The International Ethics Standards Board for Accountants (IESBA) announces the following new appointments and re-appointments:

New appointments:

• Mrs. Laurie Endsley, United States
• Mr. Richard Huesken, United States

Re-appointments:

• Mr. Hiro Fukukawa, Japan
• Ms. Kim Gibson, United States
• Ms. Caroline Lee, Singapore

Re-appointment as Deputy Chair:

• Mr. Richard Fleck, United Kingdom

"I warmly welcome Laurie Endsley and Richard Huesken to the IESBA. I look forward to the rich experience and diverse perspectives they will bring to our discussions, starting with our March 16-18, 2020 meeting in New York. I am also pleased Richard Fleck will continue to serve as Deputy Chair for another year,” said Dr. Stavros Thomadakis, IESBA Chairman. “Finally, I want to thank our departing members, Alden Leung, Patricia Mulvaney and Sylvie Soulier. Their various contributions to the Board have been significant and we are grateful for their dedication to IESBA and their commitment to the public interest."

The IESBA also welcomes two new technical advisors, Ms. Laura Friedrich from Canada, and Ms. Kristen Wydell from Australia.

The International Ethics Standards Board for Accountants^® (IESBA^®) today released two Exposure Drafts (EDs):

• Proposed Revisions to the Non-Assurance Services Provisions of the Code
• Proposed Revisions to the Fee-Related Provisions of the Code

The EDs are aimed at strengthening the non-assurance services (NAS) and the fee-related independence provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The EDs represent a key milestone in two major strategic commitments of the IESBA in its current strategy and workplan.

Among the key changes proposed to the NAS provisions are:

• A prohibition on providing NAS to an audit client that is a public interest entity (PIE) if a self-review threat to independence will be created;
• Further tightening of the circumstances in which materiality may be considered in determining the permissibility of a NAS;
• Strengthened provisions regarding auditor communication with those charged with governance (TCWG), including, for PIEs, a requirement for NAS pre-approval by TCWG; and
• Stricter requirements regarding the provision of some NAS, including certain tax and corporate finance advice.

The NAS ED also includes enhanced guidance to assist firms in evaluating the level of threats to independence when providing NAS to audit clients. 

Among the key proposed changes to the fee-related provisions are:

•  A prohibition on firms allowing the audit fee to be influenced by the provision of services other than audit to the audit client;
• In the case of PIEs, a requirement to cease to act as auditor if fee dependency on the audit client continues beyond a specified period; and
• Communication of fee-related information to TCWG and to the public to assist their judgments about auditor independence.

The Fees ED also includes enhanced guidance on identifying, evaluating and addressing threats to independence in relation to other fee-related matters, including the proportion of fees for services other than audit to the audit fee.

“Auditor independence, in fact and in appearance, is fundamental to public confidence in the financial statement audit, and in turn in the integrity of the entire financial system,” said IESBA Chairman Dr. Stavros Thomadakis. “Our proposals are a timely response to growing public perceptions about the need to reinforce auditor independence, as well as specific concerns from the regulatory community and the Public Interest Oversight Board, especially in relation to audits of PIEs. The more stringent provisions concerning the offer of NAS to PIE audit clients, as well as  the transparency and other substantive proposals concerning fees, further raise the bar on auditor independence in the public interest.”

The development of the proposals in the two EDs has benefited from cooperation with the International Auditing and Assurance Standards Board (IAASB) within the established coordination framework of the two Boards. The IESBA is strongly committed to continuing its engagement with the IAASB in finalizing the proposals.

The IESBA will host webinars during the comment period to provide an overview of the NAS and Fees EDs. Follow the IESBA on Twitter (@Ethics_Board) for updates on how to register for these events.

The IESBA welcomes feedback on the NAS and Fees EDs from all stakeholders, including investors and other users of financial statements, the corporate governance community, the regulatory and audit oversight community, preparers, firms, national standard setters, IFAC member bodies, academics and others.

How to Comment 

The IESBA invites all stakeholders to comment on the NAS and Fees EDs by visiting the IESBA’s website. Comments are requested by June 4, 2020 (Due to the COVID-19 pandemic the original comment deadline of May 4 has been extended to June 4).

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves the public interest by setting ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards).

The IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

Today, leading accounting bodies and other organisations have called for corporate and asset owner action and improved reporting on the UN’s Sustainable Development Goals (SDG) in an attempt to hit goals set for 2030. The recommendations are detailed in the report, Sustainable Development Goals Disclosure (SDGD) Recommendations, authored by Carol Adams, Professor of Accounting, with Paul Druckman and Russell Picot, Honorary Professors at Durham University Business School.

