Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA, the Ethics Board). This edition provides a summary of topics discussed and decisions made at the Ethics Board’s meeting held April 7-9, 2014, in Toronto, Canada. See the Meeting Page for the meeting highlights, including a podcast summary and agenda papers. You can also subscribe to our podcast channel in iTunes.
10. Next Meetings
11. IESBA Is Hiring
The Ethics Board approved for exposure proposed changes to the Code of Ethics for Professional Accountants (the Code) aimed at enhancing the independence provisions in Section 290 (Independence—Audit and Review Engagements) by:
- giving auditors providing NAS to an audit client additional guidance and clarification on what constitutes management responsibility, including enhanced guidance on how auditors can better satisfy themselves that client management will make all the judgments and decisions that are its responsibility;
- with respect to the preparation of accounting records and financial statements for non-public interest entity (non-PIE) audit clients, offering better guidance and clarification regarding the concept of “routine or mechanical” services; and
- removing the provision that permits an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations.
The IESBA also approved for exposure proposed enhancements to corresponding NAS provisions in Section 291 of the Code with respect to assurance clients.
The Exposure Draft was released last week, with comments requested by August 18. The board will consider a draft paper setting out its views and positions on NAS and related matters at its July 2014 meeting.
The Ethics Board received a brief update on recent discussions with certain stakeholders, including its Consultative Advisory Group. It also received an update on the preparations for its series of global roundtables in Asia-Pacific on May 20 (Hong Kong), Europe on June 13 (Brussels), and the Americas on July 10 (Washington DC).
The Asia-Pacific roundtable on May 20 was a successful event, with close to 55 senior-level individuals participating. They represented a wide cross-section of stakeholder groups, including regulators and public authorities, preparers/professional accountants in business, standard setters, IFAC member bodies, and firms (both large and small). Ten jurisdictions were represented: Australia, China (mainland), Hong Kong SAR, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, and Taiwan.
The discussions were robust and lively, with a high level of participation from the delegates. The roundtable was observed by the Chair of the IESBA Consultative Advisory Group.
Preparations for the next roundtable to be held June 13 in Brussels are in the final stages, and the board is expecting about 55 senior-level attendees, including observers from the Public Interest Oversight Board (PIOB). As space is limited, attendance is by invitation only. Expressions of interest for the upcoming roundtables, including name, job title, organization, and preferred location, should be emailed to KaushalGandhi@ethicsboard.org.
The board will consider the input received from the roundtables and a possible re-Exposure Draft at its October 2014 meeting.
The Ethics Board made significant headway in developing proposed enhancements to the long association provisions in Section 290 of the Code. Among other matters, the board discussed what the appropriate duration of the cooling-off period for key audit partners (KAPs) should be for audits of public interest entities (PIEs) with the objective of bringing “fresh eyes” to the audit; whether, if the Lead Audit Engagement Partner (LAEP) were to be subject to a longer cooling-off period, the requirement should apply to LAEPs involved in the audits of all PIEs or only LAEPs working on the audits of listed entities; and what activities the rotated KAP would be permitted to undertake for an audit client during the cooling-off period.
The Ethics Board further discussed the issue of permissible activities during the cooling-off period and provided directional input to the Task Force in a teleconference held at the end of April. The board will consider a revised draft of the proposed enhancements to the Code with a view to approving an Exposure Draft at its July 2014 meeting.
Based on the final report and recommendations of its Working Group, the Ethics Board approved a project on restructuring the Code to improve its usability. The project will explore a number of improvements, including increasing the visibility of the requirements; clarifying responsibility for compliance with the Code’s requirements; clarifying the language in the Code; reorganizing parts of the Code; and developing a web-based Code.
The board will consider a draft Consultation Paper setting out the proposed approach to the restructuring work at its July 2014 meeting. See also “Decoding the Code” in A Plus magazine to learn more about this project.
