IESBA eNews: December 2013
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.
Did you know IFAC publishes additional sector-specific electronic newsletters? Sign up for additional publications in My Subscriptions and follow us on Twitter and Facebook for additional news.
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 approach to disclosure of non-compliance with laws and regulations to an appropriate authority;
- The application of a materiality filter when responding to such a matter;
- Communication between a proposed accountant and an existing accountant when there is a change in professional appointment; and
- Documentation.
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:
- Proposed improvements to the overall framework of principles addressing long association;
- Communication with those charged with governance;
- With respect to the rotation decision, time served prior to becoming a key audit partner on the audit engagement; and
- The duration of the cooling-off period and permissible activities during that period.
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 emergency exception provisions for bookkeeping and taxation services in Section 290 of the Code;
- Clarification of the “Management Responsibilities” subsection of Section 290; and
- Clarification of the provisions in the “Preparing Accounting Records and Financial Statements” subsection of Section 290 dealing with services of a “routine or mechanical” nature.
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:
- Hong Kong – May 20, 2014
- Brussels, Belgium – June 3, 2014
- Washington DC, USA – July 10, 2014
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.