The International Ethics Standards Board for Accountants (IESBA) today released revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to better promote the role and mindset expected of all professional accountants.

The revisions explicitly recognize that the accountancy profession is entrusted with public confidence in the wide-ranging roles it plays in society and that such confidence is based on the skills and values it brings to its professional activities. Importantly, they reaffirm the profession’s responsibility to act in the public interest and the fundamental role of the Code in meeting that responsibility.

Among other matters, the revisions:

• Reinforce aspects of the principles of integrity, objectivity and professional behavior;
• Raise behavioral expectations of all professional accountants through requiring them to have an inquiring mind as they undertake their professional activities;
• Emphasize the importance of accountants being aware of the potential influence of bias in their judgments and decisions; and
• Highlight the supportive role the right organizational culture can play in promoting ethical conduct and business.

“The ethical principles and behavioral expectations embodied in the Code are the bedrock of the accountancy profession,” said Dr. Stavros Thomadakis, IESBA Chairman. “The profession is a major player in the global financial ecosystem and an indispensable facilitator of economic growth. The enhancements we have made to the Code speak to the importance of protecting and strengthening public trust in it across its varied roles and activities.”

Throughout this project, the IESBA has benefited from coordination with the International Auditing and Assurance Standards Board (IAASB) and the former International Accounting Education Standards Board (IAESB) on issues common to their standards, and especially in developing the provisions addressing the mindset expected of professional accountants.

The “role and mindset” revisions will become effective on December 31, 2021.

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves the public interest by setting ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards).

The IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

IFAC, the global voice of the accounting profession, applauds the IFRS Foundation Trustees in issuing their Consultation Paper on Sustainability Reporting. This marks a critical step on the path towards a global solution to sustainability reporting, called for earlier this month by IFAC in its Enhancing Corporate Reporting: The Way Forward roadmap.

IFAC believes that the demand is urgent and real—from investors, policymakers and other stakeholders—for a sustainability reporting system that delivers consistent, comparable, reliable, and assurable information. The IFRS Foundation is optimally positioned to establish a new sustainability standards board that leverages the expertise and disclosure requirements of existing leading initiatives.  Under the IFRS umbrella, the work of this new board can connect with the investor focus of the IASB, while also collaborating with respect to reporting requirements designed to address broader stakeholder interests.

IFAC CEO, Kevin Dancey, said, “The IFRS Foundation—with its backing by public authorities, independence, and  globally-respected governance and due process—is the appropriate home for a new sustainability standards board. Today’s open letter to IOSCO from the five leading global ESG reporting organizations lends further support to the legitimacy of a new sustainability board and I strongly encourage their continued collaborative effort. Now is the time for Professional Accounting Organizations around the world to lend their expertise and support as the IFRS Foundation Trustees consider this important challenge. IFAC looks forward to engaging with our members and other key stakeholders in formulating a full supportive response to the Consultation.” 

Congratulations to the PIOB for the organization’s 15^th anniversary. The PIOB has fulfilled successfully a demanding mandate: to build and operate an oversight framework; to ensure that international standards for audit and ethics embody clear public interest objectives; and respond to the needs of global users, while maintaining clarity and high quality.

The content and influence of the international standards have extended considerably over the period. The PIOB deserves a good share of credit for this achievement. It has followed proactively the planning and execution of standard setting, the due process, the sharpening of public interest language, and objectives. It has been alert and communicative, but at arms-length from the technical work of standard setting.

Looking at the whole system since 2005, I would certainly assess its performance as an overall success—a success premised on a collaborative stance of the PIOB and the Standard Setting Boards in their respective roles.   We should now build on this success as we move onto a new phase with the recommendations for reform that the Monitoring Group has issued, which we welcome.  This seminar is a unique opportunity to discuss ideas and directions for the future. I thank the PIOB for the opportunity.

The deeper challenge underlying the PIOB’s and the Standard Setting Boards’ missions has been to keep abreast of a dynamic public interest—a set of concepts and values varying across space and changing across time. This dynamic has taught both the Boards and the PIOB to remain open to new and evolving needs and perceptions. Corporate failures, financial turbulences, technological disruptions, looming crises such as Climate Change and the COVID-19 pandemic, have spearheaded new and broader perceptions of the public interest.

The Environmental, Social, and Corporate Governance (ESG) agenda defines clear objectives and expectations underpinning the global public interest. This is a development that informs also our more particular notions of public interest. It is all the more critical as we observe new forces towards economic nationalism. These developments create repercussions for international standards, which we need to reflect and strategize on, both as standard setters and overseers of standard setting.

My thinking, taking especially into account the technological disruptions, is that all of us should work to ensure broader adoption and more comprehensive use of the international standards. For that to happen, those standards must be globally applicable. Applicability is an overarching desideratum. International standards must respond to emerging objectives but also push for tangible improvement in practical outcomes. It is important to see the actual positive effects of the standards in real time. In my conversations with many stakeholders, I have realized how pressing and precious this is.

Examples of recent actions that focus on applicability: 

• Closer link between the Standard Setting Boards and National Standard Setters
• Systematic adoption of post-implementation reviews for impactful standards.
• Coordinated initiatives (among the Standard Setting Boards, International Federation of Accountants and the PIOB) aimed at awareness raising, facilitating adoption and providing ease of access and clarity to support effective implementation.
• Widening use of surveys of “users and beneficiaries” of the international standards as a global public good.

In closing, I want to share thoughts on coordination between the IESBA and the International Auditing and Assurance Standards Board (IAASB).

From occasional collaboration, we have moved over the last 4 years to systematic coordination of work. Collaboration at the level of leadership, task forces, staff, and joint meetings of the two Boards. These efforts were initiated with Prof. Arnold Schilder, former IAASB Chairman, and are now being actively pursued under the leadership of Chairman Tom Seidenstein.

In substantive terms, we are moving from seeking “consistency” to building “synergy” of the standards. Our ambition is that our respective standards are not just consistent and non-conflicting, but that they are increasingly becoming mutually reinforcing. This is real progress and creates a strong incentive for users to adopt both sets of standards. This also has implications on future practice including

(a) on how strategies of standard setting are crafted; and

(b) on how oversight is practiced.

In summary, we have to reflect on achieving public interest contributions not of independent parts, as if they were unrelated, but of autonomous parts that are consciously coordinated.

Thank you.

Dr. Stavros Thomadakis

IESBA Chairman