The Q&A publication is designed to highlight, illustrate, or explain aspects of the revisions in the Code and is intended to complement the Basis for Conclusions for the final pronouncement. It will assist firms, national standards setters, and professional accountancy organizations in adopting and/or implementing the revisions. The Q&As will also assist regulators and audit oversight bodies, the corporate governance community, investors, preparers, educational bodies or institutions, and other stakeholders in understanding the revisions to the Code.
The development of the Q&As has been informed by the IESBA’s extensive discussions and consultations with a wide range of stakeholders and the IESBA’s own deliberations during the development and finalization of the pronouncement.
The pronouncement is coming into effect for audits of financial statements and group financial statements for periods beginning on or after December 15, 2023, with early adoption permitted.
Across the globe momentum is building for sustainability reporting and assurance in the public sector. The IPSASB decided to move forward with the development of public sector specific sustainability reporting standards beginning with a Climate-Related Disclosures standard. Finance and audit professionals working in government, public sector bodies and supreme audit institutions – Auditors-General’s offices, Courts of Accounts and similar (SAIs) – can demonstrate leadership on this agenda, driving action to progress transparent reporting and assurance of expenditure and actions to address sustainability challenges.
At the World Investment Forum in Abu Dhabi on 16th October three global bodies, ACCA, IFAC and IDI launched a summary of their forthcoming introduction to sustainability and assurance in the public sector.
Based on their ongoing work and recent global roundtables with public sector reporting and auditing experts, the report makes the case for a focus on the principle of sustainable development: "meeting the needs of the present without compromising the ability of future generations to meet their own need." It outlines what sustainability reporting and assurance mean for the public sector, why they are important, and key principles for governments, SAIs and other public sector bodies to consider in this journey.
Speaking at the ACCA/UN symposium on developing public sector sustainability reporting, Maggie McGhee, Executive director for Strategy and Governance at ACCA said, "A sustainable future for all is a primary concern across government activity. At the same time governments play a critical role in establishing good governance: the institutional, policy and regulatory frameworks in which society operates. So governments and other public sector bodies need to be able to measure and report on how their policies and expenditure are addressing sustainability challenges."
Laura Leka, Principal and public sector lead at IFAC said, "Policymakers and other stakeholders, including the public, need information to understand the sector’s impact on sustainable development. It’s important that sustainability reporting provides disclosures that are high-quality, decision-useful, and prepared in accordance with internationally recognized reporting and disclosure standards."
As sustainability reporting develops, independent external assurance will become increasingly necessary to build trust in the information being disclosed. Roundtable participants saw SAIs taking the lead, building on their experience auditing progress towards sustainable development.
Archana Shirsat, Deputy Director General at IDI, said, "SAIs have a central role to play in providing independent and objective oversight on sustainability information generated by the public sector. Determining appropriate forms of assurance or confidence, engaging with stakeholders and developing auditor competencies to audit sustainability information is important to build public trust."
We are ACCA (the Association of Chartered Certified Accountants), a globally recognised professional accountancy body providing qualifications and advancing standards in accountancy worldwide.
Founded in 1904 to widen access to the accountancy profession, we’ve long championed inclusion and today proudly support a diverse community of over 247,000 members and 526,000 future members in 181 countries.
Our forward-looking qualifications, continuous learning and insights are respected and valued by employers in every sector. They equip individuals with the business and finance expertise and ethical judgment to create, protect, and report the sustainable value delivered by organisations and economies.
Guided by our purpose and values, our vision is to develop the accountancy profession the world needs. Partnering with policymakers, standard setters, the donor community, educators and other accountancy bodies, we’re strengthening and building a profession that drives a sustainable future for all.
The INTOSAI Development Initiative (IDI) is an autonomous implementing body that is not-for-profit. Its mandate is to provide support to Supreme Audit Institutions (SAIs) in developing countries to enhance their performance and capacity in a sustainable manner. The work done by IDI is based on the needs and challenges experienced by SAIs. The support provided is focused on a needs-based and sustainable approach. IDI seeks to empower SAIs by promoting gender-responsiveness and peer-to-peer cooperation as essential elements of long-term capacity development.
In each country, there is a Supreme Audit Institution that is tasked with auditing public funds to ensure that it is an effective, accountable, and inclusive institution. IDI is convinced that its contribution to strengthening Supreme Audit Institutions can make a difference in the lives of citizens for several reasons. Firstly, government audits are key components of effective public financial management and good governance. Secondly, SAIs contribute to the quality of government engagement and better state-society relations through their work. Lastly, SAIs are key stakeholders in supporting the implementation of Sustainable Development Goals (SDGs).
