IES 2 prescribes the learning outcomes for technical competence that aspiring professional accountants are required to demonstrate by the end of Initial Professional Development. Technical competence is the ability to apply professional knowledge to perform role to a defined standard.
It is effective from July 1, 2015.
The International Federation of Accountants (IFAC), the global organization for the accountancy profession with 179 members in 130 countries, today issued the Call for Nominations for the IFAC Board and Committees in 2015. The Call for Nominations provides information on the upcoming opportunities for membership on the IFAC Board, committees, and the Compliance Advisory Panel.
In 2015, there will be 29 vacancies, including two leadership positions—the IFAC deputy president and the chair of the Small and Medium Practices Committee. All vacancies on the Board and committees are open to nominations by IFAC members.
“Volunteers are central to the effective functioning of IFAC and the authority and expertise of our committees,” said IFAC President Warren Allen. “We remain gratified to attract tremendously qualified and talented members of the profession as Board and committee members, and look forward to receiving highly-qualified nominations again this year. The hard work and dedication of our volunteers, together with the support of our member organizations, are critical and extremely valued by the global profession.”
IFAC encourages all members to review the information in the Call for Nominations, which includes detailed information on vacancies, composition targets, qualifications, and requirements for membership for the Board and committees, as well as time commitment and performance expectations for volunteers. It also offers strategic guidance in selecting candidates, including how IFAC members can identify the most qualified nominee for each available position.
The Call for Nominations marks the opening of the nominations period, which runs from January 15 to March 15, 2014. Nominations can be submitted through the Nominations Database (instructions for submitting nominations are included in the Call for Nominations). Additional information on the Nominating Committee and its process is available on the Nominating Committee web pages.
About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
The Call for Nominations for the Independent Standard-Setting Boards in 2015 was issued today. The Call for Nominations outlines the upcoming opportunities for membership on the International Auditing and Assurance Standards Board (IAASB), International Accounting Education Standards Board (IAESB), International Ethics Standards Board for Accountants (IESBA), and International Public Sector Accounting Standards Board (IPSASB).
In 2015, there will be 22 vacancies on the independent standard-setting boards, including the IAESB chair. All vacancies are open for nominations by all stakeholders, including professional accountancy and international organizations, governmental agencies, firms, and the public. Although each candidate is ultimately selected on the basis of experience, nominations of highly-qualified candidates from the Africa-Middle East and Latin America regions are particularly encouraged.
The Call for Nominations includes detailed information on qualifications, including time commitment and performance expectations for volunteers, as well as instructions on how to apply during the nominations period, which runs from January 15 to March 15, 2014.
Nominations can be submitted through the Nominations Database (instructions on how to submit a nomination are included in the Call for Nominations). Additional information on the Nominating Committee and its transparent, open process is available on the Nominating Committee web pages.
About the IAASB
The International Auditing and Assurance Standards Board (IAASB) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).
About the IAESB
The International Accounting Education Standards Board (IAESB) develops education standards, guidance, and information papers for use by IFAC member bodies under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAESB, and the IAESB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAESB are facilitated by IFAC.
About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethics standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethics requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC.
About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.
About IFAC
The International Federation of Accountants (IFAC) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
United Kingdom
Charles Tilley is the former CEO of the International Integrated Reporting Council (IIRC). Prior to that role at the IIRC, Mr. Tilley served as Chair of its technical task force and Senior Advisor to the IIRC Board Chair. Mr. Tilley also served as Chair of the IFAC Professional Accountants in Business (PAIB) Committee 2014-2019.
Following his retirement as the Chief Executive of the Chartered Institute of Management Accountants (CIMA) in 2016, Mr. Tilley is now the Executive Chairman of the CGMA Research Foundation. As Chief Executive of CIMA since 2001, he significantly raised CIMA’s profile and brand, including developing and implementing a stakeholder-centric strategy resulting in impressive levels of member and student growth.
