Welcome to IFAC's Professional Accountants in Business Committee (PAIB) eNews.

In This Issue:

1. Business Reporting Process Guidance Released by PAIB Committee
2. Reminder: Comment Period Coming to a Close for Strategy and Work Plan
3. PAIB Committee Submits Comment Letters on Relevant Issues, Publications
4. ACCA Virtual Conference Includes IFAC Presentation on Sustainability and Accountancy
5. PUMA Environmental P&L Methodology Receives Independent Approval
6. COSO Seeking New Board Chair
7. Recent News, Events, and Publications of Interest

1. Business Reporting Processes Guidance Released by PAIB Committee

Principles for Effective Business Reporting Processes, new International Good Practice Guidance (IGPG), has been released by the PAIB Committee. The guidance helps professional accountants in business work with their organizations to enhance business reporting processes, and discuss the key issues of developing effective processes. At the heart of the new guidance are 11 key principles for evaluating and improving business reporting processes, which are complemented by practical guidance outlining the critical arrangements that need to be in place for effective business reporting. The guidance can also be used to prepare for enhanced forms of business reporting, such as integrated reporting, and is designed for organizations of all sizes, structures, and sectors, as all organizations need to produce high-quality reports.

2. Reminder: Comment Period Coming to a Close for Strategy and Work Plan

The comment period for the proposed Professional Accountants in Business (PAIB) Strategy and Work Plan for 2013-2016 closes next week—January 31, 2013. The proposed plan outlines specific initiatives to improve recognition of the diverse roles professional accountants in business perform and how they need to be positioned to drive successful and sustainable organizations. As professional accountants in business make up more than half of all accountants in the world, they have the collective power to significantly influence their organizations in implementing effective governance and an ethical culture supported by integrated risk management and internal control, sustainable leadership, and effective reporting and performance management.

Additionally, the comment period for Project and Investment Appraisal for Sustainable Value Creation, proposed new International Good Practice Guidance, closes on February 28, 2013. The proposed IGPG will help the accountancy profession facilitate sustainable organizations, financial markets, and economies by taking into account economic, environmental, and social considerations for project appraisal and investment decisions.

3. PAIB Committee Submits Comment Letters on Relevant Issues, Publications

The PAIB Committee has submitted multiple comment letters recently on topics relating to the work and needs of professional accountants in business.

• Responding to a Suspected Illegal Act
  The PAIB Committee submitted a comment letter to the International Ethics Standards Board for Accountants (IESBA)’s proposed changes to the Code of Ethics for Professional Accountants, Responding to a Suspected Illegal Act. In the letter, the PAIB Committee makes the case for the IESBA to clarify the need for the proposed revisions, modify the wording to change aspects of reporting an illegal act from a “requirement” to “apply or be able to explain,” allow for cultural or legal differences, and clarify that resignation over a suspected illegal act should be the last resort of a professional accountant, among other recommendations.

• COSO’s Internal Control over External Financial Reporting
  In response to the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s Internal Control over External Financial Reporting: Compendium of Approaches and Examples and Illustrative Tools for Assessing Effectiveness of a System of Internal Control, the PAIB Committee advocated for greater integration between internal control and risk management frameworks; revision of the internal control framework to embrace a wider perspective beyond applying internal control to reporting, operations, and compliance; and shortening the text of the framework.

• Invitation to Comment: Improving the Auditor’s Report
  The PAIB Committee’s response to the International Auditing and Assurance Standards Board (IAASB)’s Invitation to Comment, Improving the Auditor’s Report, drew heavily from Integrating the Business Reporting Supply Chain, which recommended specific improvements to auditor communication. The committee’s response emphasized the primary need for high-quality business reporting from organizations.

4. ACCA Virtual Conference Includes IFAC Presentation on Sustainability and Accountancy

The Association of Chartered Certified Accountants (ACCA) recently invited IFAC's Head of Professional Accountants in Business, Stathis Gould, to address its Global Virtual Conference during the Business Models for a Green Economy session. Mr. Gould’s session, which drew more than 300 participants, touched on the overall global context for issues of sustainability, examples of models in use, and embedding sustainability into business practices. The presentation slides and audio file are available on the IFAC website.

5. PUMA Environmental P&L Methodology Receives Independent Approval

Footwear company PUMA recently received approval from independent experts gathered by its parent company, PPR, to review its approach to environmental profit and loss(P&L). In 2011, PUMA became the first major company to release an environmental P&L statement and put an economic value on greenhouse gas emissions and water consumption (see July 2011 PAIB Committee eNews for more information). The results of this independent methodology review found that PUMA’s approach “clearly applied credible valuation approaches.” For more information, see The Guardian Sustainability Blog.

6. COSO Seeking New Board Chair

COSO is seeking a new chair for a three-year term beginning June 1, 2013. The current chair, David Landsittel, is stepping down after serving for four years.

7. Recent News, Events, and Publications of Interest

• The World Bank has published a new report on climate change, Turning Down the Heat: Why a 4°C Warmer World Must Be Avoided. The report argues that the world could see significant, problematic changes, including extreme heat waves, declining food supplies, and rising sea levels, if greenhouse gas emissions aren’t lowered.
• The International Integrated Reporting Council (IIRC) has released its prototype of the International Integrated Reporting Framework to “demonstrate progress towards defining key concepts and principles that underpin [integrated reporting] and support organizations’ ability to produce an integrated report.” Additionally, the IIRC has released:
  
• Emerging Examples Database to demonstrate emerging best practices;
• Understanding Transformation: Building the Business Case for Integrated Reporting;
• Video interviews with Pilot Programme participants discussing their experiences and approaches; and
• The Pilot Programme 2012 Yearbook: Capturing the Experiences of Global Businesses and Investors.

Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA). This edition of IESBA eNews provides a summary of decisions made at the IESBA’s meeting held December 10-12, 2012, in New York, USA. See the Meeting Page for more information.

IN THIS ISSUE:

1. Emerging Issues and Strategic Plan
2. Breach of a Provision of the Code
3. Conflicts of Interest
4. Definition of Engagement Team
5. Long Association of Senior Personnel with an Audit Client
6. Non-Assurance Services
7. Review of Part C of the Code
8. Suspected Illegal Acts
9. Next Meetings
10. New Technical Director
11. 2013 IESBA Handbook

1. Emerging Issues and Strategic Plan

IESBA members shared information and views about significant national and international developments or emerging issues of potential relevance to the IESBA’s current and future strategy and work plan.

In addition, the IESBA agreed to the scope of, and general approach to, the survey of stakeholders to be used to facilitate the development of its Strategy and Work Plan, 2014-2016. 

The survey is now open through March 15, 2013. The IESBA encourages all stakeholders to participate. For the strategy and work plan currently in effect, see Strategy and Work Plan, 2011–2012, and the additional work streams added in mid-2012.

2. Breach of a Provision of the Code

The IESBA approved for issuance, subject to due process confirmation by the Public Interest Oversight Board (PIOB), changes to the Code of Ethics for Professional Accountants (the Code) related to provisions addressing a breach of a requirement of the Code.

The changes will be effective approximately one year after issuance of the final pronouncement, which is expected by the end of March 2013. The final pronouncement will be included in the 2013 Handbook of the Code of Ethics for Professional Accountants (see below).

3. Conflicts of Interest
The IESBA approved for issuance, subject to due process confirmation by the PIOB, changes to the Code addressing conflicts of interest. The final pronouncement is expected to be released by the end of March 2013, with the changes becoming effective on July 1, 2014. The final pronouncement will be included in the 2013 Handbook of the Code of Ethics for Professional Accountants (see below).

4. Definition of Engagement Team

The IESBA considered the significant comments received on the Exposure Draft (ED) of its proposed change to the definition of the term “engagement team.” The IESBA also considered further amendments to the proposed definition, taking into account limited amendments proposed by the International Auditing and Assurance Standards Board (IAASB) to the material in ISA 610 (Revised), Using the Work of Internal Auditors, dealing with the use of internal auditors to provide direct assistance on the external audit (Direct Assistance).

