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IAASB and IESBA adjust strategic work plans

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The International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants both published new strategic plans for the next few years Thursday in coordination with each other.

The two standard-setting boards, which are both overseen by the Public Interest Oversight Board and affiliated with the International Federation of Accountants, work closely together. The IAASB Strategy and Work Plan for 2024-2027 includes completing the board’s priority audit and assurance projects, with an emphasis on fraud, going concern and sustainability assurance.

The IAASB also plans to embark on new initiatives and projects, such as focusing on supporting the adoption and implementation on its overarching standard for sustainability assurance engagements, establishing an IAASB Technology Position, and conducting post-implementation reviews, as well as standard setting on projects such as audit evidence and risk response, materiality, and reviews of interim financial information.

The IAASB also plans to continue collaborating with the IESBA, regulators, standard-setters and other stakeholders. It’s also engaging with regulatory and standard-setting partners to strengthen trust in markets globally, as well as further implementing the Monitoring Group’s recommendations to enhance independence and accountability in standard-setting. The Monitoring Group of international financial regulators and financial institutions set up a new oversight body for both the IAASB and IESBA last year called the International Foundation for Ethics and Audit. The Monitoring Group issued a set of recommendations in 2020 urging more of a separation between IFAC and its standard-setting boards so they would be less beholden to the major accounting and auditing firms and organizations (see story). 

The IAASB’s previous strategy (2020-2023) made progress on a number of objectives, including adopting agile methodologies and engaging with a broader range of stakeholders. Its achievements included a set of quality management standards, an enhanced special considerations standard for audits of group financial statements, the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (known as the ISA for LCE), and developing a proposed standard for sustainability assurance engagements, among other achievements. The new strategy for 2024-2027 reaffirms the IAASB’s commitment to serving the public interest by developing globally accepted audit, review and other assurance standards.

“Audit and assurance play vital roles in the world’s economies,” said IAASB chair Tom Seidentstein in a statement. “At their best, audit and assurance practitioners enhance trust in markets and assist in efficient, sustainable resource allocation. That is why the IAASB is dedicated to developing relevant, high-quality standards under a rigorous and transparent due process.”

The IAASB’s partner board, IESBA, also issued its strategy and work plan for 2024-2027. One of its high-priority strategic areas of focus includes accounting firm culture and governance, identifying potential actions the IESBA might take within or outside its ethics code to respond to persistent high-profile cases of unethical behavior in accounting firms. IESBA also plans to explore the opportunity to extend the impact of the ethics code beyond the accounting profession to a wider range of people who perform similar work as accountants, building on its current project to develop profession-agnostic ethics, including independence, standards for all sustainability assurance practitioners. Among other matters, this will include a new workstream to explore expanding the scope and applicability of the ethics code beyond professional accountants to all preparers of sustainability information.

“Putting ethics at the center of every business judgment and decision is the surest way to earn, restore and strengthen public trust in all that an organization does,” said IESBA chair Gabriela Figueiredo Dias in a statement. “The external landscape continues to evolve, presenting new dynamics and challenges, but good ethical behavior acts as a constant amidst the uncertainty.”

Other key highlights of IESBA’s strategic work plan include new initiatives to explore ethical considerations relating to the evolving role of CFOs and other senior accountants in business, and independence considerations relating to business relationships between firms and their audit clients. IESBA also intends to do a series of post-implementation reviews for significant ethics, including independence standards it has issued in recent years.

IFAC offices

IESBA is also doing ongoing monitoring of technological transformations and their impact on the professional activities and services performed by accountants and others to see whether there are any further standard-setting or other actions the IESBA might take in the public interest.

IESBA also reiterated its commitment to closely coordinating with the IAASB and fostering collaborative relationships with other standard-setters to ensure standards interoperability.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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