International Board Releases Revised Ethics Code


The International Ethics Standards Board for Accountants (IESBA) on Friday issued a revised version of its Code of Ethics for Professional Accountants that strengthens auditor independence requirements. The IESBA is an independent standard-setting board of the International Federation of Accountants (IFAC).


The revised code, which is effective Jan. 1, 2011:


  • Extends the independence requirements for audits of listed entities to all public interest entities ( all listed entities and any entity defined by regulation or legislation as a public interest entity).
  • Requires a cooling off period before certain members of the firm can join public interest audit clients in certain specified positions;
  • Extends partner rotation requirements to all key audit partners;
  • Strengthens some of the provisions related to providing nonassurance services to audit clients;
  • Requires a pre- or post-issuance review if total fees from a public interest audit client exceed 15% of the total fees of the firm for two consecutive years; and
  • Prohibits key audit partners from being evaluated on or compensated for selling nonassurance services to their audit clients.


The revised code maintains a principles-based approach supplemented by detailed requirements where necessary, according to an IFAC press release.


A central objective of IFAC’s Statements of Membership Obligations is the convergence of national ethics codes with its Code of Ethics for Professional Accountants. The requirements specify that member bodies such as the AICPA should not apply less stringent standards than those stated in the code.


“International convergence of the AICPA Code [ of Professional Conduct] with the IFAC code has been an ongoing objective of the AICPA Professional Ethics Executive Committee (PEEC),” said Lisa A. Snyder, CPA, director of the AICPA’s professional ethics division. “Various projects of the PEEC such as network firms, conceptual framework for independence standards, the Guide for Complying with Rules 102–505, and gifts and hospitality, are all the result of the PEEC’s convergence efforts.”


Snyder says that “while the AICPA and IFAC codes both contain similar standards regarding auditor independence and other ethics guidance, there are a few remaining significant differences that are being considered by the PEEC.” But Snyder adds that “any proposed changes to the AICPA code resulting from convergence efforts will follow full due process including exposure to membership and consideration of comments at meetings open to the public.” 


The AICPA also participates in the IFAC ethics standard-setting process. Ken Dakdduk, the chair of PEEC, is a member of the IESBA.


Matthew G. Lamoreaux is a JofA senior editor. His e-mail address is



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