The IESBA will consider approving the revised definition of “engagement team” after consulting with its Consultative Advisory Group (CAG) on January 21, 2013.

5. Long Association of Senior Personnel (Including Partner Rotation) with an Audit Client

The IESBA approved a project proposal to review the long association provisions in Section 290 of the Code to ensure that they continue to provide robust and appropriate safeguards against the familiarity and self-interest threats arising from long association with an audit client.

The IESBA will consider preliminary issues relating to the project at its March 2013 meeting, including the approach to the project.

6. Non-Assurance Services

The IESBA approved in principle, subject to confirmation of scope, a project proposal to review the non-assurance services provisions in Sections 290 and 291 of the Code to ensure that they continue to support a rigorous approach to independence for assurance services, particularly audits of financial statements.

The IESBA will consider the outcome of a benchmarking exercise for purposes of narrowing the scope of the project at its March 2013 meeting.

7. Review of Part C of the Code

Part C of the Code addresses how the conceptual framework of threats and safeguards in Part A of the Code applies in certain situations to professional accountants in business (PAIBs). The IESBA agreed to the recommendations of the Part C Working Group, including that priority attention be given to the following areas in a review of Part C of the Code:

• Pressure by superiors and others to engage in unethical or illegal acts;
• The responsibility of PAIBs to produce financial reports that are faithful representations of the economics of transactions, and associated matters; and
• Facilitation of payments and bribes.

The IESBA agreed that the Part C work stream should proceed on an accelerated basis under the current strategy and work plan rather than be subject to further consideration of relative prioritization as part of the upcoming consultation on its Strategy and Work Plan, 2014-2016. Accordingly, the IESBA directed the Working Group to develop a project proposal for its consideration at the March 2013 IESBA meeting.

8. Suspected Illegal Acts

The IESBA received a brief update on initial stakeholder reactions to its August 2012 Exposure Draft (ED), Responding to a Suspected Illegal Act, which closed on December 15, 2012.

The IESBA will consider the significant comments from the nearly 70 responses received on the ED at its March 2013 meeting.

9. Next Meetings

Meetings of the IESBA and the IESBA CAG are open to the public. The IESBA CAG will next meet via teleconference on January 21, 2013. The IESBA is expected to next meet via teleconference in the latter part of January 2013. The next face-to-face IESBA meeting will be held in New York, USA, on March 11–13, 2013. For more information and to register to attend an IESBA meeting as an observer, visit IESBA Meetings. For more information and to register to attend an IESBA CAG meeting as an observer, visit IESBA CAG Meetings.

10. New Technical Director

Ken Siong has assumed the role of technical director of the IESBA effective January 1, 2013. Ken brings over 10 years of experience working with the International Auditing and Assurance Standards Board (IAASB), most recently as deputy director. In that capacity, his responsibilities included managing a number of key IAASB standard-setting projects and other initiatives—including audit quality, quality control, and related parties—overseeing the IAASB’s liaison with major national standard setters, and coordinating the IAASB’s strategic and operational activities. Prior to joining the IAASB, Ken worked as a senior manager in the assurance practice of PwC in Hong Kong. He is a member of the Institute of Chartered Accountants in England and Wales.

11. 2013 IESBA Handbook

The IESBA is developing the 2013 Handbook of the Code of Ethics for Professional Accountants. It will contain the final pronouncements addressing breaches of provisions in the Code and conflicts of interest. It is also expected to contain the revised definition of “engagement team.” The 2013 Handbook is expected to be released in the second quarter of 2013. For the current edition, see 2012 IESBA Handbook.   

Welcome to International Auditing and Assurance Standards Board (IAASB) eNews.

In This Issue: 

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment
2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements
3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1
4. Directions in Auditing and Assurance: Challenges and Opportunities
5. Upcoming IAASB Meeting
6. Other Relevant IFAC Initiatives
7. Share IAASB eNews with Your Colleagues

1. Focus on Auditor Reporting—Feedback on June 2012 Invitation to Comment

Auditor reporting continues to be the IAASB’s foremost priority, and significant resources will be dedicated to the topic during 2012–2014. To solicit feedback on its June 2012 Invitation to Comment (ITC): Improving the Auditor’s Report, the IAASB held three well-attended global roundtables in North America, Europe, and Asia Pacific. More than 190 investor, analyst, regulatory and oversight, preparer, academic, those charged with governance, standard-setter, and firm representatives from more than 20 countries participated in the roundtables. Information, including audio recordings, is available on the IAASB’s Auditor Reporting Roundtables page.

To date, more than 160 comment letters have been received on the ITC. The IAASB’s discussion of these comments will commence at its December 2012 meeting, followed by an additional IAASB meeting planned for February 2013 to enable continued rapid progress toward an exposure draft of revised auditor reporting standards in 2013. To access the ITC comments, please visit the IAASB’s ITC web page.

2. IAASB Proposes Standard Enhancing Auditor Responsibilities for Disclosures Beyond the Financial Statements

The IAASB has released for public comment proposed International Standard on Auditing (ISA) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon.

The proposed standard clarifies and enhances the scope and focus of auditor efforts on “other information”—that is, information included in documents containing or accompanying the entity’s audited financial statements. The proposals recognize that significant changes in financial reporting have occurred over the last two decades regarding the information issued in connection with an entity’s financial statements and the manner in which it is shared with users. The proposals extend the scope of the extant standard and the auditor’s responsibilities and include suggested auditor reporting responsibilities.

The deadline for comments is March 14, 2013. To submit a comment, click here.

3. IAASB Staff Q&A Publication Addresses Proportionate Application of ISQC 1

IAASB Staff released a Questions & Answers (Q&A) publication titled Applying ISQC 1 Proportionately with the Nature and Size of a Firm. The publication highlights how the design of International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, enables it to be applied in a proportionate manner.

ISQC 1 applies to firms of all sizes that provide services covered by the IAASB’s international standards, including International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs), International Standards on Assurance Engagements (ISAEs), and International Standards on Related Services (ISRSs).[k1] 

While ISQC 1 applies to all firms, the Q&As focus on matters that are likely to be of particular relevance to the application of ISQC 1 in the context of smaller firms. Smaller firms, as well as smaller public sector audit organizations, should find the publication helpful in achieving an effective and efficient implementation of ISQC 1.

This initiative follows the 2009 IAASB Staff Q&A publication, Applying ISAs Proportionately with the Size and Complexity of an Entity.

4. Directions in Auditing and Assurance: Challenges and Opportunities

IAASB Chairman Prof. Arnold Schilder recently was a guest speaker at a seminar in Melbourne, Australia, hosted by the Australian Auditing and Assurance Standards Board. His presentation–Directions in Auditing & Assurance: Challenges and Opportunities–focused on the impact of the global environment on the relevance of an audit, and included the response of the IAASB to these challenges. Particular topics included the IAASB’s Invitation to Comment on auditor reporting, the IAASB’s projects on audit quality and disclosures, and alternatives to audits aimed at meeting the needs of small- and medium-sized entities (SMEs).

Other challenges and opportunities to enhance relevance were also discussed, including how to reinforce and support professional skepticism, and how to deal with emerging developments, such as integrated reporting.

5. Upcoming IAASB Meeting

The IAASB will meet in New York, USA, December 10–13, 2012. As a reminder, all meeting agenda materials are publicly available and posted on the IAASB's website in advance of IAASB meetings.

Topics that will be discussed include: auditor reporting, audit quality, disclosures, using the work of internal auditors, and the revision of International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

In addition, meeting highlights, a summary podcast, and complete audio recordings are posted after each meeting. Visit the IAASB Meetings page.

