Overview

In December 2022, the IESBA approved the project to address the ethics, including independence, considerations relating to the use of all experts, whether employed or externally engaged (i.e., hired) by an employing organization or firm in (a) audit, sustainability, and other assurance engagements, (b) the provision of professional services other than audit and assurance services, and (c) the preparation of financial and non-financial information.

The IESBA notes that there might be threats to a professional accountants’ (PAs) or sustainability assurance practitioners’ (SAPs) compliance with the fundamental principles if the external expert and its work, on which they rely on, are not appropriately evaluated. Therefore, the IESBA proposed new sections to establish an ethical framework to guide PAs or SAPs in evaluating whether an external expert has the necessary competence, capabilities and objectivity (CCO) to use that expert’s work for the intended purposes. The proposals also include provisions to aid in applying conceptual framework of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) when using the work of an external expert.

The IESBA unanimously approved the proposed provisions for exposure at its December 2023 meeting. The proposals include three new sections to the Code – proposed Section 390 for professional accountants (PAs) in public practice (PAPPs), proposed Section 290 for PAs in business (PAIBs), and proposed Section 5390 for sustainability assurance practitioners (SAPs). The proposed Section 5390 is an integral part of the Exposure Draft (ED), Proposed International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting (Sustainability ED), and, therefore, should be read in conjunction with that ED.

On January 29, 2024, the International Ethics Standards Board for Accountants (IESBA) announced the launch of the Exposure Draft on Using the Work of an External Expert.

The comment period for the exposure draft ends on April 30, 2024, and the IESBA expects to approve the final pronouncement by December 2024 followed by roll-out and implementation support in 2025. The Canadian standard setters have not commented on undertaking any consequential projects in Canada yet.