The International Ethics Standards Board for Accountants released an annual update of its ethics code handbook to reflect the latest changes in auditing and quality management standards.
The 2023 Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards) includes revisions regarding the definitions of “engagement team” and “group audits.” They pertain to independence and other implications of the revised definition of “engagement team” in the ethics code to align with changes to the definition of the same term in the International Auditing and Assurance Standards Board’s International Standards on Auditing and International Standards on Quality Management.
Some of the revisions involve independence considerations during audits of group financial statements. The revised definitions will take effect starting on or after Dec. 15, 2023, although IESBA is encouraging early adoption.
Another revision involves the upcoming expiration of the “jurisdictional provision” addressing long association of personnel with an audit client. That provision will no longer be available for audits of financial statements for periods beginning on or after Dec. 15, 2023. When a legislative or regulatory body (or an organization they’ve authorized) has established a cooling-off period for an engagement partner of less than five consecutive years, that shorter cooling-off period can be applied, subject to a floor of three years, provided the time-on period doesn’t last more than seven years.
IESBA, which is affiliated with the International Federation of Accountants, plans further revisions that will take effect in December 2024, including revisions to the definition of a public interest entity, changes to the definitions of “audit client” and “group audit client” in the glossary arising from the approved revisions to the definitions of listed entity and PIE, and technology-related revisions.
