
Two exposure drafts issued by the International Ethics Standards Board for Accountants (IESBA) on Dec. 21 detail key enhancements to fundamental aspects of the Code of Ethics for Professional Accountants that the independent standard-setting board is proposing.
Developed by the IESBA, the Code of Ethics for Professional Accountants establishes ethical requirements for professional accountants. It contains three parts: Part A establishes the fundamental principles of professional ethics for accountants and provides a conceptual framework for applying those principles. Parts B and C illustrate how the conceptual framework is to be applied in specific situations.
For the past three years, the IESBA has been working on restructuring the code, with the goal of making it more understandable and usable for accountants worldwide, said IESBA Chairman Stavros Thomadakis, PhD. He called this initiative a âhigh priorityâ for the board.
The first exposure draft, Improving the Structure of the Code of Ethics for Professional AccountantsâPhase 1, represents the first application of proposed new structure and drafting conventions for the Code of Ethics for Professional Accountants, covering both a number of the provisions of the code dealing with its general application and selected sections addressing professional accountants in public practice.
In addition to the use of clearer language, key features in the exposure draft include:
- Requirements clearly distinguished from application material.
- Increased clarity of responsibility for compliance with the code's requirements.
- A reorganization of the content of the code.
- A new âGuide to the Code.â
The second exposure draft, Proposed Revisions Pertaining to Safeguards in the CodeâPhase 1, includes enhanced requirements and application material pertaining to the application of the code's conceptual framework, including safeguards.
âSafeguards are a linchpin of the âthreats and safeguards' approach that is fundamental to the proper application of the code,â Thomadakis said in a written statement. âThe proposals respond to a public interest need to clarify the meaning of safeguards and to make sure that they directly relate to identified threats to compliance with the fundamental principles of the code.â
Key enhancements proposed in the exposure draft, which is presented in accordance with the new structure and drafting conventions, include:
- More robust and prominent requirements related to the application of the conceptual framework, including a required overall assessment of the judgments made and conclusions reached.
- A clearer and more robust description of the concept of safeguards, and clarified and streamlined examples of safeguards.
- New guidance regarding the application of the concept of a âreasonable and informed third partyâ that is essential to properly applying the conceptual framework.
âPending stakeholder feedback on the exposure drafts, the IESBA will continue with work on the next phases of the projects, which will include restructuring other sections of the code and a review of safeguards pertaining to the provision of nonassurance services to audit and other assurance clients,â said IESBA Technical Director Ken Siong.
Instructions on how to submit comments on the two exposure drafts can be found on the IESBA website. Comments on the âstructureâ exposure draft are due by April 18, 2016. Comments on the âsafeguardsâ exposure draft should be received by March 21, 2016.
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Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.
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