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The role and mindset expected of professional accountants

The International Ethics Standards Board for Accountants (IESBA) met in Nashville, Tennessee in June to outline a new vision of the role and mindset of the professional accountant.

The IESBA considered a first-read draft of the proposed changes to the fee-related provisions in the International Independence Standards, Section 410, Fees as well as some of the related conforming amendments to other sections. Among other matters, the IESBA deliberated:

• How to emphasise that independence might be impacted by the level of fees charged or quoted to an audit client, including the level of audit fees and fees for services other than audit, as well as the ratio of such fees.
• Whether the Code should include provisions to address threats to independence created by the fees charged or quoted by a firm for the provision of services other than audit to an audit client.
• For audit clients that are public interest entities (PIEs), whether the Code should require firms to communicate information about the level of audit fees and fees for services other than audit to: those charged with governance (TCWG), and the public to enhance transparency, and if so, how this might best be achieved.
• How the fee dependency provisions in the Code might be strengthened for audit clients that are PIEs, including through requiring public disclosure about fee dependency and withdrawal from the audit engagement in specific circumstances.

The IESBA will undertake a second read of the proposed changes to the Code at its September 2019 meeting with a view to approving an exposure draft by December 2019. As part of this project, the IESBA will engage with the International Auditing and Assurance Standards Board (IAASB) on issues that overlap the remits of both Boards, including considerations relating to public disclosure, pursuant to the established operating principles for coordination.

The IESBA received an update on the “rollout” initiatives aimed at promoting awareness and adoption and implementation of the revised and restructured Code (the Code), including webinars and other significant outreach activities conducted in Q2 2019.

The IESBA also was briefed by Mr. Joseph Bryson, IFAC Director for Quality and Development, and the IESBA Senior Technical Director on efforts by the joint staff of IFAC and IESBA to strengthen and deepen the collaboration between IFAC and IESBA to promote adoption and implementation of the Code. Similar efforts are being pursued by IFAC staff with staff of the other standard-setting Boards supported by IFAC.

The IESBA will receive the next update on rollout activities at its September 2019 meeting.


The IESBA received an update on the Technology Working Group’s Q2 2019 information gathering activities and the Working Group’s preliminary observations from its analysis to date. Among other matters, the Working Group briefed the Board on the inter-related impact of technology across all fundamental principles; identified a question as to whether the categories of threat currently in the Code sufficiently address the “complexity” of risks associated with technological developments; highlighted the importance of professional judgment, having the “right mindset” and ethical leadership in the digital age; and the need for alignment between the fundamental principles in the Code and ethical principles commonly encountered in ethical frameworks for responsible use of artificial intelligence. The IESBA also received an illustrative walk-through of how the conceptual framework might be applied to two technology-related scenarios.

The IESBA will receive a further update from the Working Group at its September 2019 meeting and will consider the Working Group’s final report in December 2019.

Non-assurance Services (NAS)

The IESBA considered a first-read draft of proposed revisions to Section 600, Provision of NonAssurance Services to an Audit Client, including the subsections. Among other matters, the IESBA deliberated:
• The proposed provisions relating to prohibiting firms and network firms from providing NAS to audit clients that are PIEs when those NAS might create self-review threats.
• The proposed provisions addressing communication with TCWG about specific NAS matters, including pre-approval of NAS by TCWG for audit clients that are PIEs.
• The ordering and flow of the material in the subsections.
• Proposed refinements and other clarifications to subsection 604 relating to tax.

At its September 2019 meeting, the IESBA will consider a revised set of proposals with a view to approving an exposure draft.

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