Firm Culture and Governance

Building Ethical Foundations: Strengthening Culture, Governance, and Trust in the Profession.

Approved by the IESBA in December 2024 and commencing in 2025, the Firm Culture and Governance Project aims to develop a new standard establishing an accounting firm culture and governance framework that emphasizes ethical values and fosters a strong ethical culture within firms. Based on the recommendations of the Firm Culture and Governance Working Group, the initiative also includes a complementary workstream to create non-authoritative materials (NAMs) to support implementation.

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FCG Sample 1
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The Firm Culture and Governance Working Group (FCGWG) Final Report

The FCGWG Final Report highlights the critical role of ethical culture and governance in addressing issues of unethical behavior within accounting firms. Through extensive outreach and research conducted in 2024, the FCGWG identified key drivers of an ethical firm culture, including ethical leadership, transparent accountability mechanisms, and governance frameworks that embed ethical values across all service lines. The report emphasizes that fostering a strong ethical culture not only mitigates risks of unethical behavior but also strengthens public trust, enhances firms’ reputations, and reinforces the profession's public interest responsibilities.

Based on these findings, the FCGWG recommends the development of a global, principles-based standard for firm culture and governance, applicable to firms of all sizes and scalable across different jurisdictions. It also proposes the creation of non-authoritative materials (NAMs) to guide firms in implementing ethical practices. The report calls for stakeholder engagement through global roundtables to gather input and refine the recommendations, ensuring the resulting standard and materials effectively address the public interest and promote an ethics-centered culture within the accounting profession.