IESBA consults on revised code of ethics for auditors

The International Ethics Standards Board for Accountants (IESBA) has released a three-art consultation on the final plans to restructure the Code of Ethics for Professional Accountants, setting out more robust ethics requirements for accountants with a view to finalising the Code by the end of the year

This is part of a strategic project to rewrite and restructure the Code, with particular focus on ‘threats and safeguards’ in a bid to produce a framework that is more understandable and easier to use, which should encourage wider adoption

It has now released three exposure drafts setting out new proposals that:

  • restructure select sections of the Code, including recently finalised provisions addressing accountants’ response to non-compliance with laws and regulations (NOCLAR), long association of audit firm personnel with an audit or assurance client, and ethical issues that professional accountants in business (PAIBs) often face (Structure ED-2);
  • revise the safeguards-related provisions in the independence sections of the Code relating to non-assurance services provided to audit and other assurance clients (Safeguards ED-2); and
  • clarify the applicability of PAIB provisions to professional accountants in public practice (Applicability).

IESBA Chairman Dr Stavros Thomadakis said: ‘This major upgrade will lead to a more robust Code with important substantive improvements in many areas, including auditor independence. These goals ultimately underpin the public interest role of the global accountancy profession.’

The IESBA is aiming to issue the revised Code by December 2017. When finalised, it will be renamed the International Code of Ethics for Professional Accountants (including international independence standards).

There has already been agreement on the wording and framework for a number of significant new requirements, which will be included in the revised Code. These include:

  • a greater emphasis on compliance with the fundamental principles in the Code;
  • clarified and strengthened provisions regarding application of the conceptual framework, including safeguards;
  • a strengthened partner rotation regime for audits of public interest entities;
  • provisions addressing accountants’ responsibilities regarding NOCLAR;
  • more comprehensive provisions addressing the responsibilities of professional accountants in business (PAIBs) when preparing or presenting information; and
  • new requirements and guidance for PAIBs regarding pressure to breach the fundamental principles.

The IESBA website includes information on the restructured and revised portions of the Code agreed to so far together with a staff-prepared compilation of the proposed restructured Code, mapping tables and other resources, to support stakeholders’ timely adoption and implementation efforts, and consideration of the exposure drafts.

How to comment

The IESBA Code of Ethics for Professional Accountants exposure drafts are available here.

The deadline for comments on Safeguards ED-2 and the Applicability ED is 25 April 2017. Comments on Structure ED-2 by 25 May 2017.

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