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Global ethics board releases revamped Code of Ethics for Professional Accountants

Apr 11, 2018

The International Ethics Standards Board for Accountants (IESBA) has released a completely rewritten Code of Ethics for Professional Accountants that is easier to navigate, use and enforce. Beyond the new structure, the Code brings together key ethics advances over the past four years and is clearer about how accountants should deal with ethics and independence issues.

While the fundamental principles of ethics have not changed, major revisions have been made to the unifying conceptual framework – the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence. New highlights include: 

  • Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles;
  • While the fundamental principles of ethics have not changed, major revisions have been made to the unifying conceptual framework – the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence. New highlights include: 
  • Revised “safeguards” provisions better aligned to threats to compliance with the fundamental principles;
  • Stronger independence provisions regarding long association of personnel with audit clients;
  • New and revised sections dedicated to professional accountants in business (PAIBs) relating to preparing and presenting information, and pressure to breach the fundamental principles;
  • Clear guidance for accountants in public practice that relevant PAIB provisions are applicable to them;
  • New guidance to emphasise the importance of understanding facts and circumstances when exercising professional judgment; and
  • New guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.
“This is a ground-breaking moment in the public interest. The Code is now a significantly strengthened platform, re-engineered for greater usability while maintaining global applicability. It underscores the importance of the fundamental principles for all professional accountants,” said IESBA Chairman, Dr Stavros Thomadakis. “Critical work begins now within firms, national standards setters, regulators and audit oversight bodies, educators, IFAC member bodies and others to promote awareness of the Code, and support its adoption and implementation.”

According to Kristian Koktvedgaard, Chair of IESBA’s multi-stakeholder Consultative Advisory Group (CAG), a strong international Code of Ethics is one of the defining characteristics of the global accountancy profession. “Clearer, more usable and enforceable independence and ethics standards are essential to public trust in the profession. The new Code establishes a solid base for ‘future-ready’ ethics standards and I am pleased that the CAG contributed to its development.”

Renamed the International Code of Ethics for Professional Accountants (including International Independence Standards), the new Code will become effective in June 2019. It is the culmination of extensive research and global stakeholder consultation. Stakeholders can now access the new Code on the IESBA website, where implementation resources and other supporting materials will be released throughout the period leading up to the effective date.

Source: International Ethics Standards Board for Accountants.