6. Other Relevant IFAC Initiatives

Initiatives of IFAC committees and other independent standard-setting boards supported by IFAC may be of interest to those who follow the work of the IAASB, including the following:

International Education Standard (IES) 6, Initial Professional Development – Assessment of Professional Competence (Revised)

Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Elements and Recognition in Financial Statements

Responding to a Suspected Illegal Act―IESBA Proposes Changes to Code of Ethics to Address Illegal Acts

PAIB Committee Response to the IAASB Invitation to Comment: Improving the Auditor’s Report

IFAC and the IIRC Sign MoU on Cooperation, Collaboration For IR

7. Share IAASB eNews with Your Colleagues

The IAASB issues regular eNews updates to keep you apprised of the board's activities and recent publications. Please forward this eNews to any interested colleagues and let them know they can register and subscribe to this and other eNews bulletins.

In This Issue:

1. IAASB Meeting Highlights
2. Approval of Exposure Draft of Proposed International Standard on Auditing (ISA) 720 (Revised)Auditor Reporting Invitation to Comment (ITC)—Comment Period
3. Drawing to a Close
4. IAASB Continues to Address Assurance Needs of Smaller Entities; Issues Revised Standard on Review Engagements

1. IAASB Meeting Highlights

The most recent IAASB meeting was held September 17–21, 2012, in New York, USA.

In addition to the projects discussed in this eNews, the IAASB deliberated issues relating to the following:

• Approval of a new project to consider the audit implications of financial statement disclosures
• The development of an audit quality framework (the Framework), Audit Quality: An International Framework
• Proposed International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information
• Preliminary findings and the planned timetable of Phase 2 of the ISA Implementation Monitoring project relating to the clarified International Standards on Auditing (ISAs)
• The IAASB’s ongoing liaison with the International Accounting Standards Board (IASB)
• The development of a Staff Question & Answer publication addressing the proportionate application of International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Service Engagements 

The IAASB will meet in New York, USA, December 10–14, 2012. As a reminder, all meeting agenda materials are publicly available and posted on the IAASB's website in advance of IAASB meetings. In addition, meeting highlights, a summary podcast, and complete audio recordings are posted after the meetings. Visit the IAASB Meetings page.

2. Approval of Exposure Draft of Proposed International Standard on Auditing (ISA) 720 (Revised)

The IAASB approved for exposure proposed ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon. The proposed standard broadens and clarifies the scope of documents to be addressed by the auditor, enhances the auditor’s work effort, and introduces reporting requirements.

The Exposure Draft will be released by the end of October 2012. Comments will be requested by February 28, 2013.

3. Auditor Reporting Invitation to Comment (ITC)—Comment Period Drawing to a Close

In support of its work to enhance, on a global basis, the communicative value of the auditor’s report on financial statements, in June 2012 the IAASB issued Invitation to Comment (ITC): Improving the Auditor’s Report. The ITC sets out the indicative direction of the board’s future standard-setting proposals to improve how and what auditors report in accordance with the International Standards on Auditing (ISAs). Interested stakeholders have the opportunity to submit a formal response to the ITC through October 8, 2012 via this link.

At its most recent meeting, the IAASB received an update on discussions held at its North American and European Auditor Reporting Roundtables and other outreach activities to date; and discussed, on a preliminary basis, the scope and potential structure of the ISAs to be revised as part of its Auditor Reporting project. The IAASB will consider responses received on the ITC, as well as feedback from its Asia Pacific Roundtable and other outreach activities, at its December 2012 meeting. The IAASB’s current timetable anticipates approval of an Exposure Draft on revised auditor reporting standards in June 2013. To follow this project, visit the IAASB’s Auditor Reporting page. 

4. IAASB Continues to Address Assurance Needs of Smaller Entities; Issues Revised Standard on Review Engagements

The IAASB has released International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements. ISRE 2400 (Revised) follows the release earlier in 2012 of International Standard on Related Services (ISRS) 4410 (Revised), Compilation Engagements, a standard also addressing services of particular relevance to small- and medium-sized entities (SMEs).

Review engagements are of particular relevance for entities that are not required, or do not elect, to have an audit, but wish to enhance the credibility of, and confidence in, their unaudited financial statements among their users through practitioner involvement. ISRE 2400 (Revised) enhances both the value and performance of review engagements. Through strengthened requirements and additional guidance, it helps ensure there is sufficient appropriate evidential support for the practitioner’s conclusion on the financial statements and further promotes high-quality engagements. The revised standard is effective for reviews of financial statements for periods ending on or after December 31, 2013. An At a Glance publication provides an overview of the revised standard.

Welcome to the International Ethics Standards Board for Accountants (IESBA) eNews.

In This Issue:

1. IESBA Welcomes New Chair
Technical Updates
2. Responding to a Suspected Illegal Act
3. Proposed Change to the Definition of “Those Charged with Governance”
4. Review of Part C of the Code
5. Breach of a Requirement of the Code
6. Reformatting of the Code
7. Strengthening Safeguards against Familiarity Threats
8. Conflicts of Interest
9. Other Matters
Additional News
10. IFAC Is Hiring
11. IESBA Handbook Now Available
12. Upcoming Meetings
13. Share IESBA eNews with Your Colleagues

1. IESBA Welcomes New Chair

Jörgen Holmquist recently began his three-year appointment as the first independent chair of the IESBA. A public member of the IESBA since 2011, he served as director general, DG Internal Market and Services, European Commission from 2007 to 2010, where he was responsible for developing the European Union (EU) regulatory response to the financial crisis, including legislation and policy concerning accounting and auditing.

A key function of the chair is to enable, encourage, and promote a deeper understanding by stakeholders and the public of the strategies and activities of the IESBA. Mr. Holmquist will be active in developing and maintaining effective relationships with national standard setters, regulators, and other key stakeholders.

Mr. Holmquist joined IFAC President Göran Tidström in acknowledging the exemplary contribution and commitment his predecessor Ken Dakdduk brought to the role, and to his position on the board, over the past seven years. To learn more, see Mr. Holmquist's interview in IFAC News and the press release announcing his appointment.

Technical Updates
This section provides an update on recent developments on key projects and a summary of decisions made at the IESBA’s last meeting in June 2012. 

2. Responding to a Suspected Illegal Act

Last month, the IESBA issued Responding to a Suspected Illegal Act. The Exposure Draft (ED) proposes that:

• A professional accountant in public practice providing professional services to an audit client be required to disclose, where the client has not done so, to an appropriate authority, suspected illegal acts that affect financial reporting or fall within the expertise of the professional accountant, and that are of such consequence that reporting would be in the public interest.
• An accountant performing a professional service for a non-audit client and an accountant in business be required to disclose suspected illegal acts to the entity’s external auditor, if any, where the accountant is unable to escalate the matter, or the client/employing organization respectively has failed to take appropriate action, and the matter is of such consequence that the professional accountant determines that disclosure would be in the public interest. If the response to the matter is not appropriate, the professional accountant will have a right to disclose certain suspected illegal acts to an appropriate authority. The accountant would be expected to exercise the right to disclose. An accountant performing a non-assurance service for a non-audit client would have a right to disclose a suspected illegal act that related to the subject matter of the professional service being provided. A professional accountant in business would have a right to disclose a suspected illegal act that affects the financial reporting of the employing organization.
• In exceptional circumstances, a professional accountant would not be required or expected to disclose the suspected illegal act. Exceptional circumstances would arise where a reasonable and informed third party might conclude that the consequences to the professional accountant or others of disclosure are so severe as to justify not complying with the requirement to disclose, for example, where there would be threats to the physical safety of the professional accountant or other individuals. Consequences that are of a commercial nature, such as the loss of a client or income, would not constitute exceptional circumstances.
• Terminating the professional relationship or resigning from the employing organization is not a substitute for disclosure to an appropriate authority.

Visit www.ethicsboard.org to access the ED and submit a comment. Comments are requested by December 15, 2012.

3. Proposed Change to the Definition of “Those Charged with Governance”

The IESBA has issued an Exposure Draft (ED) to revise the definition of the term “those  charged with governance” to more closely align with the definition in ISA 260, Communication with Those Charged with Governance. The ED recognizes that, consistent with ISA 260, communication may be with a subgroup of those charged with governance. Visit www.ethicsboard.org to access the ED and submit a comment. Comments are requested by October 31, 2012.

