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IESBA: Targeted Ethics Code Update on Firm Culture and Governance
- 20 July 2026
- Auditing and Assurance
- South African Accounting Academy
Summary:
The International Ethics Standards Board for Accountants (IESBA) has confirmed that firm culture and governance will be addressed through a targeted update to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).
Article:
The direction taken aims at the development of a single, overarching requirement in the IESBA Code, supported by limited application material referencing eight proposed interconnected Firm Culture and Governance (FCG) elements (ethical leadership, oversight and governance, independent input, accountability, incentives and disincentives, open discussion and challenge, education and training, and transparency). Practical guidance and educational materials to support awareness-raising and consistent adherence to the Code’s ethical provisions will be developed in parallel in collaboration with firms, jurisdictional standard setters, and professional accountancy organizations.
The decision balances the importance of a clear, enduring global baseline on ethical culture in firms with practical, impactful guidance on how firms can build and sustain a strong ethical culture.
The approach aims to:
- Minimize compliance burden and costs by avoiding prescriptive provisions, while delivering the authority and global consistency of a framework in the Code;
- Ensure the coherence of the Code by bringing all eight proposed FCG elements together holistically, replacing fragmented existing references;
- Complement International Standard on Quality Management 1 (ISQM 1) by reinforcing the firm’s quality objective to demonstrate a commitment to quality through a culture that recognizes and reinforces the importance of professional ethics, values, and attitudes;
- Apply globally and proportionately across firms of all sizes and service lines, with scalability built in.
An exposure draft is planned for December 2026, with final approval targeted by the end of 2027.
Click here to access more information:
Relevance to Auditors, Independent Reviewers & Accountants:
- As an accountant, auditor and independent reviewer, you need to be aware of and consider the information contained in publications by various professional bodies and standard-setters, e.g. IESBA, IAASB, etc. – so that you can apply this in the performance of your duties.