The International Ethics Standards Board for Accountants (IESBA) released a new standard, which sets out a framework to guide auditors and other professional accountants on what actions to take when they become aware of a potential illegal act.

The new standard entitled Responding to Non-Compliance with Law and Regulation standard, addresses breaches of laws and regulations in matters regarding fraud, corruption, bribery, money laundering, tax payments, financial products, and environmental protection.

It also allows auditors and other professional accountants to disclose potential non-compliance situations to the correct authorities without being constrained by breach of confidentiality.

The new standard fills a gap in jurisdictions where legislation or regulation does not address professional accountants’ responsibilities in these situations, according to IESBA Technical Director Ken Siong. And by providing guidance it may complement legislation or regulation in jurisdictions that do address it, he continued.

“This has been a long journey, and now it’s time for national standard setters, professional accountancy organisations, and accounting firms to adopt and implement the standard.”

IESBA chairman Dr. Stavros Thomadakis said: “This standard not only raises the ethical bar for the global accountancy profession but also provides an opportunity for it to demonstrate its unflagging commitment to act in the public interest.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

It also places more trust in the role of professional accountants by “stimulating more trustworthy and accountable organisations,” he added.

This issue was brought to light with the recent prosecution of PwC accountants Antoine Deltour and Raphaël Halet, both ex-PwC accountants, who were found guilty of leaking documents in the Luxleaks trial and given a suspended prison sentence of 12 months and nine months.

They have also been fined €1,500 for Deltour and €1,000 for Halet.

Deltour and Halet blew the whistle over PwC's role in brokering sweetheart tax deals between their clients and the then Jean-Claude Junker-led Luxembourg government.

Responding to Non-Compliance with Law and Regulation standard could very well pave the way for accountants to come forward with breaches who would have otherwise not wanted the same fate as Deltour and Halet.

It may also ensure that what happened to the ex-PwC accountants will not happen again.

Related articles

Deltour and Halet found guilty in LuxLeaks trial

LuxLeaks whistle-blower Antoine Deltour deserves protection, lawyer Philippe Penning says

Updated 26/07/2016: Following publication, the IESBA reached out to this magazine to provide a correction. In regards of the use of the Deltour case as an example, a spokeperson said  : "Given some of the details of the scandal, it’s possible the standard would not have helped in this scenario due to the following circumstances:

  1. If the two individuals in the case broke confidentiality laws in Luxembourg, the standard cannot help them and any future whistleblowers who do the same. The standard does not permit reporting to public authorities if doing so would breach such confidentiality laws
  2. As we understand it, they leaked the information to the local media, which do not constitute an appropriate authority under the standard. So, they would not have been able to claim that they acted in accordance with the standard in this case. The standard only permits the ethical duty of confidentiality to be set aside when reporting to appropriate authorities.

The Tesco accounting scandal from last year would be a better example since, had the auditors involved become aware of the issues, the new standard would have applied to them.