The International Ethics Standards Board for Accountants® (IESBA®, the Ethics Board) today released for public comment two Exposure Drafts (EDs) proposing key enhancements to fundamental aspects of the Code of Ethics for Professional Accountants (the Code).
The first ED, Improving the Structure of the Code of Ethics for Professional Accountants—Phase 1 (Structure ED) represents the first application of proposed new structure and drafting conventions for the Code, covering both a number of the provisions of the Code dealing with its general application and selected sections addressing professional accountants in public practice. In addition to the use of clearer language, key features in the Structure ED include:
- Requirements clearly distinguished from application material;
- Increased clarity of responsibility for compliance with the Code’s requirements;
- A reorganization of the content of the Code; and
- A new Guide to the Code.
“The Board has undertaken to restructure the Code as a high priority. This is a major infrastructural undertaking, three years in the making already, and responds to a public interest need for the Code to be more understandable and usable,” said IESBA Chairman Dr. Stavros Thomadakis.
The second ED, Proposed Revisions Pertaining to Safeguards in the Code—Phase 1 (Safeguards ED) includes enhanced requirements and application material pertaining to the application of the Code’s conceptual framework, including safeguards.
“Safeguards are a linchpin of the ‘threats and safeguards’ approach that is fundamental to the proper application of the Code. The proposals respond to a public interest need to clarify the meaning of safeguards and to make sure that they directly relate to identified threats to compliance with the fundamental principles of the Code,” explained Dr. Thomadakis.
Key enhancements proposed in the Safeguards ED, which is presented in accordance with the new structure and drafting conventions, include:
- More robust and prominent requirements related to the application of the conceptual framework, including a required overall assessment of the judgments made and conclusions reached;
- A clearer and more robust description of the concept of safeguards, and clarified and streamlined examples of safeguards; and
- New guidance regarding the application of the concept of a “reasonable and informed third party” that is essential to properly applying the conceptual framework.
“Pending stakeholder feedback on the EDs, the IESBA will continue with work on the next phases of the projects, which will include restructuring other sections of the Code and a review of safeguards pertaining to the provision of non-assurance services to audit and other assurance clients,” added IESBA Technical Director Ken Siong.
Details about the second phases of the projects, including information about the Ethics Board’s plans for coordination of the restructuring effort with other work streams in progress, can be found in the IESBA Update, Restructuring the Code of Ethics for Professional Accountants.
How to Comment
The Ethics Board invites all stakeholders to comment on the EDs. To access the EDs and submit a comment, please visit the Ethics Board’s website at www.ethicsboard.org.
Comments on the Safeguards ED are requested by March 21, 2016. Comments on the Structure ED are requested by April 18, 2016.
About the IESBA
The International Ethics Standards Board for Accountants 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, and follow us on Twitter @Ethics_Board.
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 more than 175 members and associates in more than 130 countries and jurisdictions, representing approximately 2.8 million accountants in public practice, education, government service, industry, and commerce.