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IESBA Proposed Changes to the Code of Ethics: Application Material Relating to Professional Skepticism and Professional Judgment – Longer Term Project (Potential Amendments to Harmonized Rule of Professional Conduct, Rule 204) [Research]

Comment period:

Comments on the Consultation Paper are requested by August 15, 2018.

Next steps:

The IESBA will review the comments received on its Consultation Paper in Q4/2018. In addition, the IESBA will engage with a wide range of stakeholders on the issues at a series of global roundtables to be held in Washington (June, 2018), Paris (June, 2018) and Tokyo (July, 2018).

Last up­dated:

June 2018



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 commenters suggested that the IESBA should consider how its Code of Ethics should address professional skepticism beyond audit and other assurance engagements.

On May 14, 2018, the International Ethics Standards Board for Accountants (IESBA) released its consultation paper, "Professional Skepticism – Meeting Public Expectations". Comments are requested by August 15, 2018.

In response to regulatory and other stakeholder feedback on the topic, the paper explores:

  1. The behavioral characteristics comprised in professional skepticism;
  2. Whether all professional accountants should apply these behavioral characteristics; and
  3. Whether the International Code of Ethics for Professional Accountants (including International Independence Standards) should be further developed to address behaviors associated with the exercise of appropriate professional skepticism.

Through this initiative, the IESBA also aims to reinforce the effective exercise of professional skepticism by auditors.

The consultation paper was developed following close coordination with the International Auditing and Assurance Standards Board (IAASB) and the International Accounting Education Standards Board (IAESB), and with advice from the IESBA Consultative Advisory Group.

Review the press release and consultation paper on the IESBA's website.

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


Other developments

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

Longer Term Project Relating to Professional Skepticism and Professional Judgment - IESBA

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.

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