IESBA Meeting Highlights: June 2022 Meeting

Aug 15, 2022

In August 2022, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) released the high­lights sum­mary of its vir­tual meet­ings held on June 6-8, 2022.

The Agenda items in­cluded:

  • Sustainability
  • Rollout of Revised Public Interest Entity (PIE) Definition
  • IFAC Panel on Accounting Education
  • Tax Planning & Related Services
  • Emerging Issues and Outreach Committee (EIOC)
  • IAASB-IESBA Coordination
  • Technology Fact Finding and Thought Leadership
  • Engagement Team - Group Audits Independence

Re­view the high­lights sum­mary and pod­cast on the IESBA's web­site.


IESBA staff releases Q&AS to spotlight key changes to the non-assurance services provisions of the IESBA code

Jul 11, 2022

On July 11, 2022, the Staff of the International Ethics Standards Board for Accountants (IESBA) today released a questions and answers (Q&As) publication to explain key revisions to the non-assurance services (NAS) provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).

Together with the recently issued fee-related revisions to the Code, the NAS revisions significantly strengthen the International Independence Standards by addressing public interest concerns about independence when firms provide NAS to their audit clients. The development of the Q&As has been informed by the IESBA’s deliberations in the project to revise the NAS provisions and extensive consultations with a wide range of stakeholders, including regulators and audit oversight bodies, the investor and corporate governance communities, national standard setters, firms and professional accountancy organizations.

The publication complements the Basis for Conclusions for the final NAS pronouncement and is intended to assist national standards setters, professional accountancy organizations, and professional accountants in public practice as they adopt and/or implement the revised NAS provisions. The Q&As will also assist other stakeholders, including regulators and audit oversight bodies, those charged with governance, investors, preparers, and academics and other educators better understand the key changes to the NAS provisions of the Code. These changes include the new requirements and guidance that:

  • Prohibit a firm or a network firm from providing a NAS that might create a self-review threat to an audit client that is a public interest entity.
  • Explain how firms are to determine when a self-review threat to independence might be created, including in relation to providing advice and recommendations to an audit client.
  • Are relevant in applying the Code’s conceptual framework to identify, evaluate, and address threats to independence that might be created when an audit firm provides a NAS to an audit client.
  • Enable and promote more robust communication and engagement about independence matters relating to NAS between audit firms and those charged with governance of public interest entities.

The revised NAS provisions are effective for audits of financial statements for periods beginning on or after December 15, 2022.

Review the press release and Q&A on the IESBA's website.

IESBA comments on the ISSB’S sustainability and climate-related disclosures exposure drafts

Jun 24, 2022

On June 24, 2022, the International Ethics Standards Board for Accountants (IESBA) submitted a response to the International Sustainability Standards Board (ISSB) on the ISSB’s Exposure Drafts – General Sustainability-Related Disclosures and Climate-Related Disclosures.

The IESBA believes that to meet the sustainability information needs of investors, customers, employees or potential employees, government agencies and other stakeholders, the infrastructure that supports sustainability reporting and assurance must be underpinned by the highest standards of ethical behavior.

Review the press release and response on the IESBA's website.

IESBA commits to readying global ethics and independence standards timely in support of sustainability reporting and assurance

Jun 13, 2022

On June 13, 2022, the International Ethics Standards Board for Accountants (IESBA) unanimously resolved to take timely action to develop fit-for-purpose, globally applicable ethics and independence standards as a critical part of the infrastructure needed to support transparent, relevant and trustworthy sustainability reporting. This recognizes the need to respond at pace to match the speed of transformation in the corporate reporting landscape. Demand for sustainability information has risen substantially and rapidly in recent years, and such information is increasingly used to support capital allocation or other decisions by investors, customers, current or potential employees, and other stakeholders. It also recognizes the essential role ethics and independence play in the production, reporting and assurance of sustainability information.

The IESBA has tasked its recently established Sustainability Working Group to develop a strategic vision to guide the IESBA’s standard-setting actions in relation to sustainability reporting and assurance. The Working Group will prepare a project plan by December 2022 as a launchpad for commencement of standard-setting work soon after.

This work will proceed in tandem with the development of IFRS Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB), and sustainability-related International Standards on Assurance Engagements (ISAEs) by the International Auditing and Assurance Standards Board (IAASB).

The IESBA recognizes the importance of coordinating this work closely with the ISSB and IAASB so that coherent, mutually reinforcing building blocks of standards can be put in place around the same time to support the necessary regulatory infrastructure for sustainability reporting.

