ICAEW is proposing to amend its code of ethics (the ICAEW code) in 2019, to take effect from 1 January 2020. The background and key proposals are set out below.
In April 2018, the International Ethics Standards Board for Accountants (IESBA) issued all but two sections of a revised, restructured code of ethics (the IESBA code). As a member of the International Federation of Accountants, ICAEW is committed to internationalisation of standards and to the adoption of at least the provisions of the IESBA Code. ICAEW’s code therefore comprises the IESBA code as at a certain date, together with a significant number of additional paragraphs (signified in italics, or boxes in the on-line version). This add-on material is included in the ICAEW code where the IESBA code is considered to offer insufficient discussion on a topic or, occasionally, its requirements are insufficiently robust.
We seek to minimise disruption to members by accumulating changes to the IESBA Code and issuing them only where there is substantive change or significant improvement available rather than having annual updates. Although IESBA has made a number of changes since then, we have not regarded them as having been changes of substance. Therefore, apart from some minor amendments to reflect changes to UK law in respect of investment and audit regulation, we have not changed the ICAEW code since the beginning of 2011, when an updated ICAEW code came into effect to reflect a significantly revised 2009 IESBA code
The intent behind the restructured IESBA code issued in April 2018 has been not to change the substance of the requirements but to re-present them to improve navigation and clarity. Some key features of the restructuring include:
ICAEW has been involved in the IESBA restructuring work, both directly and as a consultee. The restructured IESBA Code is a considerable improvement for users in terms of ease of use and navigation, and we propose to adopt it as the basis of the next iteration of the ICAEW code. At the same time we will pick up changes made by IESBA since our 2011 revision, adopting the 2009 IESBA code.
The changes to the IESBA code since the version adopted by ICAEW fall into three categories:
Following a consultation with a number of ICAEW committees and boards in late 2017 on our approach to the add-on material, we are taking the opportunity to streamline it where possible. Much of the add-on material is concerned with additional discussion of matters in the IESBA code, and does not lead to additional requirements. IESBA has enhanced discussion in many areas of its code since the add-ons were originally included in our code. In these areas we will delete the now-superseded add-on material as being superfluous. Remaining add-on material of a purely descriptive nature, where still relevant and useful, will be moved to help sheets and cross referenced as it is more in the nature of useful guidance, than key in-code material.
Cross references to useful regulatory material or helpsheet/FAQ material will be retained or introduced, but by way of footnote. This should assist members in identifying the significant amount of additional guidance available to them on the website and elsewhere.
There are a number of areas where the add-on material results in additional requirements over and above those in the IESBA code. The overall approach will be to preserve the substance of these add-on requirements, while realigning descriptive material and cross references as noted above.
We have received feedback that it would be helpful for any code changes to take effect at the beginning of a calendar year. As the last two sections of the restructured IESBA code are expected to be issued by IESBA in mid to late 2018, we propose to introduce our revised ICAEW Code from 1 January 2020. This will allow reasonable time for publicity and Council approval of the final document in Summer/ early Autumn 2019. Consultation on detail with other relevant committees (and ICAS and the CAI, with whom we share much of the add-on material) will therefore be undertaken on the greater part of the revised Code starting in late 2018.