Overview

Har­mo­nized provin­cial Rule 204 sets out the Cana­dian pro­fes­sion’s stan­dards that en­sure Char­tered Pro­fes­sional Ac­coun­tants (CPAs) main­tain au­di­tor in­de­pen­dence dur­ing en­gage­ments they un­der­take or par­tic­i­pate in. It sets the stan­dards and re­quire­ments CPAs must main­tain as part of their pro­fes­sional con­duct. Ethics stan­dards adopted by Cana­dian provin­cial bod­ies are cre­ated in align­ment with the Code of Ethics for Pro­fes­sional Ac­coun­tants is­sued by the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA).  Hence, changes to the IESBA Code of Ethics will need to be re­flected in Rule 204.

This Longer Term Professional Skepticism Project (PS LT) was developed out of the related Professional Skepticism - Short Term Project (the PS ST project). In replying to the exposure draft (ED) from the PS ST project, some com­mentators suggested that the IESBA should consider how its Code of Ethics should address professional skepticism beyond audit and other assurance engagements.

As part of the PS LT project, on July 31, 2019, the IESBA has issued proposed changes to the Code of Ethics (the Code) to promote the role and mindset expected of all professional accountants. The Exposure Draft, "Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants", puts forward changes that will further strengthen the Code. Comments are requested by October 31, 2019.

The proposed revisions respond to stakeholder calls for the IESBA to explore whether and how the Code could contribute to strengthening the application of concepts underlying professional skepticism by all professional accountants.

Among other matters, the proposals:

• Highlight professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and a professional accountant’s responsibility to act in the public interest; 
• Include enhancements to the robustness of the fundamental principles of integrity, objectivity and professional behavior; 
• Further strengthen the Code through requiring professional accountants to have an inquiring mind when applying the conceptual framework; and 
• Highlight the importance of being aware of bias and having the right organizational culture.

Review the press release and Exposure Draft on the IESBA's website.

For fur­ther de­tails about the PS LT project, re­fer to the IESBA’s pro­ject sum­mary.

Other developments

July 2019

• On July 31, 2019, the IESBA issued proposed changes to the International Code of Ethics for Professional Accountants (including International Independence Standards) to promote the role and mindset expected of all professional accountants. The Exposure Draft, "Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants", puts forward changes that will further strengthen the Code. Comments are requested by October 31, 2019.

September 2018

• At its meeting in September 2018, taking into account the roundtable input, the responses received on the CP, and the advice of its Consultative Advisory Group (CAG), the IESBA approved a project proposal, Promoting the Role and Mindset Expected of Professional Accountants. The objective the project is to ensure, through the development of Part 1 of the Code and other appropriate material, that the Code promotes the role, mindset and behavioral characteristics expected of all professional accountants when performing their professional activities. 

May 2018

• On May 14, 2018, the IESBA released its consultation paper, "Professional Skepticism – Meeting Public Expectations". Comments are requested by August 15, 2018.

Re­lated dis­cus­sions

Promoting the Role and Mindset Expected of Professional Accountants - IESBA

December 3, 2019

• At its meeting on December 3-6, 2019, the IESBA noted highlights of the significant comments received from respondents to its Exposure Draft. As of December 2019, the IESBA has received a total of 46 comment letters. The IESBA will undertake a full review of the comments received and the Task Force’s revised proposals at its March 2020 meeting with a view to approving the final pronouncement in June 2020.

June 17, 2019

• At its meeting on June 17-19, 2019, the IESBA approved for exposure proposed revisions to the Code aimed at promoting the role, mindset and behavioral characteristics expected of all professional accountants. The Exposure Draft is expected to be released by the end of July 2019 and will be open for public comment for 90 days.

March 11, 2019

• At its meeting on March 11-13, 2019, the IESBA considered proposed changes to the Code to promote the role, mindset and behavioral characteristics expected of all professional accountants. Among other matters, the IESBA considered (i) a new Introduction to the Code setting out the role of the accountancy profession and clarifying the linkage between (a) the provisions of the Code, and (b) the behaviors and approach to professional activities expected of professional accountants in acting in the public interest; (ii) a proposed enhancement to the description of the fundamental principle of objectivity; (iii) how best to reinforce the importance of the concept of “resolve” when facing challenging situations; (iv) properly recognizing the integral role of a “questioning mindset” when exercising professional judgment; and (v) highlighting the importance of an awareness of the risk of bias in its different forms when applying the conceptual framework. At its June 2019 meeting, the IESBA will consider a revised draft of the proposed changes to the Code with a view to approving them for exposure.

December 3, 2018

• At its meeting on December 3-5, 2018, the IESBA discussed preliminary Task Force proposals for enhancements to the Code, including: (i) a draft introduction at the front of the Code setting out the role of professional accountants in society, their responsibility to act in the public interest and the overarching objective expected of them; and (ii) proposed revisions to Sections 100 and 120 relating to organizational culture and tone at the top, and the exercise of professional judgment. The IESBA will consider a revised draft of the proposed changes to the Code and further proposals relating to other elements of the project scope, including potential new application material in support of the fundamental principles and new material addressing bias, pressure and other impediments, at its March 2019 meeting. 

September 17, 2018

• At its meeting on September 17 - 20, 2018, the IESBA considered the feedback from respondents to the May 2018 consultation paper (CP) Professional Skepticism – Meeting Public Expectations, and the input from the four global roundtables held in June and July 2018 in Washington, DC, U.S.A.; Paris, France; Tokyo, Japan; and Melbourne, Australia. Taking into account the roundtable input, the responses received on the CP, and the advice of its Consultative Advisory Group (CAG), the IESBA approved a project proposal, Promoting the Role and Mindset Expected of Professional Accountants. The objective the project is to ensure, through the development of Part 1 of the Code and other appropriate material, that the Code promotes the role, mindset and behavioral characteristics expected of all professional accountants when performing their professional activities. The IESBA plans to consider issues and initial Task Force proposals at its December 2018 meeting.

June 18, 2018

• At its meeting on June 18-20, 2018, the IESBA received a preliminary report on the Washington DC and Paris roundtables held in June 2018. The Professional Skepticism Working Group also briefed the Board on its activities since the release of the consultation paper.  Two more roundtables will be held – at Tokyo on July 12 and in Melbourne on July 16. The Board will review a full analysis of the roundtable input at its meeting in September 2018.

March 12, 2018

• At its meeting on March 12-14, 2018, the IESBA considered a “first-read” draft consultation paper dealing with longer-term issues concerning the topic of professional skepticism, following the finalization in December 2017 of enhanced application material addressing professional judgment and professional skepticism in the short term. Among other matters, the consultation paper explores the behavioral characteristics comprised in professional skepticism, whether all professional accountants should apply these behavioral characteristics, and whether the Code should be further developed as a result. The IESBA asked the Working Group to present the final draft consultation paper for IESBA approval at a teleconference scheduled for May 4, 2018

Dec 4, 2017

• At its meet­ing on December 4-8, 2017, the IESBA received an update from its Professional Skepticism Working Group regarding its longer-term professional skepticism initiative. In this regard, the IESBA considered a tentative direction forward regarding development of a consultation paper that would seek stakeholder views on a proposed approach to the question. Among other matters, the consultation paper would explore the specific behaviors that the public expects of all professional accountants, and whether to elaborate on the relationships between those behaviors and the fundamental principles. The IESBA broadly supported the proposed direction and asked that the Working Group present a draft of the consultation paper for consideration at the March 2018 IESBA meeting.