Earlier today, the Staff of the Accounting Professional & Ethical Standards Board (APESB) and the International Ethics Standards Board for Accountants (IESBA) released a new publication, Applying the Code’s Conceptual Framework in COVID-19 Circumstances: Scenarios in Taxation and Valuation Services, providing guidance to professional accountants in applying  the conceptual framework in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) during certain circumstances brought on by the COVID-19 pandemic. The publication uses four hypothetical scenarios covering services or activities relating to taxation and valuation services. Two scenarios include guidance for professional accountants in public practice, and two scenarios are focused on professional accountants in business.  

The publication was developed by the Staff of the APESB as one of the initiatives of a Working Group formed by the IESBA and national ethics standard setters (NSS) from Australia, Canada, China, South Africa, the UK and the US. The Group’s mandate is to develop implementation support resources to assist accountants effectively apply the Code when facing circumstances created by the COVID-19 pandemic.

The Group is chaired by the IESBA Deputy Chair, Mr. Richard Fleck, with support from IESBA and NSS staff. Working Group organizations comprise: APESB (Australia); Chartered Professional Accountants Canada; the Chinese Institute of Certified Public Accountants; the Independent Regulatory Board for Auditors (South Africa); the UK Financial Reporting Council; and the American Institute of Certified Public Accountants (US).

The publication can be found on the IESBA’s COVID-19 resource page which serves as the landing page on the IESBA’s website for topics related to COVID-19. The Working Group has committed to developing additional COVID-19 guidance in the coming weeks.

About APESB

Accounting Professional & Ethical Standards Board (APESB) was formed in 2006 as an independent national standards setter in Australia with the primary objective of developing professional and ethical standards in the public interest for the members of the three Australian Professional Accounting Bodies, namely Chartered Accountants Australia and New Zealand, CPA Australia and the Institute of Public Accountants. The three Professional Accounting Bodies are the members of APESB.

About IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve 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 Code).

The COVID-19 pandemic continues to disrupt markets, businesses, and organizations. This disruption has spawned an environment of uncertainty and unpredictability that may create risks that are new, or intensified, in the circumstances.

To serve the public interest, the IAASB has sought to assist, adapt, and collaborate with its many stakeholders. Now is no time to relax the commitment to the public interest. Our goal is to support the important role auditors must play in sustaining trust in financial and other external reporting. The IAASB has been closely working with its national standard-setting partners and the International Ethics Standards Board for Accountants (IESBA) to coordinate efforts and has been in regular discussion with regulatory authorities.

The purpose of this note is to update stakeholders on the outputs of our “assist” activities, although our efforts have also focused on adapting our work plan and ways of working, as well as targeted coordination with many of our stakeholders. 

A core element of our COVID-19 response has been the development of a series of specific COVID-19 audit related resources to help our stakeholders, and the larger accountancy community, navigate the application of the International Standards on Auditing (ISAs) in the current circumstances.

Since March, the IAASB has published six “Staff Audit Practice Alerts” which address the following topics:

• Areas of Focus in an Evolving Audit Environment Due to the Impact of COVID-19

Highlights some of the broader areas that may need to be further considered in designing and performing audit procedures to obtain sufficient appropriate audit evidence, and to report accordingly.

• Going Concern

Highlights key areas of focus when undertaking procedures relating to, and concluding on, the appropriateness of management’s use of the going concern basis of accounting in accordance with the ISAs, as well as reporting requirements where there are material uncertainties related to the entity’s ability to continue as a going concern.

• Subsequent Events

Highlights key areas of focus when undertaking procedures relating to subsequent events in accordance with the ISAs, i.e., matters related to events occurring between the date of the financial statements and the date of the auditor’s report and the effect, if any, of such on the entity’s financial statements.

• Auditor Reporting

Highlights key areas of focus relevant to auditor reporting in accordance with the ISAs, including modifications to the auditor’s opinion, the ‘material uncertainty related to going concern’-section, key audit matters, emphasis of matter and other paragraphs, as well as interim review reports (in accordance with International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity).

• Auditing Accounting Estimates

Highlights key areas of focus when undertaking audit procedures relating to accounting estimates and related disclosures in accordance with the ISAs, in particular considering the significant impact of estimation uncertainty and subjectivity in the current environment on accounting estimates.

• Review Engagements on Interim Financial Information

Highlights key matters for consideration when undertaking a review of interim financial information in accordance with ISRE 2410, including the auditor’s work effort and reporting considerations. 