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce.
The International Auditing and Assurance Standards Board (IAASB) has released amendments aimed at bolstering transparency and providing auditors with a clear mechanism to action changes to the International Ethics Standards Board for Accountants’ (IESBA) Code of Ethics for Professional Accountants (including International Independence Standards). The IAASB amended International Standard on Auditing 700 (Revised), Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised), Communication with Those Charged with Governance.
The IESBA Code now requires firms to publicly disclose when a firm has applied the independence requirements for public interest entities in an audit of the financial statements of an entity. The IAASB’s amendments provide a clear and practical framework for implementing this new requirement through appropriate communication in the auditor’s report and with those charged with governance.
Throughout the development of these amendments, the IAASB maintained close collaboration and coordination with IESBA, striving to align key concepts in the IAASB’s and IESBA’s standards, to the greatest extent possible.
The revisions relating to (a) the definition of engagement team, and (b) group audits. The revisions deal with the independence and other implications of the changes made to the definition of “engagement team” in the Code to align with changes to the definition of the same term in the IAASB’s International Standards on Auditing (ISAs) and International Standards on Quality Management (ISQMs). The revisions also address holistically the various independence considerations in an audit of group financial statements. The revised provisions relating to the definition of engagement team and group audits will be effective for audits of financial statements and audits of group financial statements for periods beginning on or after December 15, 2023. Early adoption of the revisions is encouraged.
The upcoming expiry of the “jurisdictional provision” addressing long association of personnel with an audit client. The jurisdictional provision will expire and be no longer available for audits of financial statements for periods beginning on or after December 15, 2023. Under the jurisdictional provision (paragraph R540.20 of the Code), where a legislative or regulatory body (or organization authorized or recognized by such legislative or regulatory body) has established a cooling-off period for an engagement partner of less than five consecutive years, that shorter cooling-off period may be applied, subject to a floor of three years, provided that the applicable time-on period does not exceed seven years.
The back of the 2023 Handbook contains the IESBA-approved revisions to the Code, which are not yet effective. These revisions will become effective in December 2024 and include:
Changes to the definitions of “audit client” and “group audit client” in the Glossary arising from the approved revisions to the definitions of listed entity and PIE.
Reproducing and Translating the IESBA Handbook To help adoption and implementation of the IESBA standards, stakeholders are invited to submit requests for permission to reproduce or translate the IESBA Handbook online via the Online Permissions Requests or Inquiries system on the IFAC website.
The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
In September 2023, the United Nations will mark the half-way point to the deadline set for achieving the 2030 Agenda and the Sustainable Development Goals. This is an important juncture for global leaders to reflect on the progress we have made, the progress we have not made, and the challenges we face ahead.
Reflecting on the G20’s current theme of One Earth, One Family, One Future, IFAC, acting in its role as the global voice of the accountancy profession, highlights the importance of inclusivity in underpinning sustainable development in its 2023 Call to Action. We must approach sustainability, the public sector, small- and medium-sized entities (SMEs), and education with an inclusive approach to make sure that the opportunities of today and tomorrow are shared, and that economic and social development are truly sustainable.
“We have serious challenges ahead of us. Fortunately, the global accountancy profession is a committed partner, doing our part to drive sustainable development and demonstrating leadership as a truly global and inclusive profession,” said IFAC CEO Kevin Dancey.
IFAC calls on G20 leaders to:
1. Make Sustainability A Reality, Not Just a Goal
Lead on achieving the UN SDGs and provide a foundation for net zero transitions
Support the ISSB's global baseline for sustainability disclosures
Support mandatory assurance of sustainability information pursuant to ISSA 5000
Support the work of the International Public Sector Accounting Standards Board to develop sustainability reporting standards for the public sector
2. Support Public Financial Management and Fight Corruption
Support high-quality public financial management, professionalization in the public sector, and accrual accounting at all levels of government
Continue to prioritize full adoption and implementation of global commitments on the fight against corruption, such as the G20 Anti-Corruption Action Plan
3. Create an Environment for SME Growth and Innovation
Embed the unique needs of SMEs into global policy making
Support access to digital infrastructure and skills for SMEs
Provide a supportive regulatory environment for SMEs
4. No Inclusive Growth without Education
Support equal access to education, including STEM (science, technology, engineering and math) and accounting skills
Support financial literacy globally and locally
About IFAC IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce.
