1. IESBA CAG Meeting New York, USA March 4, 2019
Technology
Patricia Mulvaney, IESBA Member, Technology Working Group Chair
IESBA CAG Meeting
New York, USA
March 4, 2019

2. Objectives of the Session
To provide:
Background information about IESBA’s technology initiative
Update on the Technology WG activities
To receive CAG input on emerging themes observed by WG to date

3. Background – IESBA Technology Initiatives
April 2018
IESBA issued SWP consultation paper (CP) which identified technology as an imperative priority
June 2018
Technology WG established by IESBA
September 2018
IESBA discussed comments received on the CP including strong support to prioritize the topic and preliminary thinking from the Technology WG
December 2018
IESBA approved WG’s Terms of Reference

4. Terms of Reference Objectives of the WG:
Background
Terms of Reference
Objectives of the WG:
Identify implications of technology developments on the robustness and relevance of the Code
Develop proposed responses including revisions to the Code, publication of non-authoritative material and discussion forums
Identify outreach and partnership opportunities to share knowledge and to promote the Code

5. Terms of Reference Highlights of other key elements:
Background
Terms of Reference
Highlights of other key elements:
A phased approach (Phase 1 to be completed by December 2019)
Initial information gathering focusing on AI/Robotic Process Automation (AI) and Big Data/Data Analytics (Data)
A focus on ethical behavior of both PAPPs and PAIBs
Information gathering encompasses desk research, stakeholder meetings and other channels such as focus groups and panel discussions; also partnership with other professional organizations/stakeholders
Liaise internally with other IESBA TFs as well as coordination with IAASB and IAESB
Phase 1 report to be presented to the Board in December 2019

6. Background
Terms of Reference
Any questions?

7. Information Gathering Activities to Date
Desk research involving published articles; webcasts/webinars/podcasts
Discussions with academics, ethics org leaders and other representatives from industry associations
Participation at CPA Canada Public Trust Committee and Foresight: Reimagining the Professions meetings
In person outreach meetings
Institute of Chartered Accountants in England and Wales (ICAEW)
Association of Chartered Certified Accountants (ACCA)
Chartered Institute of Management Accountants (CIMA)
Institute of Business Ethics (IBE)
Inflo (audit and accounting software vendor).

8. Five themes have emerged to date:
Key Emerging Themes
Five themes have emerged to date:
Common ethical principles are also applicable to AI
PAs need to have a growth mindset
Bias in AI can be a significant risk
Fairness and transparency are important elements in AI ethics
Responsibility to advise on risks and benefits of technologies

9. Theme A – Common Ethical Principles Also Apply to AI
Emerging Themes
Theme A – Common Ethical Principles Also Apply to AI
Stakeholders did not identify noticeable gaps in the FPs or rest of Code
Guidance or supplementary material on how PAs can identify, evaluate and address technology related risks and ethical issues would be more useful than changes to the Code
Frameworks for the development, use and application of AI have been developed - and are also of increasing interest to governmental bodies. Key framework principles include:
Fairness, transparency, inclusiveness, reliability and safety, privacy and security, accountability

10. Theme B – PAs Need a “Growth Mindset”
Emerging Themes
Theme B – PAs Need a “Growth Mindset”
Stakeholders mentioned the importance of PAs having a mindset appropriate for the digital age:
Mindset that adapts to new technologies
Shift from a compliance mindset (only) to advisory mindset
Adopting a “growth mindset”
Stakeholders also highlighted the importance of professional judgement in the midst of dynamic changes
The WG intends to explore these concepts with the Role and Mindset TF

11. Theme C – Bias in AI is a Significant Risk
Emerging Themes
Theme C – Bias in AI is a Significant Risk
Bias in AI (machine bias) can be present in the data AI consumes and in the algorithms used to analyze the data
In order to rely on outputs from AI applications PAs need a sufficient understanding of the AI technology used and impact on PAs work
PAs must accept responsibility for machine decisions used in their work
Role and Mindset TF proposals include refinements to the definition of objectivity, including a reference to undue reliance on factors such as technology, and new provisions on bias
The WG will explore our findings on bias with the Role and Mindset TF

12. Theme D – Addressing Fairness and Transparency
Emerging Themes
Theme D – Addressing Fairness and Transparency
Ethical frameworks for AI often include fairness, transparency and accountability
The WG intends to further explore how these ethical principles might intersect with the Code
Some stakeholders also asked whether PAs might have a broader role in society as ethical leaders and champions in their organizations
The WG will work in collaboration with the Role and Mindset TF to consider whether ethical leadership is behavior that should be expected of PAs

13. Theme E – Responsibility to Advise on Risks and Benefits
Emerging Themes
Theme E – Responsibility to Advise on Risks and Benefits
Stakeholders suggested customers should be made aware of the risks and benefits of new technologies
As firms continue to invest in technologies, questions arise as to whether clients and customers have sufficient knowledge of the risks and benefits associated with these technologies
The WG will reflect on whether PAs have an ethical responsibility to their clients to inform them of the risks and benefits of technologies being implemented

14. Matters for CAG Consideration
Emerging Themes
Matters for CAG Consideration
CAG’s views and reaction to the emerging themes?
Common ethical principles are also applicable to AI
PAs need to have a “growth mindset”
Bias in AI can be a significant risk
Addressing fairness and transparency
Responsibility to advise on risks and benefits of technologies

15. Next Steps Upcoming Outreach Activities Non-Authoritative Material
April University of Waterloo 2019 Ethics Symposium in Canada
May IESBA-NSS meeting in Paris and European outreach sessions; add’l Canadian outreach
June through November 2019 – ongoing research and stakeholder outreach sessions
Non-Authoritative Material
Update stakeholders of emerging themes and issues observed
Board and CAG Meetings
June Discuss preliminary thinking with Board
Sept Discuss preliminary findings/recommendations with Board & CAG
Dec 2019 – Present Phase 1 Final Report to Board

16. Matters for CAG Consideration
Next Steps
Matters for CAG Consideration
CAG’s views and suggestions on opportunities to promote and discuss the work of the WG