Promoting the Role and Mindset Expected of Professional Accountants - PowerPoint Presentation

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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

Report 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

Activities Since Sept 2018 IESBA Meeting

Joint SSB WG/TF Chair Teleconference

Upcoming meeting with PAIBC Chair

Indicative 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 

Preliminary 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

Preliminary 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

Introduction 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

Introduction 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”

Views/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

Preliminary Draft

Section 100

Views/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

Future 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

Future 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

Future 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

Views/reactions on the TF’s current thinking:

CourageObjectivityBiasQuestioning mindset or similar terms

Matters for IESBA Consideration

Preliminary Draft

The Bigger Picture

Views/suggestions from IESBA?

Next 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

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