The report has been published by global accountancy bodies -  International Federation of Accountants (IFAC), Association of Chartered Certified Accountants (ACCA), Institute of Chartered Accountants of Scotland (ICAS), Chartered Accountants Australia and New Zealand (CA ANZ), the International Integrated Reporting Council (IIRC) and the World Benchmarking Alliance. It is also endorsed by the Director of SDG Impact from the United Nations Development Programme (UN-DP). 

The SDGD Recommendations offer a new approach for businesses and other organisations to address sustainable development issues aligned to the three most influential and popular reporting frameworks. They attempt to establish a best practice for corporate reporting on the SDGs and enable more effective and standardized reporting and transparency on climate change, social and other environmental impacts.

The SDGD Recommendations were developed through consultation with accounting and finance professionals, sustainability experts, academics, consultants, framework and standard setters, asset owners and managers and civil society participants. 

Responses to the consultation have been published in Sustainable Development Goals Disclosure (SDGD) Recommendations: Feedback on the consultation. They show strong support for alignment of SDGD Recommendations with other key reporting frameworks/standards (those of the Task force on Climate-related Financial Disclosures, the Global Reporting Initiative and the International <IR> Framework).  Respondents agreed that accountability for value destruction and negative impacts are critical. 

The SDGD Recommendations call on organisations to consider sustainable development risks and opportunities relevant to their long term value creation strategy and communicate the actual or potential impacts on achievement of the SDGs. This will require relevant and material disclosures about the factors that influence long term value creation (or destruction) for the organisation and society or that have an impact (positive of negative) on the achievement of the SDGs in the annual report. 

Professor Carol Adams says: “There is increasing awareness in both business and investment communities that the health and wellbeing of the planet and its people impact on the longer term success of business.  The SDGs offer an opportunity to collaborate and address this. A change in what and how business is done is essential to the achievement of the SDGs.  Key to driving change is the requirement for a statement from the Board Chair that the Board accepts responsibility for the SDG Disclosures in the annual report.”

These Recommendations are built upon a suggested five-step approach for contributing to the SDGs aligned with long-term value creation, previously developed by Professor Adams and published by the IIRC and ICAS.

Elizabeth Boggs-Davidsen, Director at the UN DP said: “To achieve the SDGs companies and investors will need to move away from mapping existing activities to the goals to a more integrated practice of directing and disclosing on investment activities that create more impact and contribute to progress towards the SDGs.”

Gerbrand Haverkamp, Executive Director at the World Benchmarking Alliance said: “Without companies aligning their business models and operations with the SDGs - they simply won’t be achieved. We therefore need to work together in translating scientific and societal expectations into clear reporting guidance for companies. This will create the data the World Benchmarking Alliance and others can use to assess and rank corporate performance in a manner that is transparent and free for everyone to see.” 

Kevin Dancey, CEO at the International Federation of Accountants (IFAC), said: "Achieving the SDGs requires dedication from business, and the urgency continues to grow. We fully support global best practices that enable effective, transparent reporting on sustainability measures. It's imperative that we act together and that we act now to secure a sustainable future.”

The International Ethics Standards Board for Accountants (IESBA) today released Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised). Part 4B of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) comprises the independence standards for assurance engagements other than audit and review engagements.

The revision fulfills a commitment the IESBA announced in its Strategy and Work Plan, 2019-2023 to review and change Part 4B of the Code to make the part’s provisions  consistent with the revised assurance terms and concepts in the International Auditing and Assurance Standards Board’s (IAASB’s) International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

The main revisions, developed in coordination with the IAASB, include:

• Changes in key terminology, including a revised definition of the term “assurance client”;
• Amendments to certain independence requirements in light of the revised assurance client definition;
• Greater clarity as to the parties to an assurance engagement and their roles and responsibilities, and the related independence requirements that apply; and
• A clearer distinction between the types of assurance engagement covered in Parts 4A (addressing independence for audit and review engagements) and 4B of the Code.

“It is in the public interest that Part 4B of the Code is consistent with ISAE 3000 (Revised), clear on the applicable independence requirements and, most importantly, sufficiently robust and practicable for assurance practitioners in the field,” said IESBA Chairman Dr. Stavros Thomadakis. “The successful completion of this project reflects the IESBA’s strong commitment towards enhanced communication and coordination with the IAASB, to better serve the needs of stakeholders in today’s global economy.”

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves the public interest by setting ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards).

The IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

The International Auditing and Assurance Standards Board (IAASB) today released International Standard on Auditing (ISA) 315 (Revised 2019), its revised standard for identifying and assessing risks of material misstatement. 

