• Private equity (PE) investment in accounting firms has grown significantly over the past five years in a number of major jurisdictions
• Private equity investment in accounting firms may trigger ethical and independence implications as a result of related structural, strategic and operational changes to a firm
• Staff Alert aims to raise awareness and foster understanding of key ethical and independence matters for accounting firm leadership to consider, both pre- and post-PE investment

A Staff Alert highlighting key ethical matters that accounting firms should pay particular attention to when considering or accepting investment from PE organizations has today been issued by the International Ethics Standards Board for Accountants (IESBA).

Titled  “Private Equity Investment in Accounting Firms: Key Ethics and Independence Considerations”, the Staff Alert draws the attention of professional accountants in public practice, particularly accounting firm leadership, to important ethics and independence provisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that remain applicable both before and after PE investment in an accounting firm. The Staff Alert highlights various possible ethical and independence implications arising from PE investment in accounting firms.

These include:

• From an ethics perspective:
  • threats to compliance with some of the Code’s fundamental principles, such as confidentiality;
  • shifts in a firm’s ethical culture resulting from organizational restructurings, different incentives and evolving growth expectations that may undermine ethical obligations; or
  •  undue pressure to act unethically in pursuit of new revenue goals.
• From an independence perspective:
  • concerns arising from a PE organization holding a controlling interest in the firm while also having a financial interest in the firm’s audit clients;
  • the inclusion of new entities as network firms and the complexities in identifying them, and potential related independence threats, if the firm becomes part of a larger, evolving post-investment structure; or
  • situations where individuals in the PE organization’s management could fall within the Code’s “audit team” concept and the applicable independence framework.

The Staff Alert emphasizes the importance of firms maintaining ongoing monitoring for changes in clients, services, business and network relationships, and other relevant factors with potential ethics and independence implications, both during the pre-investment phase and after completion of the PE transaction, and continuing to act in the public interest.

It also underscores in the context of PE investment that compliance with the Code by firms enhances the quality and consistency of the services they provide and underpins public trust and confidence in their work.

Besides accounting firms, this publication may also be of interest to regulators and audit oversight bodies, jurisdictional standard setters (JSS), private equity entities and other investors, professional accountancy organizations (PAOs), and others with an interest or role in the work of accounting firms.

The development of the Staff Alert has been informed by the IESBA’s ongoing engagement with various stakeholders, including accounting firms, private equity organizations, regulators and oversight bodies, JSS, and PAOs.

About IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.

Along with the International Auditing and Assurance Standards Board (IAASB), the IESBA is part of the International Foundation for Ethics and Audit (IFEA). The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.

Media Contacts:
 
Rui Peres Jorge 
Director of Strategic Communications 
International Ethics Standards Board for Accountants (IESBA) 
ruiperesjorge@ethicsboard.org | Direct: +351 966-301-383

David Johnson 
Senior Manager
IESBA Communications
davidjohnson@ethicsboard.org | Direct: +1 (212) 471-8732

The amendments include the introduction of current operational value in IPSAS 12, Inventories, and IPSAS 21, Impairment Non-Cash Generating Assets, the addition of a definition of accounting estimates to IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors, and the enhancement of the terminology in current value measurement disclosures.

This Staff Alert draws the attention of professional accountants in public practice, particularly accounting firm leadership, to important ethics and independence provisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that remain applicable both before and after PE investment in an accounting firm.

The Staff of the International Ethics Standards Board for Accountants (IESBA) has released two implementation support publications to help sustainability assurance practitioners understand and apply the International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA):

• Key Differences: A comparison document outlining the main differences between the IESSA and the corresponding provisions of the IESBA Code applicable to audits of financial statement.
• List of PIE Prohibitions: A list of specific prohibitions in the IESSA applicable to sustainability assurance engagements of public interest entities (PIEs).

The Key Differences Between IESSA and Parts 1 to 4A of the Code provides an overview of how the IESSA compares to the ethics and independence provisions in the IESBA Code that apply to audits of financial statements. It is intended to support firms that already follow the Code in understanding and implementing the IESSA for sustainability assurance engagements. For reference purposes, the publication is accompanied by a marked-up version of the IESSA showing changes from the corresponding sections of the extant Code.

The List of Prohibitions for PIEs in IESSA summarizes the specific interests, relationships, non-assurance services and other circumstances prohibited under the IESSA when performing sustainability assurance engagements for PIEs. It is intended as a high-level reference to help sustainability assurance practitioners in further understanding the prohibitions in the IESSA.

Jurisdictional standard setters, regulators and oversight bodies, professional accountancy organizations, educational institutions and other stakeholders may also find the publications useful.

These new resources are part of a comprehensive implementation support program the IESBA has put in place—a strategic priority aimed at promoting the adoption and consistent and effective implementation of the IESSA, which becomes effective in December 2026. Led by a dedicated Adoption and Implementation Working Group, this effort includes a growing suite of guidance materials, webinars, and other resources to back the rollout of the Global Ethics Sustainability Standards.

Read the publications on IESBA’s Support and Resources Page
Visit the IESBA Sustainability Focus Page
 

About IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.

Along with the International Auditing and Assurance Standards Board (IAASB), the IESBA is part of the International Foundation for Ethics and Audit (IFEA). The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.

This publication is intended to be a useful reference to stakeholders, including regulators and audit/assurance oversight bodies, sustainability assurance (SA) practitioners (SAPs) (including audit firms, conformity assessment bodies or other practitioners), the corporate governance community, investors, preparers, and educational bodies or institutions. References to the relevant provisions in the IESSA are provided in footnotes to assist further understanding of the prohibitions.

This publication provides an overview of the key differences between the IESSA and the ethics and independence provisions in the Code applicable to an audit of financial statements. It is intended to facilitate the understanding and implementation of the IESSA by firms that also follow the Code when performing audits of financial statements. Jurisdictional standard setters, regulators and oversight bodies, professional accountancy organizations, educational bodies and other stakeholders may also find the publication helpful.

“Ethics is not a barrier — it’s the foundation” - A key message from IESBA Chair Gabriela Figueiredo Dias' open invitation to the IESBA Ethics & Independence Conference 2025. In this video, Ms. Dias previews this can’t-miss event for global leaders navigating disruption, innovation, and public trust. Join us in Lisbon or online this September for a one-day, high-impact program featuring voices from business, regulation, and the profession. Learn more and register: https://www.ethicsboard.org/iesba-conference-2025