I would like to wish the PIOB a happy 15^th anniversary and thank the many people who have volunteered time to the PIOB for their service. You have created an important institution, one whose relevance to the external reporting architecture should continue to grow. 

I joined the IAASB last year, as a non auditor, with the firm conviction that the public interest is best served when market participants have confidence in reported information and those that provide assurance. At its best, the audit profession is at the heart of driving market confidence. However, despite the good work of many auditors, recent corporate failures do raise questions regarding the relevance and quality of audits. Together regulators, oversight bodies such as the PIOB, independent standard-setters, and practitioners can be constructive forces in addressing those questions.

In my brief remarks today, I want to:

1. Emphasize the value of independent, publicly accountable standard-setting and therefore the PIOB’s role
2. Describe the IAASB’s effort to be more responsive, agile, and connected to our key partners, including IESBA
3. Highlight a recent accomplishment that should form a foundation to support audit quality

Let me turn to the importance of independent standard-setting. I strongly believe that setting standards at the international level is the most effective way to respond to the relentless globalization of business and avoid the economic costs and regulatory arbitrage that come with a fragmentation in rules. At the same time, international standards are best set by an independent standard-setting body with appropriate expertise and perspective, free of undue influence, and committed to a thorough due process.

However, independence is not omnipotence. With the privilege of independence, the system requires appropriate accountability mechanisms and standard setters constantly willing to prove that the public interest comes first. I commend the Monitoring Group for recently completing its reform recommendations. The reforms end a period of uncertainty and should produce positive change by bolstering the independence of the standard-setting boards. The changes also should improve public accountability. I particularly highlight the PIOB’s critical oversight role now clearly articulated through a Public Interest Framework. I am also pleased that the recommendations preserve the two-board structure, IESBA and IAASB, and the technical competence of the two standard-setters. The standard-setting boards look forward to work closely with the Monitoring Group, the PIOB, IFAC, and other key stakeholders to implement those changes.

While the Monitoring Group was deliberating the proposed reform, the IAASB took the position that our best contribution to the public interest is to take the proverbial bull by its horns. The IAASB instituted a new strategy, after PIOB review, aimed at putting the public interest front and center of all that we do. After completing foundational standards, we are now pivoting our workplan to focus on the most pressing emerging challenges facing audit and assurance. This shift includes dedicated efforts to reduce the growing complexity of our standards, where appropriate, and workstreams on fraud, going concern, assurance of non-financial information, and the impact of technology. Those topics are raised in nearly every conversation that I have had since becoming chair and the IAASB is now acting.

A common complaint of standard setters is that we move too slowly. While respecting due process, our strategy calls for us to make the standard-setting setting process more agile. For example, we heard that our standards have stood up well during the Covid 19 crisis. At the same time, we recognized that practitioners and others needed help. We responded quickly with a series of Staff Alerts aimed at applying our standards under the current environment and coordinated closely with National Standard-Setters and IFAC to disseminate our work.

Our strategy seeks tighter coordination with the broader ecosystem—including securities regulators, inspection regimes, and standard-setters. Our reporting system will work better when the different parts of the system speak together. Indeed, the level of consultation has intensified over recent months and has allowed us to identity the public interest better on key topics.

Maybe the most intense coordination has occurred with my partners at IESBA, a path forged by my predecessor, Arnold Schilder, and Stavros. Indeed, the completion of our recent Quality Management standards benefited from alignment on many topics, including the key public interest issue of a mandatory cooling off period where both boards are aligned. I can honestly say that IESBA and IAASB are working together in all aspects of their work these days.

Finally, I highlight a reason for optimism that our collective efforts will generate greater trust in audit engagements. IAASB approved its new and revised suite of Quality Management standards last week. In doing so, we addressed the PIOB’s public interest issues and now await PIOB approval. The resulting suite of standards is aimed at a more robust System of Quality Management for firms using the IAASB’s standards, and is a significant evolution from a traditional, more linear approach to quality control.  What I think is maybe most significant about the new the standards is that they greatly enhance the expectations and accountability of firm leadership for quality management and create an appropriate culture committed to the consistent performance of quality engagements.

The new requirements reinforce firm leadership’s responsibility for ensuring the system operates efficiently and effectively. The standards require more rigorous monitoring of the system of quality management, understanding the root causes of deficiencies, and swift remediation of those deficiencies. A culture that facilitates proactive and regular self-scrutiny will help engagement teams feel supported in their goals for quality engagements and enable continual improvements in quality.

The PIOB has come a long way in 15 years. From my life at the IFRS Foundation and now at the IAASB, I recognize how challenging and crucial oversight is—it is an essential ingredient to an independent standard-setting process. I look forward to participating and working closely with the PIOB as it takes on its next 15.

IAASB Chair Tom Seidenstein delivered the following keynote address during the ICAEW event New International Sustainability Assurance Standards, held at Chartered Accountants' Hall in London.

Good morning. I am honored to return to the Institute of Chartered of Accountants of England and Wales (ICAEW). I wanted to thank Malcolm Bacchus for the kind introduction and the entire ICAEW team for hosting this timely event and their continued support of global standards.

The ICAEW building has a special place in my heart. It was in this building, more than two decades ago, that I leapt deep into the world of standard setting. In my role with what would ultimately become the IFRS Foundation, we interviewed many of the candidates that became the original members of the International Accounting Standards Board (IASB).

It must have been something in the water that day. Maybe you in the audience and others impacted by the work of the International Auditing and Assurance Standards Board (IAASB) regret the choice of water then. However, at that moment of time in the autumn of 2000, I got the “bug” for standard setting. Twenty-four years later, I stand before you, nearly six years in my tenure as IAASB chair. In all seriousness, I can tell you that we at the IAASB are truly appreciative of the mandate that we have and the support that the ICAEW and accountants throughout the world have given us. We will continue to do our best to drive confidence in the work of accountants throughout the world.

Events such as the one being held today are essential to build knowledge, to exchange ideas and experience, and to guide standard setters, regulators, and practitioners as we embark on the sustainability journey together.

Journeys are never simple. On a journey, you often meet the unexpected. You meet delays from time-to-time. You often must make compromises along the way. The most important thing ultimately is keep advancing towards the destination.

For the last several years, we have witnessed an accelerating, almost inevitable momentum on our journey—towards a new era of external reporting that would mandate both financial and non-financial information to describe corporate performance. Not surprisingly, policymakers, regulators, standard setters, and a broad range of market participants called for a range of sustainability requirements that would form the basis of a new reporting ecosystem.

Let’s take two of the world’s largest capital markets. The European Union approved the Corporate Sustainability Reporting Directive, or CSRD, and with it came European Sustainability Reporting Standards. The US Securities and Exchange Commission approved a Climate Disclosure Rule.

Indeed, much like the world of financial reporting and audit, we also saw a trend towards adopting global baselines. The IFRS Foundation established the International Sustainability Standards Board with significant support from securities regulators globally. And jurisdictions throughout the world, including here in the UK and others such as Australia, Brazil, Japan, Nigeria, Singapore, and Turkey, initiated processes for considering or mandating reporting and sustainability assurance regimes.

In recent weeks, several jurisdictions have announced a reconsideration or recalibration of their sustainability requirements and commitments. My message today is that we must pay attention to this shifting landscape and understand the underlying rationale for changes. As an independent standard-setter, we cannot operate in a vacuum and must be responsive to shifting public interest demands.

However, I remain convinced that the longer-term trend is likely to remain directionally the same. Investors globally, those who provide capital, will continue to seek broader measures of corporate performance. Even before mandatory requirements more than 95 percent of the world’s largest companies were providing some form of sustainability reporting. And despite the shifts in some jurisdictions, many companies are continuing to adopt sustainability reporting requirements to meet investor demands.

It is therefore my first point and maybe most important point today—we need to keep our eye on the long-term destination for reporting sustainability-related information. We need to remain ambitious but also accept that the journey will vary by jurisdiction and will need to adapt to learnings. In doing so, we should commit to creating a system for sustainability and other material non-financial measures that focuses on building trust and confidence in the information companies provide, much as we have in the world of financial reporting.

We can take a few lessons from the world of financial reporting in terms of constructing a trusted sustainability reporting ecosystem. The most important is that trusted reporting should be built on a foundation of:

• High-quality reporting standards
• Complemented by robust assurance standards
• Supported by ethical and independent requirements
• Overseen by empowered regulatory authorities

In my mind, the public interest requires those components to:

• Enable global comparability
• Encourage the development of a cadre of professionals capable of producing and assuring high quality reporting
• Be unapologetic in its commitment to quality, rigor, and ethics

Indeed, that long-term vision was our motivation at the IAASB when we completed International Standard on Sustainability Assurance (ISSA) 5000. ISSA 5000 a global baseline that can work in every jurisdiction—whether you are in Europe, Asia, the Americas, Africa or Australia. In doing so, we moved quickly, because the International Organization of Securities Commissions (IOSCO) urged us, along with our colleagues at the International Ethics Standards Board for Accountants (IESBA), to meet the deadline of December 2024 to complement the ISSB’s work. We were also conscious of European and other national timelines and requirements.

ISSA 5000 did not sacrifice quality for speed. We followed a rigorous due process and conducted unprecedented outreach before finalizing the standard. We involved thousands of stakeholders on six continents, including our eight roundtables spread throughout six continents, bilateral meetings, and our exposure draft and comment process.

In developing ISSA 5000, the IAASB was conscious that sustainability assurance was already taking place around the world. For this reason, we adopted a no “greenfielding” strategy—we built off existing practices already embedded in our well-established and widely used assurance standards, ISAE 3000 and 3410. We needed to provide more specificity to reflect convergence around new sustainability reporting requirements and ensure greater consistency in practice. We also were able to draw upon recent modernization of audit standards, where appropriate. Finally, we benefitted from the advice of the thousands who participated in our consultations. With the benefit of their advice, we reflected themes we heard throughout the comment process. My colleague, Josephine Jackson, will shortly describe specific elements of the standard in more detail.

