IFAC today released the latest installment of its Exploring the IESBA Code educational series: The Conceptual Framework–Step 2, Evaluating Threats.
Exploring the IESBA Code is a twelve-month series providing an in-depth look at the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). Each installment focuses on a specific aspect of the Code using real-world situations in a manner that is relatable and practical. Readers will gain a better understanding of the thought process behind important aspects of the Code through storytelling and expert analysis from professionals involved in developing the standards.
The first installment of the Series looked at the Code’s five Fundamental Principles, which establish the standard of behavior expected of all professional accountants. The second installment highlighted the Code’s Conceptual Framework with a focus on identifying threats, while this third installment focuses on how to evaluate those identified threats.
A professional accountant can often come across complex or challenging situations that are not black and white. These challenging situations require ethical considerations, some of which are expressly dealt with in the Code. The unique and informational series was developed by IFAC in collaboration with the International Ethics Standards Board for Accountants (IESBA) to help explain how the Code assists in navigating some of these challenges.
To read and download this and future installments, visit the IFAC website.
The Exploring the IESBA Code was published by IFAC and does not form part of the Code. It is non-authoritative and is not a substitute for reading the Code.
For more information about the Code, please click here.
An Informational Series to Promote the Code of Ethics
The International Ethics Standards Board for Accountants (IESBA) today released its Phase One Report exploring the ethical implications of technology on the accounting, assurance, and finance functions.
The report is the culmination of the first phase of fact-finding work the global ethics standard-setting board initiated in recognition of the pace and magnitude of change caused by disruptive technological innovations. The initial phase of the initiative was led by the IESBA’s Technology Working Group (TWG).
In its findings, the TWG concluded that, generally, the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) currently provides high level, principles-based guidance for most technology-related ethics issues that professional accountants and firms might encounter. However, the report cites various findings and sets out recommendations grouped into five key topical areas where material in the Code could be enhanced.
“Over the last few years, the pace, significance and complexity of technology advances, such as machine learning, have given rise to new opportunities and challenges for the accountancy profession,” said Dr. Stavros Thomadakis, IESBA Chair, adding “The effective organization and delivery of services are already undergoing major change. The global accountancy profession will have to recognize and address new ethical challenges in a rapidly changing technological environment. The IESBA Technology Working Group has delivered a comprehensive and informative report in this strategic area. This lays the groundwork for our substantive and timely response to ethical and public interest challenges posed by radical technological change.”
The report also includes other recommendations for the next phase of the initiative, including that the IESBA conducts additional information gathering with respect to the ethical implications of other technological developments such as blockchain, cybersecurity and Internet of Things.
Click here for more information.
Programme Manager, Capacity Building Projects, ACCA
Felicity Rylands is Programme Manager of Capacity Building Projects at the Association of Chartered Certified Accountants.
Based in the UK, Felicity manages a portfolio of donor-funded development projects to build capacity in finance and accounting organisations, strengthening the profession around the world.
This portfolio includes projects across Asia, Africa, Europe and the Caribbean to implement international standards, develop strategy, and strengthen qualifications and regulation – as well as supporting partner bodies in their journey to IFAC membership.
Felicity’s background is in international development and capacity building. Prior to joining ACCA in 2018 she worked as part of a small management team to set up and establish Prince’s Trust International; Prince Charles’ newest charity, focused on capacity building partner organisations across the Commonwealth and Middle East to support young people on their journey from education to employment.
Felicity has a Bachelor of Arts in Development Studies and Swahili from the School of Oriental and African Studies (SOAS) and has lived, studied and worked across East Africa for many years.
A new report by ACCA and IFAC highlights the benefits of accrual information in the public sector and identifies the positive impact on citizen lives.
In interviewing 20+ public sector experts – including IPSASB Board member Neema Kiure-Mssusa, IPSASB Program and Technical Director Ross Smith, and IPSASB Principal Joao Fonseca – the report also provides 30 recommendations for governments to improve accrual implementation.
In asking “Is Cash Still King?” IFAC and ACCA examine how important accrual information is for a strong public sector, economy, and citizen well-being. Aligned with these outcomes, the IPSASB remains committed to the strategic objective of strengthening public financial management by increasing adoption of accrual-based IPSAS. [Hear our Chair, Ian Carruthers, discuss how the IPSASB works to strengthen public financial management.]
We encourage you to read the report and to share with your stakeholders.
There are more public sector insights available on our YouTube playlist. In particular, check out:
Technical Manager, ICAEW
Louise is a Technical Manager at ICAEW. She develops technical and practical online content to meet the needs of subscribers to ICAEW’s International Standards service and ICAEW Audit and Assurance Faculty members.
ICAEW’s International Standards service offers organisations access to world-class technical resources to support the implementation of global standards on financial reporting, auditing and ethics.
Developed for an international audience, the service is designed to support global professional member bodies, international businesses, global accounting firms and networks.
Through an annual corporate subscription, International Standards provides employees or members with online access to a range of tools, information and practical guidance, including live webinars, on-demand video recordings, technical factsheets, guides, thought leadership articles and case studies.
The International Public Sector Accounting Standards Board® (IPSASB®) has released Exposure Draft (ED) 70, Revenue with Performance Obligations, ED 71, Revenue without Performance Obligations, and ED 72, Transfer Expenses. The three exposure drafts are published together to highlight for respondents the linkages between the accounting for revenue and transfer expenses. The three EDs pioneer new approaches for some of the most significant transactions of public sector entities, including inter-governmental transfers and grants for the delivery of key government services to the community by introducing:
“Sound accounting for revenue is crucial for all governments and other public sector bodies. We are confident that the proposed use of the performance obligation approach in ED 70, together with the updates to IPSAS 23 in ED 71, will improve financial reporting for both users and preparers of public sector financial statements,” said IPSASB Chair Ian Carruthers. “ED 72 complements the other two EDs by proposing guidance for the first time on transfer expenses, which are a major area of government expenditure, often recognized as revenue by other public sector bodies.”
ED 70 is aligned with IFRS 15, Revenue from Contracts with Customers, while extending the income recognition approach in that standard to address common public sector transactions which include performance obligations, including those where the ultimate beneficiary is a third party. It is intended to supersede IPSAS 9, Revenue from Exchange Transactions, and IPSAS 11, Construction Contracts.
ED 71 is an update of IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers) that addresses some of the issues encountered in its application. Unlike the current revenue standards, which classify revenue based on an exchange or non-exchange distinction, ED 70 and ED 71 differentiate revenue transactions based on whether or not the transaction has a performance obligation, which is defined as a promise to transfer goods or services to a purchaser or a third-party beneficiary. ED 71 also provides public sector-specific guidance on capital transfers for the first time.
ED 72 proposes guidance for transfer expenses, where a transfer provider provides resources to another entity without receiving anything directly in return. In providing guidance for the first time on the expense side of transactions that may be accounted under the revenue EDs by other public sector organizations, ED 72 includes proposals for transactions with and without performance obligations.
The IPSASB welcomes the views of respondents on the proposed standards and the other matters raised for comment in the three EDs.
How to Comment
To access the Exposure Drafts and their summary At-a-Glance documents, or to submit a comment, visit the IPSASB website, www.ipsasb.org. Comments on the Exposure Drafts are requested by November 1, 2020. The IPSASB encourages IFAC members, associates, and regional accountancy organizations to promote the availability of this Exposure Draft to their members and employees.
About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.
Stakeholder Comments on Exposure Drafts 70, 71, 72 Sought by November 1, 2020