4. Review of Part C of the Code

At its June meeting, the IESBA discussed the preliminary recommendations of a Working Group formed to review Part C of the Code of Ethics for Professional Accountants (the Code) and identified areas where further development might be appropriate. For consideration in the IESBA’s next Strategy and Work Plan, the Working Group recommended guidance on two additional issues:

• The responsibility of professional accountants in business (PAIBs) to produce financial reports that are faithful representations of the economics of transactions and to avoid association with misleading information and reports; and
• Situations in which PAIBs are pressured by superiors to violate laws or ethical standards.

The IESBA agreed that the review be extended to identify any other related issues that the IESBA may wish to address in its Strategic Plan for 2014/15.

5. Breach of a Requirement of the Code

At its June meeting, the IESBA discussed amended wording in its proposal to address a breach of the Code. The changes reflect board and CAG members’ comments at meetings held earlier this year. The IESBA’s discussion also benefitted from feedback provided in response to a recent survey of those charged with governance. The IESBA concluded:

• The firm shall discuss all breaches and the action it has taken, or proposes to take, with those charged with governance. The communication shall be as soon as possible, unless those charged with governance have specified an alternative timing for less significant breaches;
• The firm shall communicate the breach in writing to those charged with governance; and
• In addition to complying with any legal or regulatory requirements, the firm shall consider reporting a breach to a member body, relevant regulator, or oversight authority when such reporting is common practice or encouraged in the particular jurisdiction by the member body, regulator, or oversight authority.

The IESBA anticipates publishing the final standard in December with an effective date of January 1, 2014.

6. Reformatting of the Code

At its June meeting, the IESBA reviewed a possible alternative approach to formatting the Code to raise the visibility of its requirements and prohibitions. The IESBA found the possible alternative helpful and requested the proposals be developed further and consideration be given to the views of regulators and those who implement the Code.

7. Strengthening Safeguards against Familiarity Threats

At its February 2012 meeting, the IESBA tentatively agreed it is important to have a position on the key regulatory proposals in Europe, the US, and other jurisdictions that are within the board’s purview. At its meeting in June, the IESBA received a report to assist it in determining its position on mandatory audit firm rotation and other possible safeguards as a means of reducing to an acceptable level the familiarity and self-interest threats that can be created as a result of an auditor’s long association with an audit client. It did not yet form an opinion on these matters and determined that it would continue to monitor developments and the debate in this area.

At its June meeting, the IESBA agreed that it was appropriate to review the provisions in the Code that address partner rotation and requested that a project proposal be prepared to initiate this. The project should address the period that a partner can serve as a key audit partner, the time-out period required, the individuals who should be subject to rotation, and other safeguards that could address the threats created by long association with an audit client. The IEBSA will review a project proposal on these issues at its next meeting in December 2012.

8. Conflicts of Interest

The IESBA discussed a summary of responses (as follows) to the Exposure Draft (ED) addressing conflicts of interest:

• Respondents were generally supportive of the application of the reasonable and informed third-party test and the basis on which threats arising from network firm interests and relationships are addressed in the ED;
• Respondents were supportive of proposals to deal with situations when consent cannot be obtained because it would breach confidentiality; and
• Respondents were supportive of the proposed requirements for professional accountants in business.

The IESBA reached tentative conclusions on the following matters:

• The description of a conflict of interest should be redrafted to provide a linkage between the professional activity and the matters that are in conflict, thus making it clear that a conflict of interest is not created merely because the interests of two clients are in conflict; and
• The guidance on managing conflicts of interest, and obtaining and documenting consent, could be clarified by addressing disclosure and consent separately and providing additional guidance on the types of consent—general, explicit, and implied.

The IESBA will consider revised wording at its December 2012 meeting.

9. Other Matters 

In June, IFAC released a new policy position paper setting out guidance on defining the “public interest.” At its June meeting, the IESBA noted the IFAC Board’s approval of the paper. The IESBA also noted that in its response to the Exposure Draft addressing conflicts of interest, the International Organization of Securities Commissions (IOSCO) had encouraged the IESBA to consider the concept of the public interest as outlined in the Code and whether it should be a fundamental principle. The IESBA agreed that it would consider both of these matters at its December 2012 meeting.

The IESBA has been trial testing an approach to assessing the impact of its proposals and to date has received comments from respondents on three different approaches to developing its impact assessment. The IESBA agreed that it would consider its experience with impact assessment, and the experience of the other standard-setting boards supported by IFAC, at its December 2012 meeting with a view to considering whether there is a favored model to use for future IESBA impact assessments.

Additional News

10. IFAC Is Hiring

The International Federation of Accountants, which supports the operations of the IESBA, is searching for a Technical Director to supervise and coordinate the work of the IESBA. Qualified candidates will have senior level accounting experience, including significant technical experience and a deep working knowledge of ethical and independence standards, in particular, the Code of Ethics for Professional Accountants. Visit Working at IFAC to learn more. Qualified candidates should send a resume and salary requirements to jobs@ifac.org.   

11. IESBA Handbook Now Available

The 2012 Handbook of the Code of Ethics for Professional Accountants is now for sale on the IFAC website. Discounts for bulk orders, students, educators, and those in World Trade Organization developing countries are available.

12. Upcoming Meetings

Meetings of the IESBA and the IESBA Consultative Advisory Group are open to the public. The IESBA plans to next meet by conference call on October 15, 2012, 7:00–9:00 AM Eastern Daylight Time and October 16, 2012, 7:00–8:00 AM Eastern Daylight Time. The next face-to-face meeting of the IESBA is scheduled for December 10–12, 2012 in New York, USA. For more information and to register to attend an IESBA meeting as an observer, visit IESBA Meetings.

13. Share IESBA eNews with Your Colleagues

The IESBA issues regular eNews updates to help keep you informed of its activities and recent developments. Please forward this eNews to any interested colleagues and advise them that they can subscribe to receive IESBA eNews by following these simple steps:

• Register a new account or log in to your existing IFAC web account.
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• Select "Ethics eNews" from the checklist, as well as any other newsletters or press releases that you would like to receive.

Welcome to this Special Edition of eNews—The Role of Professional Accountants in the Sustainability of Small Businesses.

In This Issue:

1. Introduction
2. Reporting and Assurance
3. Guidance and Support Tools
4. Surveys and Reports
5. Events and Presentations
6. Awards
7. Next Steps

1. Introduction

IFAC’s member organizations are increasingly developing activities that specifically address small- and medium-sized entities (SMEs), sustainability, and the role of accountants. This special edition of eNews highlights these activities to facilitate information sharing, and to promote how professional accountants can work with SMEs to improve their environmental, social, and governance (ESG) performance.

There is an opportunity for accountants working in small- and medium-sized practices (SMPs) to respond and provide sustainability advice and guidance to their SME clients. Professional accountants working in SMEs also have a critical role to play in embedding sustainability into the business strategy and practices of their employers.

A good starting point for organizations is to do more with less. Accountants can advise on the benefits of reducing energy costs and pollution, from simple behavioral changes aimed at eliminating waste, to investment in new equipment and alternate sources of energy, to developing an environmental management system. Accountants can also assist with the preparation of sustainability and integrated reports and the provision of assurance thereon.

SMEs are crucially important to the health, stability, and sustainability of the global economy: they account for the majority of private sector gross domestic product (GDP), wealth and employment creation, and social and environmental impacts. Today, they are starting to face pressure to measure and reduce outputs that negatively affect the environment and society. The good news is that studies are finding that initiatives that help SMEs reduce their carbon footprint also help improve their bottom line. SMEs of all kinds—for profits and not for profits, public or private, across all industrial sectors—stand to yield significant benefits from adopting sustainable business practices and their accountants can help.

