1. Promoting the Role and Mindset Expected of Professional Accountants
Richard Fleck, IESBA Deputy Chair & Task Force Chair
IESBA Meeting
New York, USA
December 3-5, 2018

2. Objectives Report on recent activities
Provide input to preliminary draft of new Introduction to the Code and revisions to s100
Provide input and suggestions to:
TF’s current thinking on other concepts
High level plan to achieve actual behavioral changes
Next steps

3. Activities Since Sept 2018 IESBA Meeting
Joint SSB WG/TF Chair Teleconference
Upcoming meeting with PAIBC Chair

4. Indicative Timeline by Scope
Project Scope
Dec 18
Mar 19
June 19
Sept 19
Pre. Draft
1st Read
2nd Read
Describe role, mindset and behavioral characteristics expected of PAs, overarching objective
Linkage with FPs and CF
Threats from bias, pressure and other impediments
Other parts of the Code to reinforce mindset and behavioral characteristics
Linkage with PS
Any other matters relevant to the project objective

5. OVERVIEW OF KEY REVISIONS
Preliminary Draft
Role of Accountancy Profession including overarching objective
Professional Accountants in a broad sense
Role of the Code
New Introduction to the Code
Firm and organizational culture
Professional judgment
Scope and compliance with FP and CF
Revisions to Section 100, Part 1
OVERVIEW OF KEY REVISIONS

6. Key Comments from IFAC SMPC
Introduction to the Code
Suggested that para 1 did not sufficiently recognize the unique expertise of PAs on highly technical matters as a significant factor in deciding the involvement of the Profession
Queried if the responsibility of PAs to act in the public interest in para 4 is appropriate for all activities
Questioned the need to include information about oath/affirmation
Section 100
Suggested that new material should not be added if it is self-explanatory or sufficiently dealt with by other requirements (e.g., IAASB’s ISQM 1)
Queried if moving the material on professional judgment in Section 120 would weaken the overall structure of the CF
Noted the view that the compliance issue may only be one of perception and suggested that perhaps more can be done by PAOs in ensuring PAs are behaving ethically

7. Introduction to the Code Section
Preliminary Draft
Introduction to the Code Section
In developing material on role, mindset and behavioral characteristics expected of PAs at the beginning of the Code, the Task Force considered:
Roundtable discussions of an overarching statement
Introductory material of other national ethics code as well as national oaths
The 2001 version which contained material on the role of the Code, public interest and objectives of profession as well as IESBA’s decision to streamline the extant Code when restructuring the Code
The TF concluded:
It is more impactful to insert a new Section before Part 1 of the Code to remind PAs of the importance of their work and their role in society as part of a global profession and to motivate them to comply with the Code
It is not suitable for an oath or mission statement to be inserted into the Code

8. Introduction to the Code Section
Key Features
New Section
Positioned after Preface & before Part 1
Treated as part of the Code
Uses non-technical language
Exhort & Remind Readers
The role of the profession in society, the public confidence it receives due to the value of its work because of its expertise and adherence to a set of ethical behavior and its responsibility to act in the public interest.
The key elements that differentiate professional accountants (in a broad sense) from other accountants
Importance of compliance with the Code in maintaining public confidence
Three Parts
The role of the Accountancy Profession in serving the public interest
Professional Accountants
The Code
Describe Overarching Objective

9. Overarching Objective
Introduction to the Code Section
Overarching Objective
Paragraph 5 describes the overarching objective of professional accountants in serving the public interest:
“to apply an objective and diligent mindset, together with knowledge, experience and judgment, so that others can have confidence that the professional accountant’s advice or other output is fit for the purpose for which it was provided”

10. Matters for IESBA Consideration
Preliminary Draft
Matters for IESBA Consideration
Views/reactions to the proposed text including the overarching objective
Views on not including oath or mission statement in the Code

11. Section 100 New application material Organizational culture
Preliminary Draft
Section 100
New application material
Paragraphs A1 – A1
Organizational culture
Importance of organizational culture in ensuring proper ethical behavior
Recognized that non-firm organizations are not subject to the Code
Will take into consideration IAASB’s proposed ISQM 1 to ensure appropriate alignment
Professional judgement
New application material in s120 was approved by IESBA in 2017 as a short term measure
Repositioned paragraphs A1 and A2 to paragraphs A5- A7
Revisions aims to highlight the importance of exercise professional judgment in achieving compliance with the fundamental principles and indeed the Code

12. Matters for IESBA Consideration
Preliminary Draft
Matters for IESBA Consideration
Views/reactions to the proposed text on organizational structure including its location
Views/reactions on:
Whether the paragraphs A1 and A2 should be relocated to paragraph 100 as proposed?
The proposed text in paragraphs A5 - A7

13. Future Task Force Discussions
Jan 2019 TF meeting to discuss and develop proposals re:
linkages of FPs and CF in Sections 110 and 120 with role, mindset and behavioral characteristics expected of PAs in the proposed material
Threats to compliance with FPs from bias, pressure and other impediments
The TG has developed preliminary thinking and seek the Board’s early reaction on:
Courage, Objectivity, Bias, Questioning mindset or similar terms

14. New AM in Support of the FPs
Future TF Discussions
New AM in Support of the FPs
Courage as enabler:
Concept of “moral courage” was previously discussed as part of a presentation by ICAS at the March 2016 IEBSA meeting
Propose to refer to “courage” as an enabler to comply with the FPs
Propose to include in Section 110, under either “General” or “Integrity” section
FP of Objectivity:
Propose to rephrase the definition of objectivity to be positive in nature
Propose to include additional AM to the principle of objectivity

15. Other Concepts Elevating the concept of “bias”:
Future TF Discussions
Other Concepts
Elevating the concept of “bias”:
Propose to generalize the discussion about bias in either Section 110 or 120 so that the material applies wherever bias occurs – not just in the context of Objectivity
Considering whether to develop non-authoritative material on the topic of bias
Questioning mindset or similar term:
Considering the use of “questioning mindset”, “critical thinking” and/or similar concepts such as “challenging mindset”
Considering whether to include in Section 110 or 120
Will ensure alignment with Auditing and Education standards

16. Matters for IESBA Consideration
Preliminary Draft
Matters for IESBA Consideration
Views/reactions on the TF’s current thinking:
Courage
Objectivity
Bias
Questioning mindset or similar terms

17. Views/suggestions from IESBA?
The Bigger Picture
Effecting changes in ethical behavior of PAs require more than revisions to the Code
Need the right organizational culture, education and strong and consistent messaging
TF to develop plan to work with IAESB, member bodies and firms via IFAC
Views/suggestions from IESBA?

18. Next Steps Timing Action Mar 2019
Discussion with CAG; IESBA discussion of draft revisions to ss110 and 120, refined draft Introduction to the Code and s100
May 2019
Discussion with NSS
Jun 2019
IESBA first read of draft ED
Sep 2019
Discussion draft ED with CAG; IESBA second read and approval of ED

19. The Ethics Board