International Ethics Standards Board Revamps Standardsby
The International Ethics Standards Board for Accountants (IESBA) has issued revamped standards that take ethical issues in accounting to a new level.
The new standards become effective in June 2019.
Significantly revised, the new standards incorporate specific advances in ethics during the prior four years. That includes replacing the 2016 IESBA Ethics Code as it’s been revised by the so-called NOCLAR Pronouncement (noncompliance with laws and regulations), changes to the code concerning long associations with audit or assurance clients; and changes to the code that addresses preparation and presentation of information, and pressure to breach the fundamental principles.
“This is a groundbreaking moment in the public interest,” said IESBA Chairman Stavros Thomadakis, in a prepared statement. “The code is now a significantly strengthened platform, re-engineered for greater usability while maintaining global applicability. It underscores the importance of the fundamental principles for all professional accountants.”
Kristian Koktvedgaard, chair of IESBA’s Consultative Advisory Group, believes that public trust in the accounting profession hinges on clearer, more usable and enforceable independence and ethics standards.
The 200-page four-part code includes sections on code compliance and the fundamental principles of integrity, objectivity, professional competence, confidentiality and professional behavior; information pertinent to accountants in commerce, industry or service; the public sector; education; nonprofits; and regulatory and professional groups.
Revised safeguards are more in sync with threats to compliance with the fundamental principles.
Independence provisions are strengthened regarding long association of personnel with audit clients. There are varying effective dates for this provision; see Page 3 in the standards.
New and revised sections pertain to professional accountants in business and relate to preparing and presenting information; and pressure to breach fundamental principles
Clear guidance for public accountants
New guidance emphasizes the importance of understanding facts and circumstances when exercising professional judgment
New guidance explains how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.
IESBA operations are facilitated by the International Federation of Accountants, whose members include 2.8 million accountants in public practice, education, government, industry and commerce.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.