ISA 315 (Revised 2019) is an important part of the IAASB’s efforts to improve audit quality globally. In finalizing the changes, the IAASB focused on the understandability, complexity and length of the standard, and made enhancements and clarifications to encourage a more consistent and robust risk assessment, which forms the foundation of the auditor’s efforts to gather sufficient appropriate audit evidence. The revisions also modernize the standard to keep up with the evolving environment in which businesses operate, in particular in relation to technology, as well as a focus on why procedures are required.

“This revised standard is the second significant standard to be completed in our efforts to enhance audit quality. ISA 315 (Revised 2019) is foundational to the audit – the core of the audit is undertaking work to obtain sufficient appropriate audit evidence to address the risks of material misstatement, and the changes made to ISA 315 (Revised 2019) recognize the importance of a robust and consistent risk assessment in driving an appropriate and effective response to those risks,” says Tom Seidenstein, IAASB Chair. 

ISA 315 (Revised 2019) becomes effective for financial statement audits for periods beginning on or after December 15, 2021.

Due to the foundational nature of this revised standard, the IAASB will undertake activities to support effective and consistent application of the changes. An implementation plan has been developed which lays out the planned activities and estimated timing.

About the IAASB
The 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). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

(New York, NY, December 17, 2019) – The International Auditing and Assurance Standards Board (IAASB) today released a Feedback Statement sharing what the Board has heard regarding audits of less complex entities in response of its recent Discussion Paper: Audits of Less Complex Entities (LCEs): Exploring Possible Options to Address the Challenges in Applying the ISAs.

“The extraordinary participation in our consultation and the thoughtful comments we received demonstrate the importance of, and interest in, this initiative, said Tom Seidenstein, Chair of the IAASB.  “We are pleased with the high level of engagement we received on this topic globally, and look forward to further engagement as the IAASB progresses its work in this area.”

The Discussion Paper, and related outreach activities, solicited perspectives of different stakeholder groups on the issues and challenges surrounding the audits of LCEs. Further information gathering activities will continue until June 2020, when the Board will decide the way forward. 

“We have developed this feedback statement to acknowledge the important and constructive input received to date, but also to keep our stakeholders informed about where we are in this important initiative, said Roger Simnett, LCE Working Group Chair. “The IAASB believes that sharing what we have heard will be useful in stimulating further thinking and exploration of this very important topic towards developing recommendations.”

Click here to view the document.

About the IAASB 

The 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). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org. 

The Public Interest Committee, the body that oversees the standard setting activities of the International Public Sector Accounting Standards Board (IPSASB), today launches a public Survey on IPSASB governance arrangements which were implemented in accordance with the 2015 Recommendations of the IPSASB Governance Review Group. All interested stakeholders are encouraged to participate in this global consultation.

Established in 2015, the Public Interest Committee reviews the standard-setting activities of the IPSASB to ensure appropriate due process and that the Board’s activities reflect the public interest. Since its formation, the Committee has actively provided advice and recommendations concerning the development of the IPSASB strategy and work program, the appointment process for members of the IPSASB, and IPSASB standard-setting due process. 

Stakeholder feedback through the survey will be an important source of input for the Public Interest Committee in carrying out the review of the current oversight arrangements of the IPSASB.

Responses to the Survey on IPSASB governance arrangements are invited by February 24, 2020.

This week, a coalition of 11 global and regional accountancy organizations and international development agencies, led by IFAC, the International Federation of Accountants, convened a three-day conference to bring awareness to how effective public financial management is critical to the advancement of emerging economies.

The conference, Developing Accountancy Capacity in Emerging Economies, features a series of keynotes and workshops designed to equip accountants, government officials, stakeholders and other practitioners with a roadmap for facilitating conversations and driving progress in their respective jurisdictions.

“Accountancy capacity development efforts, like this conference, are most effective when national, regional, and global organizations come together with a laser-focus on a common cause. IFAC, with the support of the UK Department for International Development (DFID), is grateful to be able to catalyze the convening of institutions that comprise the financial management eco-system, in order to enhance awareness and collaboration,” said Kevin Dancey, IFAC CEO.

The accountancy profession plays an essential and significant role in a country’s sustainable economic development in both the public and private sectors. Not only has a strong and vibrant accountancy profession been regularly associated with lower levels of fraud and corruption, but there is also a recognized correlation between a strong accountancy profession and higher levels of economic growth. Supporting the development of accountancy capacity can be a catalyst to the success of the state-building strategies implemented by international development actors.

Dr. In-Ki Joo, IFAC President, said: “The role of professional accountants is to manage the financial information required by all stakeholders, and to develop the insights needed for sound decision-making that helps promote economic, social and political stability. This important connection between accountancy and economic development is something that organizations, including the DFID, the World Bank, the Asian Development Bank and the Global Fund, have understood for a number of years and we are grateful for their ongoing partnership.”

