Global Ethics Board Takes Major Step Forward in Strengthening Auditor Independence
Apr 28, 2021
On April 28, 2021, the International Ethics Standards Board for Accountants (IESBA) released revisions to the Non-Assurance Services (NAS) and fee-related provisions of the "International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code)".
The revised NAS and fee-related provisions significantly strengthen the guardrails around auditor independence in two important areas that have the potential to create incentives influencing auditor behavior—non-assurance services provided to audit clients and fees.
The package of new measures includes:
- A far-reaching prohibition on audit firms from providing a NAS that might create a self-review threat to an audit client that is a public interest entity.
- New provisions to enable and promote more robust engagement between auditors and those charged with governance of public interest entities about independence matters relating to NAS and fees.
- Strengthened provisions to address undue fee dependency on audit clients.
- Provisions to stimulate greater public transparency about fees paid by audit clients that are public interest entities to assist stakeholder judgments about auditor independence.
- Comprehensive guidance to steer auditors’ threat assessments and actions in relation to NAS and fees.
The revised NAS and fee-related provisions become effective for audits of financial statements for periods beginning on or after December 15, 2022. Early adoption is permitted and encouraged.
Review the press release and the Code on the IESBA's website.
Related Topics
- IESBA Changes to Certain Provisions of the Code of Ethics which Address the Long Association of Personnel with an Audit or Assurance Client (Amendments to Harmonized Rule of Professional Conduct, Rule 204) [Completed]
- IESBA Proposed Changes to the Code of Ethics: Section 600, Provision of Non-Assurance Services to an Audit Client (Potential Amendments to Harmonized Rule of Professional Conduct, Rule 204) [Completed]
- IESBA Proposed Changes to the Code of Ethics: Fee-related Provisions in Part 2, Part 3 and Part 4A of the Code (Potential Amendments to Harmonized Rule of Professional Conduct, Rule 204) [Completed]