A prominent advocate for global reform of corporate reporting, and a commentator on a wide range of business issues, at CIMA Mr. Tilley has led advocacy to effect change on finance, governance, and accountancy issues with government, regulators, standard setters, and the World Bank, among other organizations. He continues to direct CIMA’s thought leadership activity, focused on governance, the development of effective external and internal reporting, performance management, and developments in the finance function. Under his leadership, CIMA formed a joint venture with the American Institute of CPAs to establish the Chartered Global Management Accountant (CGMA) designation.
He also sits on the UK Financial Reporting Council’s Lab Steering Group and is a council member of the Prince of Wales’ Accounting for Sustainability. Currently, he is Deputy Chairman of Great Ormond Street Hospital. Previously, between 2008 and 2015, he held various non-executive positions at the Ipswich Building Society.
Prior to joining CIMA, Mr. Tilley spent fourteen years at KPMG, becoming a partner in 1986. Subsequently, he held senior positions as Group Finance Director of Investment Banks at Hambros plc and Granville Baird.
Mr. Tilley was awarded an OBE for his services to the economy in the New Year’s Honours, 2016.
The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) is holding a series of three global roundtables to gain additional feedback on its project to address professional accountants’ responsibilities regarding the disclosure to an appropriate authority of suspected non-compliance with laws and regulations (formerly called suspected illegal acts) by a client or employer:
The Ethics Board initiated the project in response to regulatory concerns that the current confidentiality provisions in the Code of Ethics for Professional Accountants (the Code) are an impediment to whistleblowing in relation to non-compliance or suspected non-compliance with laws and regulations. The issues revolve around how to balance professional accountants’ responsibility to act in the public interest against confidentiality, one of the five fundamental principles in the Code. At the heart of the debate is what is reasonable to ask of auditors and other professional accountants within their public interest mandate.
These events are a follow-up to the board’s August 2012 Exposure Draft, which described the circumstances in which a professional accountant would be required or expected to breach confidentiality and disclose the matter to an appropriate authority. The roundtables will bring together representatives from a broad range of stakeholder groups around the world, including regulators, investors, preparers, audit committee members, IFAC member bodies, firms and national standard setters, to share their perspectives on the Ethics Board’s indicative direction of its revised proposals on the topic.
As space is limited, attendance is by invitation only, which will follow shortly. If you are interested in participating, we invite you to submit your expression of interest via email to KaushalGandhi@ethicsboard.org by January 31, 2014, indicating your name, job title, organization and preferred location.
About the IESBA
The International Ethics Standards Board for Accountants (IESBA, the Ethics Board) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the Ethics Board develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the Ethics Board are facilitated by IFAC. Please visit www.ethicsboard.org for more information.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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Save the Date
The aim of the project is to develop a standard(s) that provides requirements applicable to both administrators and participants in Emissions Trading Schemes (ETS).
As Australia assumes the presidency of the G-20 for 2014, IFAC reiterated its call on global policymakers to refocus on regulatory convergence, and said their failure to do so is stifling business confidence, economic stability, and ambitions for a sustainable recovery.
The global financial crisis highlighted the problems created by having “uneven playing fields” for multi-national organizations. Different regulatory arrangements in different jurisdictions allowed these organizations to engage in regulatory arbitrage, but at the same time created unnecessary costs and uncertainty for them and their key stakeholders. These differences limited the type and effectiveness of responses that governments, central banks, and regulators could take to address the problems created by the crisis.
“IFAC is concerned by the growing divergence and regulatory fragmentation that is occurring and the uncertainty that it creates. We call on international coordinating organizations and forums—the G-20, IFIAR, IOSCO, FSB—to fully commit to promoting and enacting global regulatory consistency and evidence-based regulatory reform,” said Mr. Fayezul Choudhury, CEO of IFAC.
Currently, a number of jurisdictions are increasingly resorting to nation-specific responses and reforms that create the potential for uncertainty and instability—and ultimately stifle global growth—despite the fact that the G-20 has called for global convergence in a number of areas and the FSB has recognized 12 sets of internationally-accepted standards deserving of priority implementation.
“High-quality globally accepted financial reporting, auditing and ethics standards exist,” said Mr. Choudhury. “Divergent regulatory approaches risk creating considerable problems and additional compliance costs for multi-national companies and their auditors; problems and costs that IFAC believes can be eliminated if governments and regulators wholeheartedly supported the regulatory convergence agenda.”
