The International Ethics Standards Board for Accountants® (IESBA®, the Ethics Board) today released for re-exposure an enhanced standard, Responding to Non-Compliance with Laws and Regulations. The proposed standard sets out a new framework to guide auditors, other professional accountants in public practice, and professional accountants in business (PAIBs) in deciding how best to act in the public interest when they come across an act or suspected act of non-compliance with laws and regulations.
“Fundamentally, all professional accountants have an ethical responsibility to respond in these situations and not turn a blind eye to them,” commented IESBA Chairman Dr. Stavros Thomadakis. “Importantly, their response can play a role in ensuring that serious instances of non-compliance with laws and regulations are appropriately addressed, or in deterring them. The board intends the proposed framework to guide professional accountants’ response in these situations, ensuring their actions serve the public interest while recognizing the essential role of management and those charged with governance in addressing the issue.”
Among other matters, the proposed standard serves to better equip auditors and other professional accountants to address such issues by providing a pathway to disclosure to an appropriate authority in appropriate circumstances without the duty of confidentiality under the Code of Ethics for Professional Accountants™ acting as a barrier. It also places renewed emphasis on the importance of senior-level PAIBs promoting a culture of compliance with laws and regulations within their organizations.
“The board believes that the proposed framework represents a holistic, proportionate, and balanced model for addressing what can often be complex situations,” noted IESBA Technical Director Ken Siong. “The board also believes that the proposed standard’s enhanced guidance will support and complement legal and regulatory frameworks in jurisdictions that already mandate reporting by professional accountants of identified or suspected non-compliance with laws and regulations to appropriate authorities.”
The development of the proposed standard was informed by stakeholder responses to the first Exposure Draft issued in August 2012 and other extensive consultation with stakeholders, including global roundtables in Hong Kong, Brussels, and Washington, DC in 2014, and discussions with the IESBA Consultative Advisory Group.
For an overview of the proposed standard, see the At-a-Glance document.
How to Comment
The Ethics Board invites public comment on the Exposure Draft and, in particular, from regulators and audit oversight bodies, preparers, those charged with governance, investors, accounting firms, and all other stakeholders who have a role or interest in addressing the relevant issues. National and regional professional accountancy organizations also are invited to share the ED and encourage participation from their members and employees. To access the ED and submit a comment, please visit the Ethics Board’s website at www.ethicsboard.org. Comments are requested by September 4, 2015.
About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.
About IFAC
The International Federation of Accountants® (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 more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.