment Three, expected later this year, will cover monitoring and remediation. This series joins IFAC’s collection of available resources that support quality management implementation, including webinars, articles and videos, as well as the IAASB first-time implementation guides, all of which are available at ifac.org/qualitymanagement.

IFAC acknowledges and appreciates feedback from IFAC’s Small and Medium Practices Advisory Group and Forum of Firms representatives in the development of the series.

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 180 members and associates in 135 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce