The International Ethics Standards Board for Accountants^® (IESBA^®, the Ethics Board) today released Changes to the Code Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients. The changes enhance the independence provisions in the Code of Ethics for Professional Accountants™ (the Code) by, in particular, no longer permitting auditors to provide certain prohibited non-assurance services to public interest entity (PIE) audit clients in emergency situations, and ensuring that they do not assume management responsibility when providing non-assurance services to audit clients.

“Auditor independence is foundational to public trust in the external audit,” said IESBA Chairman Dr. Stavros Thomadakis. “These enhancements will not only further reinforce independence but also promote greater consistency of application of the Code’s provisions in the 100-plus jurisdictions around the world where the Code is currently in use.”

The revisions include the removal of provisions that permitted an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations, as these were susceptible to being interpreted too generally. In addition, the revised provisions include:

• New and clarified guidance regarding what constitutes management responsibility; and
• Clarified guidance regarding the concept of “routine or mechanical” services relating to the preparation of accounting records and financial statements for audit clients that are not PIEs.

The revisions also include corresponding changes to the Code’s non-assurance services provisions with respect to other assurance clients.

“These changes focus on a few select, but important, areas of the Code. Nonetheless, the board continues to explore other areas where there may be a need for further enhancement,” noted IESBA Technical Director Ken Siong. “In this regard, the board has recently launched a new project that will review the clarity, appropriateness, and effectiveness of the safeguards against threats to auditor independence in the Code, particularly as these relate to the provision of non-assurance services to audit clients.”

To access the revised pronouncement, visit the IESBA website: www.ethicsboard.org. The changes will be effective April 15, 2016, with early adoption permitted. See the final pronouncement for details.

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
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 more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Public Sector Accounting Standards Board^® (IPSASB^®) has published Recommended Practice Guideline 3 (RPG 3), Reporting Service Performance Information.

RPG 3 provides good practice guidelines on reporting service performance information. Development of this RPG reflects the IPSASB’s commitment to addressing public sector-specific reporting issues, including those that relate to information additional to the financial statements.

“Service provision is the primary function of the vast majority of public sector entities,” said IPSASB Chair Andreas Bergmann. “Service performance information is essential for users to evaluate the services provided and public sector entities’ efficient and effective use of resources to deliver those services. RPG 3 provides guidance to support the quality of service performance information already reported by entities and offers a useful framework for entities that have not yet started to report service performance information.”

RPG 3 provides principles applicable to the presentation of service performance information and definitions that establish a standardized service performance information terminology. It addresses the reporting entity and reporting period for service performance information. RPG 3 also provides guidance on the choice of performance indicators that show an entity’s achievements with respect to its service performance objectives, disclosures about the basis of the reported information, and service performance-related narrative discussion and analysis.

RPG 3 states that service performance information may be presented, either in the same report as the financial statements or in a separate report, and identifies factors to consider when making that decision.

About the IPSASB
The 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^®
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 over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Small- and medium-sized accountancy practices (SMPs) around the world are generally optimistic about the year ahead, according to the results of the 2014 IFAC Global SMP Survey. Out of four areas—audit and assurance; accounting, compilation, and other non-assurance/related services; tax; and advisory/consulting services—tax and business advisory were nearly tied in terms of pace of expected growth, with about half of respondents expecting at least moderate growth in each area.

While SMPs have long engaged in compliance-driven tax engagements for their clients, business advisory is emerging as an area of increasing importance to SMPs’ growth. In 2013, advisory ranked third out of the four service areas in terms of pace of projected growth, while in 2014, advisory (13%) edged out tax (11%) as the area most likely to drive substantial revenue increases in the coming year.

The results also indicate that advisory is now commonly offered by SMPs, as 93% of respondents provided some form of advisory in 2014. Tax planning is the most common type of advisory service by a wide margin, suggesting that tax services—whether in the realm of compliance or advisory—are driving revenues overall.

“The findings from the 2014 Survey are critical to increasing, and acting on, our understanding of this critical sector,” said IFAC SMP Committee Chair Giancarlo Attolini. “Over 60 IFAC member organizations and regional bodies participated in the survey, allowing us to collect an even broader sample of responses than in previous years, while contributing to our mission of collaborating with our member organizations in building and supporting a global community of SMPs.”

Additional findings from the survey included:

• The regulatory environment and competition topped the list of environmental factors most likely to impact SMPs over the next five years;
• Business intelligence/data analysis software and customer relationship management/document management are the two types of technology most likely to impact SMPs in the next five years; and
• While only 27% of SMPs are currently part of a network, association, or alliance, another quarter are considering joining one.

The survey also included a number of questions about SMPs’ clients—typically small- and medium-sized entities (SMEs). Key findings included:

• While the majority of respondents (87%) reported that at least some of their SME clients seeking financing experienced difficulty in 2014, for most respondents, a relatively small portion (less than 25% of total clients) experienced difficulty;
• Over half (54%) of respondents reported that at least one of their SME clients experienced some type of financial crime, but volume of crimes overall was low, with most respondents indicating that less than 5% of their total clients experienced a crime; and
• Many SMPs are part of the globalization trend; 44% of total respondents have at least 5% of clients that operate internationally, while 69% of the largest SMPs (those with 21+ partners and staff) have at least 5% international clients.

The 2014 IFAC Global SMP Survey was conducted in 21 languages between November 3 and December 29, 2014 and received 5,083 responses from 135 countries. The survey was undertaken in collaboration with lead researchers from the University of Dayton (US), and the report was authored by professors Timothy and Marsha Keune. IFAC wishes to thank the many member and regional organizations that helped with translation and distribution of the survey. See the full results and subscribe to SMP updates on the IFAC website: www.ifac.org/SMP.

Some regions, countries, and larger SMPs were not well represented in the survey results; caution should be exercised when attempting to generalize survey results to specific countries, specific regions, or SMPs of all sizes.

About the SMP Committee
The SMP Committee of the International Federation of Accountants^® (IFAC^®) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

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. It is comprised of more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The 3rd Africa Congress of Accountants (ACOA), held by the Pan African Federation of Accountants (PAFA) and the Mauritius Institute of Professional Accountants (MIPA), will be held May 12-14, 2015 in Mauritius. Rising Africa: Partnering for Results will include sessions on partnerships between the public and private sectors, professional accountancy organization development, women and accountancy, and public sector accountancy, among other topics. Full details are available on the ACOA website.

The International Public Sector Accounting Standards Board^® (IPSASB^®) welcomes the IPSASB Governance Review Group’s final recommendations on the future governance of the IPSASB, released today. The recommendations include the establishment of a governance body—the Public Interest Committee—to ensure that the public interest is served by the IPSASB’s standard-setting activities, as well as the establishment of an IPSASB Consultative Advisory Group.

The Review Group was formed to assess the IPSASB’s governance arrangements and to make recommendations to strengthen these processes and structures.  It is chaired by the International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), and World Bank; members are representatives from the Financial Stability Board (FSB), International Organization of Securities Commissions (IOSCO), and International Organization of Supreme Audit Institutions (INTOSAI).

“The IPSASB has a growing reputation as the international standard setter for the public sector, and its standards are increasingly considered benchmarks for public sector financial reporting,” noted IPSASB Chair Dr. Andreas Bergmann. “The Review Group’s recommendations on the board’s governance will provide further support to these trends by assuring governments and other stakeholders that the board is independent, that it acts in the public interest, and that its standards result from widespread and carefully considered comment from interested stakeholders around the world.”

The IPSASB Review Group has developed draft Terms of Reference for the Public Interest Committee and plans an inaugural meeting of the Committee by the end of March 2015. The recommendations are available here.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. It 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. The structures and processes that support the operations of the IPSASB are facilitated by IFAC.

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. It is comprised of over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Federation of Accountants^® (IFAC^®) welcomes the release today of the International Public Sector Accounting Standards Board^® (IPSASB^®) Governance Review Group^[1] report on the future governance of the IPSASB, which is an important milestone in further strengthening its governance and credibility.

“We fully support the recommendations of the Review Group, and believe they will strongly enhance the robustness of the standard-setting arrangements and ultimately improve the legitimacy and acceptance of the International Public Sector Accounting Standards (IPSASs) across the globe” said Fayez Choudhury, Chief Executive Officer of IFAC. “High-quality internationally accepted standards provide the necessary foundation for high-quality financial reporting in the public sector—an area that needs vast improvement in many jurisdictions around the world, and which leads to better government decision-making, transparency, and accountability.”

Following a public consultation early last year, the Review Group made several important recommendations, including that:

• a governance body, the Public Interest Committee, be established to ensure that the public interest is served by the standard-setting activities of the IPSASB; the Committee’s membership should include, but not be limited to, individuals from the IMF, OECD, World Bank Group, and INTOSAI;
• the Committee’s objectives should be to review and advise IFAC and the IPSASB on the (i) terms of reference of the IPSASB; (ii) arrangements for nomination and appointment of IPSAB members; and (iii) procedures and processes for formulation of the IPSASB’s strategy and work plan and development of IPSASs to ensure that the views of all relevant stakeholders are sought and given due consideration;
• the Committee should not have a direct role in the development, adoption, and implementation of public sector accounting standards;
• IFAC should establish a Consultative Advisory Group (CAG) for the IPSASB; and
• a public consultation on the effectiveness of the IPSASB’s reformed governance arrangements be undertaken no later than 2020.

“The recommendations represent strong support for robust and balanced standard-setting arrangements, whereby the involvement of the profession, public sector, and international organizations ensure that the standards that are produced are in the public  interest and are high quality—and can be practically implemented.” Mr. Choudhury added, “IFAC is highly appreciative of the work done by the Review Group and its members and looks forward to working with these organizations to put the new arrangements in place in 2016.”

The International Federation of Accountants^® (IFAC^®) today published the following Question and Answer (Q&A) documents of the International Auditing and Assurance Standards Board^® (IAASB^®) and the International Ethics Standards Board for Accountants^® (IESBA^®) in the Spanish language:

• Staff Q&A - Applying ISAs Proportionately with the Size and Complexity of an Entity
• Staff Q&A - Applying ISQC 1 Proportionately with the Nature and Size of a Firm
• IESBA Staff Q&A - Implementing the Code of Ethics—Part I      
• IESBA Staff Q&A - Implementing the Code of Ethics—Part II 

These Spanish language translations are a result of the Ibero-American cooperation framework, known as the IberAm project. Established in 2012, the IberAm project—which includes IFAC and its member bodies Instituto de Censores Jurados de Cuentas de España, Federación Argentina de Consejos Profesionales de Ciencias Económicas, and Instituto Mexicano de Contadores Públicos—is an IFAC-authorized translation and review process that strives to achieve longer-term, sustainable processes for single Spanish translations of international standards and other IFAC publications. The Interamerican Accounting Association, IFAC’s regional organization for Latin America and the Caribbean, is an observer to the project.  In addition, the project involves a Review Committee of technical experts representing IFAC member bodies in nine Spanish-speaking countries.

The IAASB Staff Q&A publications highlight how the design of the International Standards on Auditing (ISAs) enables them to be applied in a manner proportionate with the size and complexity of an entity, and how the design of International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, enables it to be applied in a manner proportionate with the nature and size of a firm.

The IESBA Q&A publications are intended to assist professional accountancy organizations and others as they adopt and implement the Code of Ethics for Professional Accountants (the IESBA Code).

Additional Spanish translations of IFAC publications will be forthcoming.

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 IFAC.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) develops ethics standards and other pronouncements for professional accountants worldwide under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IESBA, and the IESBA Consultative Advisory Group, which provides public interest input into the development of the standards and other pronouncements. The structures and processes that support the operation of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information, and follow us on Twitter @Ethics_Board.

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 over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Public Sector Accounting Standards Board^® (IPSASB^®) has published the following five International Public Sector Accounting Standards™ (IPSASs™):

• IPSAS 34, Separate Financial Statements;
• IPSAS 35, Consolidated Financial Statements;
• IPSAS 36, Investments in Associates and Joint Ventures;
• IPSAS 37, Joint Arrangements; and
• IPSAS 38, Disclosure of Interests in Other Entities.

These five standards will replace current requirements in:

• IPSAS 6, Consolidated and Separate Financial Statements;
• IPSAS 7, Investments in Associates; and
• IPSAS 8, Interests in Joint Ventures. 

A key part of the IPSASB’s strategy to develop high-quality public sector financial reporting standards is to maintain existing IPSASs. IPSASs 6, 7, and 8 are based on International Financial Reporting Standards (IFRSs). Because the underlying IFRSs have changed, the IPSASB has developed IPSASs 34-38 so that convergence with the related IFRSs is maintained to the extent appropriate. These IPSASs also incorporate important guidance to make them appropriate for application in the public sector.

“These five IPSASs establish requirements for how public sector entities, including governments, should account for their interests in other entities,” said IPSASB Chair Andreas Bergmann. “Accrual-based accounting practices provide a comprehensive picture of the financial performance and position of public sector entities. Appropriate accounting for interests in other entities is an important aspect of this comprehensive picture.”

The following highlights particular aspects of each IPSAS:

IPSAS 34, Separate Financial Statements

The requirements for separate financial statements in IPSAS 34 are very similar to the current requirements for separate financial statements in IPSAS 6.

IPSAS 35, Consolidated Financial Statements

IPSAS 35 supersedes the requirements in IPSAS 6 regarding consolidated financial statements.

IPSAS 35 still requires that control be assessed having regard to benefits and power, but the definition of control has changed and the standard now provides considerably more guidance on assessing control. The definition of control focuses on an entity’s ability to influence the nature and amount of benefits through its power over another entity. This new definition of control may impact previous assessments of control, and therefore whether certain entities should be consolidated.

IPSAS 35 introduces the concept of “investment entities,” which may be applicable to some sovereign wealth funds. Generally, an investment entity measures its investments in controlled entities at fair value through surplus or deficit. After thorough consultation, the IPSASB decided, for public sector specific reasons, that an entity which controls an investment entity should retain this method of accounting for an investment entity’s investments in its consolidated financial statements, regardless of whether it is itself an investment entity.

In contrast with IPSAS 6, IPSAS 35 no longer permits an exemption from consolidation for temporarily controlled entities. Consistent with the IPSASB’s policy of reducing unnecessary differences between IPSASs and Government Finance Statistics reporting guidelines, the IPSASB has aligned the principles in IPSAS 35 with the Government Finance Statistics Manual 2014 (pre-publication draft) where feasible.

IPSAS 36, Investments in Associates and Joint Ventures

IPSAS 36 explains the application of the equity method of accounting, which is used to account for investments in associates and joint ventures. The requirements are very similar to the current guidance in IPSAS 7. Because equity accounting must now be used when accounting for joint ventures, the title of the standard now also refers to joint ventures.

In contrast with IPSAS 7, IPSAS 36 does not permit a different accounting treatment for temporary investments. 

IPSAS 37, Joint Arrangements

IPSAS 37 establishes requirements for classifying joint arrangements and accounting for those different types of joint arrangements. Joint arrangements are classified as either joint operations or joint ventures. In a joint operation, the parties to the arrangement have rights to the assets and obligations for the liabilities relating to the arrangement. In a joint venture, the parties to the arrangement have rights to the net assets of the arrangement. These classifications differ from IPSAS 8, which referred to three types of arrangements (jointly controlled entities, jointly controlled operations, and jointly controlled assets).

IPSAS 37 requires that an entity account for its interest in a joint operation by recognizing its share of the assets, liabilities, revenue, and expenses of the joint arrangement. It also requires that joint ventures be accounted for using the equity method. Previously, IPSAS 8 permitted jointly controlled entities to be accounted for using either the equity method or proportionate consolidation.

IPSAS 38, Disclosure of Interests in Other Entities

IPSAS 38 brings together the disclosures previously included in IPSASs 6–8. It also introduces new disclosure requirements, including those related to structured entities that are not consolidated and controlling interests acquired with the intention of disposal.

About the IPSASB
The 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^®
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 over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Public Sector Accounting Standards Board^® (IPSASB^®) has published a new International Public Sector Accounting Standard^™ (IPSAS^™), IPSAS 33, First-time Adoption of Accrual Basis IPSASs. IPSAS 33 grants transitional exemptions to entities adopting accrual basis IPSASs for the first time, providing a major tool to help entities along their journey to implement IPSASs. 

“With IPSAS 33, the IPSASB has developed a comprehensive standard that provides guidance and exemptions for entities that are transitioning to accrual basis IPSASs,” said IPSASB Chair Andreas Bergmann. “IPSAS 33 meets the needs of both preparers and users of financial statements during the transition period. Its publication is a further incentive for entities to make the decision to apply IPSASs. ”

IPSAS 33 allows first-time adopters three years to recognize specified assets and liabilities. This provision allows sufficient time to develop reliable models for recognizing and measuring assets and liabilities during the transition period.

This new standard addresses situations when reliable historical cost information about assets and liabilities is not available. It also addresses the presentation of comparative information in transitional IPSAS financial statements and an entity’s first IPSAS-compliant financial statements.

Using these comprehensive principles will ensure that an entity’s first financial statements using accrual basis IPSASs contain high-quality information and can be generated at a cost that does not exceed the benefits.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities.  It 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.  The structures and processes that support the operations of the IPSASB are facilitated by IFAC.

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. It is comprised of more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Auditing and Assurance Standards Board^® (IAASB^®) today released proposals to enhance auditor reporting on special purpose financial statements. The Exposure Draft includes changes proposed to ISA 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, and ISA 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement.

Reporting on special purpose financial statements is linked to the recently issued new and revised Auditor Reporting standards, in particular ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements and new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. As such, the IAASB has amended ISA 800 and ISA 805 to provide guidance on how the enhancements to the auditor’s report would apply in audits of special purpose financial statements. These amendments are limited to auditor reporting and are not intended to substantively change the underlying premise of these engagements in accordance with the extant ISAs.

How to Comment
The IAASB invites all stakeholders to respond to this Exposure Draft, which includes specific questions for respondents on key aspects of the proposals and highlights areas of focus for various stakeholders in responding to the Exposure Draft. To access the Exposure Draft and submit a comment, visit the IAASB’s website at www.iaasb.org. Comments on the Exposure Draft are requested by April 22, 2015.

About the International Auditing and Assurance Standards Board(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).

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 over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.