The International Federation of Accountants (IFAC) is seeking user feedback via a brief survey that will help shape phase two of its digital platform, e-International Standards (eIS). The anonymous survey allows users to rank which features they would like to see in future updates to the platform, and even includes a space to suggest ideas.
Since its launch in November 2021, eIS has provided over 30,000 stakeholders digital access to standards and resources developed by the International Auditing and Assurance Standards Board (IAASB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB).
IFAC intends to consistently evolve the platform to meet user needs and will take into consideration all survey responses when moving forward with the product. The survey closes on August 31, 2022.
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 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
Stakeholders’ responses will shape phase two of eIS
The Staff of the International Ethics Standards Board for Accountants (IESBA) today released a questions and answers (Q&As) publication to explain key revisions to the non-assurance services (NAS) provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). Together with the recently issued fee-related revisions to the Code, the NAS revisions significantly strengthen the International Independence Standards by addressing public interest concerns about independence when firms provide NAS to their audit clients. The development of the Q&As has been informed by the IESBA’s deliberations in the project to revise the NAS provisions and extensive consultations with a wide range of stakeholders, including regulators and audit oversight bodies, the investor and corporate governance communities, national standard setters, firms and professional accountancy organizations.
The publication complements the Basis for Conclusions for the final NAS pronouncement and is intended to assist national standards setters, professional accountancy organizations, and professional accountants in public practice as they adopt and/or implement the revised NAS provisions. The Q&As will also assist other stakeholders, including regulators and audit oversight bodies, those charged with governance, investors, preparers, and academics and other educators better understand the key changes to the NAS provisions of the Code. These changes include the new requirements and guidance that:
Prohibit a firm or a network firm from providing a NAS that might create a self-review threat to an audit client that is a public interest entity.
Explain how firms are to determine when a self-review threat to independence might be created, including in relation to providing advice and recommendations to an audit client.
Are relevant in applying the Code’s conceptual framework to identify, evaluate, and address threats to independence that might be created when an audit firm provides a NAS to an audit client.
Enable and promote more robust communication and engagement about independence matters relating to NAS between audit firms and those charged with governance of public interest entities.
The revised NAS provisions are effective for audits of financial statements for periods beginning on or after December 15, 2022.
Click here to access the revised NAS provisions, and the other recently approved changes to the Code.
New Guidance for Auditors of Public Interest Entities
The International Ethics Standards Board for Accountants (IESBA) has submitted a response to the International Sustainability Standards Board (ISSB) on the ISSB’s Exposure Drafts – General Sustainability-Related Disclosures and Climate-Related Disclosures.
The IESBA believes that to meet the sustainability information needs of investors, customers, employees or potential employees, government agencies and other stakeholders, the infrastructure that supports sustainability reporting and assurance must be underpinned by the highest standards of ethical behavior. Fit-for-purpose, globally applicable standards, such as those set out in the IESBA Code and future, sustainability-related standards that the IESBA has already committed to developing, alongside a robust system of quality management, oversight and enforcement, are essential for consistent, relevant and trustworthy sustainability reporting.
The International Ethics Standards Board for Accountants (IESBA) has unanimously resolved to take timely action to develop fit-for-purpose, globally applicable ethics and independence standards as a critical part of the infrastructure needed to support transparent, relevant and trustworthy sustainability reporting. This recognizes the need to respond at pace to match the speed of transformation in the corporate reporting landscape. Demand for sustainability information has risen substantially and rapidly in recent years, and such information is increasingly used to support capital allocation or other decisions by investors, customers, current or potential employees, and other stakeholders. It also recognizes the essential role ethics and independence play in the production, reporting and assurance of sustainability information.
The IESBA has tasked its recently established Sustainability Working Group to develop a strategic vision to guide the IESBA’s standard-setting actions in relation to sustainability reporting and assurance. The Working Group will prepare a project plan by December 2022 as a launchpad for commencement of standard-setting work soon after. This work will proceed in tandem with the development of IFRS Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB), and sustainability-related International Standards on Assurance Engagements (ISAEs) by the International Auditing and Assurance Standards Board (IAASB). The IESBA recognizes the importance of coordinating this work closely with the ISSB and IAASB so that coherent, mutually reinforcing building blocks of standards can be put in place around the same time to support the necessary regulatory infrastructure for sustainability reporting.
