IESBA Meeting New York, USA December 3-5, 2018 Technology Patricia Mulvaney, IESBA Member, Technology Working Group Chair IESBA Meeting New York, USA December 3-5, 2018

Objectives of the Session To receive an update on Technology WG activities To provide input to the WG’s proposed Terms of Reference for approval during the IESBA meeting

Proposed Terms of Reference WG activities that have informed our proposal Preliminary insights and observations from published reports and articles, and presentations to WG and Board Feedback from respondents to SWP. joint IAASB/IESBA meeting and IESBA Board and CAG discussions Initial discussions with stakeholders and subject matters specialists WG’s preliminary assessment of threats to compliance with FPs and independence by technology category

List of Contact Stakeholder Organizations Proposed Terms of Reference List of Contact Stakeholder Organizations # Stakeholder Region  1. AICPA American Institute of Certified Practicing Accountant NA 2. ACCA Association of Chartered Certified Accountants Global  3. CEA Cercle d’Ethique des Affaires EU  4. CIMA Chartered Institute of Management Accountants  5. ECI Ethics & Compliance Initiative  6. GU-MSB Georgetown University – McDonough School of Business  7. DAWG IAASB Data Analytics Working Group  8. ICAEW The Institute of Chartered Accountants in England and Wales  9. IFAC SMPC IFAC Professional Accountants in Business Committee 10. IFAC PAIBC IFAC Small and Medium Practices Committee 11. IBE Institute for Business Ethics 12. IAETAG International Accounting Education Transitional Advisory Group 13. JICPA Japan Institute of Certified Public Accountants AP 14. Various public accounting firms  

Basis for proposed way forward Proposed Terms of Reference Basis for proposed way forward As an ethics board, the focus of our work should be on ethical considerations that impact the behavior of PAs when encountering and using technology Expressly addressing impacts of technology on PAIBs is appropriate given their roles in private and public sector organizations Limited published material focusing on impact of technology on ethical behavior (including of PAs), therefore need to engage with stakeholders through other means Using two technology categories for information gathering and assessment of threats to FPs, independence and behaviors expected of PAs will be more effective than scoping too broadly Seeking to strike balance between time needed for research and reflection and providing visibility to IESBAs work and commitment to addressing technological challenges (and opportunities) for PAs

Key Components - Objectives Proposed Terms of Reference Key Components - Objectives Identify threats to compliance with FPs and independence Both PAIBs and PAPPs Develop responses to address the ethical issues identified Revisions to Code and/or non-authoritative material Identify outreach and partnership opportunities Share knowledge Promote the Code Background Objectives Focus Approach Deliverables Composition

Proposed Terms of Reference Key Components - Focus Ethical behavior of PAs, not broader ethical implications in society or deep analysis of technologies themselves Specific consideration of impact on PAIBs Align technology categories to those prioritized by IFAC: Artificial Intelligence and Robotic Process Automation Blockchain, Cryptocurrencies and Initial Coin Offerings Cyber-crime and Cyber-security Data Analytics and Big Data Background Objectives Focus Approach Deliverables Composition

Matters for IESBA Consideration Proposed Terms of Reference Matters for IESBA Consideration Board’s View and reaction to? A. Background B. Objectives C. Focus Background Objectives Focus Approach Deliverables Composition

Key Components - Approach Proposed Terms of Reference Key Components - Approach Phase 1 – through December 2019 Use Data analytics/Big data and AI/Robotic process automation as the context for evaluating ethical behaviors of PAs Information gathering and assessment Engage with a broad range of external stakeholders via different forums Identify opportunities to partner with other stakeholders Review existing published reports Communication and Coordination Liaise and provide support to other IESBA TFs/ WGs Coordinate with IFAC and sister SSBs (incl working groups thereunder) Background Objectives Focus Approach Deliverables Composition

Key Components - Deliverables Proposed Terms of Reference Key Components - Deliverables Phase 1 – through December 2019 Update stakeholders through various communications channels (e.g., IESBA website, eNews, social media) Invite informal input and comment from stakeholders Consider how communications can be integrated into Restructured/eCode rollout program plans Consider publication of non-authoritative material (e.g., Staff publication) Provide quarterly updates at IESBA meetings Provide Phase 1 final report at December 2019 IESBA meeting Background Objectives Focus Approach Deliverables Composition

Proposed Terms of Reference Key Components – Phase 2 Phase 2 – commencing January 2019 Proposed scope and approach to be informed by Phase 1 work and included in Phase 1 final report Learnings from approach to research and analysis in Phase 1 expected to result in accelerated progress of Phase 2 and beyond efforts Background Objectives Focus Approach Deliverables Composition

Matters for IESBA Consideration Proposed Terms of Reference Matters for IESBA Consideration Board’s View and reaction to? D. Approach E. Deliverables Background Objectives Focus Approach Deliverables Composition

Work plan for Q1 2019 (subject to ToR approval) WG in person and monthly telephonic mtgs (Dec 6 and TBD) Stakeholder meetings in London Jan 2019 Add’l targeted stakeholder meetings TBD Feb – Mar 2019 Board update at March 2019 IESBA meeting