IESBA Issues Ethics Alert on Private Equity Investment in Accounting Firms

Posted 11 August 2025 Written by Acts Online
Category Professional Ethics

Brought to you by SA Accounting Academy: The International Ethics Standards Board for Accountants (IESBA) has issued a new Staff Alert addressing the ethical and independence requirements for accounting firms considering or accepting investment from Private Equity (PE) organisations.

In terms of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code), the Staff of the IESBA has published “Key ethics and independence considerations for Private Equity Investment in Accounting Firms”. The alert serves to remind professional accountants in public practice, particularly firm leadership, that the provisions of the Code remain fully applicable both before and after a PE investment transaction.

The Staff Alert highlights various ethical and independence implications arising from PE investment, including the necessity for firms to maintain ongoing monitoring for changes in:

  • Client portfolios and the nature of services provided;
  • Business and network relationships;
  • Other relevant factors with potential independence implications during the pre-investment phase; and
  • Post-completion compliance and the continued duty to act in the public interest.

The publication underscores that compliance with the Code by firms enhances the quality and consistency of services and underpins public trust. The development of this alert was informed by engagement with regulators, audit oversight bodies, jurisdictional standard setters, and PE entities. It is intended for use by accounting firms, professional accountancy organisations, and investors involved in the restructuring of professional practices.

Click here to download the IESBA Staff Alert - PEI - Final (7.31.25).

What this means for you, your business, or your clients

  • For yourself: You must ensure that your personal independence and ethical obligations under the Code are not compromised by new corporate structures or profit-sharing arrangements introduced by PE investors.
  • For your business: Firms must implement rigorous due diligence and monitoring systems to identify independence threats posed by a PE investor’s existing portfolio companies before and after any transaction.
  • For your clients: Clients must be assured through transparent disclosure that the firm’s professional objectivity and independence remain intact despite the change in ownership or capital structure.

Originally published at https://accountingacademy.co.za/news/read/iesba-private-equity-investment-in-accounting-firms-key-ethics-and-independence-considerations

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