*Note for assurance practitioners – since the publication of this article, the XRB has reissued PES 1 to include changes from both the Sustainability and Use of Experts projects discussed below. Please refer to XRB’s Audit and Assurance Alert on 12 March 2026 for further information.*

The NZ Regulatory Board (Regulatory Board) of New Zealand Institute of Chartered Accountants (NZICA) is seeking comments on Exposure Draft 2026-1: Proposed 2026 Update to NZICA Code of Ethics – Sustainability and Use of Experts (ED 2026-1) that will apply to New Zealand resident members of Chartered Accountants Australia and New Zealand (CA ANZ) and all other practitioners subject to NZICA jurisdiction effective from 15 December 2026 (early adoption permitted).

The changes are intended to update the NZICA Code of Ethics (NZICA Code) to:

• Incorporate recent amendments made by the International Ethics Standards Board for Accountants (IESBA) to the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) as reflected in:
  • Final Pronouncement: International Ethics Standards for Sustainability Assurance (including International Independence Standards) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting, published by the International Federation of Accountants (IFAC) in January 2025 (Sustainability Project).
  • Final Pronouncement: Revisions to the Code Addressing Using the Work of an External Expert, published by IFAC in January 2025 (Use of Experts project).
• Align with amendments proposed by the New Zealand Auditing and Assurance Standards Board (NZAuASB) to PES 1 because of those amendments to the IESBA Code.

Overview of proposed changes

All members

Members should note that some proposed changes from both the Sustainability and the Use of Experts projects might affect areas beyond sustainability reporting and assurance. Notably, proposed Use of Experts changes will apply to all situations where members use specialist advice in their work (for example, tax and valuation advice).

Sustainability project

The Sustainability project concluded that existing parts 1 (complying with the code, fundamental principles and conceptual framework), 2 (professional accountants in business) and 3 (professional accountants in public practice) of the IESBA Code already address ethical issues that might arise in both financial and non-financial reporting, including sustainability reporting issues such as “greenwashing.”

The most substantive changes proposed in ED 2026-1 arising from the Sustainability project are to section 220 (preparation and presentation of information) to clarify and extend its scope to fully capture all financial and non-financial reporting situations (i.e. to eliminate potential grey areas in interpretation). A new definition of “sustainability information” is also proposed to be added to the glossary.

Other proposed changes to parts 1, 2 and 3 in ED 2026-1 arising from the Sustainability project are confined to:

• Updating wording to clarify that a specific requirement and/or guidance material applies to both financial and non-financial information.
• Adding sustainability examples to guidance materials.
• Making minor consequential and conforming amendments to incorporate the existence of new Part 5 (International Ethics Standards for Sustainability Assurance (including International Independence Standards) – see below) into parts 1, 2, and 3 to align with PES 1.

Use of Experts project

ED 2026-1 proposes – consistent with IESBA’s Use of Experts project - to add two new sections to the NZICA Code:

• Section 290 – for members in business (MIB) who use the work of external experts in performing their professional activities.
• Section 390 – for members in public practice (MIPP) who use the work of external experts in providing their professional services (not including assurance only paragraphs –see below).

An “external expert” is defined as an “expert” engaged by a member, member’s employing organisation or firm, where an “expert” is defined as an individual possessing “expertise” that is outside the member’s competence and, in turn, “expertise” is defined as skills, knowledge and experience in a particular field.

Where a member’s activities/services are captured by the proposed new sections, it is proposed that the member will be subject to certain new prescriptive requirements – in addition to complying with other applicable provisions of the NZICA Code – including, requiring members to:

• Agree terms of engagement with the external expert.
• Evaluate the external expert’s competence, capabilities and objectivity (CCO) (guidance material is provided to assist members with this evaluation).
• Re-evaluate this evaluation for new information or changes in facts and circumstances.
• Not use the work of an external expert who does not possess necessary CCO.

The proposed sections also include guidance material regarding:

• Potential threats to the fundamental principles arising from the use of external experts.
• Evaluating external experts in emerging fields or areas.
• Communicating with management and those charged with governance about the use of experts.
• Documentation that should be kept.