Growing diversity in regulatory arrangements for auditing and auditor independence requirements are a prime example of where jurisdictions appear to be moving further apart, rather than converging.
Over 90 jurisdictions use or are in the process of adopting or incorporating clarified International Standards on Auditing (ISAs)[1] into their national auditing standards, or use them as a basis for preparing national auditing standards; current proposed legislation in Europe would mandate use of clarified ISAs for statutory audits within the European Union. However, some jurisdictions unnecessarily modify standards, choose not to adopt the full set of standards, or introduce revisions to national standards before the International Auditing and Assurance Standards Board (IAASB) has finalized revisions to the relevant ISAs. These actions diminish the considerable benefits of facilitating transparency, consistency, economic growth, and financial stability that come with the global adoption and implementation of high-quality international standards, such as ISAs.
Similarly, the Code of Ethics for Professional Accountants[2] provides a solid ethical foundation for auditors, outlines robust requirements for auditor independence, and is suitable for application around the globe. It addresses matters such as conflicts of interest, the provision of non-audit services, and the rotation of audit engagement partners. However, major jurisdictions are clearly divided in their views on auditor independence. For example, some jurisdictions adopt the prohibitions on non-audit services that exist in the Code, some jurisdictions introduce additional legislative prohibitions, and some others propose a list of “acceptable services.”
Another aspect of auditor independence where there are considerable and growing jurisdictional differences is mandatory audit firm rotation. Certain jurisdictions with major capital markets activity (e.g., the US and Canada) have considered it, and have clearly rejected it. In contrast, last month the European Parliament announced a series of legislative reforms to auditing, including mandatory audit firm rotation—with the possibility that the rotation period will differ among member states—creating even more divergence.
Still other countries have adopted, or are proposing to adopt, some form of mandatory audit firm rotation for a particular segment of the economy—i.e., banks and financial institutions.
“Global regulatory reform should enhance financial reporting and audit quality, and a critical aspect of achieving this ambition is to advance the global regulatory convergence agenda,” said Choudhury. “Otherwise, we will have learned few lessons from the crisis and will be consigned to discussing and addressing these same issues again in the not too distant future.”
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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The International Federation of Accountants (IFAC) is seeking an exceptional individual for the fulltime position of Managing Director, Professional Standards (MD).
IFAC serves the public interest by contributing to the development of strong and sustainable organizations, markets, and economies. As part of its public interest mandate, IFAC contributes to the development of high-quality international standards by facilitating and resourcing standard-setting by the following independent Standard-Setting Boards (SSBs): the International Auditing and Assurance Standards Board (IAASB), the International Accounting Education Standards Board (IAESB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB).
The MD reports functionally to the chairs of the independent SSBs and administratively to IFAC’s chief executive officer. He/she is a key resource to the SSB chairs, and acts as a liaison between the SSBs and the Monitoring Group and Public Interest Oversight Board (PIOB). He/she maintains relationships with key stakeholders and is a spokesperson for the SSBs.
The MD is the SSBs’ primary liaison with IFAC’s chief executive officer and Board, and oversees the SSB senior management. He/she ordinarily is not involved in the day-to-day standard-setting activities and operations of the boards.
The position calls for a senior level individual who is prominent in the international standard-setting and regulatory community. The MD should have technical and standard-setting experience, as well as knowledge of and practical experience in a range of professional issues, with special emphasis on auditing, ethics, accounting education, and public sector accounting. He/she should be articulate, confident, and exercise sound political judgment in interactions with the press, members of the profession, and the regulatory community at both the national and international levels.
The position is based in the IFAC office in New York or Toronto—preferably New York. It is not required for the MD to be a professional accountant. Applications from individuals who have had a direct relationship with an audit firm are welcome; however, these individuals should be able to implement safeguards against any threats or perceived threats of their independence. The role requires extensive international travel.
This position has become available due to the retirement of Jim Sylph, Executive Director, Professional Standards and External Relations in June 2014. The position and title have been modified to reinforce further the independence of the SSBs.
