To respond to its key strategic priorities, during the December 4-7 meeting of the International Ethics Standards Board for Accountants (IESBA), held in Livingstone, Zambia, the Board established a new Task Force on Technology and Innovation. The strategic task force is charged with responsibility to assess the impact of emerging technology and innovation on international ethics standards, and to develop new or expanded ethics standards as considered necessary. The Task Force members were selected from among IESBA members and technical advisers based on their relevant skills and experience. Nigyar Mamedova, NASBA’s Director of Technical Research and IESBA’s Technical Adviser, was nominated by the IESBA Chairman Stavros Thomadakis to join the Task Force with Patricia Mulvaney (PWC, US), Myriam Antoinette (CIMA, UK), Hironoti Fukukawa (Institute of CPAs, Japan) and Robert Juenemann (Institute of Corporate Governance, Brazil).
One of the key areas of focus for the Zambia meeting was IESBA’s Strategy and Work Plan 2019-2023. Based on its recent survey of regulators, standard-setters, investors, users of financial statements and other stakeholders, the IESBA identified a strong convergence of views in terms of priority on the following key topics:
In addition, IESBA agreed to add to its 2018 agenda a review of the independence provisions pertaining to non-assurance services, a review of the international Ethics Code to align with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, and the development of enhanced electronic code.
IESBA is the International Federation of Accountants’ (IFAC) board responsible for setting ethics standards (including auditor independence requirements) for professional accountants around the world. IESBA’s activities have had significant impact on the U.S. accounting profession through the activities of the American Institute of Certified Public Accountants’ Professional Ethics Executive Committee (PEEC), as the AICPA is a member of IFAC.
The IESBA standards are also relevant to U.S. accounting firms that are members of various global networks which incorporate international audit-related and ethics standards as part of the common global audit methodology, training and governance. U.S. regulators, SEC and PCAOB, are also impacted by IFAC’s audit-related and ethics standard-setting boards. The IESBA members include standard-setters, regulators, leaders of professional practices of accounting firms, academia, public members and other international stakeholders.
During its December meeting IESBA also discussed the Monitoring Group’s recent consultation paper Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest and obtained comments from the IFAC bodies around the globe. IFAC submitted a letter in response to the consultation and NASBA is also sending in a reply.
IESBA also finalized several important projects such as restructuring the international Code of Ethics, which contains new application material to clarify exercising professional skepticism for professional accountants performing audits and other assurance engagements. This is a major milestone for the IESBA since it can take up to several years to develop a single standard. Subject to the Public Interest Oversight Board (PIOB) approval, the restructured Code is expected to be released by early April 2018.
IESBA is also considering undertaking a long-term professional skepticism initiative which would evaluate the application of the concept to all professional accountants, beyond audits and other assurance engagements. IESBA plans to develop a consultation paper that would seek stakeholder views on this topic. Among other matters, the consultation paper would explore the specific behaviors that the public expects of all professional accountants, and whether to elaborate on the relationships between those behaviors and requirements of the IESBA Ethics Code. The draft of the consultation paper on professional skepticism will be discussed by IESBA during its March 2018 meeting in New York.
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