Aman Trana, Director, Procurement, Portfolio, and Financial Management Department of the Asian Development Bank, said: “One of ADB’s operational priorities under its Strategy 2030 is to strengthen governance and institutional capacity of its developing member countries. Professional accountants play a critical role in this area by supporting public financial management institutions improving their public service delivery, financial efficiency, and transparency and accountability, thereby accelerating poverty reduction and achieving sustainable development.

IFAC extends its sincere appreciation to its partners and hosts for making the conference possible: DFID, the World Bank, the Asian Development Bank, the Global Fund, the Malaysian Institute of Accountants, the Confederation of Asian and Pacific Accountants, the ASEAN Federation of Accountants, the South Asian Federation of Accountants, and the Arab Federation of Accountants and Auditors.

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 more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

About the Asian Development Bank
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.

IFAC, the International Federation of Accountants, is pleased to recognize Mr. Aki Fujinuma of Japan with its Global Leadership Award for his service to the accountancy profession.

Among his many achievements, Mr. Fujinuma helped build public confidence in the accountancy profession over the past two decades. His actions, which included launching a quality-control initiative in Japan and other countries to ensure confidence in audit, significantly contributed to that effort in the region and around the world.

Mr. Fujinuma is a well-known leader both within and outside of the profession, having been recognized by the government of Japan for his leadership and contributions to the accountancy profession and Japanese society. He is a past president of IFAC (2000-2002) and played a significant role promoting IFRS adoption in the Asia-Oceania region as a former vice chair of the IFRS Foundation.

Mr. Fujinuma’s accomplishments also include serving as an IFRS Foundation trustee, a member of the Financial Accounting Standards Foundation of Japan and the International Auditing and Assurance Standards Board, and as chairman and president of the Japanese Institute of CPAs, which awarded him its Grand Prize of the Day of CPAs. He has served as an outside director of many large corporations, including the Japan Exchange Group, and as one of the Governors of Japan Exchange Regulation.

“I am honored to present the Global Leadership Award to Aki, for whom I have the deepest respect,” said Dr. In-Ki Joo, IFAC President. “At a critical time, Aki built bridges between the profession and key stakeholder groups—and he continues to do so. Aki’s efforts have resonated at difficult moments and he continues to be a powerful advocate for the accounting profession on the global stage.”

Established in 2017 by the IFAC Board, the IFAC Global Leadership Award recognizes individuals who make outstanding contributions to the global accountancy profession. The award honors the contributions of Robert Sempier, IFAC’s first executive director who greatly contributed to the development of the profession worldwide.

The Global Leadership Award was presented during IFAC’s 2019 Council meeting, held from November 13 to 14 in Vancouver, Canada.

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 more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

As the UN Climate Change Conference (COP) meets this week, IFAC urges decisive action to put the world on a path to a sustainable future. To clearly articulate the role of the global accounting profession in addressing the climate emergency, IFAC published its Point of View on climate action.

In the Point of View, IFAC sets forth recommendations for various stakeholders:

• Governments can take advantage of The UN Climate Change Conference of the Parties (COP) to provide clear direction on reducing long-term emissions, to deliver greater certainty for business, and to encourage investment in low-emissions technology and innovation.
• Businesses can accelerate plans for climate change mitigation and adaptation. They can deliver transparency and confidence through reliable and decision-useful climate related information.
• Professional accountancy organizations (PAOs) have an influential role in influencing climate change mitigation and adaptation as advocates for the profession and providers of accounting training and support. PAOs can commit to keeping accountants informed of how they can support their organizations’ and clients’ efforts to respond to climate risk.
• Accountants can encourage and enable meaningful action on climate change as influential advisors in governments and organizations. They can achieve this by providing relevant insights, analysis, reporting, and assurance to help organizations create and protect value over the long-term.

At the global level, IFAC is committed to working with the global profession to build the knowledge and capacity of accountants to meet the Sustainable Development Goals (SDGs) and to speaking out on climate action on behalf of the accounting profession, working through the B20, G20, and OECD.

“Ignoring the impact of climate change is not an option – nor is business as usual,” said IFAC CEO, Kevin Dancey. “As instrumental members or advisers of every government, business, and not-for-profit organization, professional accountants must influence and enable the transition to a low-carbon society.”

The conversations at COP 25 this week will be particularly important to provide clarity in reducing long-term emissions to meet the Paris Agreement. All actors in the global economy must usefully contribute, and professional accountancy remains a committed part of the solution.

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 more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.