For further information about the position, please see the job description on the IFAC website at www.ifac.org/careers. Applications are due by February 15, 2014.
*Notes to Editors
About the Independent SSBs
The independent SSBs serve the public interest as follows:
The independent SSBs follow a rigorous due process to ensure that the views of those affected by their pronouncements are thoroughly considered.
The IAASB, IAESB, and IESBA each has a consultative advisory group (CAG). The CAGs are an integral part of the boards’ formal process of consultation, and provide valuable public interest input on the boards’ agendas, project timetables, priorities, and technical issues.
The Public Interest Oversight Board (PIOB) oversees the IAASB, IAESB, and IESBA (and their respective CAGs). The PIOB’s mandate is to ensure that these boards follow due process and are responsive to the public interest; ensure the completeness of their strategies and work programs; and oversee the process of nominations to the boards and their CAGs. IFAC and the Monitoring Group are currently in the process of determining the best approach to public interest oversight for the IPSASB.
About IFAC
IFAC is the worldwide organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC’s current membership consists of over 179 professional accountancy bodies in 130 countries, representing approximately 2.5 million accountants in public practice, education, government service, industry and commerce. IFAC supports the setting of auditing and assurance, ethics, education, and public sector accounting standards and develops guidance to encourage high-quality performance by professional accountants in business.
IFAC Seeks Managing Director, Professional Standards
Good afternoon ladies and gentlemen. It is my pleasure to be here, certainly because of the opportunity to hear perspectives on the important and relevant topics on today’s agenda. However, it is also because this is my first visit to Baruch College—I must say how impressed I am by the cultural diversity of the college’s faculty and student base, and the broad range of countries they represent. Even more impressive, if I may say, is the college’s namesake, Mr. Bernard Baruch himself. At the end of his productive, 95 year life, he is quoted as saying, “I have had a long life, a good one and a full one. But above all I have had the opportunity to serve my country. This has meant most to me.” I am privileged to have such a fitting backdrop for my update on the activities of the IAASB.
The Changing Audit Environment
The speakers before me today already have rightly noted that there is a lot happening in today’s audit environment. Indeed, the environment is changing. The nature of financial reporting continues to evolve: now more complex, more areas of judgment, and more qualitative disclosures. There is changing demand from users, which can be summarized as “we want to hear more”—a call directed not only to preparers of financial statements but also to auditors and others involved in the financial reporting supply chain. Then, as a result of the global financial crisis, some key questions were raised: about the quality of auditing, its effectiveness, and the role of professional skepticism and judgment; and perhaps more fundamental, about the relevance of the audit. For example, if auditors did all that they were supposed to do, yet still did not warn of the risks leading to the financial crisis, what then is the relevance of the audit? I do not see this as a criticism per se. Rather, it is an important inquiry as to whether audit could deliver more – an essential question that must be considered in the wider context of trust in the profession.
As a result, there are many important debates on auditing now happening in Europe, North America, and elsewhere. These debates acknowledge—indeed, emphasize—the importance of ongoing and structured dialogue among, and between, many stakeholders. Audit regulators, for example, are further increasing their dialogue at an international level, and I am pleased to note the leadership of Lew Ferguson, Chairman of the International Forum of Independent Audit Regulators (IFIAR), and Deputy Chair Janine van Diggelen in this regard. These developments underscore the essential importance of interactions among participants as the basis for further improving audit quality.
Interactions
Let me to pause a moment to explore a little further the idea of interactions. This concept has received attention over many decades.
In the early 1930s we learned from the Dutchman Prof. Theodore Limperg, who referred to the relevance of interactions between stakeholders and to the accountancy profession serving a fundamental public interest need. I quote: “The place that accountants occupy in the community, and the confidence inspired by them, are the result of the interaction of the needs of the community and of the manner in which accountants meet those needs.”
Fifty years later this theme was picked up by a Scotsman, Prof. David Flint, who said: “Audit’s foundation in social need is a crucially important characteristic. In a changing and developing society the interpretation of the practical implementations of the audit concept must be the result of a constant interaction between the relevant groups and the auditors.”
