The document summarizes updates and future plans regarding the International Ethics Standards Board for Accountants' (IESBA) Code of Ethics. It discusses expectations for the accounting profession to respond to public scandals by continuing to strengthen ethics standards globally. Key ongoing projects aim to address issues like long partner rotations, non-assurance services, responding to illegal acts, and improving the structure and implementation of the Code. The IESBA is seeking input on proposed changes and working to balance ethics and confidentiality while acting in the public interest.

1. Future Expectations and the
Profession’s Response
Jim Sylph, Formerly Executive Director, Professional Standards, IFAC
July 30, 2014

2. 2
PUBLIC EXPECTATIONS

3. 3
Scandals

4. 4
Global Adoption of IESBA Code
Total # Asia/Oceania
Adopted 84 Australia, Bangladesh*, Brunei Darussalam,
Cambodia, Fiji, Hong Kong SAR, Japan, Kazakhstan,
Kyrgyzstan, Malaysia, Mongolia, Nepal, New Zealand,
Philippines, Russian Federation, South Korea, Sri
Lanka*, Uzbekistan
Committed to Adopt 14 India, Pakistan,* Papua New Guinea, Singapore,
Sri Lanka*
Based on IESBA Code 15 China (mainland), Pakistan,* Vietnam
Process of Convergence 19 Bangladesh,* Indonesia, Sri Lanka,* Taiwan, Thailand
* Country has more than one professional body at
different stages of convergence
• Member of G-20

5. 5
IESBA Code
• Both Auditors & PAIBs
• Highlights from Current Work
Program
• Part C
• Long Association
• Non-Assurance Services
• Strategy & Work Plan
• Structure of the Code
• NOCLAR

6. 6
Part C of the Code
• Addressing three priority issues with respect to Professional
Accountants In Business (PAIBs)
– Pressure by superiors and others to engage in unethical or illegal acts
– Responsibility of PAIBs to produce financial reports that are faithful
representations of the economics of transactions
– Facilitation payments and bribes
• Exposure Draft up for approval in January 2015

7. 7
Long Association
• Cooling–off period for key audit partners (KAPs) on PIE audits:
– 5-year cooling-off for Engagement Partners (EP); 2 years for all other KAPs
– If EP for only part of 7-year time-on period, cool-off for 5 years at end of the 7
years
• Permissible activities during cooling off:
– EP permitted to be consulted on technical or industry-specific issues after 2
years cooling-off if on matters not previously considered by EP
– Other roles or activities prohibited if could influence audit outcome
– Provision of other services permitted if no significant/frequent interaction with
TCWG/no significant influence on the audit outcome exerted
• Exposure Draft Approved July 2014

8. 8
Non-Assurance Services (NAS)
• Exposure Draft approved April 2014
• Key proposals
– Withdrawal of emergency exception provisions re bookkeeping and tax
services
– Clarifications to provisions addressing management responsibilities
– Clarification of concept of “routine and mechanical” re bookkeeping
services
• Anticipated final approval: Q1 2015

9. 9
Strategy and Work Plan 2014-2018
• Approved in July 2014
• Support for the four work streams added to agenda in 2012
– Long Association, Non-Assurance Services, Structure of Code, Part C
• Strong support for proposed multi-pronged strategy
– Maintaining a high-quality Code
– Promoting and facilitating adoption and implementation
– Maintain the Code’s continued relevance in changing global
environment
– Increasing engagement and cooperation with key stakeholders

10. 10
Structure of the Code
• Review of structure of the Code to enhance usability
– To spur increased adoption and more effective implementation
– To facilitate compliance and enforcement
• Considering how to facilitate compliance and enforcement
– Increasing visibility of requirements and prohibitions
– Clarifying who is responsible for meeting them
• Consultation paper Q4 2014; Exposure Draft Q4 2015

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Responding to Non-Compliance
with Laws and Regulations (NOCLAR)
• Impetus for project
– Regulatory perception that confidentiality provisions in IESBA Code are
an impediment to whistle-blowing re non-compliance with laws and
regulations
• Key issue
– When should a PA override confidentiality and report non-compliance
to an appropriate authority?
• Balances acting in public interest vs. confidentiality principle
• Debate about disclosure of non-compliance is about what’s
reasonable to ask of PAs within their role in the public interest

12. 12
Responding to NOCLAR
• Main August 2012 Exposure Draft proposal: Requirement for auditor
to disclose to an appropriate authority
• Significant push-back from respondents
• Board considering alternative approach based on a right for
accountants to override confidentiality and report to appropriate
authority
• Three roundtables in 2014: Hong Kong (May 20), Brussels (June 13)
and Washington, DC (July 10)
• Expected completion Q1 2016

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