• Single, high-level, overarching requirement anchors firm culture and governance in the Code globally, allowing for development of practical guidance outside the Code to support implementation.
• Targeted approach aims to minimize compliance burden and costs by avoiding prescriptive provisions.
• Exposure draft planned for December 2026, with final approval targeted by end 2027.
NEW YORK - Firm culture and governance addressed through a targeted update to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code), following a decision on the way forward by the International Ethics Standards Board for Accountants (IESBA) at its June 2026 board meeting in New York.
The direction taken aims at the development of a single, overarching requirement in the IESBA Code, supported by limited application material referencing eight proposed interconnected Firm Culture and Governance (FCG) elements (ethical leadership, oversight and governance, independent input, accountability, incentives and disincentives, open discussion and challenge, education and training, and transparency). Practical guidance and educational materials to support awareness-raising and consistent adherence to the Code’s ethical provisions will be developed in parallel in collaboration with firms, jurisdictional standard setters, and professional accountancy organizations.
The decision balances the importance of a clear, enduring global baseline on ethical culture in firms with practical, impactful guidance on how firms can build and sustain a strong ethical culture.
The approach aims to:
• Minimize compliance burden and costs by avoiding prescriptive provisions, while delivering the authority and global consistency of a framework in the Code;
• Ensure the coherence of the Code by bringing all eight proposed FCG elements together holistically, replacing fragmented existing references;
• Complement International Standard on Quality Management 1 (ISQM 1) by reinforcing the firm’s quality objective to demonstrate a commitment to quality through a culture that recognizes and reinforces the importance of professional ethics, values, and attitudes;
• Apply globally and proportionately across firms of all sizes and service lines, with scalability built in.
An exposure draft is planned for December 2026, with final approval targeted by the end of 2027.
For more information, please consult the IESBA FCG Snapshot.
www.ifac.org