Sustainability Exposure Draft and Tax Planning-related Ethics Standard completed

Sustainability Exposure Draft and Tax Planning-related Ethics Standard completed

• 05 January 2024
• Sustainability Reporting
• South African Accounting Academy

At its December Board meeting, IESBA completed and approved an Exposure Draft on Ethics and Independence Standards for Sustainability Reporting and Assurance and the final Ethics Standard for Tax Planning and Related Services. 

Other major achievements of the IESBA December Board meeting include the approval of an Exposure Draft on the Use of Experts and of the IESBA’s Strategy and Work Plan for 2024-2027.

Commitment to Trustworthy Sustainability Reporting and Assurance

The IESBA voted and approved the proposed new International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA), and proposed revisions to the International Code of Ethics for Professional Accountants on sustainability reporting. The Exposure Draft will contain proposed independence standards for use by all sustainability assurance practitioners regardless of whether they are professional accountants, and specific ethics provisions relevant to sustainability reporting and assurance. This milestone completes more than 18 months of intensive fact-finding, outreach, and drafting efforts by the IESBA Board and staff.

The result is a set of draft standards that will establish the essential third pillar of ethics, including independence, standards to support public and corporate trust in sustainability-related information, alongside sustainability reporting and assurance standards. The IESBA intends to release the Exposure Draft in late January 2024.

Strengthening Ethical Behaviour in Tax Planning

The IESBA also approved final revisions to the Code to address tax planning and related services. These revisions respond to heightened public concerns about ethical behaviour in tax planning in light of high-profile revelations about tax avoidance schemes in several jurisdictions in recent years. The final provisions establish an ethical framework in the public interest to guide professional accountants in making judgments and decisions when providing tax planning or related services. Pending certification by the Public Interest Oversight Board (PIOB), the final pronouncement is expected to be issued by mid-April 2024.

Using the Work of External Experts

The IESBA approved proposed ethics provisions addressing the use of external experts by organizations as well as in the context of audit and assurance engagements, including sustainability assurance engagements. Professional accountants and sustainability assurance practitioners will be guided by an ethical framework to evaluate the competence, capabilities, and objectivity of external experts. These provisions will thereby help meet public expectations concerning ethical behaviour when using external experts, especially in an audit or assurance context.

Click here for more details on the above items:

https://www.ethicsboard.org/news-events/2023-12/iesba-announces-successful-completion-and-approvals-sustainability-exposure-draft-and-tax-planning 

https://www.iaesb.org/iaesb/consultations-projects/sustainability-reporting-project

Relevance to Auditors, Independent Reviewers & Accountants:

• As an accountant, auditor and independent reviewer, you need to comply with the International Code of Professional Conduct.

• Failure to adhere to the Code may lead to disciplinary action.

• Auditors, Independent Reviewers and Accountants should be aware of the latest version of the IESBA handbook containing the International Code of Ethics for Professional Accountants, as well as approved revisions and revisions not yet effective.

Relevance to Your Clients:

• None

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