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The outcome of the first phase is a new structure and drafting convention, as well as a major restructured portion of the Code. The IESBA’s overall restructuring efforts are intended to result in a Code that is more understandable and easier to use, thereby facilitating its adoption and effective implementation globally. At the same time, the IESBA has agreed revisions to a number of provisions pertaining to safeguards in the Code, including enhancements to the conceptual framework of “threats and safeguards.”
The IESBA now enters the final stage of this project. Comprised of three EDs, this final stage sets out new proposals that:
- Restructure select sections of the Code, including recently finalized provisions addressing accountants’ response to non-compliance with laws and regulations (NOCLAR), long association of audit firm personnel with an audit or assurance client, and ethical issues that professional accountants in business (PAIBs) often face (Structure ED-2);
- Revise the safeguards-related provisions in the independence sections of the Code pertaining to non-assurance services provided to audit and other assurance clients (Safeguards ED-2); and
- Clarify the applicability of PAIB provisions to professional accountants in public practice (Applicability ED).
“The board has committed to timely delivery of the restructured Code,” said IESBA Chairman Dr. Stavros Thomadakis. “This major upgrade will lead not only to a Code that is more understandable and easier to use but also to a more robust Code with important substantive improvements in many areas, including auditor independence. These goals ultimately underpin the public interest role of the global accountancy profession.”
The IESBA is targeting December 2017 for completion of this work to restructure and strengthen the Code. The restructured Code, which will be renamed International Code of Ethics for Professional Accountants (including International Independence Standards), will contain significant new requirements and revised provisions that the IESBA has already finalized, including:
- A greater emphasis on compliance with the fundamental principles in the Code;
- Clarified and strengthened provisions regarding application of the conceptual framework, including safeguards;
- A strengthened partner rotation regime for audits of public interest entities;
- Provisions addressing accountants’ responsibilities regarding NOCLAR;
- More comprehensive provisions addressing PAIBs’ responsibilities when preparing or presenting information; and
- New requirements and guidance for PAIBs regarding pressure to breach the fundamental principles.