Richard Fleck IESBA Deputy Chair amp Task Force Chair IESBA Meeting New York USA December 35 2018 Report on recent activities Provide input to p reliminary draft of new Introduction to the Code and revisions to s100 ID: 775963
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Slide1
Promoting the Role and Mindset Expected of Professional Accountants
Richard Fleck, IESBA Deputy Chair & Task Force Chair
IESBA Meeting
New York, USA
December 3-5, 2018
Slide2Report on recent activities Provide input to preliminary draft of new Introduction to the Code and revisions to s100Provide input and suggestions to:TF’s current thinking on other conceptsHigh level plan to achieve actual behavioral changesNext steps
Objectives
Slide3Activities Since Sept 2018 IESBA Meeting
Joint SSB WG/TF Chair Teleconference
Upcoming meeting with PAIBC Chair
Slide4Indicative Timeline by Scope
Project ScopeDec 18Mar 19June 19Sept 19Pre. DraftPre. Draft 1st Read2nd ReadDescribe role, mindset and behavioral characteristics expected of PAs, overarching objective Linkage with FPs and CFThreats from bias, pressure and other impediments Other parts of the Code to reinforce mindset and behavioral characteristics Linkage with PS Any other matters relevant to the project objective
Slide5Preliminary Draft
OVERVIEW OF KEY REVISIONS
Key Comments from IFAC SMPC
Introduction to the Code
Suggested that para 1 did not sufficiently recognize the unique expertise of PAs on highly technical matters as a significant factor in deciding the involvement of the Profession
Queried if the responsibility of PAs to act in the public interest in para 4 is appropriate for all activities
Questioned the need to include information about oath/affirmation
Section 100
Suggested that new material should not be added if it is self-explanatory or sufficiently dealt with by other requirements (e.g., IAASB’s ISQM 1)
Queried
if moving the material on professional judgment in Section 120 would weaken the overall structure of the CF
Noted the view that the compliance issue may only be one of perception and suggested that perhaps more can be done by PAOs in ensuring PAs are behaving ethically
Slide7Preliminary Draft
Introduction to the Code Section
In developing material on role, mindset and behavioral characteristics expected of PAs at the beginning of the
Code, the Task
Force considered:
Roundtable discussions of an overarching statement
Introductory material of other national ethics code as well as national oaths
The 2001 version which contained material on the role of the Code, public interest and objectives of profession as well as IESBA’s
decision to streamline the extant
Code when restructuring the Code
The TF concluded:
I
t is more impactful to insert a new Section before Part 1 of the Code to remind PAs of the importance of their work and their role in society as part of a global profession and to motivate them to comply with the Code
It is not suitable for an
oath or mission
statement to be inserted into the Code
Slide8Introduction to the Code Section
Key Features
New
Section Positioned after Preface & before Part 1Treated as part of the CodeUses non-technical language
Three PartsThe role of the Accountancy Profession in serving the public interestProfessional AccountantsThe Code
Exhort & Remind ReadersThe role of the profession in society, the public confidence it receives due to the value of its work because of its expertise and adherence to a set of ethical behavior and its responsibility to act in the public interest.The key elements that differentiate professional accountants (in a broad sense) from other accountantsImportance of compliance with the Code in maintaining public confidence
Describe
Overarching
Objective
Slide9Introduction to the Code Section
Overarching Objective
Paragraph 5 describes the overarching objective of professional accountants in serving the public interest:
“to apply an objective and diligent
mindset
, together with knowledge, experience and judgment, so that others can have confidence that the professional accountant’s advice or other output is fit for the purpose for which it was provided”
Slide10Views/reactions to the proposed text including the overarching objective
Views on not including oath or mission statement in the Code
Matters for IESBA Consideration
Preliminary Draft
Slide11Preliminary Draft
Section 100
Slide12Views/reactions to the proposed text on organizational structure including its location
Views/reactions on:Whether the paragraphs 120.5 A1 and A2 should be relocated to paragraph 100 as proposed?The proposed text in paragraphs 100.1 A5 - A7
Matters for IESBA Consideration
Preliminary Draft
Slide13Future Task Force Discussions
Jan 2019 TF meeting to discuss and develop proposals re:
linkages of FPs and CF in Sections 110 and 120 with role, mindset and behavioral characteristics expected of PAs in the proposed material
Threats to compliance with FPs from bias, pressure and other impediments
The TG has developed
preliminary
thinking and seek the Board’s early reaction on:
Courage, Objectivity, Bias,
Questioning mindset or similar terms
Slide14Future TF Discussions
New AM in Support of the FPs
Courage
as enabler:
Concept of “moral courage” was previously discussed as part of a presentation by ICAS at the March 2016 IEBSA meeting
Propose to refer to “courage” as an enabler to comply with the FPs
Propose to include in Section 110, under either “General” or “Integrity” section
FP of
Objectivity
:
Propose to rephrase the definition of objectivity to be positive in nature
Propose to include additional AM to the principle of objectivity
Slide15Future TF Discussions
Other Concepts
Elevating the concept of “
bias
”:
Propose to generalize the discussion about bias in either Section 110 or 120 so that the material applies wherever bias occurs – not just in
the
context
of
Objectivity
Considering whether to
develop non-authoritative material
on the topic of bias
Questioning mindset
or similar term:
Considering the use of “questioning mindset”, “critical thinking” and/or similar concepts such as “challenging mindset”
Considering whether to include in Section 110 or 120
Will ensure alignment with Auditing and Education standards
Slide16Views/reactions on the TF’s current thinking:
CourageObjectivityBiasQuestioning mindset or similar terms
Matters for IESBA Consideration
Preliminary Draft
Slide17The Bigger Picture
Views/suggestions from IESBA?
Slide18Next Steps
Timing
Action
Mar 2019
Discussion with CAG;
IESBA discussion
of draft revisions to ss110 and 120, refined draft Introduction to the Code and s100
May
2019
Discussion with NSS
Jun 2019
IESBA
first read of draft ED
Sep 2019
Discussion draft
ED
with CAG;
IESBA second
read and
approval of
ED
Slide19www.ethicsboard.org
The Ethics Board