To allow for easier accessibility for the broader audience, the IAASB has established a separate COVID-19 Resource Page, as part of the IAASB website. This page not only houses the topic-specific Staff Audit Practice Alerts, but also provides several other areas of interest, including thought leadership from the IAASB, webinars on related topics, and links to other web-based COVID-19 resources. We encourage all direct users of our standards, as well as the broader financial community, to utilize these resources. 

The IAASB will continue to adapt the way we work for the current evolving environment and provide assistance to those who use our standards. To learn more, and be kept aware of the latest developments, join our mailing list and follow us on Twitter and LinkedIn, as we will announce updates to our response on all three channels. 

Yours sincerely,

Tom Seidenstein

Chair, IAASB

This Handbook contains the complete International Public Sector Accounting Standards, published as of January 31, 2020. It also includes the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.

The International Federation of Accountants (IFAC) today released the latest in its Exploring the IESBA Code educational series: Installment 8: Responding to Non-compliance with Laws and Regulations (NOCLAR) [for PAIBs].

The publication is part of a 12-month short series to help promote awareness of the provisions in 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. This NOCLAR installment is part 1 of 2 and is focused on explaining the actions that accountants in business, including senior professional such are directors, and officers are expected to take when they become aware of, or suspect a NOCLAR within their employing organizations. Part 2 will focus highlighting provisions that apply to auditors and other accountants in public practice in client service. Previous installments highlighted the Code’s five fundamental principles of ethics and conceptual framework, as well as more topic-specific requirements, such as independence and conflicts of interest.

“The Exploring the IESBA Code series is the result of a strong collaborative effort between the International Federation of Accountants and the International Ethics Standards Board for Accountants (IESBA),” said Kevin Dancey, CEO of IFAC. “International standards are the bedrock on which our profession is built, and IFAC is committed to developing resources that raise awareness and encourage the adoption and implementation of such standards.”

Dancey continued, “We launched the Exploring the IESBA Code initiative last November to support the work of IESBA and highlight the substantively revised and restructured Code, including the digital eCode. We are pleased to see this material being used by professional accountancy organizations around the world to promulgate guidance on ethics and independence, and we will continue to support this important work.”

The Exploring the IESBA Code is published by IFAC and does not form part of the Code. It is non-authoritative and is not a substitute for reading the Code.  Click here to access this and future installments.

For more information about IFAC, visit www.ifac.org

For more information about the IESBA and the Code, visit www.ethicsboard.org

As increasing numbers of companies worldwide report on ESG factors, investors—and those charged with making capital allocation decisions—should be free to make use of all available, relevant information about companies without penalty or increased risk of legal liability.

A recently proposed rule in the United States addresses the appropriateness of ESG considerations as Financial Factors in Selecting Plan Investments (RIN 1210-AB95).  The proposed rule highlights the increasing focus by asset owners and investors on the relevance of “non-financial” information—measures related to value creation, sustainability or environmental, social, and governance factors (“ESG factors”). 

IFAC continues to speak out on behalf of the global accounting profession on the topic of non-financial reporting and believes that corporate reporting should capture all relevant information about organizations.  Investors and other stakeholders are demanding more and higher-quality information about company performance, risks, opportunities, and long-term prospects than the conventional financial reporting process makes available. 

Recent recommendations by the U.S. Securities and Exchange Commission’s Investor Advisory Committee acknowledge that “ESG is no longer a fringe concept.  It is an integral part of the larger investment ecosystem of our modern, global, interconnected world.”

While the importance of maximizing the financial security of pension plan beneficiaries is clear, the rules governing asset allocation and investment decisions should not create ambiguity that could, for example, discourage fund managers from appropriately considering and disclosing ESG factors as a component of how they analyze company performance, nor in any way “chill prospects” for integrating the value of information that ESG factors can bring into portfolio or investment decisions related to ERISA plans.

IFAC believes that investors and markets benefit when relevant, reliable, and comparable ESG factors are included in corporate reporting.  Further, reporting this information can incentivize companies to improve their focus and organizational decision-making on creating long-term value for investors, resulting in better long-term returns.  This is explored in greater depth in IFAC’s Point of View on Enhancing Corporate Reporting.

As the global voice of the accounting profession, IFAC remains committed to advocating for a comprehensive approach to corporate reporting through its contributions to global consultations and engagements.

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. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.