In This Issue:
1. IESBA Issues Revised Code of Ethics
2. Revisions Strengthen Independence, Clarify Requirements
3. Member Bodies and Firms Encouraged to Develop Implementation Plans
4. Resources Available to Support Adoption and Implementation of Revised Code
5. Ethics Board Launches Process for Developing 2010-2012 Strategic Plan
6. Tell Others About Ethics eNews
1. IESBA Issues Revised Code of Ethics
The International Ethics Standards Board for Accountants (IESBA) issued in July, following the approval and consideration of due process by the Public Interest Oversight Board, a revised Code of Ethics for Professional Accountants (the Code). The revised Code clarifies requirements for all professional accountants and significantly strengthens the independence requirements of auditors.
The Code is effective on January 1, 2011.
The full text of the revised Code can be accessed from the Ethics section of the IFAC online bookstore at www.ifac.org/Store.
2. Revisions Strengthen Independence, Clarify Requirements
The revisions to Code of Ethics for Professional Accountants (the Code) include the following changes, among others, to strengthen the Code's independence requirements:
- Extending the independence requirements for audits of listed entities to all public interest entities;
- Requiring a cooling-off period before certain members of the firm can join public interest audit clients in certain specified positions;
- Extending partner rotation requirements to all key audit partners;
- Strengthening some of the provisions related to the provision of non-assurance services to audit clients;
- Requiring a pre- or post-issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years; and
- Prohibiting key audit partners from being evaluated on or compensated for selling non-assurance services to their audit clients.
Also included within the revisions are changes in the drafting conventions used in the Code. These changes, which include the use of the word "shall," present the Code's requirements in clearer, more precise language.
3. Member Bodies and Firms Encouraged to Develop Implementation Plans
Given the effect the revisions to Code of Ethics for Professional Accountants (the Code) will likely have on professional practice, and the fact that they will go into effect less than 18 months from now, member bodies, firms, and other relevant stakeholders are encouraged to develop plans for implementing the revised Code by the effective date of January 1, 2011.
Issues to consider while developing implementation plans would include the implications of:
- Expanded partner rotation requirements;
- New independence requirements for public interest entity audit clients; and
- Expanded requirements related to the provision of non-assurance services to audit clients
4. Resources Available to Support Adoption and Implementation of Revised Code
The IESBA has developed a number of resources to support adoption and implementation efforts for the revised Code of Ethics for Professional Accountants (the Code).
These materials include the following:
- A high-level overview of the Code
- A detailed presentation slide package and speaking notes addressing the independence requirements contained in section 290
- A presentation slide package and speaking notes addressing the independence requirements for audits of public interest entities
- Templates, both high-level and detailed, to help member bodies/firms analyze differences between the requirements in their jurisdiction and the requirements of the revised Code
- Comparisons, both high-level and detailed, to the existing Code
- A short paper describing the changes from the existing Code
- An article for member bodies describing the process of developing the Code, highlighting some key changes and emphasizing the need to start the process of implementation
All of these support materials will be available soon in the Ethics section of the IFAC website (www.ifac.org/Ethics).
5. Ethics Board Launches Process for Developing 2010-2012 Strategic Plan
In April 2009, the IESBA launched a strategic review to develop the 2010-2012 Strategic and Operational Plan.
The IESBA's terms of reference and due process require the strategic review to include a formal survey of key stakeholders' views about issues that they believe should be addressed in the immediate future. The IESBA conducted a short survey to solicit these views in July. The IESBA will consider this feedback as it develops its Strategic Plan which will be exposed for public comment.
To view the 2007-2009 Strategic and Operational Plan, please visit the Ethics section of the IFAC online bookstore at www.ifac.org/Store.
6. Tell Others About Ethics eNews
The IESBA issues regular eNews updates to keep you current on its activities and recent publications. Please forward this eNews to any interested colleagues and advise them that they can subscribe to receive this eNews by following these simple steps:
1. Go to the eNews sign-up page at http://www.ifac.org/E-news/index.tmpl.
2. Enter your email address, name, and country.
3. Select "Ethics eNews" from the checklist, as well as any other eNews alerts that you would like to receive.
The next issue of the Ethics eNews will be delivered directly to you in your inbox.
For more information about any of the items mentioned above or other information about the IESBA, please contact: communications@ifac.org.
About the IESBA and IFAC
The IESBA develops ethical standards and guidance for use by professional accountants. It encourages member bodies of IFAC to adopt high standards of ethics for their members and promotes good ethical practices globally. The Public Interest Oversight Board oversees the activities of the IESBA and, as one element of that oversight, establishes its due process and working procedures.
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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.