Accounting Standards

IESBA enhances guidance

The revisions will provide guidance that supports the ISQM 2 in ‘addressing the eligibility of an individual to serve in an EQR role’, and will be effective from December 2022

The International Ethics Standards Board for Accountants (IESBA) has released revisions to its International Code of Ethics for Professional Accountants, which looks to address the objectivity of engagement quality reviewers (EQR). 

This project coincides with the International Auditing and Assurance Standards Board’s (IAASB’s) development of International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews, which was finalised last month. 

The revisions will provide guidance that supports the ISQM 2 in “addressing the eligibility of an individual to serve in an EQR role”, and will be effective from December 2022. 

The guidance: 

  • Elaborates on the need to identify, evaluate and address threats to compliance with the fundamental principle of objectivity that might arise in the appointment of an individual as an EQR for a given engagement
  • Explicitly refers to and supports the requirement in ISQM 2 for a firm to establish, as a condition for eligibility, a cooling-off period of two years before an engagement partner can assume the EQR role on the same engagement

  • Emphasizes that the cooling-off requirement in ISQM 2 serves the dual objective of supporting compliance with the fundamental principle of objectivity and the high quality of engagements

It may also apply in situations where somebody is appointed as an appropriate reviewer for work performed, in order to address identified threats to compliance with fundamental ethics principles.

IESBA chairman Dr. Stavros Thomadakis said: “It is in the public interest that individuals trusted to serve as engagement quality reviewers act with unquestioned objectivity, given the nature and importance of that role.

“This new guidance is intended to reinforce the guardrails around this important function. I commend the extensive coordination efforts between the IESBA and IAASB in finalizing this guidance, and acknowledge the Public Interest Oversight Board’s useful advice on this project.”

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