We believed it was important to develop the standard so that a diversity of practitioners could use ISSA 5000 for a wide range of sustainability assurance engagements. We committed to ensuring that the standard is useable and does not create any unnecessary burdens. We therefore paid particular attention to scalability and proportionality throughout.

My second major message is that for the IAASB, the journey on sustainability doesn’t end with the approval of the standard. We stand ready to help support the consistent application of standard in several ways.

First, we will support the adoption and implementation with significant energy and resources. We will continue to publish a wide range of implementation support. On January 27, jointly with IESBA, we released a first package of guidance and support videos—with more to follow. We have also committed to a wide range of outreach activities, which have already begun. Our focus is on issuing guidance that is concise, focused and pragmatic.

Second, we will give the market time to absorb ISSA 5000. We need a period of stability. Therefore, the emphasis will not be on the setting of new standards in the 5000-space. Do not expect a new 5000 series standard soon.

Third, we will set up a wide range of monitoring activities to determine whether there are practical implementation issues. We will work closely with our advisory council, national standard-setters, and regulators to get this feedback. We are in the process establishing a technical implementation contact group as well. Even though we will not write a new 5000 series standard in the next few years, we as a Board, stand ready to respond to market feedback if adjustments or guidance to ISSA 5000 are necessary.

My third major message is that if we are to reach our ambitious destination, we will require support and collaboration from a wide range of parties. We are calling upon policymakers and practitioners to adopt ISSA 5000 when adopting sustainability requirements. The UK Financial Reporting Council’s study will hopefully pave the way for broad use of ISSA 5000 among UK practitioners. The IAASB will not attempt to dictate the timing and phasing of requirements throughout the world, but a commitment to assurance requirements that complement reporting requirements is critical if reported sustainability information is to engender the same confidential as financial reporting.

We also call on the accountancy profession to prepare for broader scale demand for sustainability assurance engagements. This means organizations, like the ICAEW, play a critical role in developing curriculum and training programs. Accountancy and other assurance firms will need to develop expertise and capacity with the emerging requirements. And a new generation of talent in accountancy profession will have to expand skillset in the audit and assurance toolkit. Clearly, this will be a challenge, but we must see this as an opportunity for the profession to demonstrate their continued relevance and remain attractive to future generations of professionals.

Let me close by returning to a theme that I highlighted earlier. Our sustainability journey will not always be smooth or go as anticipated. We need to work together with a sense of ambition and patience.

We must always remember our ambitious goal—to create a system of sustainability reporting that engenders the same level of trust as financial reporting. That will not be easy or immediately achievable—but that should not deter us. Companies will need to develop systems of internal controls, governance, and data gathering to improve reporting. We will need to train assurance specialists and reporting teams. Investors and other users will need to learn how to best analyze the new information, if unfamiliar with sustainability reporting. And regulators and standard setters must be ready to react as challenges arise.

We also need patience because the initial waves of reporting will not be perfect. But imperfection should not deter us from the journey ahead. As we move forward, the IAASB will continue to engage with stakeholders across sectors, listen to market feedback, and provide the support needed for successful implementation.

Thank you once again for your trust, your collaboration, and your commitment to a future where transparency and integrity in reporting serve the public interest. We look forward to continuing this journey together, building a robust foundation for sustainable economies.

IAASB Chair Tom Seidenstein delivered the following keynote address during the Accountancy Europe/IFAC webinar, “Shaping the Future of Sustainability Assurance Engagements.” Learn more about the event and access materials from presenters on the IFAC website here.

Good afternoon. I am so pleased to be here today for this timely webinar. I want to express my appreciation to Accountancy Europe and IFAC for hosting this event and for their continued support for global standards, set by an independent standard-setting body committed to a robust due process. And I also want to thank you, the over 1,200 registered participants, who have given up your time to join today.

Today’s webinar is titled, “Shaping the Future of Sustainability Assurance Engagements.” Indeed, my remarks will shortly turn to ISSA 5000, the standard that the International Audit and Assurance Standard Board (the IAASB) approved in September. In fact, I bring good news—this morning, the Public Interest Oversight Board (PIOB), certified the standard for final publication. It is now officially ready to use in Europe and elsewhere.

While ISSA 5000 certification is a big deal for the IAASB, we know that we are part of something bigger. We are at the advent of a new era of external reporting. Users will expect a broader range of information—financial and non-financial information—to assess corporate performance.

Today, policymakers, regulators, standard-setters, and a broad range of market participants together are creating the foundations of a new reporting ecosystem. Well-calibrated actions should help build a system that engenders trust, confidence, and well-functioning economies. In doing so, we can encourage a new generation of professionals to choose careers in reporting. We together can do our part to build more resilient, sustainable, and efficient economies.

We can take a few lessons from the world of financial reporting in terms of constructing this new sustainability reporting ecosystem. The most important is that a trusted reporting should be built on a foundation of:

• High-quality reporting standards,
• Complemented by robust assurance standards,
• Supported by ethical and independent requirements, and
• Overseen by empowered regulatory authorities.

In my mind, the public interest requires those components to:

• Enable global comparability,
• Encourage the development of a cadre of professionals capable of producing and assuring high quality reporting, and
• Be unapologetic in its commitment to quality, rigor, and ethics.

These are points that EU policymakers know well. These components are embedded in the Corporate Sustainability Reporting Directive (CSRD). When the IAASB initiated the work on ISSA 5000 two short years ago, we committed ourselves to supporting the EU’s leadership.

Make no mistake, the IAASB has created a global baseline that can work in every jurisdiction, in Europe and elsewhere. At the same time, we were particularly conscious of European timelines and requirements under CSRD. It was obvious to the IAASB that we can’t have a globally accepted standard without the European Union, considering its leadership position.

EU deadlines and IOSCO recommendations therefore served as a helpful prompt to complete our work in September of this year, three months faster than originally scheduled. We wanted to give practitioners as much time to prepare.

Timeliness, however, did not come at the expense of our due process and extensive engagement. We involved thousands of stakeholders in six continents through events like this one, our eight roundtables, bilateral meetings, and our exposure draft and comment process. Throughout the consultation and drafting periods, we worked closely with the European Commission, European securities regulators, the Committee of European Auditing Oversight Boards, and EU stakeholders in all sectors. Accountancy Europe deserves special thanks for helping to convene so many helpful discussions.

Willie Botha, the IAASB’s Technical Director, will describe the standard in more detail shortly. I did want to highlight a few elements that either were vital to European requirements or reflects themes we heard in Europe throughout the comment process.

• ISSA 5000 addressed both limited and reasonable assurance engagements. Before finalizing the requirements, we ensured differences in work effort for limited and reasonable assurance were clearer.
• We created an assurance framework that works with both traditional materiality and double materiality concepts and have included enhanced explanatory material to support practitioners.
• We highlighted the work required related to an entity’s materiality process.

In developing ISSA 5000, we were mindful of the practical challenges of implementation. For this reason, we adopted a no “greenfielding” strategy—we built off existing practices already embedded in our well-established and widely used assurance standards, ISAE 3000 and ISAE 3410. We also paid particular attention to scalability and proportionality throughout. This was because we know that there will be a diversity of practitioners for a wide range of engagements, and because we committed to ensuring that the standard is useable and does not create any unnecessary burdens.

Finally, we at the IAASB are committed to support implementation through the issuance of timely guidance. We will release a package of guidance, support videos, and wide range of outreach activities beginning in January 2025. Our focus will be issuing guidance that is concise, focused and pragmatic. We will also certainly depend on partnerships with bodies such as IFAC and Accountancy Europe to amplify these efforts.

So what is next? The hard work did not end with the standard’s approval. At the IAASB, we will support the adoption and implementation with significant energy and resources. As I just mentioned, we will provide a wide range of implementation support. We are also conscious that we need to give the market time to absorb ISSA 5000. We need a period of stability. Therefore, the emphasis will not be on the setting of new standards in the 5000-space. However, we as a Board stand ready to respond to market feedback if adjustments or guidance are necessary. We will be working closely with our advisory council, national standard-setters, and regulators to get this feedback.

We now call upon policymakers and practitioners to adopt ISSA 5000. We are pleased that the European Commission has asked the CEAOB to advise the Commission on how to incorporate ISSA 5000 into CSRD-related requirements. This commitment to a global baseline has and will serve as a catalyst for other jurisdictions to use ISSA 5000 as well.

Earlier, I said that ISSA 5000 addressed many of the elements in CSRD. At the same time, as a global standard, ISSA 5000 does not incorporate the specific requirements unique to Europe, such as the green and digital taxonomies. As the term global baseline implies, we anticipate jurisdictions to add on requirements to meet their regulatory mandates. Our expectation, as the European Commission’s letter to the CEAOB notes, is that “carve outs” should be avoided when they impact the performance of the engagement. We know that the reasonable assurance requirements in ISSA 5000 will not be part of the first-wave requirements for the European Union. That was anticipated in Europe and elsewhere. That is why we distinguished the limited and reasonable assurance requirements clearly.

Let me close by emphasizing the importance of collaboration and cooperation in the journey to develop ISSA 5000. The standard is a testament to the dedicated support and partnership we’ve received, including from organizations like Accountancy Europe, IFAC, and many that have contributed their expertise, insights, and feedback.

As we move forward, the IAASB will continue to engage with stakeholders across sectors, listen to market feedback, and provide the support needed for successful implementation.

Thank you once again for your trust, your collaboration, and your commitment to a future where transparency and integrity in reporting serve the public interest. We look forward to continuing this journey together, building a robust foundation for sustainable economies.

Good evening, esteemed guests and colleagues.

It is an immense pleasure to stand before you today at this distinguished gathering.

I would like to extend my deepest gratitude to the Accounting Professional & Ethical Standards Board and to Chair Nancy Milne very specially, for this very kind invitation to address you all. And I have had the privilege of counting on the unwavering commitment and dedication of my fellow IESBA Board member and dear friend Channa Wijesinghe, APESB CEO. I want to publicly recognize his highly valued contribution to the IESBA projects and strategy, thanking Nancy and the APESB Board and staff for all the support provided to Channa and to the IESBA.

