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Restructured code of ethics will ‘stand the test of time’

The recent revision to the code of ethics for professional accountants will help strengthen auditor independence and “stand the test of time”, says the Accounting Professional and Ethical Standards Board.

Professional Development Jotham Lian 29 January 2020
— 1 minute read

In 2018, the Accounting Professional and Ethical Standards Board (APESB) issued a restructured APES 110 Code of Ethics for Professional Accountants, which has since come into effect from 1 January 2020.


APESB chief executive Channa Wijesinghe believes the implementation of the revised code will deal with some of the concerns of auditor independence raised during the Parliamentary Joint Committee’s (PJC) ongoing inquiry on audit regulation in Australia.

According to the APESB, a key change is the clear distinction between requirements and guidance material, which will assist professional accounting bodies and regulatory authorities with monitoring and enforcement of APES 110.

“A clear advantage of this principles-based approach, supplemented by prohibitions in specific circumstances, is that it stimulates thinking and the need to take action to address threats to an auditor’s independence while being sufficiently broad to address future types of services firms may provide to audit clients,” Mr Wijesinghe said.

“Compared to a prescriptive list of prohibited services alone, such as in the United States, we firmly believe we’ve created changes that will stand the test of time for years to come.”

Mr Wijesinghe also believes an increase to the “cooling-off” period for audit engagement partners of Public Interest Entity (PIE) audit clients to three years, and eventually five years after 31 December 2023, will help place greater emphasis on auditor independence, going above the two years stipulated under the Corporations Act.

He also noted that the prohibition of an audit partner from being compensated or remunerated for their ability to sell other services to that partner’s audit clients has been extended in the revised code.

Commenting on the PJC’s audit inquiry, Mr Wijesinghe said that while there are, invariably, instances of non-compliance with the existing auditor independence requirements which need to be appropriately dealt with, any new proposals need to take into consideration the existing requirements.

“It is also important to take into consideration differences in the Australian environment, such as the extensive range of APESB’s professional standards that apply to non-assurances services in Australia,” Mr Wijesinghe said.

“This comprehensive professional standards framework is a feature absent in most G20 jurisdictions, including the United Kingdom.

“While the restructured Code, which commenced on 1 January 2020, will assist accountants and auditors in understanding and complying with the Code’s requirements better, it is also expected to facilitate monitoring and enforcement by the regulators and professional bodies, which is a key component of an effective regulatory framework.”

Restructured code of ethics will ‘stand the test of time’
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Professional Development