IESBA Enhances International Code of Ethics; Proposes New Guidance for Professional Skepticism and Professional Judgement

The IESBA has released for public comment the Exposure Draft, Proposed Application Material Relating to Professional Skepticism and Professional Judgment.The proposed guidance for the first time links key concepts in the IESBA Code of Ethics for Professional Accountants (the Code) and clarifies their application, namely:

  • how compliance with the fundamental principles in the Code supports professional skepticism by auditors and assurance practitioners for audit, review, and other assurance engagements; and
  • the importance of professional accountants obtaining a sufficient understanding of the facts and circumstances known to them when exercising professional judgment in applying the conceptual framework underpinning the Code.

Dr. Stavros Thomadakis, IESBA Chairman said:

Compliance with the fundamental principles and professional skepticism are essential obligations of professional accountants for audit and other assurance engagements
We are articulating for the first time the linkage between the two, making clear the important role that the fundamental principles play in enabling auditors and assurance practitioners to meet the public’s expectations about exercising professional skepticism

The proposed guidance addressing the fundamental principles and professional skepticism responds to a recommendation from the tripartite Professional Skepticism Working Group established by the IESBA, the International Auditing and Assurance Standards Board (IAASB), and the International Accounting Education Standards Board (IAESB).

Ken Siong, IESBA Technical Director noted:

While developing this guidance, the IESBA also emphasises the importance of professional accountants not simply accepting information at face value when exercising professional judgment

Once finalised, this material will be included in the clarified and restructured Code that the IESBA plans to complete by the end of 2017. Beyond this, the IESBA will continue to explore further issues relating to professional skepticism in close coordination with the IAASB and IAESB, and in consultation with stakeholders.

How to Comment
The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the Ethics Board’s website at Comments are requested by July 25, 2017.