As some of you may know, I come from Portugal, a relatively small European country on our globe but one with a rich heritage of exploration and discovery. Ferdinand Magellan, the first person to sail the Pacific and around the world, proving that the earth is round. Vasco da Gama, the first European to sail from Europe to India, enabling trade with the Far East, or Bartolomeu Dias, the first European to sail around the Cape of Good Hope, opening a sea route from Europe to Asia.

Well, I hear you say I’m in illustrious company, but I admit my wanderings have been far more modest in breaking new ground and changing the course of history. Before embarking on this new adventure with the IESBA in January 2022, I chaired the Portuguese Securities Commission (CMVM) for 5 years, and in total worked there for 13 years in different areas and roles. I was also a member of the Board of Supervisors of the European Securities and Markets Authority (ESMA), a member of the IOSCO Board, and vice-chair of the OECD Corporate Governance Committee.

Yet, while I have not found new lands or established new trade routes, I have seen clearly the spirit of my seafaring forebears who were driven by a passion and ambition to bring worlds together, to bridge divides, to mark land for fellow citizens in order to open their minds to the wonders of new frontiers, new knowledge, new possibilities, and yes, a better world. Like my illustrious mariner countrymen of centuries past, I strongly believe timidity has no place if we are to set sail in that spirit and towards that vision of a new world. To borrow from Magellan’s words, “The sea is dangerous and its storms terrible, but these obstacles have never been sufficient reason to remain ashore… unlike the mediocre, intrepid spirits seek victory over those things that seem impossible.”

It is with this ambition in mind that I made my way to the place where that conviction better translates into purpose, action, and impact – and that place is the IESBA.  

An Interconnected but Ethically Afflicted World

From the very different vantage points my wanderings have taken me, I have come to understand well the critical role played by markets and their agents in contributing, in a decisive way, to robust, resilient and dynamic economies, serving families, citizens, and ultimately, the society. From that intense experience, I have retained indelible conclusions:

• That market integrity, and the integrity of the work and actions of all its agents, is a vital condition for sustainable economic systems; and
• That in a deeply interconnected world, from technological, communications, economic and geopolitical perspectives, any isolated and fragmented frameworks and solutions will fail their objective of achieving strong and resilient responses to the different problems we need to address.

Unfortunately, from these vantage points, I have also seen too many high-profile adverse events in the financial sector, too many collapses, and too many cases of unethical behavior in accounting firms, both in my country and internationally. These events have had painful consequences in terms of individual investors sometimes losing all their lifetime savings, employees losing their jobs, and institutional investors losing confidence and departing markets which desperately needed their capital, causing direct harm to citizens and leaving governments with huge financial stability problems.

While all these events were different in many senses, there are two common and decisive factors I wish to highlight.

First, in one way or another, these events unveiled widespread and persistent unethical conduct or practices, revealing corporate culture failures in companies, accounting firms and other organizations.

And secondly, the events showed the ineffectiveness of individual reactions to individual cases, pointing to the imperative of integrated, though nimble, preventive responses.

The consequences of unethical behavior in business and financial markets, and by agents who are entrusted the mission to provide confidence in business and organizations, reverberate in waves – sometimes towering waves – throughout the system and society.

We must therefore recognize ethics as a structural and systemic element of financial resilience and economic performance, and agree on the need to expand the frontiers of possibilities for a more consistent, systematic and integrated approach to that objective.

The Response Requires Unity of Purpose and Action

This brings me to the question of how we might rescue businesses, companies and firms from its ethical afflictions.

All market relations are built upon information and trust. Market integrity is the result of the integrated ethics of all its agents and parts. All market agents have large responsibilities in ensuring that the information that supports market decisions and economic relations is trustworthy, and all actors are responsible for ensuring that they contribute to the integrity and reliability of the system that supports the whole functioning of economies and the society itself.

Professional accountants and accounting services are a crucial and very sensitive part of this system. Accountants’ social license to operate stems from the public expectation that they provide trust to the information and decisions of businesses, companies and clients.

Therefore, I would like to stress the power of a strategic alliance among all stakeholders, among us all, among the accountancy profession, regulators, governments, international organizations, investors, companies, the corporate governance community and others. We must have the boldness of vision and the intrepidity to venture beyond our comfortable and familiar shores to contribute in each of our roles and through leveraging the power of togetherness to uphold ethics and trust in accounting services, in the profession and in business.

Ethics must be the next frontier for us, because from the ethical afflictions we continue to witness in the business and financial world we live in, we know we must keep on making the journey towards a better place. And to chart this next frontier, we must have unity of vision, purpose and action, and importantly, trust in one another.

Navigating the World of Risks with an Ethical Compass

But how then do we navigate our journey forward together through this turbulent and uncertain world?

If I were to choose three words to define the times we are living in, they would be: change, promise and risk.

Change, and therefore promise and risk, is a condition for growth, progress and success in meeting the needs of an evolutive society.

Important triggers for change – and risks – in our space are challenging the accountancy environment and calling all stakeholders, including the IESBA, to respond firmly to these risks, serving the public interest and the economic development for the welfare of the people.

Ethics is an element of organizations’ risk profile, which may not be as front and center as legal conflicts, cyber risks or compliance risks, yet somehow runs through everything. In a world brimming with risks – from geopolitical tensions and societal shifts to environmental challenges – our ethical compass becomes not just a guide but a strategic imperative. As we confront these uncertainties, actions must reflect the integrity that defines an activity, a profession, an organization.

Given the potentially significant impacts of unethical culture and behaviors in organizations, including accounting firms, ethics must lie at the heart of organizational strategy and risk management. It prevents unforeseen consequences, fosters a strong culture and builds trust. At a time when younger generations seek purpose and impact in their work, ethical conduct becomes a beacon that attracts and retains talent – a promise they can hold on to build a better world – whereas pervasive ethical issues make them stay away or depart from certain organizations or professions. Organizational and professional reputation is built on trust, and just like a sturdy ship with fresh sails navigating the high seas, strong ethical foundations can help organizations to weather crises and uncertainty.

Organizations with a strong ethical culture and which choose to have ethics as a strategic asset for their growth and sustainability adapt better to rapidly evolving circumstances. Their agility stems from a foundation of integrity. They have built trust with their stakeholders and society. They have cultivated a culture of accountability and transparency. They have aligned their purpose and strategy with the public interest and the sustainable development goals. These are the qualities that make ethical organizations resilient and successful in the long run. And these are the qualities that IESBA strives to promote and support through our standards and guidance.

That is why IESBA's ethics and independence standards are more relevant than ever in this world of risk – where we witness continuing concerns about fraud, corruption, tax avoidance, disruptive technological developments, and pressing sustainability reporting requests and issues.

The awareness of emerging external risks, changes and challenges; the timely and humble identification of areas where we, as standard-setters, or the profession may have to adopt a different approach; and the efforts of us all to raise recognition of IESBA’s role in a coordinated way and to focus on the local implementation of our global standards are fundamental to the achievement of our common goals.

The Role of IESBA and Its Standards

IESBA is of course not a newcomer in sailing these choppy waters. Despite the dimension of the challenges, IESBA has over the past two decades strived to live up to its responsibilities as an independent global ethics standard setter in this ambitious project to bring ethics higher in the agenda in a world of change and risks. Let me outline a few of the ways in which we have recently brought the old world to join with the new, viewed through our ethical spyglass.

Technology, one of the main triggers for innovation, with both severe impacts and great opportunities for the profession, is one of the fields where we have recently done important work. We undertook two comprehensive research phases into key technologies such as AI, blockchain, robotic process automation and cloud computing, culminating two reports issued in December 2019 and November 2022. These led, firstly, to a comprehensive revision of the IESBA’s International Code of Ethics to respond to the transformative effects of major trends and developments in technology on the assurance, accounting and finance functions (these revisions in fact come into effect this December); and secondly, to the publication of a series of thought-leadership pieces and guidance materials, in collaboration with some national standard setters and professional accountancy organizations, on topics such as ethical leadership in an era of complexity and digital change, and AI. These standards and resources have never been more timely and relevant as the world witnesses explosive growth in generative AI applications.

Another area where we are bringing a new dimension of awareness and ethical responsibility is tax planning. In this regard, we just released last month the first global ethics standards on Tax Planning. Three years ago when this work started, there were many doubts and concerns about where this voyage would take us. Fear of the unknown was certainly in the air. Today, the ship has sailed and it is more than ever clear that ethics in tax planning is absolutely crucial to avoid pervasive cases of unethical tax planning and its very harmful impacts. In this regard, we have seen a metamorphosis in public attitudes to tax avoidance across jurisdictions. Tax planning is a subject with a high reputational risk for professional accountants, dramatically affecting the public trust in them.

A third area where we have been sailing on a voyage for over 18 months now is Sustainability. In December 2022, we launched our two projects, one with the mandate to develop ethics and independence standards for sustainability reporting and assurance, and the other to develop ethics standards addressing the use of experts. Our vision in this ambitious voyage is unabashedly bold – to provide not only the essential third pillar but also the foundation in the global standards infrastructure for corporate sustainability disclosures, alongside sustainability reporting and assurance standards. Last January, we reached a key port of call when we released the Exposure Drafts from those two sustainability-related projects, the consultation periods for which have recently closed.

However, what makes IESBA’s work in the sustainability field even more important in the public interest is that we are bridging the divide between two worlds that have, up until now, largely operated separately by developing profession-agnostic standards for sustainability assurance: joining the world of professional accountants and the world of conformity assessment bodies and other practitioners under the same new framework. For this, we recognize and thank the International Accreditation Forum (IAF) for its willingness and commitment to enter into a strategic partnership with IESBA, announced last February. This recognizes the reality of jurisdictions gradually allowing a broad church of sustainability assurance practitioners regardless of their backgrounds. Our partnership with IAF thus holds the promise of a new world of jointness and togetherness to serve the greater public interest, as opposed to the downsides of insularity and separation.