Inclusive approach to key global challenges—like sustainability and education—necessary to achieve the UN SDGs
The digitally interactive report looks back at 2022 through the eyes of the international ethics standard-setting board, complete with detailed reports on the Board’s projects alongside reflective remarks from its leaders. The report showcases a board in transition, completing long-running projects aimed at further strengthening the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards)(the Code), addressing the ethical implications of rapid technological advances, and moving fast to develop the necessary ethics and independence standards for sustainability reporting and assurance, always working to serve the public interest.
“IESBA’s work in 2022 will ultimately strengthen the public’s trust in the professional accountant, corporate reporting and businesses more generally at a time of rapid change and complexity,” said IESBA Chair Gabriela Figueiredo Dias. “Collectively, we’ve ensured the necessary strategic adjustments to better serve the public interest in a context of complex developments that we face today, like sustainability and technology, through our actions to enhance our global ethics and independence standards, thereby raising the bar for ethical conduct and practice for all professional accountants and other service providers that may want to use our standards.”
Beyond the updates on IESBA projects, the 2022 IESBA Report features an overview of the Board’s extensive stakeholder outreach efforts and information about its efforts to promote global adoption and effective implementation of the Code. The Report also includes a message from the IESBA’s Consultative Advisory Group (CAG) Chair, Mr. Gaylen Hansen.
About IESBA
The International Ethics Standards Board for Accountants serves the public interest by setting high-quality ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
Along with the International Auditing and Assurance Standards Board (IAASB), the IESBA is part of the International Foundation for Ethics and Audit (IFEA). The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards. For copyright, trademark, and permissions information, please visit Permissions.
Showcases global ethics board’s 2022 achievements strengthening international ethics and independence standards while pivoting to serve the public interest in emerging areas
“Our proposed ISSA 5000 is a crucial step in enhancing confidence and trust in sustainability reporting. This proposal directly responds to the International Organization of Securities Commissions recommendations and complements the work of other standard setters, including the International Ethics Standards Board for Accountants,” noted IAASB Chair Tom Seidenstein. “Corporate reporting, whether financial or sustainability focused, is more trusted when it receives external and independent assurance based upon globally accepted standards independently developed in the public interest.”
ISSA 5000 is a principles-based, overarching standard suitable for both limited and reasonable assurance engagements on sustainability information reported across any sustainability topic. The IAASB drafted the standard to work with sustainability information prepared under any suitable reporting framework. These frameworks include the many reporting frameworks already in place and those under development, including but not limited to those issued by the European Union, the International Sustainability Standards Board, the Global Reporting Initiative, the International Organization for Standardization, and others. The standard is profession agnostic, supporting its use by both professional accountant and non-accountant assurance practitioners when performing high quality sustainability assurance engagements.
The IAASB is committed to an extensive, high-level outreach plan to ensure broad stakeholder input. One core element of the outreach is a series of four roundtables beginning in September. The IAASB will also take part in virtual, regional, and national events, many held in partnership with other organizations, throughout the consultation period.
“Receiving the broadest range of views from our stakeholders will improve both the quality of and trust in the final standard. Our unprecedented commitment to outreach will allow us to engage directly with a much wider group of stakeholders to gather the valuable insights we need to finalize a high-quality robust standard,” noted IAASB Vice-Chair and Sustainability Task Force Chair Josephine Jackson.
ISSA 5000 will be available French, Japanese, Portuguese, and Spanish in the coming weeks. The IAASB invites all stakeholders to comment on the proposed revisions via the IAASB website by December 1, 2023.
Proposed International Standard on Sustainability Assurance 5000 Suitable for Use by All Assurance Practitioners
The International Federation of Accountants (IFAC) plays a vital role in driving the development, adoption, and implementation of transparent and high-quality international standards. These standards for audit and assurance, ethics and independence, education, and public sector accounting are used by professional accountants and serve as a fundamental pillar within the global financial architecture.
The World Bank, an institution dedicated to providing financing, policy advice, and technical assistance to governments of developing countries, recently extended significant financial support to expand the accessibility of certain materials (noted below) into Spanish and French. This support broadens the availability of these publications to IFAC’s global audience and their stakeholders, and helps to promote greater economic growth, development, and accountability.
In jurisdictions where English is not an official or business language, one of the primary obstacles to successful adoption and implementation of international standards is the lack of access to translations in local languages. IFAC takes proactive steps to tackle this challenge by collaborating with member organizations in leveraging their technical expertise to provide translation support, as well as engaging with donors to help further facilitate the translation process.