Review the press release on the IESBA's website.

IESBA discussion on sustainability and ethics

May 18, 2022

This IESBA Sustainability and Ethics Discussion examines the critical role that complying with ethics standards, including on independence, plays in ensuring reliable and trustworthy sustainability information.

The one-hour, live-streamed conversation provided key insights about the applicability of the International Code of Ethics for Professional Accountants (including International Independence Standards) to the preparation and presentation of sustainability information and the provision of assurance thereon.

Watch the video on the IESBA's website.

Watch IESBA'S global webinar on the proposed revisions relating to the definition of engagement team and group audits

Apr 27, 2022

Recently, the International Ethics Standards Board for Accountants (IESBA) hosted two global webinars on the Board's exposure draft, Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits.

Both webinars provided an overview of the exposure draft and opportunities for stakeholders to participate in a questions and answers session with the presenters. 

The proposals in the Exposure Draft establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team―a concept central to an audit of financial statements―in the International Auditing and Assurance Standards Board's (IAASB) International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements. The proposals were developed in close coordination with the IAASB's group audits and quality management projects.

Review the press release on the IESBA's website.

IESBA broadens definition of public interest entity

Apr 19, 2022

Auditors following global standards will want to review new guidance released by the International Ethics Standards Board for Accountants that broadens the definition of a public interest entity and complements other recently revised provisions to the International Code of Ethics for Professional Accountants.

Review the press release and article on the IESBA's website.

Yes, Investing in ESG Pays Off

Apr 13, 2022

Why are leaders so reluctant to make ESG investments? Even those who know they’ll pay off are reluctant to do so, for five key reasons. The authors outline each — the numbers hide the truth about the real cost, our biases trick us, we focus on short-term benefits, we think about costs in silos, and we miss the bigger existential costs — and propose a solution for getting past these flawed mental models.

We Need Better Carbon Accounting. Here’s How to Get There

Apr 12, 2022

Any effective system of greenhouse gas (GHG) accounting needs to measure each company’s supply-chain carbon impacts accurately, providing visibility and incentives for it to make more climate-friendly product-specification and purchasing decisions. The current dominant system for carbon accounting, the GHG Protocol, misses this critical point by allowing companies to guestimate upstream and downstream emissions. To address this shortcoming, they introduced an E-liability accounting system, based on well-established practices from inventory and cost accounting, for accurately measuring GHG emissions across corporate supply-chains. In this article, they describe the basic flaw inherent in the GHG Protocol, explain why it has persisted, and offer a way forward for robust carbon accounting that does not involve rescinding the Protocol, which has been widely embedded in many global climate agreements. They conclude by identifying which companies stand to gain most from accurate GHG accounting and could be early adopters of the E-liability system.

Global ethics board expands universe of entities that are public interest entities

Apr 11, 2022

On April 11, 2022, the International Ethics Standards Board for Accountants (IESBA) released a revised definition of a PIE together with other revised provisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The revised provisions specify a broader list of categories of entities as PIEs whose audits should be subject to additional independence requirements to meet stakeholders’ heightened expectations concerning auditor independence when an entity is a PIE.

To recognize diversity in jurisdictional contexts, the IESBA has taken a novel approach of expanding the PIE definition globally at a high level while providing guidance to regulators, national standard setters and other relevant local bodies on tailoring the broad definition for jurisdictional specificities. Among other matters, the revisions also:

  • Articulate an overarching objective for additional independence requirements for audits of financial statements of PIEs.
  • Provide guidance on factors to consider when determining the level of public interest in an entity.
  • Replace the term “listed entity” with a new term “publicly traded entity,” providing a definition of the latter term.
  • Recognize the essential role local bodies responsible for the adoption of the Code play in delineating the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories and adding any other categories relevant to their environments.
  • Introduce a transparency requirement for firms to publicly disclose the application of independence requirements for PIEs where they have done so.

The IESBA coordinated the development of these revisions closely with the International Auditing and Assurance Standards Board (IAASB) given that some of the terms and concepts that were considered are common to both Boards’ standards. The IAASB is pursuing a project to consider a number of matters relevant to its standards arising from the finalization of the IESBA’s PIE provisions, including whether and how to address the transparency requirement noted above in the IAASB’s standards.

The revised PIE definition and related provisions become effective for audits of financial statements for periods beginning on or December 15, 2024. Early adoption is permitted and encouraged.

Review the press release and revised provisions on the IESBA's website.

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