In between, there was a monograph in the United States by Mautz and Sharaf, who also described these concepts and further emphasized the importance of interactions.
Throughout history, therefore, it is clear that there has been a strong call for professional accountants to act in the public interest and to take into account the expectations society places on them, and to understand these expectations and respond to them through meaningful interactions. Interactions, therefore, in my view, is more than a concept – rather, an essential and fundamental principal underpinning what we do.
With this backdrop, allow me to highlight some of the IAASB’s key responses to current developments.
Enhancing the Value of Audit
Audit Quality
At its meeting next week, the IAASB intends to finalize a new publication entitled A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality. Our simple but essential goals for this Framework are to: raise awareness of the key elements of audit quality; encourage key stakeholders to reflect on ways to improve audit quality; and facilitate greater dialogue between key stakeholders on the topic. The Framework is qualitative in nature, describing not only the different elements that create the environment for audit quality at the engagement, firm, and national levels, but also, importantly, their interrelationships. It elaborates on input, process, and output factors, as well as interactions in the financial reporting supply chain and contextual factors. The essence of the Framework is depicted below:
In considering audit quality, focus is often placed on input and process factors, such as standards, methodology, education and training, etc. These are certainly essential, but we should not stop there. Consider the importance of output factors: what users of financial statements see and read on which they base their perceptions and conclusions of audit quality. The current developments in auditor reporting, therefore, are very important. Also consider, for example, context factors such as culture, corporate governance, and the regulator regime and litigation environment. They have the potential to impact financial reporting and directly or indirectly audit quality, and auditors need to respond properly to them. Finally, consider all those involved in the financial reporting process—from the auditor, who is ultimately responsible for audit quality, to management, regulators and inspectors, audit committees, and users. Their roles, and the interactions they have, influence the environment in which audits are conducted, and their actions can meaningfully and positively contribute to audit quality.
We are certainly interested in the U.S. Public Company Accounting Oversight Board (PCAOB)’s efforts on the topic of Audit Quality Indicators, and we will continue to monitor developments. We are simply approaching the issue of audit quality from different, but complementary, perspectives. Our next steps will be to continue the dialogue on audit quality and stimulate organizations to use the Framework in exploring how best they might contribute to helping improve audit quality.
New Proposals for Auditor Reporting
Now, let me turn to the topic of the auditor’s report. Informed by international academic research, global outreach to stakeholders, and two consultation papers, the IAASB unanimously approved and released in July this year a comprehensive exposure draft of proposed new and revised International Standards on Auditing (ISAs) addressing reporting on audited financial statements.
I am pleased to note the degree of similarity between our auditor reporting proposals and those of the PCAOB, which were released shortly after the IAASB’s. The ongoing dialogue between the boards’ leadership and senior staff on this topic had, in my view, helped achieve this positive outcome. We have focused similar efforts in relation to developments in Europe, holding constructive meetings with senior representatives of the European Commission, European Parliament, and Council of the European Union. These actions supplement our broader outreach efforts on auditor reporting globally.
There are many important changes proposed to the auditor’s report—for example, clarification of the responsibilities of the auditor, and giving greater prominence to the auditor’s opinion within the report. But let me focus in on one of the more fundamental changes we propose: new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. This proposal involves a new section in the auditor’s report to communicate those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.
Communicating key audit matters is not a tick in the box. It requires professional judgment, and a careful consideration of what is unique about the specific entity and the specific audit undertaken—and therefore the matters of relevance to users of the auditor report and the entity’s financial statements. The required thought process is inherently no different than that the auditor would go through when preparing for discussion with the entity’s audit committee—a focus on what is important and relevant.
The proposed standard directs the auditor to select key audit matters from those matters communicated with the audit committee. Some have expressed concern that this may prompt the auditor to not communicate certain matters to the audit committee if there is pressure from management against bringing further transparency to an issue, and therefore the standard should indicate a broader source from which the auditor would consider the matters to communicate in the auditor’s report. However, I believe we must continue to appeal to the ‘backbone’ of the auditor to not concede to any such pressure and to communicate what is necessary in the circumstances. In any event, irrespective of the starting point, when there is a key audit matter to be communicated the auditor will certainly inform the audit committee.
