The International Ethics Standards Board for Accountants (IESBA) recently restructured and revised its Code of Ethics for Professional Accountants. While the IESBA Code isn’t specifically geared toward management accounting and finance professionals, it does extend beyond public accountants and auditors to the private sector. At the March 2019 meeting of the IESBA board of directors in New York City, IESBA members discussed the new changes to the Code and debated other hot-button ethical issues that may require future updates. The context of the changes to the IESBA Code is the rapid transformation of technology during the post-financial crisis period, leading to technological disruption that affects the accounting profession.

The IESBA Code contains five fundamental principles that outline accountants’ ethical obligations: integrity, objectivity, confidentiality, competence and due care, and professional behavior. “We believe that these fundamental principles remain strong and valid, but they may require new content and applications, and therefore there are new opportunities for complying with them but also risks to compliance,” said Stavros Thomadakis, chairman of IESBA and an emeritus professor of financial economics at the University of Athens.

“Confidentiality now has a new dimension related to cybersecurity, proprietary data, databases, and the cloud. That’s an example of how an existing principle morphs into something that we never imagined 20 years ago. Objectivity generally means lack of bias—now you have machines and algorithms that learn, so the bias is not just the bias in your head or mine, but it’s the potential bias of the algorithm itself.”


Major ethical dilemmas related to technology stem from the rise of AI and machine learning, Thomadakis added.

“AI touches one of the fundamental elements of the ethics code, which is the professional behavior and judgment of accountants—how they should exercise ethical judgment to comply with fundamental ethical principles when AI intermixes with learning, judgment, making decisions,” he said.

A discussion about the ethics of AI has been raging since the very beginning of AI development. “This is not the same as the ethics of professional accountants using AI, but there is clearly an overlap, and we have to make sure that they are reinforcing each other,” Thomadakis noted. “We’re not really moving into a world where machines will make all of the decisions; rather, judgment and decisions will be hybrid, part machine and part human.

“There will be variations where the human may intervene more or the machine may intervene more, but the onus of complying with ethical principles falls on the human, not the machine, so accountants must acquire the skills to determine whether the machine complies with ethical standards, which can be very scary. That’s a high bar to clear, but we will move that way as a profession.”


Last year, IESBA established a technology working group to develop lines of inquiry into the impact of technology on the audit profession as well as on the work of accountants in business and government.

Patricia Mulvaney, a member of IESBA, a designated fellow and member of the Ethics & Compliance Initiative (ECI), and a partner at PwC, is part of that group. “We’ve been working on evaluating and identifying the implications of technology developments on the applicability and relevance of our Code of Ethics to assist practitioners with complying with the principles,” she said. “The restructuring and revision of the Code tie back into the implications of technology on ethics and change within the profession.

“The Code will be impacted by various factors, not the least of which is changing technology—as new risks and potential conflicts with the fundamental principles emerge in the business world in which we operate, we can identify and evaluate those threats, then address them with attendant application materials.”

IESBA’s technology working group analyzes various types of technology, has discussions about ethical challenges stemming from them, and evaluates the appropriateness of the Code for accountants of all stripes.

“There’s an inclination to think of accountants who are bound by a code of ethics as a public accountant at an accounting firm working in audit or tax, but we want to make sure that our work in the technology area overtly includes professional accountants in business,” Mulvaney said.


The ethical principle of competence and due care takes on new meaning in the current era of rapid technological evolution.

“You need to have the skills to discharge your responsibility, whether you’re an accountant in business, finance, reporting, or auditing,” Mulvaney noted. “With the advent of technology, it’s not just the accounting rules, but you also need to have an understanding of what these technologies do.

“It’s not necessary to become an expert technologist, but being aware of the new technologies and understanding them represent an opportunity to illustrate that principle in the context of the implications of technology on the accounting profession….The ability that accountants need to have is to be open to learning new things, including how new technologies impact their work—having a growth mind-set, not a fixed mind-set, is quite critical. That’s so important now that technology is omnipresent in everything that we touch.”


Cathy Allen, founder of Audit Conduct, attended the technology discussion at the IESBA’s March 2019 meeting. Her main takeaways were:

  • Stay in scope, i.e., don’t create ethics principles for AI, but rather address how the IESBA Code’s fundamental principles should be applied within the accounting context.
  • There’s a need to clarify how to apply the Code’s fundamental principles in light of new technology.
  • Accountants have a responsibility to advise on technology’s risks, not just its benefits.
  • There’s concern about accountability for human and machine “hybrid” judgment.


For clarification of how the IMA Statement of Ethical Professional Practice applies to your ethical dilemma, contact the IMA Ethics Helpline.

In the U.S. or Canada, dial (800) 245-1383. In other countries, dial the AT&T USA Direct Access Number from, then the above number.

The IMA Helpline is designed to provide clarification of provisions in the IMA Statement of Ethical Professional Practice, which contains suggestions on how to resolve ethical conflicts. The helpline cannot be considered a hotline to report specific suspected ethical violations.

See also: “When Best Intentions Aren’t Enough,” Strategic Finance, April 2019.