ICAS response to IESBA on the role and mindset expected of professional accountants
Ann Buttery reports on the ICAS Ethics Board’s response to the IESBA Exposure Draft on the role and mindset expected of professional accountants.
The ICAS Ethics Board has responded to the International Ethics Standards Board for Accountants (IESBA) Exposure Draft ‘Proposed Revisions to the Code to Promote the Role and Mindset Expected of Professional Accountants’.
The ICAS Code of Ethics is largely based on the IESBA Code. IESBA’s most recent Exposure Draft explores the role, mindset and behavioural characteristics expected of all professional accountants. Its proposed revisions to the IESBA Code of Ethics include:
- Highlighting in Section 100 of the Code the broad role of the accountancy profession in society, recognising the skills and values that professional accountants bring to their professional activities; the relationship between compliance with the Code and the professional accountant’s responsibility to act in the public interest; and clarifying the expectation that professional accountants should comply not only with the letter of the Code but with the spirit of the Code.
- Emphasising the importance of having the “determination to act appropriately in difficult situations” by adding new application material to the fundamental principle of “integrity”.
- Amendments to the “objectivity” and “professional competence and due care” principles to reflect the impact of technology.
- Revising the professional behaviour principle to better link this to the public interest responsibility.
- Introducing a requirement for all professional accountants to have an “inquiring mind” when applying the conceptual framework.
- Highlighting the need to be aware of bias, with the inclusion of a list of examples of bias for professional accountants to be alert to when exercising professional judgement.
- Emphasising the importance of the right organisational culture in ensuring the effective application of the conceptual framework.
Overall, ICAS is supportive of the proposals; however, we note some matters for IESBA’s consideration.
Section 100 – Complying with the Code
Roles and values of professional accountants
ICAS supports the proposals for Section 100 of the Code that explain the role, values and skills of professional accountants. We note that our The Power of One business ethics initiative recognises that, through their ethical behaviour, CAs are a force for good in the organisations in which they work. They can also influence those around them, and thereby help shape the culture and values of their organisation.
Acting in the public interest
Whilst ICAS agrees with IESBA that there is something more to addressing the public interest than just complying with the letter of the Code, we are concerned that the particular wording IESBA proposes still implies that the responsibility to the public interest is met if the professional accountant adheres to the Code.
Public interest and the individual professional accountant
We note that IESBA’s proposed paragraphs within Section 100 refer to professional accountants’ “responsibility to act in the public interest.” ICAS agrees that the accountancy profession has a responsibility to act in the public interest; however, it notes, in practice, the difficulties in requiring individual professional accountants to “act in the public interest”. It suggests that a requirement for an individual professional accountant to give “due consideration to the public interest”, rather than to “act in the public interest”, is more appropriate.
Determination to act appropriately in difficult situations
ICAS agrees with IESBA’s inclusion of the concept of “determination to act appropriately in difficult situations” within the fundamental principle of “integrity”. This serves to highlight that it is not always easy to do “the right thing”. We note that this has echoes of the 2017 revision to the ICAS Code of Ethics when ICAS established “moral courage” as an enabler – an underpinning qualitative characteristic – which helps CAs to comply with the fundamental principles.
Impact of technology
ICAS agrees with the inclusion of “technology” within the “objectivity” principle in order to highlight the threat posed to objectivity by over-reliance on technology. We also agree with the inclusion of the reference to technology within the “professional competence and due care” principle to highlight the need for professional accountants to maintain a continuing awareness of technology-related developments.
Inquiring mind
In the ICAS response to IESBA’s 2018 Consultation Paper Professional Skepticism – Meeting Public Expectations, we noted that whilst we believe that the concept of “professional scepticism” should be applicable to all professional accountants, and not just those performing audit or other assurance engagements, we would prefer an alternative term to “professional scepticism” when it is being applied to all professional accountants. We suggested the term “enquiring mindset”. ICAS therefore agrees with IESBA’s proposed introduction of the requirement for all professional accountants to have an “inquiring mind” when applying the conceptual framework. We believe that IESBA’s term “inquiring mind” appropriately represents the challenge, the willingness to ask the right questions and the “digging deeper” aspects of the professional accountant’s role.
Examples of bias
ICAS believes the proposed examples of bias are a helpful addition to the Code and will assist professional accountants to recognise when bias could be a threat to their professional judgement, particularly in relation to technology.
Organisational culture
ICAS welcomes the proposal to introduce additional application material on “organisational culture”. We agree with IESBA that “the internal culture of an employer, be it a firm or other organisation, can significantly impact whether professional accountants comply with the Code and act ethically”. This echoes the sentiment within our The Power of One publications and, in particular, our publication Organisational culture and values.
However, ICAS notes the following for IESBA’s consideration:
Applicability to all professional accountants
Whilst we are supportive of the proposed new application material in relation to organisational culture, we believe that it gives the impression that only those at the top of organisations have a responsibility for an ethical culture within an organisation with the result that less senior individuals could think the paragraphs are not relevant to them. ICAS believes that all professional accountants have a responsibility to be ethical leaders within their own sphere of influence – and this is an aspect that ICAS actively promotes when training CAs. In order to ensure that all professional accountants recognise that they have a role to play in creating an ethical organisational culture, ICAS suggests the inclusion of additional wording discussing the importance of individual ethical leadership within organisations.
Importance of effective “speak up/listen up/whistleblowing” policies to organisational culture
ICAS also suggests that another aspect of organisational culture which could be noted within the organisational culture application material is in relation to advocating the importance of “speak up/listen up/whistleblowing” mechanisms within organisations. To ensure a successful organisational culture, employees need to feel they can speak up about concerns without retribution, that their concerns will be listened to and, most importantly, followed up. This is discussed in the recently published ICAS research papers:
“Speak up? Listen up? Whistleblow? A survey of ICAS members”