As part of the first phase of the project to review Part C—Professional Accountants in Business, the Ethics Board considered the following issues and proposed changes to the Code:
- possible enhancements to Section 320 addressing the preparation and reporting of information, including guidance to assist professional accountants in business (PAIBs) in better understanding their responsibilities for issues such as misuse or abuse of discretion under the applicable reporting framework, as well as transaction-based misrepresentation; and
- a new section including guidance to assist PAIBs in dealing with pressure from superiors and others to breach the fundamental principles.
The board will further consider issues and revised drafts of these sections and proposed changes to other related sections of Part C at its July 2014 meeting.
The Ethics Board considered three international developments as potentially warranting its attention as emerging issues: the MG Rover case in the UK; aggressive tax avoidance; and the regulatory developments concerning audit reform in the European Union. The board will further consider matters arising from its emerging issues initiative at its October 2014 meeting.
The Ethics Board considered significant comments received on its Consultation Paper, Proposed Strategy and Work Plan, 2014-2018, and its Planning Committee’s preliminary proposals in response to these comments. The board will consider a revised draft of its strategy and work plan for 2014-2018 with a view to approving it at its July 2014 meeting.
Earlier this year, the International Federation of Accountants (IFAC) launched the Global Knowledge Gateway, a new digital hub for the global accountancy profession: www.ifac.org/gateway. The Gateway serves professional and aspiring accountants in all sectors by providing streamlined access to relevant resources, news, discussions, and thought leadership in nine different areas, including ethics. Resources in this area, designed to serve both accountants in business and in practice, include surveys and reports on business ethics issues, as well as practical guidance on implementing the IESBA Code and other codes of conduct.
We invite you to explore and contribute your views to the discussions, recommend content that you find the most useful, suggest new resources, and subscribe to receive customized updates on new content added to the Gateway. Register to take full advantage of all of these features.
The 2013 Handbook of the Code of Ethics for Professional Accountants is available to download or purchase. The 2013 edition contains the final revised pronouncements addressing a breach of a requirement of the Code and conflicts of interest, and the revised definition of “engagement team.” To access the handbook for personal use or purchase print copies, see Handbook of the Code of Ethics for Professional Accountants.
The 2014 edition of the Handbook is expected to be published in the coming weeks.
Meetings of the Ethics Board and the Ethics Board’s Consultative Advisory Group (CAG) are open to the public. The next meeting of the board will be held in New York, USA, on July 7-9, 2014. The next CAG meeting will be held via teleconference on June 30, 2014.
For more information and to register to attend an Ethics Board or Ethics Board CAG meeting as an observer, visit Ethics Board Meetings and Ethics Board CAG Meetings respectively.
The IESBA is searching for a senior technical manager to join its staff team based in New York. Qualified candidates will currently be, or have had experience, at the senior manager level or higher in professional practice, a professional accountancy organization, a relevant standard setter, or the office of a public sector auditor. For a complete job description and required skills and experience, see Working at IFAC. Qualified candidates should send a resume to jobs@ifac.org.
The IFAC Nominating Committee has issued a Call for Applications for Ethics Board Chair. The successful candidate should have effective leadership, communication, and strategic skills; demonstrated technical and professional competency; and a commitment to the IESBA and its mission to serve the public interest. The preferred candidate is an individual who is not a professional accountant. Candidates who are professional accountants will need to demonstrate their independence from the accountancy profession. Additional information is available on the IFAC website. Applications are due by June 6, 2014.
The next World Congress of Accountants (WCOA) will be hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Rome, Italy later this year. Themed 2020 Vision: Learning from the Past, Building the Future, the 2014 WCOA will be held November 10-13 at the Auditorium Parco della Musica. More than 4,000 professionals from around the world will convene at this quadrennial IFAC event. WCOA 2014 will look back to explore the evolution of the accountancy profession and forward to showcase the innovations that will shape its future. Register Now.
The WCOA also provides a global platform for organizations and firms to share their projects and visions via various sponsorship opportunities. For more information, please contact info@wcoa2014rome.com or Dimarco@wcoa2014rome.com.