“Sustainability has risen to the top of our strategic agenda as societal expectations have unquestionably changed towards the need for companies and organizations to pursue more sustainable business goals, capital has flowed in substantial waves towards Environmental, Social and Governance (ESG)-focused investments, and concerns about market integrity have triggered regulatory mobilizations and actions,” said IESBA Chair Gabriela Figueiredo Dias. “Time is of the essence and it is critical that the ethics standards pillar of the infrastructure be strong and ready to support the sustainability information supply chain. Stakeholder expectations are high and we are determined to take the necessary actions to meet the market needs.”
The IESBA has been proactively engaged in outreach to stakeholders to exchange views and insights on the emerging issues in sustainability reporting and assurance, and is actively involved in discussions with the International Organization of Securities Commissions (IOSCO) and the IAASB on coordinated plans and actions to respond to the developments.
Pending finalization of the IESBA’s plan of work for sustainability-related ethics and independence standard-setting, IESBA Staff will issue in the near term guidance to draw the attention of professional accountants and other market participants to the fundamental principles and key provisions of the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards) that already apply broadly to sustainability reporting and assurance.
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 ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).
Countries around the world are searching for ways to shift capital investments into activities that support the transition to a more sustainable, low-carbon economy. To finance that massive change, investors and regulators are looking to the sustainable debt market as an important vehicle in raising funds to finance projects that advance environmental, social and governance (ESG) objectives.
“Trust and confidence in this relatively new, still evolving, and rapidly expanding market is critical,” said Kevin Dancey, CEO of the International Federation of Accountants (IFAC). “Like any financial innovation, there are challenges. Smart regulation, standardization and external verification or assurance are needed to protect investor interests, mitigate the risk of greenwashing and enhance transparency. Verifying the details of these bond programs—both pre-issuance and in the form of annual updates for investors—is an essential part of maintaining integrity. The accountancy profession can help drive progress.”
A new, comprehensive study that delves into the challenges and opportunities that exist in the sustainable debt market – Navigating the sustainable debt market: Enhancing credibility in an evolving market – is the result of a collaborative effort by IFAC and Chartered Professional Accountants of Canada (CPA Canada), who recruited PwC Canada to conduct the underlying research.
While the sustainable debt market has evolved significantly over the last few years, the study identified a number of issues that need to be addressed for the benefit of all capital market participants. These challenges include: the proliferation of voluntary, market-driven guidance; lack of a common understanding of what projects and activities qualify as “green” or “sustainable”; and inconsistent reporting, impact measurement, external review and assurance practices.
“Sustainability is increasingly being integrated into business, investment and financing decisions,” said Pamela Steer, president and CEO, CPA Canada. “Serving the public interest is core to the global accounting profession. It has a critical role to play in advancing sustainable finance. Collectively, the profession will continue to advocate for better policy, regulation and standards in this area and the study will help inform the dialogue.”
As part of the overall push to make sustainability front and centre for business, IFAC and CPA Canada welcome the establishment of the International Sustainability Standards Board (ISSB) by the IFRS Foundation. Globally accepted sustainability standards will enhance the credibility of ESG disclosures by improving their consistency and comparability and this will help mitigate some of the challenges identified in the report.
About CPA Canada Chartered Professional Accountants of Canada (CPA Canada) works collaboratively with the provincial, territorial and Bermudian CPA bodies, as it represents the Canadian accounting profession, both nationally and internationally. This collaboration allows the Canadian profession to champion best practices that benefit business and society, as well as prepare its members for an ever-evolving operating environment featuring unprecedented change. Representing more than 220,000 members, CPA Canada is one of the largest national accounting bodies worldwide. cpacanada.ca
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 180 members and associates in over 130 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
The global accountancy profession is on a journey—along with investors, companies, regulators and other stakeholders—toward a unified, coherent, global and authoritative standard-setting process for reporting on sustainability information.
IFAC welcomes the establishment of the International Sustainability Standards Board (ISSB), as well as jurisdiction or regional initiatives that can contribute toward the creation of a global system for consistent, reliable and assurable sustainability disclosure.
