The Staff, Chair and other members of the International Ethics Standards Board for Accountants (IESBA) recorded a podcast that provides highlights of its March 11-13 meeting held in NYC.
Highlights of that meeting include:
- Role & Mindset (previously Professional Skepticism) Working Group - presented a new introduction and proposed revisions to the fundamental principles and conceptual framework portions of the Code, which describe the expected role and mindset for the professional accountant. The group's chair indicated there are a small number of issues to resolve and that a revised proposal will be presented to the Board in June with plans to approve an exposure draft for revisions to the Code at that time.
- Nonassurance Services Working Group - presented key proposals to the Board, that is, (1) retain different standards for public interest entities (PIEs) and non-PIEs (with no change to the provisions for non-PIEs); (2) auditors should not provide nonassurance services to PIEs that create self-review threats; and (3) those charged with governance (TCWG) should pre-approve nonassurance services before firms provide them. The Board generally supported the three key proposals with comments, which the task force will address. In June, the group will provided proposed revisions to the Code with a goal to issuing an exposure draft by September.
- Fees Working Group - presented proposed revisions to strengthen and enhance the Code regarding level of audit fees and fee dependency. On the former, the group recommends that the auditor be satisfied that the level of fees will allow the firm to perform services in accordance with professional standards. A reference to International Standards on Auditing (ISA) 120 is recommended in terms of defining the engagement partner's responsibilities for audit quality. To enhance transparency, the group recommends communication with TCWG about fees and public disclosure (the latter elicited a range of views, which the group will continue to discuss). On fee dependency, the group suggests the Code be revised primarily with respect to PIE audits, though some suggested edits to the Code for non-PIEs were also proposed. The group will present revised proposals to the June Board meeting.
- Part 4B Alignment to ISAE 3000 (revised) - An exposure draft adds new terms, clarifies others (e.g., assurance client) and clarifies which parties the firm should be independent of, e.g., not only the responsible party, but also the measurer or evaluator of the subject matter if different from the responsible party. A 90 day comment period to follow its release. The goal is to present a draft for discussion at the September Board meeting and finalize the text at the Board's December, 2019 meeting. The effective date will be June 2021 to align with Board's decision to observe a "quiet period" two (2) years post-issuance of the new Code.
- Technology Working Group - reported on recent data gathering and outreach on technological developments and their impact on the Code's robustness. A subject matter expert from PwC discussed the opportunities and risks in artificial intelligence (AI) and the ethical challenges AI raises. For example, the group has noted two emerging issues; bias and professional judgment. They have also noted that the Code's fundamental principles are consistent with those found in information technology frameworks, especially with respect to AI. The group will continue its research and report back to the Board at the June and September meetings with the objective to present a final report to the Board in December 2019.
- e-Code Working Group - The Board received a demonstration of the e-code, which provides a variety of functionalities to suit both the frequent and infrequent user. Currently the e-code is in the beta testing phase and is expected to be available in June 2019, which aligns with the new Code's effective date.
The Board will meet next on June 17 - 19 in Nashville, Tennessee.