Moving away from a purely mechanical and legalistic approach, the goal of the IESBA's Tax Planning Standards is to provide a principles-based framework and a global ethical benchmark applicable to tax planning services and activities.

At its December Board meeting, the International Ethics Standards Board for Accountants (“IESBA”) successfully completed and approved an Exposure Draft on Ethics and Independence Standards for Sustainability Reporting and Assurance and the final Ethics Standard for Tax Planning and Related Services. Other major achievements of the IESBA December Board meeting include the approval of an Exposure Draft on the Use of Experts and of the IESBA’s Strategy and Work Plan for 2024-2027.

Commitment to Trustworthy Sustainability Reporting and Assurance

The IESBA voted and approved the proposed new International Ethics Standards for Sustainability Assurance (including International Independence Standards) (“IESSA”), and proposed revisions to the International Code of Ethics for Professional Accountants (“the Code”) on sustainability reporting. The Exposure Draft will contain proposed independence standards for use by all sustainability assurance practitioners regardless of whether they are professional accountants, and specific ethics provisions relevant to sustainability reporting and assurance. This milestone completes more than 18 months of intensive fact-finding, outreach, and drafting efforts by the IESBA Board and staff.

The result is a set of draft standards that will establish the essential third pillar of ethics, including independence, standards to support public and corporate trust in sustainability-related information, alongside sustainability reporting and assurance standards. The IESBA intends to release the Exposure Draft in late January 2024.

Using the Work of External Experts

The IESBA approved proposed ethics provisions addressing the use of external experts by organizations as well as in the context of audit and assurance engagements, including sustainability assurance engagements. Professional accountants and sustainability assurance practitioners will be guided by an ethical framework to evaluate the competence, capabilities, and objectivity of external experts. These provisions will thereby help meet public expectations concerning ethical behavior when using external experts, especially in an audit or assurance context.

Strengthening Ethical Behavior in Tax Planning

The IESBA also approved final revisions to the Code to address tax planning and related services. These revisions respond to heightened public concerns about ethical behavior in tax planning in light of high-profile revelations about tax avoidance schemes in several jurisdictions in recent years. The final provisions establish an ethical framework in the public interest to guide professional accountants in making judgments and decisions when providing tax planning or related services. Pending certification by the Public Interest Oversight Board (“PIOB”), the final pronouncement is expected to be issued by mid-April 2024.

Strategy and Work Plan 2024-2027

The IESBA voted to approve its Strategy and Work Plan (“SWP”) for 2024-2027. Among other matters, the IESBA will tackle two new ambitious strategic areas of focus: accountancy firm culture and governance, and extending the impact of the Code beyond the accountancy profession, where it believes it can significantly expand reach and business impact.

Throughout 2023, the IESBA has responded vigorously to the challenges of ethics in the accountancy profession and beyond. The IESBA’s 2024 agenda will focus on final approvals of the sustainability-related  standards, as well as on new workstreams addressing accountancy firm culture and governance, and independence considerations regarding the audits of collective investment vehicles, pension fund arrangements, and investment company complexes.

“The global shift of governments, companies, and investors towards a more sustainable future will not happen with good intentions and soft targets,” said IESBA Chair Gabriela Figueiredo Dias. “This movement will require hard ethics to realize sustainability goals and mitigate the risks of wrongdoing. The IESBA’s new and proposed revisions to the Code and the Board’s strategy will help ensure that professional accountants and other sustainability assurance practitioners adopt the necessary ethical approaches to foster transparency, relevance, and public trust within the reporting sphere while supporting global sustainability efforts.”

About IESBA

The International Ethics Standards Board for Accountants serves the public interest by setting high-quality ethics standards, including independence requirements, as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.

Along with the International Auditing and Assurance Standards Board (“IAASB”), the IESBA is part of the International Foundation for Ethics and Audit (“IFEA”). The Public Interest Oversight Board (“PIOB”) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.

For more information about IESBA, please visit www.ethicsboard.org and on LinkedIn at www.linkedin.com/company/iesba.

The Staff of the International Ethics Standards Board for Accountants (IESBA) today released a questions and answers (Q&A) publication on the pronouncement Revisions to the Code Relating to the Definition of Engagement Team and Group Audits. The revisions to the Code address holistically the various independence considerations in an audit of group financial statements. The revisions also deal with the independence and other implications of the changes to the definition of an engagement team in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) to align with changes to the definition of the same term in the International Auditing and Assurance Standards Board’s (IAASB) International Standards on Auditing (ISAs) and International Standards on Quality Management (ISQMs).

The Q&A publication is designed to highlight, illustrate, or explain aspects of the revisions in the Code and is intended to complement the Basis for Conclusions for the final pronouncement. It will assist firms, national standards setters, and professional accountancy organizations in adopting and/or implementing the revisions. The Q&As will also assist regulators and audit oversight bodies, the corporate governance community, investors, preparers, educational bodies or institutions, and other stakeholders in understanding the revisions to the Code. 

The development of the Q&As has been informed by the IESBA’s extensive discussions and consultations with a wide range of stakeholders and the IESBA’s own deliberations during the development and finalization of the pronouncement.

The pronouncement is coming into effect for audits of financial statements and group financial statements for periods beginning on or after December 15, 2023, with early adoption permitted.

This Q&A publication is designed to highlight, illustrate, or explain aspects of the Code's recent revisions that holistically address the various independence considerations in an audit of group financial statements and is intended to complement the Basis for Conclusions for the final pronouncement.