Minor consequential and conforming amendments are proposed to sections 120, 220, 230, 280, 320, 380 to integrate new sections 290, 390, and 5390 (see below) and the new definition of “expertise” into existing material in the NZICA Code.

Assurance practitioners

Members who are assurance practitioners are required to comply with both PES 1 and the NZICA Code. To assist these members, NZICA aligns with the XRB (including NZAuASB) but does not replicate changes to the IESBA Code related only to audit, review, other assurance engagements and related services in the NZICA Code; instead, members are directed to the equivalent paragraphs in PES 1. Currently, this practice impacts certain paragraphs in section 360 (non-compliance with laws and regulations) and parts 4A and 4B (International Independence Standards (New Zealand)) of the Code. It is also proposed to apply this practice to new assurance only paragraphs in section 390 and new Part 5 (including section 5390) – see below.

Sustainability project

As part of the Sustainability Project, IESBA also approved amendments to paragraphs 360.18 A1 – 360.19 and sections 400, 410 and 540 of Part 4A and section 900 of Part 4B of the IESBA Code and introduced a new Part 5 (International Ethics Standards for Sustainability Assurance (including International Independence Standards)).

New part 5 is a set of ethics and independence standards for use and implementation by all sustainability assurance practitioners, which generally restates relevant requirements and guidance material from the existing IESBA Code in profession agnostic language and with a focus on sustainability.

In July 2025, the NZAuASB released exposure drafts:

• International Ethics Standards for Sustainability Assurance (including International Independence Standards (New Zealand), that is designed to incorporate Part 5 into PES 1.
• Other revisions to the Code Relating to Sustainability Assurance and Reporting, that is designed to incorporate the other amendments arising from the Sustainability project into PES 1.

These amendments to PES 1 are proposed to be effective for accounting periods commencing on or after 15 December 2026 (early adoption allowed). Assurance practitioners should refer to the XRB website for further information about these proposed changes.

Use of Experts project

As part of the Use of Experts project, IESBA also approved new:

• Paragraphs R390.11 A1 – 390.18 A4, R390.20, 390.21A1 and R390.28, which impose more specific requirements regarding the information that assurance practitioners must obtain from external experts to conclude on their CCO (including documentation that must be kept).
• Section 5390, which provides new profession agnostics rules on use of experts for sustainability assurance practitioners.

In July 2025, the NZAuASB released an exposure draft, Revisions to the Code Addressing Using the Work of an External Expert, that is designed to incorporate amendments arising from the Use of Experts project into PES 1. These amendments to PES 1 are generally proposed to be effective for accounting periods commencing on or after 15 December 2026 (early adoption allowed). Assurance practitioners should refer to the XRB website for further information about these proposed changes.

Update approval mismatch

To implement its policy of alignment with XRB, NZICA’s due process timetable often follows the due process timetable of the XRB. In this instance, this practice might cause members who are assurance practitioners to encounter interpretation issues when early adopting these changes for trans-Tasman (and global) engagements. Accordingly, to provide certainty for these members, during any period when PES-1 changes are in use but the same changes have not yet been approved for the NZICA Code, the Regulatory Board expects members to comply with PES 1 regarding these updates.

Members should refer to the Invitation to Comment (ITC) (see below) for more details of how these amendments impact the NZICA Code.

Submissions / Approvals process

16 February 2026	Invitation for submissions on ED 2026-1 issued.
18 May 2026	Submissions on ED 2026-1 are due. Information on how to submit a response is included on page 4 of this ITC.
June 2026*	Regulatory Board meet to consider submissions and Management’s report on the submissions. Regulatory Board will finalise the proposed amendments to the Code of Ethics (or decide on an amended timetable if further work be required).
July 2026*#	Anticipated date for issue of revised Code of Ethics. The revised Code of Ethics will be published on our website, together with a copy of Management’s report and the submissions received (see page 4 of this ITC).
15 December 2026	Effective date of revised Code of Ethics.

* Exact dates and timing subject to volume of submissions received.
# Exact date and timing also subject to NZ Parliamentary Calendar.