All these standards I have mentioned have the potential to make a difference. And I am sure they will, if we remain as ambitious and firm in our convictions as the issues addressed require us to be, refusing weaker solutions or any race to the bottom for the benefit of compromise. Our commitment as a Board is to serve the public interest. And this may be not achieved if we work for the agreement and wide adoption of yet modest standards.

Sailing on IESBA’s Next Voyage

As well-weathered as IESBA is, we are working to make IESBA thrive even more as a leading ethics standard-setter in times of unprecedented risks, putting ethics at the top of the business and corporate agenda. We have drawn three strategic axes on our map as we chart the path forward.

First, we are determined to maintain and enhance the IESBA Code not only as the global standard of behavior for the profession, but also as the strongest imperative for all those setting the scene at the top of accounting firms. This axis speaks to our recently launched workstream on accounting firm culture and governance. As we have seen in recent times, high-profile unethical behavior within accounting firms both abroad and here in Australia can damage public trust not only in the firms involved but also in the profession as a whole. The questions we seek to address are challenging and we are under no illusion that there are easy solutions. But we assert that boldness and determination are in our veins.

Our second axis will explore extending the impact of the IESBA Code beyond professional accountants to many others doing the same things that accountants do without being subject to the same standards. We will also explore what can be done for companies and those therein who design and manage the culture and governance of organizations. This will necessarily take aim at decision-makers at all management levels who must ensure ethical options and directions, setting the tone from the top. Further, we know that very often, part of the problems lies with other professionals, including consultants, technical experts, and lawyers, who opt to take the wrong direction, while the reputational risk and other consequences mostly fall over professional accountants. IESBA has already made concrete nautical progress in that direction with the development of proposed professional-agnostic standards for sustainability assurance.

And thirdly, it is not sufficient to map the navigational contours, intersections and turns of standards, but to lead discussions with policy makers, regulators, other standard-setters, the profession and other providers of similar services, and users of those services, about the importance of effective implementation and enforcement. Yes, one may say, we need both trained sailors on the galleon to sail it effectively and the cannons to give it the necessary affirmation and respectfulness. Without these essential supporting structures, the standards will remain a weak tool, and the advantages of international frameworks serving as a global and convergent baseline diminished. At the same time, we need to add effective communication and stakeholder engagement to the list of the top elements required to achieve the full potential of the standards. The world is today totally connected. The importance of communicating the message and the impact, purpose or result of a standard requires timely and high-quality education and communications.

Reaching Final Port

IESBA’s role and desired achievements take of course ambition and inspiration, but also awareness, attention, openness, timeliness and intense dialogue with all stakeholders. It takes us willingness to leave our comfortable shores. It takes focus on innovation and change, in a very wide sense.

The intensity of the request of the whole community regarding the importance of the essential nature and purpose of IESBA is clear: to bridge the gap between material and ethical worlds. They are completely interconnected, as we, at IESBA, have always believed, as we believe that the split between profit and ethics that the economic thinking and business practice has created is completely artificial. Rather than moving blindly, the only lucid way forward is to carefully choose and integrate all the positive elements of ethics and accounting and finance, to adjust to positive systems and economic models.

Creating, more than a proposition for value, real social and economic value.

This is what brought me to Australia in such a busy period. The intense and irreplaceable nature of the dialogue and interaction with all our stakeholders is much more than a part of our due process: it is the life insurance of our standards and ultimately, of IESBA’s relevance. Creating trusted relationships, accepting that we do not own the truth, listening, sharing, taking suggestions and concerns on board for reflection, even if never prescinding of our core values and convictions, understanding the others’ concerns, objectives, and views, making the best from the natural tensions that will always arise from different perspectives – these are crucial tenets onto which we hold dear at IESBA.

Let me finish by thanking you all in advance for joining IESBA in this great adventure of sailing the seas – no, setting global and leading ethics standards – in the age of consciousness but also of insane threats to our goal: to make a better world for the people.

I’m Gabriela Figueiredo Dias, Chair of IESBA. It is an honor to join you today in my first address to IFAC’s Council.

My first 10 months with the IESBA have been very busy. 

But I would like to begin by stressing, on behalf of the entire Board, how seriously we take our responsibility to protect and advance the global accountancy profession’s Code of Ethics.

We see the IESBA’s ethics and independence standards as one of the greatest assets of the profession, one that makes the profession unique, and the framework that ties professional accountants to always act in the public interest.

Ethics has a crucial importance to the profession. Actually, the IESBA Code underpins the profession’s reputation. Your reputation.

It is the basis for trust in all that the profession does. And “You only have trust once.”

Let me therefore assure you that we understand the full importance and impact of our decisions as the global ethics standard setter.

The key question then is – How do we intend to handle this asset?

Well, some will say the priority is to protect it, to defend it.

That is valid of course.

Others, however, will say that an asset like this should continue to be nurtured, to grow, adapt and evolve in the changing and dynamic world we live in.

For me, the answer is both. A balanced approach. A purposeful one, focused on making a positive impact in the society.

Why? Ethics is a behavioral construct for professional accountants in service of businesses and the wider society. But businesses and societal expectations evolve.

Therefore, so must the IESBA Code.

At the same time, the Code has proven itself in many ways – so, we must retain its operability and durability.

As a former securities markets regulator, concerned about investor protection, I am aware of the importance of an ethical culture and leadership and of high-quality corporate information prepared and assured in accordance with the strongest ethics standards.

Given all this, what is critical as we move ahead in ethics standard setting?

I believe we must anchor to a clear vision.

That vision must speak to the heart of the profession, the expectations of stakeholders, and to the dynamics of today as well as tomorrow. The vision must revolve around reinforcing…re-igniting …trust

What does it take to be “recognized and accepted as the ‘linchpin to public trust”?

I see three critical drivers:

Critical Driver One: an unwavering focus on the areas of greatest opportunity, or threat, and a commitment to act with agility and impact.

Right now, that opportunity is sustainability.

The international regulatory community has recognized the IESBA’s critical role in the future of sustainability standard setting.

In September, IOSCO and the FSB have publicly recognized the IESBA’s critical role in the future of sustainability standard setting, urging us to develop profession-agnostic sustainability ethics standards to complete the infrastructure needed for transparent, relevant, and trustworthy sustainability reporting.

There is actually global appreciation that the IESBA Code sets the high ethical bar needed to underpin confidence in corporate information. Based on that experience and demonstrated relevance, the IESBA is particularly well positioned to also set the ethics standards needed to support trust in sustainability information.

We are conscious of the urgency of an integrated approach to sustainability, where all professionals, sectors and organizations play a role.

Therefore, we have committed publicly to developing timely, fit-for-purpose ethics and independence standards for sustainability reporting and assurance, usable by any provider, in coordination with the International Sustainability Standards Board (ISSB) and, of course, our close friends at the IAASB.

The world is aligning… Ethics is being recognized as an equal pillar and an enveloping element of the infrastructure, besides reporting and assurance standards.

Critical Driver Two: a commitment to foster a community of active stakeholders, both inside and outside of the accountancy profession.

Our relevance and the impact of our outputs depend on the diversity of our stakeholders, on the intensity of our outreach to them, and on our openness to address their needs and their inputs.

As an example, coordinating with the IAASB and the ISSB, and engaging with national standard setters, jurisdictional bodies, and others, is for us an essential instrument of work and progress.

Doing with the others, and not in spite of them, is our motto and our safeguard against irrelevance.

Finally,

Critical Driver Number Three: Relentless agility and prioritization.

Prioritization in delivering on our promises and ensuring quality.

Prioritization in observing trends, changes and transformation, incorporating it in our reflections and work, and being agile in doing the necessary adjustments.

And prioritization in the transformation of the Board as it implements the Monitoring Group recommendations. 

With all this in mind, if you are asking… how can we help?

I will tell you how:

Please prioritize the adoption and implementation of the IESBA Code in your own jurisdictions, including the future sustainability ethics standards.

IFAC has been a great partner in adoption and implementation support. I have seen this firsthand during my first year here, and I applaud Kevin and his team.

Please also continue to help us communicate the relevance and importance of ethics in the accountancy profession, and walk the talk.

Continue to promote and engage with us on our exposure drafts and other dialogue opportunities.

What you do with this great asset, the IESBA’s global ethics standards, and how you advance it in your own communities, matters for the IESBA’s ethics standards to be the linchpin of public trust.

My full report is in your material, it is rich with details. I welcome any comments or questions while we are together in Mumbai.

Distinguished guests, esteemed fellow panelists,

I am truly honored to have the opportunity to give this address at the WFE’s Annual Meeting in Malta, one of the jewels of the Mediterranean.

I am here with my hat of Chair of the International Ethics Standards Board for Accountants – IESBA – that I am proud to wear since I was appointed in January this year.

Let me briefly introduce you to the IESBA and demonstrate what may not be obvious: that it makes all the sense to be here today speaking at the WFE Congress about sustainability from the perspective of a standard setter for professional accountants for an audience of stock exchanges’ representatives.

About the IESBA and the IESBA Code

The IESBA is an independent global standard-setting board at the forefront of ethics standard-setting for professional accountants. Its Code of Ethics provides a robust, comprehensive and dynamic set of ethics standards, including auditor independence requirements, aiming at a consistent alignment of values and approaches with respect to the preparation and assurance of corporate reporting.

The IESBA Code of Ethics, which has been adopted in over 120 jurisdictions, and translated into about 40 languages, is the ethical “north star” for professional accountants globally. Underpinned by five fundamental principles - integrity, objectivity, professional competence and due care, confidentiality, and professional behavior -, the IESBA Code of Ethics plays an important role regarding accountants’ conduct, guiding them on how to ethically approach their day-to-day work, be it the rigor of their analyses, the inquiring mind they apply or their duty to challenge the information and explanations provided by management.