2. Reporting and Assurance

• For the years 2011-2012, the Association of Chartered Certified Accountants (ACCA) issued its first integrated annual report, which follows the initial approach set out by the International Integrated Reporting Council (IIRC) in their Pilot Programme (see below for additional information on the IIRC).

Prior to the United Nations Conference on Sustainable Development (Rio+20) in June 2012, the ACCA also released Making a Difference at Rio+20, advocating for theinclusion in the final conference outcome document of a call for the integration of sustainability information into corporate reports (from companies of any size). See also the final document from the conference.

• The CPA Australia 2011 Annual Report combines CPA Australia’s annual and sustainability reports, which reflects its “journey towards an integrated report.” The report also benchmarks performance against the Global Reporting Initiatives’ G3.0 Guidelines and sustainability indicators. The report highlights CPA Australia’s activities related to thought leadership, carbon emissions, human resources, governance, and community involvement.
   
• The IIRC is developing the Integrated Reporting Framework, a new approach to corporate reporting that demonstrates the linkages between an organization’s strategy, governance, and financial performance and the social, environmental, and economic context in which it operates.

In 2011, the IIRC released the Discussion Paper, Towards Integrated Reporting—Communicating Value in the 21^st Century. The IIRC received comment letters from more than 200 respondents, including the IFAC Small and Medium Practices (SMP) and Professional Accountants in Business (PAIB) Committees. See additional submissions on the IIRC website.

IFAC’s President Göran Tidström is a member of the IIRC and IFAC Chief Executive Officer Ian Ball is the chairman of the IIRC’s Working Group. Additionally, IFAC provides staff support for the development of the integrated reporting framework.

In July 2012, the IIRC released its Draft Outline of the Framework and plans to launch a prototype later in 2012, a Draft Framework in early- to mid-2013, and a “version 1.0” of the Framework in late 2013. Mr. Ball recently gave an update on the work of the IIRC, which is available on the IFAC website in the News & Events section.

The ACCA, the Chartered Institute of Management Accountants (CIMA), and the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) are participating in IIRC’s Pilot Programme to test the building blocks of the Framework and inform its development and application.

• The International Auditing and Assurance Standards Board (IAASB) has released the International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas (GHG) Statements, to ensure high-quality assurance reviews for those organizations that release GHG statements. The standard covers reasonable and limited assurance engagements and is designed to help foster public confidence in assured greenhouse gas emissions information. The ISAE has been drafted such that it can be applied in a manner proportionate to the size of complexity of the entity. It is therefore applicable in various contexts, from emissions from a single office to emissions from complex physical or chemical processes at several facilities across a supply chain. See the At a Glance summary for more information.
   
• In 2011, the South African Institute of Chartered Accountants (SAICA) published its first integrated annual report, using the guidelines in the discussion paper released by the (South African) Integrated Reporting Committee. SAICA has also created a dedicated website for sustainability issues: www.sustainabilitysa.org. The website contains information on integrated reporting and sustainability for both South Africa and the global community.

3. Guidance and Support Tools

• The article The Role of SMPs in Greening Small Business, written by Sylvie Voghel, then chair of the IFAC SMP Committee, and Paul Thompson, IFAC deputy director, SME and SMP Affairs, presents the arguments, both environmental and financial, in favor of SMPs implementing “green” policies and initiatives within their own organizations. The article also explores sustainability advisory as an emerging service area for SMPs.
   
• The IFAC Sustainability Framework 2.0, published by the IFAC PAIB Committee, is a tool for accountants around the world to accomplish the integration of sustainability within their organization from three perspectives: strategy, operations, and reporting. Through key considerations developed from examples and opinions from entities of all sizes, from major international corporations to smaller firms, and leaders from around the world, the Framework provides a comprehensive global view of some of the current best practices in each of these areas.
   
• The PAIB Committee also published Investor Demand for Environmental, Social, and Governance Disclosures: Implications for Professional Accountants in Business earlier in 2012 to consider the current trends in investor demand for and use of ESG information, and make recommendations on how professional accountants can better support their organizations in responding to these demands. The report includes a sector-neutral list of the most commonly used core performance indicators, which are of use for professional accountants working with organizations.
   
• The ACCA’s The ABC of CSR for Small and Medium Enterprises provides guidance on how businesses “can voluntarily engage with key stakeholders to determine how to ‘do good while doing good business.’” It breaks corporate social responsibility (CSR) down into plain English and basic categories that can help businesses assess what they do and make sense of CSR from a holistic perspective. It focuses on four key areas that are likely to be important to businesses: employees, environment, community, and the supply chain. The guidance includes definitions of key terms, real-life case studies and an explanation of the what, why, and how of CSR for small businesses.
   
• In 2011, the AICPA, the Canadian Institute of Chartered Accountants, and CIMA issued a joint report discussing how SMEs can profit from sustainability and the growing emphasis SMEs are putting on sustainability. SMEs Set Their Sights on Sustainability uses case studies from Canada, the UK, and the US to illustrate how smaller companies are using sustainability issues to their advantage and taking various approaches to core issues.
   
• The Institute of Chartered Accountants in England and Wales (ICAEW)’s Business Sustainability Program earlier in 2012 to consider the current trends in investor demand for and use of ESG information, and make recommendations on how professional accountants can better support their organizations in responding to these demands. The report includes a sector-neutral list of the most commonly used core performance indicators, which are of use for professional accountants working with organizations.
   
• The Institute of Chartered Accountants in Australia (ICAA) developed a series of case studies that highlight five businesses and their initiatives to integrate sustainable business practices at their organizations. Integrating Sustainability into Business Practices: A Case Study Approach features companies of varying size, industry, and structure and includes tips to help business leaders get involved. For the organizations examined, moving toward a more sustainable business has yielded both environmental and financial gains.
   
• With financial support from the Swedish Transport Administration, the Swedish Energy Agency, the Swedish Environmental Protection Agency, and the Swedish region Västra Götaland, Swedish professional accountancy organization FAR has developed a set of tools known as MER (Miljö Engagerad Revisor, or Environmentally Committed Accountant). The tools strive to help accountants work with their SME clients to assess the environmental and financial status of the business’s operations. MER was featured in a FEE paper promoting the tools as a good practice example in March 2010. To access the tools in English, see the MER website.
   
• Nederlandse Beroepsorganisatie van Accountants has published Corporate Social Responsibility: CSR for SME Accountants, designed to provide practical guidance to professional accountants working with SMEs get started in CSR. The brochure explores a number of different aspects of CSR and its importance for SMEs and the professional accountants that work with them. Most significantly, it examines how an SME and its accountant can get involved in CSR and what roles the accountant can play.

4. Surveys and Reports

• Published in July 2012, the ACCA’s Environmental Aspects of Sustainability, SMEs, and the Role of the Accountant, investigates the intersection between these issues. Building on previous research on the role of SMPs as SME advisors, the study was conducted via 14 interviews with practicing accountants, SME representatives, and environmental consultations.

The research found that SMPs are not generally providing sustainability advice due to limited resources and their lack of knowledge and confidence to apply their accounting skills in this area. In addition, the current sustainability advice provided by SMPs is largely informal in nature, pertaining mostly to cost-reduction opportunities, such as energy consumption and transport costs.

• The Comité de Integración Latino Europa-América (CILEA) conducted a survey from October 2011 to February 2012 on social and environmental reporting in Latin American and Latin European countries. The objective of the survey was to determine what types of social and environmental information is currently being reported in the participating countries, what the requirements are in those jurisdictions, and what the benefits are of reporting such information. The survey results include an indication of which mandatory requirements are applicable to SMEs. Twelve professional organizations participated in the survey, including several IFAC member bodies. For the complete results, see Resultados de la Encuesta Sobre Balance Social.
   
• Released by the Fédération des Experts Comptables Européens (FEE) in January 2010, the policy statement Small and Sustainable: Opportunities for SMEs calls for professional accounting practices to contribute to sustainable thinking in SMEs by developing sustainable products and services for their small business clients. The statement is part of a series of policy statements released by FEE on core issues related to sustainability and the accountancy profession.
   