I am very pleased that many countries and firms already are preparing now in anticipation of the new standards. For example: the UK has introduced similar new standards; last week while I was visiting the professional and regulatory bodies in Vietnam there was much discussion on how best they may prepare; and several firms already are ‘field testing’ the proposals. As the IAASB moves forward, we will study and respond to comments on our exposure draft and maintain an active dialogue with stakeholders. We have heard the call for continued effort towards a global solution, and we will therefore stay in close contact with the PCAOB and others as developments progress.
The IAASB is fully committed to finalizing its new auditor reporting standards in 2014. I anticipate they will result in significant change to the way auditors communicate information about their audits. They will also be critical to improving the perceived value and relevance of the auditor’s report and the profession as a whole. It is therefore essential that the intentions of the auditor reporting proposals be achieved, and their full benefit realized. Our work on this important topic will therefore not end in 2014—we anticipate taking actions in 2015 and beyond to facilitate adoption and implementation of these standards, including a review after a period of implementation.
Further Enhancement of the Clarified ISAs
Today there are 92 jurisdictions already using the Clarified ISAs, or committed to using them in the near future, and we anticipate more in 2014. In light of this increasing global use of the Clarified ISAs, we seek to capitalize on opportunities to learn about the implementation experience, whether the standards are operating with the intended effects, and where further enhancements may be necessary. In this regard, we have continued our active dialogue with international and national regulatory and audit oversight bodies—strengthening our relationships with groups such as IFIAR, the International Organization of Securities Commissions, the World Bank and the Basel Committee on Banking Supervision. These groups, together with input from both larger firms and smaller practices, national standards setters and others, have been instrumental in providing feedback to the IAASB’s post-implementation review of the Clarified ISAs.
In this regard, the overall feedback has been positive: the Clarified ISAs are more understandable and better fit for purpose, and the revisions to their content a positive contribution to audit quality. Nevertheless, there were also some areas where future review may be appropriate: professional skepticism, quality control, and group audits. In addition, the IAASB has been encouraged to consider new developments in the environment of the audit, such as “big data” and data analytics, and emerging IT risks, and how these may affect standards addressing risk assessment and evidence gathering. Responding to this feedback on the other findings from the Clarity ISA post-implementation review will feature prominently in our future Strategy and Work Program.
Looking Ahead
This brings me to my last topic, the IAASB’s forward strategy.
At its meeting next week, the IAASB intends to finalize for public consultation our strategy for 2015-2019 and the related work plan for 2015-2016. The proposal will include action in a number of areas, including responding to the findings from our ISA implementation monitoring review, supporting the implementation of the new auditor reporting standards, and addressing auditing issues related to financial institutions, including fair value estimates and loan impairment.
Audits of financial statements, however, are not the only service provided by professional accountants for which there is a demand for international standards. I am therefore pleased that in September the board completed the revision of its umbrella assurance standard, ISAE 3000. This standard serves as an important platform for a wide range of assurance engagements by both large and smaller practices, and supports continued innovation in services. We also established our Innovation, Needs, and Future Opportunities Working Group to monitor emerging developments in assurance and related services. Our forward strategy, therefore, will also include efforts to monitor the adoption and implementation of IAASB’s other assurance and related services standards, and consideration of new assurance standards, e.g. in relation to Integrated Reporting.
In Conclusion
Our efforts need to continue to be focused and ambitious. All of us, in our individual capacities and collectively, need to seize the global momentum for stronger corporate and auditor reporting. There will be challenges, but they are not insurmountable.
There will continue to be critical comments with regard to the relevance and effectiveness of audit and assurance, in light of the financial crisis and findings from audit inspections across the world. However, underlying these comments are the positive expectations that many have of the contributions that professional accountants can make to this global, dynamic marketplace, and, in turn, to financial stability and trust. That is the public interest that all of us want to serve.
For me, the essence of our role has not been better expressed than through the compelling words of Mahatma Gandhi: “Be the change that you wish to see in the world.”