Crucially, the Code guides accountants when they face delicate ethical decisions in preparing or assuring corporate reporting. Balancing the professional duty of confidentiality versus their public interest duty to report suspected illegal acts by the company or the client; the perplexities faced in providing tax planning services against the public interest dimension of companies and clients paying their tax dues; dealing with pressures to sign or confirm the conformity of a financial or nonfinancial report that doesn’t reflect the fundamental reality of the company; or the independence dilemmas and conflicts of interest that auditors are so often confronted with, namely in providing non-assurance services to audit clients, are just a few examples of ethical questions faced when performing corporate reporting.

Corporate Information, Capital Markets and Stock Exchanges

Before having been appointed as IESBA’s Chair, I served as Chair of the Portuguese Securities Commission, CMVM, and as a member of the IOSCO Board. I am therefore aware of the capital markets’ needs and conscious of the close links between high-quality, ethically prepared and presented corporate information, supported by robust standards, and well-functioning capital markets.

An efficient market is a market that is able to bring together buyers and sellers of financial instruments.

Stock exchanges and trading platforms, in turn, provide the meeting point and trading opportunities to those companies looking for funding and investors looking for companies to invest their money.

The link between the IESBA and the stock exchanges’ mission and purpose is therefore very clear: both aim at providing an appropriate framework and infrastructure for responsible and informed investment decisions, grounded on solid and reliable corporate information, prepared and assured against the strongest ethics standards in support to the efficient functioning of businesses, financial markets, economic development and social wellbeing.

The Essential Role of Ethics to Public Trust and a More Sustainable World

Over the last two decades, we have witnessed an unfortunate number of corporate scandals and collapses. Beyond their direct and severe impact on the viability of the companies, these events have had dramatic impacts on investors, workers, customers, the supply and credit chains, and the broader economic and social ecosystem. They have eroded the incentive of investors to fund public companies and the appetite of companies to go to the market, frustrating the goal of sound functioning of corporations, financial markets, and the whole economic system.

The dramatic global decrease of IPOs that stock exchanges have been painfully observing and the increasing number of delisting decisions in the last 15 years reflect that erosion of companies’ and investors’ trust in the market, with severe consequences for economic dynamics, value creation and value distribution, and financial stability.

Looking back, we easily conclude that most, if not all these events involved unethical behavior by those acting within or on behalf of a corporation, where false or inappropriate accounting and reporting played an important role.

Many reasons have been identified as being causal to these scandals and collapses. The most frequent situations refer to widespread and persistent inadequate corporate practices and conduct. But, at the end of the day, all the cases reveal ethics and corporate culture failures as a root cause, from poor risk management and short-termism all the way to pure fraud.

It is, therefore, crucial to restore trust and set up the right incentives for capital markets to work well and be fit for purpose to provide companies and families with an alternative or complementary source of funding. It is imperative to advance an urgent process of changing business cultures towards more ethical, values-based, and sustainable models, preventing negative impacts on the integrity of the economic system and the social balance.

Professional Accountants and Corporate Culture

Accounting and corporate reporting, as well as audit and assurance to which they are subject, are the most essential pillars of stakeholders’ trust in companies. It is what allows them to see and understand how financially healthy a company is, how sustainable it performs, and how likely it will generate quality

or customers, returns for creditors and investors, profits for shareholders, and value for the economy and the citizens.

Professional accountants play a critical role in changing the corporate culture, avoiding reputational issues, and restoring trust.

Likewise, ethics standard setters contribute decisively to those goals by setting up a standard-setting approach focused on the conduct, behavior, and culture of accountants and of the companies in which they work or to which they provide services. This represents the greater contribution from international standard setters to economic growth, social balance, and value creation.

The call for companies to adopt ethical behaviors and sustainable business models has increased dramatically, became irrefutable. The rapid and pervasive growth of sustainability goals, framed by the United Nations Sustainable Development Goals (SDG), has been pushing this trend.

More widely, though, there is increasing scrutiny by stakeholders regarding non-sustainable management approaches: self-interested management, biased and short-term-focused results, corruption, bribery, and fraud in the business and financial sector are growingly subject to strong criticism. The community became more aware of the high costs of wrongdoing in the corporate sector, for the individual citizen, and the entire economic system.

The Role of the IESBA in Sustainability Reporting and Assurance

In response to this call, financial markets have seen accelerated growth in the disclosure of sustainability information – including environmental, social and governance matters. As this information is progressively used in investors’ capital allocation decisions, as well as other decisions by customers, workers, government agencies and other stakeholders, it is important that it is as reliable as financial information, so that there can be justifiable public confidence in what is reported.

The UN Sustainable Exchanges Initiative, aiming at integrating the positive action of all the responsible regulators, standard setters, professionals and market players in advancing the sustainable finance project, is a paradigm of how necessary it is that the financial ecosystem works consistently in favor of citizens and the planet.

Accountancy is a critical element of this ecosystem, playing a major role in sustainability reporting  as the bedrock of informed sustainability investment decisions . That is why it is so important that it is guided by the ethical guardrails of the IESBA Code in preparing, presenting, and assuring financial information and helping fight greenwashing.

In this regard, the international regulatory community has recognized the IESBA’s key role in developing those standards. Specifically, in June 22 the Financial Stability Board acknowledged the IESBA as the appropriate standard setter for the development of the ethics standards necessary to create an infrastructure for sustainability reporting and assurance; two weeks ago, IOSCO issued a statement welcoming the IESBA’s plans to develop global assurance, ethics and independence standards that are profession-agnostic and can support assurance of sustainability-related information irrespective of who is performing it.

IESBA’s Sustainability Project Plan

The IESBA is actually resolvedly responding to these developments. It has committed to develop timely, fit-for-purpose ethics and independence standards for sustainability reporting and assurance, in close coordination with those of the International Sustainability Standards Board (ISSB) and the IAASB.

A strategic matter that the IESBA is intensely considering is how best to respond to the call for profession-agnostic standards with respect to sustainability assurance.

In fact, in some major jurisdictions, such as the EU under its Corporate Sustainability Reporting Directive, or in the US, the market for sustainability assurance has now been or is being open to all assurance providers, allowing sustainability assurance to be provided by an audit firm or any other entity.

Establishing a level playing field in this regard is a crucial matter of the public interest. Without it, there is a clear danger that markets will pivot to lower-cost but lower-quality providers, potentially harming investors and other stakeholders, and ultimately undermining public trust in sustainability assurance. It is in the public interest that all assurance providers, whether or not from the accountancy profession, be subject to the same high bar of ethical behavior and independence.

While it is for regulators to decide who must comply with the IESBA’s standards and enforce those standards, the IESBA is ready to make available high-quality ethics and independence standards that are usable by any assurance providers.

The IESBA has set a December 2022 target to approve a project plan addressing sustainability reporting and assurance. In the meantime, IESBA will soon issue a  greenwashing” staff document to provide guidance to professional accountants in navigating ethics situations or challenges that might give rise to greenwashing 

Closing

In closing, there is a unique window of opportunity to put in place a robust, sound and globally interoperable standards infrastructure to support trustworthy sustainability reporting and assurance and hence, the wider project of the business and financial sectors funding the transition.

While the IESBA will be proactively engaging will all key stakeholders in this process, I invite all other players in the ecosystem, including WFE members, to keep on playing their parts and recognize the crucial importance of global ethics standards for sustainability reporting and assurance and the seamless functioning of sustainable stock exchanges and markets.

Introduction

Ladies and Gentlemen, dear Colleagues.

I am very happy to address the “Audit and Assurance” Conference today and I want to thank you for the kind invitation.  Congratulations to the Organizers and especially Elias Basioudis for putting together yet another successful conference.

The International Ethics Standards Board for Accountants (IESBA) has been working very hard over the last years on a series of projects that have led to considerable changes to the International Code of Ethics, including the International Independence Standards. A comprehensive restructuring of the Code which we delivered in 2018, included a much strengthened conceptual framework; new standards such as NOCLAR, Provisions on Inducements, on Safeguards, on Long Association and on the Role and Mindset of professional accountants, have been added at the time of the Restructuring and since then, are examples of the projects that have cumulatively produced a large qualitative upgrading of the Code.

This major upgrading has pushed forward the central ambition of our strategy and workplan 2019-2023. It continues with other projects today. Among its goals has been the need to maintain and expand the relevance of the Code, its responsiveness to the evolving conceptions of the global public interest and to the needs of users of financial statements.  Being aware of expectations about the contributions and responsibilities of auditors and other professional accountants and new technological realities that are changing fundamental parameters of professional practice has also been on our active agenda.

A central and most prominent feature of the International Code is of course the part dealing with Independence for audits and reviews which is itself based on the Code’s fundamental principles and the Conceptual framework for compliance with the Code. The importance of independence needs no special explanation in this audience.  Suffice it to say that auditor Independence is the linchpin of credibility. It is the overall defining feature of a trustworthy external examination system of financial reporting presented by private or public entities that are seeking to raise capital and engage with a variety of stakeholders in our market economies.

Although a non-accountant, I know as an economist that informational asymmetry is a fact of corporate life, market competition and of entrepreneurial secrecy. It is a continuous challenge to capital market investors who are always thirsting for new, accurate and decipherable information. It can never be eliminated because of the importance of entrepreneurial and commercial pursuit of strategic advantage. But it can be mitigated by independent and credible examination of financial statements and other corporate disclosures. 

The realities of corporate life and the pressures of the asymmetry of information have led to the evolution of a whole eco-system of professionals who make it their task to opine on companies’ condition, credibility and prospects, based on public or semi-public information, analysis and forecasting. Analysts, credit raters, financial press reporters, investment advisors, internet gurus and so on. Ethical issues exist and ethical requirements should be articulated for all of them, because they all play a role and bear responsibility for shaping opinions, expectations and decisions of others.

Within that eco-system the role of the auditor is special and also special are therefore the attendant ethical requirements. The value of transparency really depends on the quality and trustworthiness of the materials being disclosed. The auditor’s role is expected to function as a major safeguard of that quality and trustworthiness, which after all forms the basis of all analysis and forecasting. Hence the centrality of the ethical requirements on auditor independence, as articulated in the International Code of Ethics.