In a joint statement today, IFAC joins with leading capital markets participants—PRI (Principles for responsible Investment) and WBCSD (World Business Council for Sustainable Development)—in calling for simplicity and alignment in the standard-setting process. At this critical juncture, regulatory and standard-setting fragmentation must be avoided through efforts to align key concepts, terminologies, and metrics upon which disclosure requirements are built.
The International Ethics Standards Board for Accountants (IESBA) is reminding stakeholders and encouraging the public to act soon and submit comments on their two open exposure drafts.
The Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The exposure draft landing page linked above includes a webinar explaining the proposed revisions.
Comments are requested by May 31, 2022.
The Proposed Technology-related Revisions to the Code seeks to enhance the Code’s robustness and expand its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide. The exposure draft landing page linked above includes a webinar explaining the proposed revisions.
Comments are requested by June 20, 2022. (For stakeholders who are unable to submit a formal response, an online survey has been created for the Tech ED.)
Public input is a critical component of the standards setting process. The IESBA encourages all stakeholders to comment on both important exposure drafts. Learn more about the IESBA at www.ethicsboard.org
“Considerable advances have been made in recent years to strengthen the International Independence Standards, further reinforcing the important role of the independent audit to the integrity of financial markets worldwide,” said IESBA Chair Gabriela Figueiredo Dias. “This timely benchmarking analysis answers many questions we have received and provides much insight into how the provisions in the Code compare with those of a major jurisdiction like the U.S., and will ultimately instill greater public confidence in the robustness of the Code.”
The IESBA launched the benchmarking study to promote awareness and further adoption of the Code. Without making judgments as to the relative merits of the two independence frameworks, the report highlights the similarities and key differences between the Code and the U.S. SEC and PCAOB rules in areas of greatest interest to stakeholders, including the permissibility of non-assurance services to audit clients, fees, long association with an audit client, and business and financial relationships. The IESBA will consider the findings of the benchmarking analysis in developing its 2024-2027 Strategy and Work Plan.
Alongside the detailed report, the IESBA Staff has published an abridged report that provides an overview of the main similarities and differences, as well as an additional publication with further information on the background and objectives of the initiative.
“This Report includes my final message as IESBA Chairman and showcases the significant progress that the IESBA has made on behalf of the public interest during a time of great uncertainty,” said Dr. Stavros Thomadakis, former Chairman of the IESBA. “This includes the critical work that has been completed to strengthen the International Independence Standards, especially in relation to Non-Assurance Services, Fees, and the definition of a public interest entity; as well as timely and important milestones in projects related to Tax planning, Technology, and Independence in Group Audits. I am also proud of the extensive work that has been done jointly with certain National Standards Setters to highlight the applicability of the International Code of Ethics for Professional Accountants (including International Independence Standards) to the unique challenges posed by the COVID-19 Pandemic.”
The 2020-2021 Report provides an overview of the IESBA’s extensive stakeholder outreach efforts. It also provides information about the Board’s partnership with IFAC to promote awareness, adoption, and effective implementation of the Code.
“As evidenced by this report, the IESBA’s body of work during the years the world was engulfed in a global pandemic is as important as it is impressive,” said IESBA Chair Gabriela Figueiredo Dias. “The IESBA successfully pushed key strategic initiatives further – such as the work to strengthen the International Independence Standards – while skillfully pivoting to address the real-time issues affecting professional accountants brought on by innovations in technology and the COVID-19 pandemic.”
The Report also provides an overview of the IESBA’s Consultative Advisory Group (CAG) and includes a message from the IESBA CAG Chairman, Mr. Gaylen Hansen.
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 ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).
Showcases Significant Milestones Reached in Elevating Ethics and Independence Standards
This IESBA Sustainability and Ethics Discussion examines the critical role that complying with ethics standards, including on independence, plays in ensuring reliable and trustworthy sustainability information. The one-hour, live-streamed conversation between IESBA Chair, Gabriela Figueiredo Dias; IESBA Sustainability Working Group Chair and UK Financial Reporting Council Executive Director, Mark Babington, and Financial Conduct Authority Director of ESG, Sacha Sadan provided key insights about the applicability of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to the preparation and presentation of sustainability information and the provision of assurance thereon.
Instilling Public Trust and Confidence in Sustainability Reporting and Assurance
