IESBA revises ethics code

  • IESBA (International Ethics Standards Board for Accountants) (lt gray) Image

20 Mar, 2013

The International Ethics Standards Board for Accountants (IESBA) has amended its 'Code of Ethics for Professional Accountants' (Code) to address conflicts of interest, breaches of a requirement of the Code, and amend the definition of the term “engagement team”.

Following is a brief summary of the new requirements:

  • Conflicts of interest.  The revised Code includes specific requirements guidance on identifying, evaluating, and managing conflicts of interest. The new guidance states that a professional accountant must not allow a conflict of interest to compromise professional or business judgement, provides examples of possible conflicts of interest, and explains how to manage conflicts of interest whilst maintaining confidentiality and complying with the other provisions of the code.  The new requirements follow the publication of an exposure draft in December 2011 and are effective from 1 July 2014
  • Breaches of the Code.  The revised Code requires new requirements where a breach of an independence requirement the Code has occurred.  The Code now requires a firm to undertake various actions, which may include terminating the relationship causing the breach, evaluating the significance of the breach, communicating the breach, and documentation requirements.  These amendments resulted from an exposure draft published in October 2011 and are effective from 1 April 2014
  • Definition of 'engagement team'.  These amendments to the code ensure consistency with the revised International Standard on Auditing ISA 610 Using the Work of Internal Auditors, which now provides guidance on when internal auditors can provide direct assistance to the external auditor. The revised definition of the term “engagement team ” excludes individuals within the client’s internal audit function who provide direct assistance on an audit engagement when the external auditor complies with the requirements of ISA 610. The revised definition is the result of a February 2012 exposure draft and is effective for audits of financial statements for periods ending on or after 15 December 2014.

Click for IESBA press release (link to IFAC website).

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