Having said all that, with which many of you are familiar, I can now tell what my focus will be  today: the most recent major revisions of Independence provisions that the  IESBA just completed last quarter, have been  approved by our Oversight Board and have been published with an effective date of December 15 2022. These revisions address a pivotal issue regarding Independence: Limits, conditions and prohibitions on the provision of non-assurance services (NAS) to audit clients; principles for the transparency and the distinct separation of fees charged for audit and non-audit services and restrictions directed to limitation or elimination of fee-dependence of the auditor on a single client. All this is viewed by the new standards through the lens of impact upon independence in fact and independence in appearance.

From the perspective of global standard-setting these new provisions are path-breaking in several ways. Their greatest probable advantage is that they are future-focused and farsighted, as I will explain.

I will structure my remarks today as follows:

I will speak briefly about the genesis of these projects, including stakeholder needs and perceptions. Then, I will move to a description of the objectives, including the pursuit of a combined effect of provisions on both NAS and Fees, landing at market simultaneously.  I will proceed with the key features of these provisions, showing the “IESBA SOLUTION”, i.e. the way in which IESBA chose to deal with principle-based requirements suitable for present and future global application.

I will end with a few concluding remarks about ongoing IESBA projects that relate with the application of our new NAS and Fees provisions and look to solidify the resilience of their benefits. It is my hope that you will be able to assess the comprehensive impact that will arise from these major changes.

The Genesis of the Projects 

Concerns among stakeholders, especially from the regulatory and investor communities have been lingering for some time about the impact of NAS provision to audit clients on auditor independence.

The IESBA itself, when it was completing a review of its “safeguards” provisions and the related issues about how to identify, evaluate and manage threats to independence, came to an important conclusion that was reflected in the Code back in 2018:  there were situations in which no safeguards could be applied to reduce threats to an acceptable level.

The extant Code does include prohibitions on the provision of NAS, in many cases subject to a materiality threshold which required the judgment of the auditor/audit firm. The safeguards project also had upgraded the importance of the use of a “Reasonable and Informed Third Party” test which implied that outsiders’ perceptions about independence in fact and appearance had to be considered in auditor judgments. All these previous steps of Code amendment facilitated and smoothed the way to the present bolder steps.

In broader terms, I must also note that the occurrence of corporate failures and the pressures of persistent crises led many to question whether independence could be maintained when NAS were becoming both a significant source of revenue to audit firms and an important and growing expenditure of corporate Boards. The deeper issue has been one of possible distortion of incentives, or, in the language of the Code, emergence of serious threats to independence: could a firm conduct an independent audit when the provision of NAS to the audit client was becoming a serious business relationship that could influence auditor judgments and objectivity? Were there potential situations when this distortion could not simply be corrected by safeguards? And was not this a matter that involved both the nature of NAS provided and the fees generated by the provision of NAS for the audit firm?

Confronted with these questions the IESBA, after internal deliberation, proceeded to extensive stakeholder outreach on the basis of a paper issued in May 2018 and titled “Non-assurance Services: Exploring Issues to Determine a Way Forward”. We also commissioned a review of academic papers relating to the importance and possible impact of fees on market perceptions about auditor independence.

The IESBA also studied, as a matter of course, the steps that some advanced national jurisdictions had taken in the direction of reinforcing independence.  It was noted that “black lists” of prohibited NAS or “white lists” of allowed NAS to be provided to audit clients had made their appearance in national regulations. It was noted that fee disclosures and caps on types of fees were also used as an indirect constraint of the provision of NAS to audit clients. These national experiences clearly furnished a guidepost to the deliberations of the Ethics Board as to the direction of travel. Audit Firms themselves, sensitive to perceptions and regulatory pressure, had also been taking steps to reduce in fact and appearance the mixing of audit and non-audit services by instituting various forms of separating walls among their various business lines. Thus, both overwhelming evidence and wide perceptions pointed to the need for the global standard-setter to step in. And step in we did with the two simultaneous projects:  NAS & Fees.

The Objectives 

The overarching objective of the projects has been  to strengthen the IIS by addressing public interest concerns about the perceived lack of independence when firms provide NAS to their audit clients and in certain fee-related situations.

The parallel supplementary objective, common to all Code provisions, is that the standards have to be applicable and operable globally, not being fashioned, in other words, for a few select jurisdictions. By and large this “applicability” objective implies the advancement of principles-based provisions which allow the possibility of supplementary provisions to meet local needs.

More specifically now, the work, consultations and deliberations that were done in order to execute these projects looked for conditions, limits, and prohibitions of the provision of NAS to audit clients; they also looked to mandating transparency of related fees paid by the audit client for both audit services and NAS, and to possible threats to independence that fee correlation between the two categories or fee dependency may give rise to.

It was clear in the specification of project objectives that the new independence provisions would be differentiated, depending on whether the client entity is a public interest entity (PIE) or not; this choice rests on the premise that, by definition, independence requirements need to be more stringent for PIEs, as their financial condition is much more relevant to a broad set of stakeholders and has higher potential impact on the public interest. This critical distinction between PIEs and non-PIEs already exists in the Code anyway, and provides an important and socially meaningful tool for scalability of requirements and provisions. It would be disproportional if SMEs and SMPs were, for example, subjected to strictures as severe as for large and more complex entities.

 Key Features: the IESBA Solution -  NAS

Let me offer a brief description of the “IESBA Solution” to all these queries and concerns. I will stay on key provisions and will discuss their broad significance. For those who would like to see the complete set of provisions for NAS and Fees, let me urge that you visit our webpage (ethicsboard.org) for a full review, details, responses to consultation commentary and justification of IESBA’s specific choices of standard architecture. 

As many of you know, one of the structural elements on which the Code of Ethics is premised is the list of five fundamental principles followed by a conceptual framework that specifies threats to compliance and how to address them. The five threats are worth repeating here: Self-interest, Self-review, Advocacy, Familiarity, Intimidation. All of them may affect independence in various circumstances. And all, or most, of them become entwined with the provision of NAS and the payment by the audit client of fees for services offered by audit firms. 

When we examine the black lists in jurisdictions that have regulated this matter we find a common – and powerful – denominator in the prohibited NAS:  the distinct possibility that their provision creates a Self-Review threat. Self-review means of course reviewing in the course of an audit your own previous work; and this is the most evident and most damaging circumstance to both the substance and the appearance of independence. If you think about it for a moment, reviewing your own work signals the elimination of any critical perspective or skepticism, it undermines independence or even leads to its complete disappearance. I would add upon reflection that of all threats the S-R threat is by far the most damaging both in fact and in perception.

So the IESBA’s global solution has not been yet another black list. It has gone to the heart of the issue and has mandated a prohibition of any service that might give rise to self-review. This is a novel approach both in the Code and in relation to various national regulatory regimes.

Let me note here that the new standard is efficient, stringent and objective. It is efficient because with one principles-based prohibition it in fact prevents the provision of a whole set of NAS to audit clients. It is stringent because it eliminates not simply all NAS that give rise to a SRT but all NAS that might give rise to a SRT, i.e not just the fact but even the mere possibility of a SRT occurring. It is objective because, as specified in the revision, the prohibition does not depend on a materiality threshold.  So it is not a matter of judgment whether the prohibition will bite or not. It will bite for PIEs.

But besides being efficient, stringent and objective the prohibition based on the SRT has one more powerful advantage: it covers possible future services, especially embedding new technologies that may present new forms and opportunities for the SR threat to surface. In our world of technology-driven innovation this is an advantage as compared to lists of presently defined and known NAS. In short the SRT prohibition is farsighted and future-proof.

The centerpiece prohibition of services that might give rise to a SRT is complemented by a series of other provisions that enhance independence. For one, the new standards elevate very significantly the role of those charged with Governance within the client entity. They have to concur to the provision of any NAS and they approve the fees, as well. Communication of the auditor with TCWG is an important feature we have included because it empowers these parties to play a very significant role in the process, to express an opinion on the question of independence and to act on this opinion.  This too is a significant novelty in this group of standards.

By virtue of the Code’s “related entity” provision, the SRT prohibition of NAS extends to cover related entities of the PIE client. For a listed client in particular, this will include related entities under direct or indirect control of the listed entity, its parent entity as well as its sister entities. A noteworthy supplement to the standard is that the provision of NAS not otherwise subject to the SRT prohibition to certain members of the PIE’s corporate family, especially the parent entity, must also be disclosed to TCWG of the PIE by the audit firm so that they take these into account when assessing independence and concurring with (or rejecting) the provision of the NAS.

These core provisions prohibiting the S-R threat apply to PIEs, as I already explained. In the case of other entities, non-PIEs, the provisions are scaled down but still involve a strengthening of evaluation and review of the S-R threat and the application of appropriate safeguards by the auditor.  So, I would say that, on the whole, the new standard represents a general clarification and enhancement of independence requirements with respect to the S-R threat. Mind you, this does not mean that other threats are disregarded or omitted. There is ample consideration, requirements or application material for the management and reduction of other threats. I would single out IESBA’s focus on the advocacy threat to independence which is frequently closely related to the S-R threat and which can also   undermine independence. The new standard places serious limitations on provision of NAS such as legal services or tax-planning services, for example, precisely in order to prevent the erosion of confidence in the auditor’s ability to exercise skepticism and independent judgement.

 Key Features: the IESBA Solution -  FEES 

Let me now turn to the new provisions on Fees. The Board and the extant Code recognize the wide acceptance and practice of the audit client payer model. We also however recognize that the payment of fees on the basis of that model may give rise to considerable threats to independence, especially the self-interest threat and the intimidation threat. It has been therefore a clear project objective of the Fees project to raise the awareness of audit firms on these threats as risks to independence and to put together provisions reducing those threats to an acceptable level or eliminating them altogether.  Again, as in the case of NAS provisions, the execution of this project acknowledged and followed the distinction between PIEs and non-PIEs for the same reasons of proportionality and scalability that I explained earlier.

