The International Ethics Standards Board for Accountants (IESBA) has launched a significant public consultation on auditor independence as it pertains to audits of Collective Investment Vehicles (CIVs) and Pension Funds—collectively referred to as “Investment Schemes.” This initiative represents a proactive step to ensure that the International Code of Ethics for Professional AccountantsTM (including International Independence StandardsTM) remains robust, relevant, and capable of consistent application in today’s evolving financial landscape.
Addressing Emerging Independence Challenges
Investment Schemes, such as mutual funds and pension plans, play a vital role in the global financial ecosystem by pooling investors’ funds and directing them into diversified portfolios. These schemes often rely on a network of “Connected Parties”—external service providers performing roles that would traditionally fall within internal corporate structures. This creates unique challenges to auditor independence, which the IESBA believes merit careful consideration.
Gabriela Figueiredo Dias, Chair of IESBA, emphasized the importance of this initiative, stating:
“Investment Schemes play a critical role in both the savings and retirement of ordinary citizens and in the development and growth of our economies. This underscores the high level of public interest, and therefore the fundamental role of the independent audit, in this segment of the global financial system.”
According to the Investment Company 2024 Factbook, the total net assets of regulated open-end funds—including CIVs—reached approximately US$69 trillion in 2023. As assets under management continue to grow, the importance of maintaining strong ethical standards in auditing cannot be overstated.
Key Consultation Focus Areas
The Consultation Paper, informed by extensive research and stakeholder engagement throughout 2024, highlights several areas for review:
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Definition of “Related Entity”: Assessing how current definitions apply to Investment Schemes and whether adjustments are needed.
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Identifying Connected Parties: Determining which external parties should be considered when evaluating auditor independence.
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Application of the Conceptual Framework: Examining how threats to independence arise due to relationships or interests between auditors and connected parties.
These areas of focus aim to ensure that auditors are well-equipped to identify and address threats to independence in complex investment structures.
🔍 Dawgen Global’s Perspective
At Dawgen Global, we firmly believe that independence is the bedrock of audit quality—a principle that safeguards not only the integrity of financial statements but also the public’s trust in capital markets. As a leading multidisciplinary professional services firm in the Caribbean, we bring deep experience and insight into the audit of complex investment structures, including Collective Investment Vehicles (CIVs) and Pension Funds.
These schemes, by design, involve a diverse range of external service providers and stakeholders—commonly referred to as “Connected Parties.” Navigating these relationships while maintaining auditor objectivity requires clear, internationally accepted independence standards that can be applied consistently across jurisdictions and market structures. The IESBA’s initiative to revisit and potentially revise the International Independence Standards is therefore both timely and critical.
We commend the IESBA for proactively engaging the global financial community and for recognizing the unique risks and relationships embedded in Investment Schemes. By inviting public consultation, they are taking an inclusive and transparent approach to standard-setting—one that we believe will enhance audit quality, protect investors, and strengthen confidence in financial reporting across borders.
Dawgen Global encourages all relevant stakeholders—including our clients, audit professionals, regulatory bodies, financial advisors, and investment managers throughout the Caribbean and internationally—to actively engage in this consultation. Your contributions will help ensure that the ethical framework governing auditor independence remains fit for purpose, even as financial products and services evolve.
A unified and globally consistent approach to auditor independence not only facilitates high-quality audits but also reinforces the credibility of investment schemes that play a critical role in personal wealth, retirement security, and economic development. At Dawgen Global, we remain committed to upholding these standards and advancing best practices in every engagement.
Participate in the Consultation
Stakeholders can submit feedback to the IESBA electronically by June 30, 2025, through the IESBA website. Your insights will help shape potential revisions to the Code, ensuring it remains fit for purpose in a world of increasingly complex investment models.
🔗 To learn more and access the Consultation Paper, visit the IESBA website.
Next Step!
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