• ICAEW published Sustainability Assurance: Your Choice in 2010, which outlines the intersection between sustainability and assurance services and what is distinct about the assurance service available from a professional accountant in public practice. The booklet also includes a listing of who makes use of sustainability information, why they want assurance, and the types of services a professional accountant can provide.

The ICAEW’s 2004 report Sustainability: The Role of Accountants, reprinted in 2011, and describes ways in which information supports mechanisms used to promote sustainable development and the challenges and opportunities that these present for professional accountants in business and in practice. An Executive Summary and Abstract of the report are also available.

• In September 2012, the ICAA published a business briefing on building and implementing a sustainability plan to help Chartered Accountants and other financial professionals assess the sustainability of their businesses. Twenty key issues relevant to implementing a new strategic approach to sustainability in a corporate context, the issues are divided into four key areas: building sustainability into your strategy; implementing the strategy; embedding sustainability into core business processes; and creating value through reporting.

5. Events and Presentations

• In response to growing interest in the environmental footprint of SMEs, ACCA held a roundtable, SMEs and SMPs on the Road to Sustainability: Opportunities and Barriers, to discuss trends, challenges, and opportunities shaping the sustainability and CSR agenda for SMEs and SMPs in December 2010.
   
• The Hong Kong Institute of Certified Public Accountants’ professional development events for members in 2012 cover corporate environmental management; environmental, social and governance (ESG) reporting; and becoming a sustainable company.
   
• The South African Institute of Professional Accountants (SAIPA) held its National Conference, Accounting as a Catalyst for Change, on building and implementing a sustainability plan to help Chartered Accountants and other financial professionals assess the sustainability of their businesses. Twenty key issues relevant to implementing a new strategic approach to sustainability in a corporate context, the issues are divided into four key areas: building sustainability into your strategy; implementing the strategy; embedding sustainability into core business processes; and creating value through reporting.

6. Awards

• The ACCA sponsors the annual Sustainability Reporting Awards, which recognize companies for excellence in ESG reporting, with an emphasis on innovative ways to communicate performance and transparency. The awards only comment on transparency and reporting standards. Previous winners have included multinational corporations and SMEs, such as REAP and Traidcraft. ACCA has been sponsoring the awards program for more than ten years.
   
• CPA Australia's Global Research Perspectives Program, an annual research grant program for research of relevance to CPA Australia’s members, the accountancy profession, and the global business community as a whole, includes sustainability and integrated reporting as an eligible category. Research in this area should link internal sustainability-based performance to external reporting and seek to explore how accounting practices should adapt or develop to contend with changing expectations of the responsibility, scope, and impact of business. Previously selected research included the influence and impact of sustainability on capital investment decisions and applying sustainability reporting to product focus.
   
• The Hong Kong Institute of Certfied Public Accountants’ annual Best Corporate Governance Disclosure Awards includes an award for performance in sustainability and corporate social responsibility reporting and a category for listed companies of mid-small market capitalization.  Information about the 2012 awards is available on the Institute’s website.
   
• Winners of the inaugural Finance for the Future Awards were announced in June 2012. The ICAEW, The Prince’s Accounting for Sustainability Project, and NatWest launched the new awards program to promote sustainability in business in the UK. With six categories ranging from start-ups to established major corporations, including not-for-profit, public sector, and small business organizations, the Awards help raise awareness of organizations that have shown how the finance function has driven or had a significant role in embedding and measuring sustainable performance. ICAEW also recently launched a series of new videos and website dedicated to encouraging sustainability in business—Just Good Business.

7. Next Steps

Join us on LinkedIn! As evidenced in this newsletter, IFAC member bodies are ramping up efforts to support accountants in this area, but there may be scope for the profession to do even more to position and equip professional accountants as sustainability advisors.

Please join us in the IFAC group on LinkedIn to share your thoughts on how professional accountants in business and in practice, especially SMPs:

• can further support their organizations in strengthening and facilitating sustainable practices; and
• provide high-quality sustainability advice to SMEs

We are also interested in learning what else member bodies are doing to support their SMP members in sustainability accounting, reporting, and advising.

IFAC and the SMP and PAIB Committees look forward to hearing from you.

Note: IFAC has reported on the member body activities related to SMPs/SMEs and sustainability of which it was aware. If you feel that your organization has an activity that should have been included, please email communications@ifac.org so that we may include it in any subsequent editions of this newsletter.

Welcome to IFAC's Translations & Permissions eNews.

In This Issue:

1. Member Body Teamwork Leads to Single, Spanish Translations of the Handbook of International Standards on Auditing and Quality Control and the Code of Ethics for Professional Accountants
2. Spanish Translations of Key Small- and Medium-Sized Practices Publications
3. Handbook of International Public Sector Accounting Pronouncements Now Available in Spanish
4. IFAC, CNOCP Reach Agreement on French Translation of IPSASB Handbook
5. Russian Translation of IAASB Handbook Completed and Undergoing Final Review
6. IPSASB 2010 Handbook Available in Russian
7. PAO Development Committee Toolkit, IPSASB 2011 Handbook Available in Arabic
8. Chinese Translation of Key Publications in Progress
9. What to Watch for in 2012

1. Member Body Teamwork Leads to Single, Spanish Translations of the Handbook of International Standards on Auditing and Quality Control and the Code of Ethics for Professional Accountants

After more than two years of collaboration, a group of IFAC member bodies has produced a single, Spanish translation of the Handbook of International Standards on Auditing and Quality Control of the International Auditing and Assurance Standards Board (IAASB).

The Instituto de Censores Jurados de Cuentas de España (ICJCE) and Instituto de Contabilidad y Auditoría de Cuentas translated the handbook, which was reviewed by a Latin American committee led by Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE), with IFAC member bodies in Bolivia, Chile, Colombia, Costa Rica, Mexico, Panama, Paraguay, and Uruguay, and other key stakeholders. The Directorate General of Translations (DGT) of the European Commission also reviewed it for its European Union acceptability.

The Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants was translated by ICJCE and reviewed by Instituto Mexicano de Contadores Públicos (IMCP), together with FACPCE and the above-mentioned Latin American review committee.

Both include an unofficial Table of Equivalencies, showing the differences between Spanish and Latin American terminologies.

More information can be found in the April 18, 2012 and May 11, 2012 press releases.

2. Spanish Translations of Key Small- and Medium-Sized Practices Publications

The Guide to Quality Control for Small- and Medium-Sized Practices, Third Edition, was published in May by IMCP after being reviewed by ICJCE.

The Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Second Edition (“ISA Guide”) has been translated by IMCP and is presently undergoing final review by ICJCE. Publication of the translated ISA Guide, as well as the Guide to Practice Management for Small- and Medium-Sized Practices, Second Edition is expected later in 2012.

3. Handbook of International Public Sector Accounting Pronouncements Now Available in Spanish

Members of the Department of Accounting and Finance, Faculty of Economics and Business Administration, at the University of Zaragoza, Spain, have produced a Spanish-language version of the Handbook of International Public Sector Accounting Pronouncements – 2011 Edition.

An international committee consisting of public sector experts from Argentina, Chile, Mexico, Spain, and Uruguay also reviewed the translated handbook.

A Spanish translation of International Public Sector Accounting Standards Board’s (IPSASB’s) Study 14 - Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities was also recently published.

International Public Sector Accounting Standards (IPSAS) 32 Service Concession Arrangements: Grantor and the 2011 Annual Improvements document are translated and undergoing final review to be published later this year.

These projects were made possible with assistance from the World Bank and contributions from the Spanish Fund for Latin America and the Caribbean.

4. IFAC, CNOCP Reach Agreement on French Translation of IPSASB Handbook

France’s Public Sector Accounting Standards Council (Conseil de normalisation des comptes publics -CNOCP) and IFAC recently signed an agreement to translate the IPSASB’s Handbook of International Public Sector Accounting Pronouncements into French in 2012. Efforts are currently under way to complete the translation.