Thank you for your attention.
Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA, the Ethics Board). This edition provides a summary of topics discussed and decisions made at the Ethics Board’s meeting held December 4-6, 2013, in New York, New York, USA. See the Meeting Page for the meeting highlights, including a podcast summary and agenda papers. Visit our podcast channel in iTunes to subscribe.
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The IESBA approved for issuance its Consultation Paper, Proposed IESBA Strategy and Work Plan, 2014–2018. The IESBA invites comment from all stakeholders by February 28, 2014.
Pursuant to its Exposure Draft, Responding to a Suspected Illegal Act, the Ethics Board considered revised proposals regarding a professional accountant’s responsibilities relating to responding to non-compliance with laws and regulations. Among other matters, the board discussed:
The Ethics Board agreed on a draft of the proposed changes to the Code as a basis for further consultation with stakeholders through three roundtables to be held in Asia-Pacific, Europe, and North America (see dates/locations below). The board will consider the input received from the roundtables and a possible re-Exposure Draft at its October 2014 meeting.
The Ethics Board considered the preliminary report and recommendations of its Structure of the Code Working Group regarding ways to improve the usability of the Code. Among other matters, the board discussed the Working Group’s recommendations with respect to enhancing the visibility of the Code’s requirements; clarifying responsibility for compliance with the Code’s requirements; simplifying the wording in the Code; repackaging parts of the Code; and developing a web-based Code. The board also considered examples of a possible approach to restructuring the Code. The Ethics Board will receive the Working Group’s final report and recommendations at its April 2014 meeting.
The Ethics Board considered issues and Task Force proposals with respect to possible enhancements to the long association provisions in Section 290, Independence – Audit and Review Engagements, to ensure that those provisions continue to provide robust and appropriate safeguards against the familiarity and self-interest threats arising from long association with an audit client. Among other matters, the board considered:
The Ethics Board will continue its deliberation of the issues and Task Force proposals at its April 2014 meeting.
The Ethics Board considered issues and Task Force proposals regarding a revised Section 320 of the Code addressing the preparation and reporting of information. Among other matters, the board discussed a proposal to strengthen the requirement to prepare or present information fairly, honestly, and in accordance with relevant professional standards; whether to deal separately with management information and external information in Section 320; and whether to prohibit professional accountants in business from preparing or presenting misleading financial information that complies with the applicable reporting framework.
The Ethics Board will further discuss issues and Task Force proposals with respect to Section 320, as well as with respect to proposed Section 370 addressing pressure from superiors and others to engage in unethical or illegal acts, at its April 2014 meeting.
The Ethics Board considered issues and Task Force proposals with respect to:
The board will consider a further draft of proposed changes to the relevant subsections of the Code, and a draft paper setting out its views and positions on non-assurance services and related matters, at its April 2014 meeting.
The Ethics Board approved the working process for its Emerging Issues and Outreach initiative and the Terms of Reference for its Emerging Issues and Outreach Committee to oversee the initiative going forward. The board will receive the first report from the Committee at its April 2014 meeting.
Meetings of the Ethics Board and the Ethics Board’s Consultative Advisory Group (CAG) are open to the public. The next meeting of the board will be held in Toronto, Canada, on April 7-9, 2014. The next meeting of the CAG will be held on March 10, 2014, in New York, USA.
For more information and to register to attend an Ethics Board or Ethics Board CAG meeting as an observer, visit Ethics Board Meetings and Ethics Board CAG Meetings respectively.
The board will also hold three roundtables in 2014 to obtain additional stakeholder input regarding its project on responding to non-compliance with laws and regulations. The roundtables are scheduled as follows:
The 2013 Handbook of the Code of Ethics for Professional Accountants is available to download or purchase. The 2013 edition contains the final revised pronouncements addressing a breach of a requirement of the Code and conflicts of interest, and the revised definition of “engagement team.” These changes will be effective in 2014; see the individual pronouncements for details. To download an electronic copy of the handbook for personal use or to purchase print copies, see Handbook of the Code of Ethics for Professional Accountants.