Approaching the question of Fees, the Board stayed away from any attempt to determine what the proper level of fees should be. The Code acknowledges that this is in the domain of business decisions and depends on a variety of real-life business factors. However, the new provisions flagged several important elements of principle. First, that the audit fee should be sufficient for fulfilling the needs of competence and quality of the audit services. Second, that the audit fee should be determined on a stand-alone basis and not be connected or correlated to fees paid for non-audit services. Third, the Board also flagged that very high or very low fees might affect adversely perceptions of independence or quality.

A very significant factor in ensuring that these conditions are met has been recognized explicitly by the Board: the corporate governance of PIEs. TCWG, such as audit committees, who make decisions about audit and non-audit services must be fully informed on the determination of fees and services involved, on the basis of the requirements and strictures of the Code that I mentioned above. As in the case of NAS provisions, the explicit recognition, elevation and empowerment of TCWG in the assessment and enhancement of independence has also been enacted in the Fees provisions.

But beyond elevating the role of TCWG, the new provisions go further: they mandate transparency via the public disclosure of fees paid by the client to the audit (network) firm separately and distinctly for the audit and the non-audit services provided. We firmly believe in the power of transparency which enables market participants to make comparisons and draw their own conclusions about the trustworthiness of external examinations, audits, reviews and assurance.

I would note in this connection – as some may ask the question – that the IESBA has considered at length the specification of a “fee-cap” as some jurisdictions have chosen to do in order to limit the relative size of fees for non-audit versus audit services. We have concluded that this is only an indirect constraint on the provision of NAS to audit clients that may simply be redundant when the Code has already included direct constraints by the prohibition of S-R threats. We have also chosen not to grapple with specific numbers and percentages, given that the International Code is principles-based, and should be fit for application in a variety of jurisdictions. The empirical evidence of fee-cap regulations across some advanced jurisdictions does not indicate some sort of “central” or “equilibrium” value of the percentage limitation itself. Furthermore, the Board has also been aware of evidence that the clear disclosure of fees by category of service – audit and non-audit – has created strong incentives towards the reduction of the magnitude of non-audit fees. Thus, we concluded that the fee cap was neither appropriate nor necessary in a principles-based International Code.

A last feature of the Fees provisions is very important to mention here, as it relates to “fee dependency”.  This is a condition that is already described in the extant Code and relates to situations where an auditor or an audit firm operates with a high concentration of business with and revenue from one audit client. This is a situation where “self-interest” and “intimidation” threats come to play. The new provisions seek to banish fee dependency by flagging that in the case of PIEs the appearance of revenue concentration to over 15 percent from single client must lead to corrective measures. These include, undertaking measures to reduce the concentration, public disclosure of the fee dependence if it is for two consecutive years and final disengagement from the audit client if the concentration persists for more than five years. In the case of non-PIEs again, as with NAS provisions, the Code prescribes a less stringent but still enhanced use of additional safeguards.

Ongoing Complementary IESBA Projects 

I would be remiss in my responsibility to inform this audience as fully as possible on IESBA’s work, if I did not mention two ongoing projects that will have a bearing on how the NAS and Fees provisions are applied around the world.  Two ongoing projects of IESBA are of direct relevance: the work on revising the definition of PIE in the Code, and the work on enriching and adjusting the Code with insights from our Technology project that looks very carefully into ethical implications of disruptive technological innovations that surround us.

Let me first turn to the work we are doing to revise the definition of PIE. In the extant Code this definition basically includes “listed firms” and whatever local laws and regulations specify in additional categories. This extant specification encompasses by construction a lot of variety, as local circumstances and idiosyncratic factors matter a lot in which entities would be characterized as PIEs by local authorities. This variation is of course acknowledged in the ongoing work for revision of the definition, but it also sought to specify some steering indications of what features PIEs should have so that local decisions are brought into greater global consistency.

Thus, the “PIE” project (on which we have issued an exposure draft) states an overarching objective which is the focus on the financial condition of entities that has a higher impact on the public interest. Based on that our current proposal contains listed firms and several categories of financial intermediaries; and beyond that lists factors that should be considered for local/national definitions. This is ongoing work of course and we are just receiving consultation responses, so I will not expand on this any further. I will only point out that this project is closely coordinated with the IAASB since inception, so that we can work towards a common definition. And also point out that in this case as in NAS and Fees, the Code openly promotes engagement with local authorities by suggesting factors to be considered, asking that those local authorities refine the Code’s categories by size thresholds, for example, and creating pressure for more consistency in an area where national divergences are wide. The revised definition of PIE will notably affect the implementation of NAS and Fees provisions, as it will move  the boundary between PIEs and non-PIEs.

Lastly, a few words about our technology initiatives and their relation to NAS and Fees. Our technology initiatives are looking broadly on the impact of innovations on ethical standards and ethical behavior. The first item I would like to note is that a comprehensive review of the Code’s fundamental principles, taking into account current technological inroads via algorithms, AI tools and related innovations has convinced us that the Code’s fundamental principles are solid, comprehensive and clear in their coverage of new services and new configurations of technologically-supported human practice and human judgment. Specifically in the case of NAS and Fees, we therefore plan to undertake the composition of helpful non-authoritative guidance, for the usability of the new NAS and fees provisions in a context of dense technological applications. In addition, we are actively looking to develop additional application material that would refresh guidance – as cases and examples – that would better illustrate the resolution of ethical dilemmas in the new tech environment. Finally, issues such as complexity, accountability and embedded bias, are now and will remain important in the ethical enhancement of practice and the protection of independence in our menu of future undertakings.

Concluding Remarks

A few concluding remarks centered on the global application and use of the Code now and in the future.

First of all, and as I have already stated repeatedly in previous remarks, a principle-based Ethics Code with clear guidance for application continues to be the best option for globally consistent application of ethical precepts and requirements.

Secondly, Code pronouncements must be comprehensive and remain relevant not only in the context of new technologies but also in another context: the pressing needs for more informative and more standardized non-financial reporting, which will require an extension of the system of external examination in the form of audits, reviews and assurance.

Thirdly, and equally important: advancements in ethical codes – analogous to the International Code of Ethics for professional Accountants  - across the entire eco-system of corporate professions, both within and around corporate organizations. I remain a very strong proponent of a generalized elevation of ethical standards of behavior across the actors who move and energize the economy. The International Code furnishes a very good example.

That is why I also would encourage all of you to reflect about expanding the name of your excellent conference series to “Audit, Assurance and Ethics”!

Thank you very much.

Madame Minister of Finance, Mr. President of the Association of National Accountants of Nigeria, esteemed representatives and colleagues, ladies and gentlemen.

It is a pleasure and a privilege to address you today at this ANAN-PAFA-IFAC conference. I congratulate the organizers and thank the hosts for holding this very timely and useful event.

The fight against illicit behavior and corrupt practice is a worldwide undertaking pursued by international organizations, public and private sector entities, civil society and organized professions.

Accountants around the world are very important - I would say central - actors at the very heart of economic decisions, transactions and strategies. They can therefore play an enormous role in combatting all aspects of illegality and noncompliance with laws and regulations, and in freeing economies from the burdens caused by malfeasance. 

The International Code of Ethics for Professional Accountants is a valuable instrument in that combat. It also is one of the most explicit and broadly accepted Ethical Codes in the world, recognized also by other international professions.

We at IESBA are working to maintain, enhance and promote The International Code of Ethics for Professional Accountants (including international independence standards). The Code is, as I said, a powerful instrument at the disposal of the global accounting profession.

Promotion of faithful adherence to ethical behavior builds up a solid barrier against corrupt practice. Implementation of the Code’s provisions fortifies the international profession in resisting and  battling corruption.

The Fundamental Principles of the Code - integrity, objectivity, due care and competence, professional behavior – provide a comprehensive armory in opposition both to corrupt intent and to illicit practice.

The body of the provisions of the Code strongly encourages PAs to respond to illicit behaviors and corruption when they encounter them in the course of their duties. My colleague, Saadiya Adam, will expand on this theme and the Code’s more specific provisions in her presentation to follow.

We are going through a difficult time because of the Covid pandemic and its dire health and economic consequences in all countries. We are witnessing universal efforts by governments around the world to boost the resilience of economies and societies as they are faced with this calamity.

In this environment of pandemic, as in any crisis, it is unfortunate but true that opportunities and incentives for corruption, illicit, unethical practices are heightened. For example, many organizations, including governments, corporations and accounting firms had to pivot to virtual platforms very quickly, among other adjustments. This may have exposed their IT systems and infrastructures to more sophisticated corruption activities including cybercrime.

Besides this, as many companies have to face unexpected and difficult financial challenges and as they seek government support, accountants offering their services in those activities must be very alert, diligent and vigilant that these arrangements are carried out within laws, regulations and the duty of due care.

In response to all these heightened risks, IESBA has formed a CV-19 working group with a mandate to provide guidance to accountants on compliance with Code provisions in the current difficult circumstances. We have reached out for collaborations in this task and the results have already appeared.

Let me mention for example two very recent and relevant staff publications that have been circulated by IESBA in collaboration with other stakeholder organizations:

1. Issued jointly by the Staffs of the South African Independent Regulatory Board for Auditors, (IRBA) the International Ethics Standards Board for Accountants (IESBA) and the International Auditing and Assurance Standards Board (IAASB), the paper titled, Navigating the Heightened Risks of Fraud and Other Illicit Activities During the COVID-19 Pandemic, including Considerations for Auditing Financial Statements. 
2. Issued jointly by the Staffs of Chartered Professional Accountants of Canada (CPA Canada) and IESBA, the paper titled COVID-19 and Evolving Risks for Money Laundering, Terrorist Financing and Cybercrime.

Hoping that the pandemic will quickly come under control, we have to look forward to opportunities and responsibilities as we return to normalcy. The IESBA, as a global standard setter will continue and enhance its work of engagement with stakeholders around the globe as a major strategic imperative.

This engagement is a two-pronged activity. On one hand we engage to promote adoption and implementation of the Code, its revisions and its enhancements. This work has brought us into contacts with many stakeholders, such as yourselves, and we look forward to continued two-way communication and mutual awareness. 