5. Russian Translation of IAASB Handbook Completed and Undergoing Final Review

Following discussions originating at the 2010 World Congress of Accountants, as well as a recent Translations Roundtable hosted by the Russian Collegium of Auditors on April 23 in Moscow and attended by IFAC’s Daria Koukhar, technical manager, Member Body Development, a Russian translation of Part 1 of the 2010 edition of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements has been completed and is undergoing final review by a committee of Russian and Commonwealth of Independent States stakeholders. Publication is expected in early September 2012. The Chamber of Auditors of the Republic of Kazakhstan is currently translating Part 2.

6. IPSASB 2010 Handbook Available in Russian

The Handbook of International Public Sector Accounting Pronouncements (May 2010) has been translated into Russian by the Consortium of ZAO BDO and LLC “Institute for Budget Decisions” and was recently published. Please see Translations Database for more information.

7. PAO Development Committee Toolkit, IPSASB 2011 Handbook Available in Arabic

The Professional Accountancy Organization Development Committee’s Establishing and Developing a Professional Accountancy Body and the 2011 version of the Handbook of International Public Sector Accounting Pronouncements are now available in Arabic.

The PAO Development Committee Toolkit, translated by the Saudi Organization for Certified Public Accountants, is also available.

The IPSASB 2011 Handbook was translated by the Arab Society of Certified Accountants (Jordan) and is currently available.

8. Chinese Translation of Key Publications in Progress

The Chinese Institute of Certified Public Accountants is currently completing Chinese translations of the 2010 editions of the Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements and the Handbook of the Code of Ethics for Professional Accountants, along with the Guide to Quality Control for Small and Medium-Sized Practices, Third Edition, and the Guide to Practice Management for Small- and Medium-Sized Practices.

9. What to Watch for in 2012:

• Updated Translations & Permissions FAQs on the Way

A revised version of “Translations & Permissions Frequently Asked Questions” will be available in early September. Please check the Translations & Permissions web site.  

• Iberian-American Cooperation Project for Sustainable Spanish Translations Agreement Expected

IFAC is currently working with its member bodies from Argentina, Mexico, and Spain on a Memorandum of Understanding (MOU) regarding translation and future cooperation to achieve sustainable Spanish language translations of the international standards. The draft MOU is currently under review and the parties will meet in New York City in early October with a view to finalizing it.

• Please Check IFAC’s Translations Database Regularly for Updates

The list of new translations of IFAC publications by third parties is continuously updated, so please visit Translations Database for the latest information available. 

• Use of Translation Memory Software Encouraged

Use of translation memory software can assist in achieving high-quality and sustainable translation processes. In addition to enhancing consistency in the use of translated terminology, use of translation memory software makes it possible to share and reutilize translated content, thereby reducing processing time and the need to perform multiple or new translations. It can also help to reduce translation costs.

IFAC’s designated translating bodies are encouraged to use translation memory software where possible to enhance the quality and efficiency of their translations, to contain translation costs and to achieve sustainable translation processes. Please contact permissions@ifac.org with questions or for more relevant information.

Welcome to IFAC’s International Auditing and Assurance Standards Board (IAASB) eNews.

In This Issue: 

1. Invitation to Comment: Improving the Auditor’s Report
2. Highlights—53rd Meeting of The IAASB—June 11-15, 2012
3. International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statements
4. IAASB Strategy and Work Program, 2012–2014
5. Other 2012 IAASB Activities

IN THIS ISSUE:

1. IESBA Revises 2012 Strategy
2. Responding to a Suspected Illegal Act
3. Breach of a Requirement of the Code
4. IESBA Proposes Changes to the Definition of “Engagement Team”
5. Upcoming Meetings
6. Share Ethics eNews with Your Colleagues

1. IESBA Revises 2012 Strategy

The IESBA has agreed on a revision to its strategy and activities for 2012. Its revised strategy calls for the board to undertake the following activities in 2012:

Rotation—The IESBA will consider firm rotation and also whether the position of the Code of Ethics for Professional Accountants (the Code) on partner rotation remains appropriate, including whether the requirement to rotate off the audit engagement after serving seven years as a key audit partner and observe a two-year time-out period continues to be appropriate.

Non-assurance services—The IESBA will consider whether the Code's position on non-assurance services remains appropriate, including the use of materiality, and, if so, whether guidance should be provided for applying the materiality test. If certain non-assurance services are permitted, the IESBA might also consider whether they should be subject to pre-approval by those charged with governance, restricted in size in relation to the audit fee, or publicly disclosed.

Structure of the Code—The IESBA will determine how to increase the visibility of the requirements and prohibitions in the Code and clarify who is responsible for meeting them.

Part C of the Code—The IESBA will determine whether recent corporate accounting irregularities reveal ethical implications for professional accountants in business (PAIBs) and whether part C of the Code should be strengthened to provide PAIBs with more guidance and support.

These matters will be discussed initially at the IESBA's June 2012 meeting. Depending upon the positions reached, the IESBA ultimately may propose revisions to the Code.

2. Responding to a Suspected Illegal Act

At its February 2012 meeting, the IESBA discussed its position on how a professional accountant should respond to a suspected illegal act. The IESBA agreed on the following:

• An auditor and a professional accountant in public practice providing non-assurance services to an audit client should be required to disclose to an appropriate authority suspected illegal acts that affect financial reporting or fall within the expertise of the professional accountant. This requirement would apply when the suspected illegal act is of such consequence that disclosure would be in the public interest and the client has not done so. 
• Accountants performing non-assurance services for non-assurance clients and accountants in business should be required to disclose the matter to the external auditor. If the response to the matter is not appropriate, the accountant would be expected to exercise his right to disclose the matter to an appropriate authority. 
• Exceptional circumstances may exist where a reasonable and informed third party would conclude that it is not in the public interest to make such disclosure because the probable consequences, such as the risk to the personal safety of the professional accountant or other individuals, would outweigh the benefits of disclosure.

The IESBA expects to approve an exposure draft on this subject at its next meeting in April.

3. Breach of a Requirement of the Code

At its February 2012 meeting, the IESBA began discussing responses to the Exposure Draft proposing a new framework for addressing a breach of a requirement of the Code. The IESBA noted:

• Respondents are supportive of the Code addressing breaches.
• Respondents expressed mixed views on whether all independence breaches should be reported as soon as possible to those charged with governance; a majority felt that all breaches should be reported while a minority felt that breaches that were not significant need not be reported.
• Many respondents commented on the timing of such reporting, including that insignificant breaches not be required to be reported as soon as possible.

The IESBA tentatively concluded that all breaches should be reported to those charged with governance, but it may be appropriate to have some flexibility on the timing of reporting less significant breaches. The IESBA will continue considering comment submissions at its June meeting. 

4. IESBA Proposes Changes to the Definition of “Engagement Team”

At its February 2012 meeting, the IESBA approved an exposure draft to revise the definition of “engagement team” to make it clear that internal auditors providing direct assistance to an external auditor are not considered to be part of the audit engagement team under the Code and eliminate the perception that the Code and ISA 610, Using the Work of Internal Auditors are in conflict. The comment deadline is May 30, 2012.

5. Upcoming Meetings

Meetings of the IESBA and the IESBA Consultative Advisory Group (CAG) are open to the public. The IESBA next meets by conference call on April 19, 2012, from 7:00–10:00 AM Eastern Daylight Time and, in person, June 18–20, 2012 in New York, USA. For more information and to register to attend an IESBA meeting as an observer, visit IESBA Meetings.

The next IESBA CAG meeting will be held on September 12, 2012 in New York, USA. For more information, visit IESBA CAG Meetings.

6. Share Ethics eNews with Your Colleagues

The IESBA issues regular eNews updates to help keep you informed of its activities and recent publications. Please forward this eNews to any interested colleagues and advise them that they can subscribe to receive IESBA eNews by following these simple steps:

• Register a new account or log in to your existing IFAC web account. 
• Go to My Subscriptions to manage your subscription preferences. 
• Select "Ethics eNews" from the check list, as well as any other newsletters or press releases that you would like to receive.

