the IESBA held four global roundtables to obtain input that will help shape the development of new ethics and independence standards for sustainability reporting and assurance.
The International Ethics Standards Board for Accountants (IESBA) is saddened by the untimely passing of Brian Friedrich, a long-term board member, and friend to many.
Born and raised in Western Canada, Brian was a significant contributor to the IESBA’s work, including leading several initiatives and global outreach. He had an infectious energy in promoting the importance of education and ethics for professionals worldwide. Committed to inclusive and collaborative discourse, he always challenged colleagues to think about issues in fresh and innovative ways, especially in his role as Chair of the Technology Working Group.
He lived life – both personally and professionally – on his own terms, always pushing boundaries and questioning arbitrary conventions. His commitment to ethics and the public interest was unwavering, and his perceptive nature and intelligence played a significant part in promoting IESBA’s mission and elevating the role of ethics in the global accountancy profession.
Above all, Brian was a trusted friend to his fellow Board members and IESBA Staff, who will all miss him greatly. His warm personality and friendship will stay with his colleagues and friends, and his passion will continue to inspire.
The thoughts and condolences of the IESBA community are with Brian's wife and professional partner, Laura, and their family during this difficult time.
A celebratory memorial for Brian is being arranged. In lieu of flowers, the family requests that donations be made to your local Society for the Prevention of Cruelty to Animals or your local Heart and Stroke Foundation.
The International Ethics Standards Board for Accountants and the International Auditing and Assurance Standards Board applaud the recent announcement by the International Sustainability Standards Board (ISSB) that final decisions for all technical content related to ISSB's inaugural sustainability standards have been made and that the ISSB is entering the final stages of the standards development process ahead of an expected issuance at the end of Q2 2023.
We echo the recent statement of support from the International Organization of Securities Commissions (IOSCO) and appreciate IOSCO's encouragement for our boards’ work to develop standards by the end of 2024. The IOSCO statement is a timely reminder that providing the necessary assurance and ethics standards is essential to complete the sustainability reporting and assurance standards infrastructure. We will continue to work closely with all parties as we develop our sustainability standards, which we will discuss at our respective March meetings.
The International Ethics Standards Board for Accountants (IESBA) today released final revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to address holistically the various independence considerations in an audit of group financial statements. The revisions also deal with the independence and other implications of the changes made to the definition of an engagement team in the Code to align with changes to the definition of the same term in the International Auditing and Assurance Standards Board’s (IAASB) International Standards on Auditing (ISAs) and International Standards on Quality Management (ISQMs).
“Group audits play a fundamental role in safeguarding the integrity of, and public trust in, the financial markets,” said Ms. Gabriela Figueiredo Dias, IESBA Chair. “For a long time, there was a vacuum in international standards addressing the independence of audit firms and individuals involved in group audits, leading to uncertainty and inconsistent practice around the world. This standard effectively closes that gap and responds in a timely manner to a public interest need for robust and clear requirements for independence in this important area.”
Strengthen and clarify the independence principles that apply to:
Individuals involved in a group audit, including those within, or engaged by, firms that audit components within a group.
Firms engaged in the group audit, including firms within and outside the group auditor firm’s network.
Specify the need for, and content of, appropriate communication on independence matters between the group auditor firm and component auditor firms participating in the group audit.
More explicitly set out the process to address a breach of an independence provision at a component auditor firm, reinforcing the importance of transparency and appropriate communication with those charged with governance of the group.
Amend the definitions of the terms “engagement team” and “audit team” in the Code to recognize the different and evolving engagement team structures, and address the implications of those definitional changes.
Provide guidance to facilitate the determination of who is included in an engagement team or an audit team.
Revise the definitions of a number of existing terms and establish new defined terms with respect to independence in a group audit context.
The development of the proposals has benefited from close coordination with the IAASB’s group audits and quality management projects.
The pronouncement will be effective for audits of financial statements and group financial statements for periods beginning on or after December 15, 2023, with early adoption permitted.
Global Webinar and Other Implementation Support
The IESBA will hold a global webinar on April 18, 2023 from 9:00 to 10:00 am Eastern Time, during which members of Task Force will explain the key revisions to the Code. Click hereto register.
The recording of the webinar and other supporting materials, such as an IESBA Staff publication on Frequently Asked Questions, will be available on the IESBA’s website in due course.
Revisions also address independence implications of changes to the definition of an engagement team. Global webinar to review revisions to be held April 18, 2023, 9:00 to 10:00 am EST
These revisions to the Code Relating to the Definition of Engagement Team and Group Audits address holistically the various independence considerations in an audit of group financial statements.
The proposed revisions respond to public interest concerns about tax avoidance and the role played by consultants, including professional tax advisers, in light of revelations in recent years such as the Paradise and Pandora Papers. The proposals strengthen the ethical expectations for professional accountants in business and in public practice when performing tax planning activities for employing organizations or providing tax planning services to clients, respectively.
“The accountancy profession plays a trusted role in facilitating the efficient and effective operation of a jurisdiction’s tax system and in making it a pillar of the economic system,” said IESBA Chair Ms. Gabriela Figueiredo Dias. “However, it is crucial that there are clear and robust ethical guardrails when professional accountants assist their employing organizations’ and clients’ tax planning to safeguard the public interest. These timely proposals are also designed to provide professional accountants with practical guidance to navigate the ethical challenges in this complex area.”
Among other matters, the proposed ethical framework:
Explains the types of threats to compliance with the fundamental ethics principles of the Code that might be created when professional accountants are involved in tax planning.
Sets a clear principle that professional accountants recommend or otherwise advise on a tax planning arrangement only if they have determined that there is a credible basis in laws and regulations for it.
Requires consideration of the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view the tax planning arrangement before determining whether to proceed with the recommendation or advice.
Provides practical guidance to assist professional accountants in navigating situations of uncertainty when carrying out tax planning.
Deals with other practical matters, including disagreement with the client or management or those charged with governance, and documentation.
The development of the proposals has been informed by extensive fact finding and outreach to stakeholders, including three global roundtables held in April 2022.
How to Comment
The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the IESBA’s website. Comments are requested by May 18, 2023.
Global Webinars
The IESBA will hold three webinars where members of the Tax Planning and Related Services Task Force will explain the key proposals in the exposure draft. The webinars will be held virtually on:
The proposed revisions to the Code addressing tax planning and related services respond to public interest concerns about tax avoidance and the role played by consultants, including professional tax advisers, in light of revelations in recent years such as the Paradise and Pandora Papers.
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Translated by: Instituto Salvadoreño de Contadores Públicos