IFAC CEO Kevin Dancey said, “IFAC thanks the World Bank and our member organizations for their generous financial support in expanding the accessibility of multilingual materials. Your invaluable contribution has made a profound impact on our efforts to foster the adoption and implementation of international standards on a global scale. Consequently, this will pave the way for driving progress, bolstering economic stability, and ensuring responsible financial practices worldwide.”
About IFAC IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
“This joint APESB-IESBA Staff publication is timely and fulfills a commitment we have made to collaborate with national standard setters and others to provide helpful guidance to assist auditors in implementing and consistently applying the Code’s revised technology-related provisions,” said Gabriela Figueiredo Dias, IESBA Chair. “Over the past three years, the Board has dedicated strategic focus and significant resources to addressing the ethics and independence implications of technological innovation such as AI, blockchain, and data analytics, culminating in strengthened technology-related provisions in the Code and two comprehensive reports under Phases 1 and 2 of its fact-finding work.”
This non-authoritative publication was developed jointly by the Staff of the APESB and IESBA under the auspices of the IESBA’s Technology Task Force, initiated as part of the IESBA’s Phase 2 Technology Working Group activities. Learn more about IESBA’s technology work here.
Recent events in a number of major jurisdictions involving professional accountants have raised concerns with many stakeholders and the public about whether the accountants’ conduct was straightforward and honest, free from conflicts of interest, in accordance with confidentiality requirements, or in the public interest. A number of these events have resulted in government inquiries, significant regulatory penalties or other adverse consequences for the professional accountants or their firms, and undermined public trust in the accountancy profession.
Among all professions, the global accountancy profession stands apart in having a comprehensive and robust code of ethics in the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that it must apply. The Code is developed in accordance with a rigorous due process and under the oversight of the Public Interest Oversight Board (PIOB). The strength and global acceptance of the Code are evidenced by its adoption or use in over 130 jurisdictions, and adoption by the 34 largest international networks of accounting firms for transnational audits.
“Ethics is fundamental to public trust in the work of all professional accountants and it must always be at the heart of their judgments, decisions, and actions when performing professional activities or services,” said Gabriela Figueiredo Dias, IESBA Chair. “The high-quality ethics standards in the Code are a cornerstone to ethical behavior in business and organizations, and they underpin the accountancy profession’s longstanding good reputation. It is therefore crucial that all accountants fully understand and comply with all their ethical obligations under the Code.”
Professional accountants must act in all business and professional dealings or relationships in accordance with the five fundamental principles of the Code:
Integrityby being straightforward and honest;
Objectivityby not being compromised by bias, conflict of interest, or undue influence of, or undue reliance on, individuals, organizations, technology or other factors;
Professional competence and due care by maintaining professional knowledge and skill at the level necessary to competently perform their work, and acting diligently;
Confidentialityby respecting the confidentiality of information acquired as a result of professional and business relationships; and
Professional behavior by complying with relevant laws and regulations, behaving in a manner consistent with the profession’s responsibility to act in the public interest, and avoiding any conduct that might discredit the profession.
The fundamental principles clearly establish the standard of behavior expected of all professional accountants. The Code also contains detailed provisions specifying the conduct and mindset expected of all professional accountants, including demonstrating an inquiring mind and having the strength of character to act appropriately, even when facing pressure or potential adverse personal or organizational consequences.
Importantly, the Code sets a clear expectation for professional accountants, especially those in leadership or managerial roles, to promote an ethical culture within their organizations.
Upholding the fundamental principles and complying with the specific requirements of the Code enable professional accountants to meet their responsibility to act in the public interest. These obligations are in no way lightened or diminished by the types of activities or services they undertake. The Code applies to professional accountants in all their professional activities, whether it is audit, tax, consulting or other advisory services, or in business. Non-compliance with ethical requirements not only creates a risk of adverse consequences for accountants from a professional or regulatory standpoint, but also may result in profound negative consequences for firms, employing organizations, clients, other stakeholders, and the public at large. Ethical failures can also damage the profession’s reputation.
Ethics is central to the proper functioning of organizations, financial markets, and economies worldwide. The fundamental principles are the foundation to ethical behavior within organizations and underpin the integrity and credibility of financial and non-financial information. An organizational culture that integrates an ethical approach strengthens public trust in professional accountants’ work, safeguards the well-being and sustainability of organizations, and ultimately serves to protect the public interest.