IN THIS ISSUE:

1.         Spanish Translation Highlights
2.         Russian Translation Highlights
3.         Additional Highlights from Q3 and Q4 of 2011
4.         What to Watch for in Q1 and Q2 of 2012
5.         Revised Guides from IFAC’s Small and Medium Practices (SMP) Committee
6.         Translations and Permissions section of IFAC website
7.         Request for Translation Proposals
8.         Important Notes Regarding IFAC Translations: Adoption of Standards, Time Needed to Process Permission Requests, IAASB Handbook 2012

1. Spanish Translation Highlights

Pronouncements of the International Auditing and Assurance Standards Board (IAASB)

A single, Spanish translation of the International Standards on Auditing (ISAs) and International Standard on Quality Control (ISQC) 1 of the IAASB (the Clarity Standards)—acceptable in Spain and throughout Spanish-speaking Latin America—was published in Spain in September 2011 and will be published in Latin America on approximately February 15, 2012.

This great achievement is the result of a project coordinated by IFAC and involving the joint Translating Bodies in Spain: Instituto de Censores Jurados de Cuentas de España (ICJCE) (IFAC member body) in cooperation with Instituto de Contabilidad y Auditoría de Cuentas (regulatory body).

The translated publication, the Handbook of International Standards on Auditing and Quality Control, includes an unofficial Table of Equivalencies showing differences between terminology used in Spain and that commonly used in Latin America. The translation has been reviewed by the Directorate General of Translations of the European Commission as well as by a Latin American Review Committee led by Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE). This Review Committee is comprised of representatives from IFAC member bodies in Bolivia, Chile, Colombia, Costa Rica, Mexico, Panama, Paraguay, and Uruguay, as well as other key stakeholders.

The translation was published in Spain by ICJCE and will be published in Latin America by FACPCE (Argentina). Contact ICJCE at auditoria@icjce.es or FACPCE at facpce@facpce.org.ar to purchase printed copies of the translated Handbook.

Pronouncements of the International Public Sector Accounting Standards Board (IPSASB)

IFAC and the World Bank have partnered to perform the Spanish translation of the IPSASB’s 2011 Handbook of International Public Sector Accounting Pronouncements. The translation is being performed by a translating team at the University of Zaragoza, Spain, and reviewed by a multi-jurisdictional review committee with members representing Argentina, Chile, Mexico, Spain, and Uruguay. This Spanish-language translation is funded by the contribution of the government of Spain through the Spanish Fund for Latin America and the Caribbean.

The translation and review were completed in Q4 2011, and the translation is expected to be published on the IFAC website in Q1 2012. A separate Spanish translation of IPSASB’s Study 14, Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities, has also been performed with funding from the Spanish government and has been posted on the IFAC website.

Other Multi-jurisdictional Spanish Translation Activities

IFAC member bodies are working together on a number of other related projects. A cooperation agreement was recently signed between ICJCE, FACPCE, and Instituto Mexicano de Contadores Públicos (IMCP) to publish a single, Spanish translation of the Code of Ethics for Professional Accountants, issued by the International Ethics Standards Board for Accountants. The final translation is expected to be published on the IFAC website in early 2012.

A draft memorandum of understanding among these three IFAC member bodies has also been prepared with the objective of collaborating to achieve longer-term sustainable processes for a single, Spanish-language translation of the international standards and other IFAC publications.

2. Russian Translation Highlights

Over 60 representatives from 12 Commonwealth of Independent States (CIS) and Baltic countries met with leadership and staff of the IAASB, the International Accounting Standards Board (IASB), and IFAC in London to discuss the adoption and implementation of ISAs and International Financial Reporting Standards (IFRSs). The need for timely Russian-language translations and sustainable processes were prominent meeting discussion themes.

The successful event was attended by representatives from Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Latvia, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Delegates included IFAC member bodies and associates, professional accountancy organizations, national standard setters, ministries of finance, regulators and securities market authorities, national banks, donor organizations, and other key stakeholders.

IFAC’s member body, the Russian Collegium of Auditors (RCA), is presently in the process of performing a Russian translation of the Clarity Standards. This project will involve a two-part review committee (Russia and other Russian-speaking countries) and the result is expected to be a single, Russian translation that will be widely acceptable in Russia and throughout the Russian-speaking region. In addition, the Chamber of Auditors of the Republic of Kazakhstan has carried out Russian-language translations of the International Standards on Review Engagements, International Standards on Assurance Engagements, and International Standards on Related Services, completing the set of IAASB pronouncements available in Russian.

The Russian translation of the 2010 Handbook of the Code of Ethics for Professional Accountants was performed by the Siberian Academy of Finance and Banking, reviewed by RCA, and published in Q4 2011.

3. Additional Highlights from Q3 and Q4 of 2011

In addition to the Spanish and Russian translations noted above, we are pleased to note that the French translation of the Guide to Quality Control for Small and Medium-Sized Practices, Third Edition was completed by CGA-Canada and published in Q4 2011.

During the period, numerous other translations were finalized and a number of new translations have been commenced. Please see the IFAC Translations Database for more details.

We welcome your feedback about the database and would especially appreciate being informed if any of the information contained therein is inaccurate or in need of updating.

4. What to Watch for in Q1 and Q2 of 2012

• Arabic, Russian, and Spanish translations of the Handbook of International Public Sector Accounting Pronouncements – 2011 Edition

• Arabic translations of:
      o Guide to Quality Control for Small and Medium-Sized Practices (QC Guide) - Third Edition 
      o Establishing and Developing a Professional Accountancy Body (PAODC Toolkit) - 2011 Edition

• Chinese translations of:
      o Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements - 2010 Edition
      o Handbook of the Code of Ethics for Professional Accountants - 2010 Edition
      o Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (ISA Guide) - Second Edition 
      o QC Guide - Second Edition  
      o Guide to Practice Management for Small- and Medium-Sized Practices (PM Guide)

• Spanish translations of:
      o The Code of Ethics for Professional Accountants (revised 2009)
      o ISA Guide - Third Edition 
      o QC Guide - Third Edition 
      o PM Guide - Second Edition

5. Revised Guides from IFAC’s Small and Medium Practices (SMP) Committee

During 2011, the SMP Committee revised the Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Guide to Quality Control for Small and Medium-Sized Practices, and Guide to Practice Management for Small- and Medium-Sized Practices. These updated editions include some enhanced content as well as editorial changes. Translating bodies wishing to update existing translations, or perform new translations, should contact permissions@ifac.org.

6. Translations and Permissions section of the IFAC website

The Translations and Permissions section of the IFAC website has been updated. The Frequently Asked Questions document for translations and permissions is now easier to locate and includes expanded content.

A new addition to the Publications and Resources section of the website is multi-language filter functionality to allow users to more easily locate translations of IFAC publications. We encourage readers to visit the website, and we welcome any comments you may have.

7. Request for Translation Proposals

IFAC would especially welcome translation proposals for French translations of the Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Third Edition and Guide to Practice Management for Small- and Medium-Sized Practices, Second Edition.

We would also welcome requests to translate the exposure drafts issued by IFAC’s independent standard-setting boards in order to encourage wider international participation in the standard-setting process.

8. Important Notes Regarding IFAC Translations: Adoption of Standards, Time Needed to Process Permission Requests, IAASB Handbook 2012

The pace of activities related to adoption and implementation of international standards is increasing around the world. Consequently, additional information has been included on the IFAC website in regard to procedures for requesting permission to reproduce, adapt, or translate the international standards, including relevant policy statements, permission request forms, and information about the time necessary to process and prepare related reproduction or translation agreements.

For the many translating bodies wishing to translate the upcoming 2012 edition of the IAASB Handbook, it is expected that this Handbook will be issued in April or May 2012, subsequent to which time IFAC would be pleased to receive translation permission requests and facilitate such translations.