A new Code of Ethics released Monday by the International Ethics Standards Board for Accountants is designed to be easier to navigate, use, and enforce.
The code is designed to provide clear guidance about how accountants should deal with ethics and independence issues.
Although the fundamental principles of ethics remain the same in the new code, the unifying conceptual framework has undergone major revisions. As a result, the code contains a new approach for professional accountants to use to identify, evaluate, and address threats to compliance with the fundamental principles and independence.
The new code contains:
- Revised “safeguards” provisions designed to be better aligned to threats to compliance with the fundamental principles.
- Stronger independence provisions regarding long association of personnel with audit clients.
- New and revised sections dedicated to professional accountants in business relating to preparing and presenting information, and relating to pressure to breach the fundamental principles.
- Clear guidance for accountants in public practice explaining that they are subject to relevant provisions for professional accountants in business.
- New guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment.
- New guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.
“This is a groundbreaking moment in the public interest,” said IESBA Chairman Stavros Thomadakis. “The code is now a significantly strengthened platform, reengineered for greater usability while maintaining global applicability. It underscores the importance of the fundamental principles for all professional accountants.”
The new code has been renamed the International Code of Ethics for Professional Accountants (including International Independence Standards). The new code takes effect in June 2019.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.