IESBA proposes ethics guidance on objectivity of engagement quality reviewers

Register now

The International Ethics Standards Board for Accountants released an exposure draft Thursday proposing changes to the International Code of Ethics for Professional Accountants to provide additional guidance to audit engagement quality reviewers about their professional objectivity.

The proposed changes to the ethics code are limited in scope and aim to align it with the International Auditing and Assurance Standards Board’s development of proposed International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews. Both IESBA and the IAASB are affiliated with the International Federation of Accountants.

The exposure draft deals with the application of the conceptual framework in the ethics code to address the topic of the objectivity of an engagement quality reviewer, supporting the proposed quality management standard in addressing the matter of the eligibility of an individual to serve in an engagement quality reviewer role.

Specifically, the proposed guidance explains the different types of threat to compliance with the fundamental principle of objectivity that might be created in circumstances where an individual is being considered for appointment as an engagement quality reviewer for a given engagement. It also describes the factors to consider in evaluating the level of the identified threats; and suggests some actions that might act as safeguards to address those threats.

Both IESBA and the IAASB cooperated on developing the proposed guidance, and IESBA is proceeding on an accelerated time frame to finalize the proposal so it will be able to align it closely with the anticipated finalization of ISQM 2 later this year. In the meantime, IESBA is asking for comments on the exposure draft by March 16.

For reprint and licensing requests for this article, click here.