On the other hand, we seek close engagement with global stakeholders through our consultations processes which bring out contributions to our current standard-setting projects.

We issue exposure drafts of proposed standards, we organize roundtables and present webinars on current work and, in short, we use all available means for eliciting stakeholder opinions and advices for our work.

The success of all this is critical to an important strategic dimension that we espouse at IESBA: our standards must be “principle-based”, clear and globally applicable. This is something we cannot achieve on our own. We absolutely need stakeholder engagement in order to fulfill that objective.

But this is not the only stricture for good standards. International standards, when implemented in national environments have to work well with local laws and cultures. The accountants implementing those standards may be more successful if they can depend on the work of others, for example, local standard setters, regulators, corporate governance officials, public and private sector managers etc. Ethical behavior of a single profession can multiply its effectiveness if surrounding professions also espouse and apply ethical goals.

Let me close by saying again how pleased I am to be with you and that I consider today’s event as the start of a new series of fruitful contacts of IESBA with ANAN, PAFA members and other African stakeholders.

Thank you very much, good health and best wishes to your endeavors.

Dr. Stavros Thomadakis

Chairman, International Ethics Standards Board for Accountants

Ladies and gentlemen, dear colleagues:

It is an honor and a great pleasure to be with you today on Global Ethics Day. I congratulate the ACCA/SINGAPORE for hosting for the fourth year, and virtually for the first time, the Ethics Film Festival, an engaging and significant event.

Today, I am speaking to you in my capacity as Chairman of IESBA, the global standard setter of the International Code of Ethics for Professional Accountants, including the International Independence Standards. I am pleased that Singapore is among the 80 jurisdictions around the world that have adopted the 2018 edition of the Restructured Code which came into effect last year, in its substantively revised form.

Ethics is a social endeavor that permeates our mindset and orients our judgments. Events as this Film Festival offer an innovative and enticing way to bring together accounting professionals for discussion, and cultivation of awareness of ethical challenges that continuously accompany professional practice. And unfortunately, the COVID-19 pandemic makes awareness of ethical values a pressing need. We, at IESBA, perceive demand for ethical guidance to be clearly on the rise globally. We are doing much work at IESBA to explore new themes, for example in the areas of technology and tax planning.

The role ethics plays in the accounting profession cannot be overstated. Accountants are no strangers to dealing with complex and challenging situations. The Code’s provisions – the fundamental principles, the conceptual framework, the requirements, the application material – require individual accountants and firms to behave ethically and uphold their responsibility to the public interest.

The role of leaders of organizations is paramount in guiding, incentivizing, and shaping a professional culture. That is why the conversations among leaders, as among today’s distinguished panelists, provide individual accountants with insights and inspiration. So, I have been looking forward very much to tonight’s event.

THE ESG AGENDA AND THE GLOBAL PUBLIC INTEREST

The broad commitment of the profession to the public interest is of course reflected on our responsibilities as global standard setters. We have a strong commitment to crafting our standards with clear public interest objectives. The Ethics Code has long been a source of public interest education and practice by the profession.

For many years, I have encountered a persistent request: define the global public interest. It has been hard to offer a satisfactory answer. As commonly understood public interest is a concept varying across jurisdictions and across time, reflected in variety of laws and regulations. Yet today, with all the vicissitudes of crises, a global notion of the public interest has emerged. It is embedded in the environmental, social and governance (ESG) agenda. This makes the vector of objectives for both global standard-setters and global practitioners very definitive. There are surely complexities to be ironed out, but the value system built around sustainability is stable, foundational, and global. This is indeed a very exciting time. A time for work, vision, and restructuring.

How does ethics precisely relate to an agenda about sustainable environment, society, and governance? How does ethics fit into a discussion about Troubled Water?

Ethics and sustainability are close relatives. Ethics is crucial for the sustainability of human relationships, based on trust. There are ethics involved in every facet making up the ESG agenda. How do the policies and decisions of public and private entities and of professionals affect the ESG matrix for shareholders, employees, taxpayers, society at large? Sustainability will be by construction ethical, or it will not prevail. Sustainability standards must acknowledge and embody ethical values.

International organizations, public authorities, and private entities in many countries – including Singapore – are crafting policies for sustainable operations and investments. Capital markets are also affected. In January 2020, Blackrock’s Chairman Larry Fink stated “... companies have a responsibility … to give shareholders a clear picture of their preparedness. And in the future, greater transparency on … sustainability will be a persistently important component of every company’s ability to attract capital.” The big 4 accounting firms, and others as well, are focusing on ESG matters. I note with interest the recently released ESG metrics by the World Economic Forum. We look forward to a standardization of a common approach for measuring and reporting ESG metrics.

THE UNIQUE ROLE OF ACCOUNTANTS

The longstanding expectation of accountants to prioritize the public interest and commitment to the Code of Ethics fits very well with the role of measuring and reporting on ESG objectives. Transparency on sustainability metrics will require strong application of ethical provisions both in the preparation and in the assurance of ESG. The accounting profession is uniquely positioned to lead in this space, as ethics forms part of its value-proposition.

In this connection, I read with special interest the ACCA’s global report: Mainstreaming Impact: Scaling a Sustainable Recovery, launched this month. A large majority surveyed agreed that professional accountants should be involved in understanding social and environmental impacts and dependencies, prioritising the creation of positive social impact alongside financial returns and improving risk management of social and environmental issues.[1] This is a very encouraging finding.

The Code has many lessons for these novel tasks in non-financial reporting. Highlighting the Code I would remind that:

• Accountants are required to be honest and competent and should not associate themselves with misleading or fraudulent information.
• To follow the pace of innovation and technology, accountants must be agile, alert, and open to continuous learning and upskilling.
• Accountants cannot cave under pressure nor can they turn a blind eye when they witness or suspect illegal or illicit behaviors and activities.

Today’s Netflix film, Troubled Water, is a dramatic reminder of the importance of this pair, ethics and sustainability, as technological and social change are unfolding at breakneck speed.

Change is inevitable. Professional standards must be modernized to remain fit-for-purpose. We understand this well at IESBA. Our work program includes projects that enhance transparency and improve communications, among other goals. Earlier this month, we released a new comprehensive pronouncement on “Role and Mindset” that elevates accountants’ societal role and strengthens the mindset and expected public interest orientation.

The drive for sustainable economies and societies will depend very much on building transparency, accountability, and trust in private and public organizations and among the financial professions. Accountants have a central responsibility in this construction for recovery and future well-being. And already, from ACCAs work, it appears that the new generations in the profession are ready and eager to move in that direction. That is the most encouraging sign of all. Keep going!

Thank you very much.

Congratulations to the PIOB for the organization’s 15^th anniversary. The PIOB has fulfilled successfully a demanding mandate: to build and operate an oversight framework; to ensure that international standards for audit and ethics embody clear public interest objectives; and respond to the needs of global users, while maintaining clarity and high quality.

The content and influence of the international standards have extended considerably over the period. The PIOB deserves a good share of credit for this achievement. It has followed proactively the planning and execution of standard setting, the due process, the sharpening of public interest language, and objectives. It has been alert and communicative, but at arms-length from the technical work of standard setting.

Looking at the whole system since 2005, I would certainly assess its performance as an overall success—a success premised on a collaborative stance of the PIOB and the Standard Setting Boards in their respective roles.   We should now build on this success as we move onto a new phase with the recommendations for reform that the Monitoring Group has issued, which we welcome.  This seminar is a unique opportunity to discuss ideas and directions for the future. I thank the PIOB for the opportunity.

The deeper challenge underlying the PIOB’s and the Standard Setting Boards’ missions has been to keep abreast of a dynamic public interest—a set of concepts and values varying across space and changing across time. This dynamic has taught both the Boards and the PIOB to remain open to new and evolving needs and perceptions. Corporate failures, financial turbulences, technological disruptions, looming crises such as Climate Change and the COVID-19 pandemic, have spearheaded new and broader perceptions of the public interest.

The Environmental, Social, and Corporate Governance (ESG) agenda defines clear objectives and expectations underpinning the global public interest. This is a development that informs also our more particular notions of public interest. It is all the more critical as we observe new forces towards economic nationalism. These developments create repercussions for international standards, which we need to reflect and strategize on, both as standard setters and overseers of standard setting.

My thinking, taking especially into account the technological disruptions, is that all of us should work to ensure broader adoption and more comprehensive use of the international standards. For that to happen, those standards must be globally applicable. Applicability is an overarching desideratum. International standards must respond to emerging objectives but also push for tangible improvement in practical outcomes. It is important to see the actual positive effects of the standards in real time. In my conversations with many stakeholders, I have realized how pressing and precious this is.

Examples of recent actions that focus on applicability: 

• Closer link between the Standard Setting Boards and National Standard Setters
• Systematic adoption of post-implementation reviews for impactful standards.
• Coordinated initiatives (among the Standard Setting Boards, International Federation of Accountants and the PIOB) aimed at awareness raising, facilitating adoption and providing ease of access and clarity to support effective implementation.
• Widening use of surveys of “users and beneficiaries” of the international standards as a global public good.

In closing, I want to share thoughts on coordination between the IESBA and the International Auditing and Assurance Standards Board (IAASB).

From occasional collaboration, we have moved over the last 4 years to systematic coordination of work. Collaboration at the level of leadership, task forces, staff, and joint meetings of the two Boards. These efforts were initiated with Prof. Arnold Schilder, former IAASB Chairman, and are now being actively pursued under the leadership of Chairman Tom Seidenstein.

In substantive terms, we are moving from seeking “consistency” to building “synergy” of the standards. Our ambition is that our respective standards are not just consistent and non-conflicting, but that they are increasingly becoming mutually reinforcing. This is real progress and creates a strong incentive for users to adopt both sets of standards. This also has implications on future practice including

(a) on how strategies of standard setting are crafted; and

(b) on how oversight is practiced.

In summary, we have to reflect on achieving public interest contributions not of independent parts, as if they were unrelated, but of autonomous parts that are consciously coordinated.

Thank you.

Dr. Stavros Thomadakis

IESBA Chairman