The International Ethics Standards Board for Accountants is releasing a new standard this week that redefines the roles of auditors, CFOs and other accounting professionals when they witness or suspect illegal acts at their own organizations or within a client’s organization.
The IESBA Code of Ethics applies to all professional accountants worldwide. IESBA is an independent standard-setting board supported by the International Federation of Accountants, or IFAC, whose member bodies in the U.S. include the American Institute of CPAs and the Institute of Management Accountants.
The standard is known as NOCLAR, short for noncompliance with laws and regulations. It aims to guide accountants on how to act in the public interest when they encounter or become aware of suspected illegal acts such as accounting fraud. When laws and regulations appear to have been broken, the new standard explains when and how accountants should report wrongdoing to the authorities, without breaching their ethical duty of confidentiality. IESBA sees the new standard as an opportunity for the global accounting profession to enhance its reputation as a safeguard for trustworthy business and a healthy global financial system.
IESBA released an exposure draft of the proposed standard last year, building on an earlier exposure draft from 2012. The text of the final pronouncement released this week is here and a document explaining the basis for conclusions in the final document is here.
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