Revision of International Education Standard 8
Eileen Walsh (Chair)
Greg Owens (Secretary)
Andrew Barry (Secretary)
Objective(s) of project
To improve the clarity and implementation of IES 8 by (1) applying the new IAESB drafting conventions, (2) updating the concepts and terminology to conform to the revised Framework for International Education Standards for Professional Accountants, and (3) clarifying issues resulting from changes in the environment of accounting education and the experience gained from implementation of the Standards by IFAC member bodies.
IES 8 shall be revised to assist IFAC member bodies in understanding their obligations and the learning and development requirements for area of competence requirements for audit professionals.
IES 8 was approved for publication in 2006 and became effective July 1, 2008.
At its November 2006 meeting, the IAESB agreed to conduct a detailed review of existing IESs and the framework underpinning the IESs, to determine areas where the clarity of standards could be improved and/or additional guidance most usefully developed. The IAESB agreed to suspend any further work on redrafting or revising the IESs until the work on the Framework project was substantially complete.
At its October 2009 meeting the IAESB agreed the project direction to redraft and revise all eight IESs.
In December 2009 the IAESB published the new Framework for International Education Standards for Professional Accountants, which enhances the relevancy, consistency, and applicability of its publications to IFAC members. The Framework also includes an appendix, "IAESB Drafting Conventions," which will be used to increase the clarity of its standards.
Issues that this project will consider include:
IES 8 - Competence Requirements for Audit Professionals
(i) Revise the Standard’s use and interpretation of the following key definitions: Significant judgment, Audit professional, Education and development program, and Advanced level.
(ii) Clarify the Standard’s explanation surrounding:
- Precise roles in a transnational audit;
- Acceptance of the need for progression through a variety of roles, over time, whilst part of a larger team;
- How the shared responsibility between IFAC member bodies, firms and regulatory authorities should work in practice;
- The practical application of an IES that has requirements written primarily to individuals who are practicing members of Member Bodies; and
(iii) Revise the Standard's scope to clarify the coverage of the following key areas:
- Engagement Partner Competences
- Specific Industries
- Practical Experience
Task Force progress / Board discussions to date
October 2014: The IAESB received a revised draft of IES 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements, and an Issues paper that identified significant issues resulting from the drafting of the revised version of IES 8. The IAESB agreed with task force proposals on: (1) modifying the Objective statement to replace the term, “demonstrate” with “develop and maintain” to support the view that the responsibility of fulfilling CPD is on the professional accountant; (2) presenting two Requirements rather than one to focus on requiring engagement partners to develop and maintain professional competence and on prescribing CPD as the vehicle for developing and maintaining competence (IES 7) for the specific role of engagement partner; improving the clarity around the appointment process to an engagement partner by describing how other factors such as legislation, regulation, regulator partnership structure may influence the appointment process; improving the clarity of Table A by rewording learning outcomes (a) (i), (b) (iv), (j) (i), (j) (ii), (k) (iii) (l) (i), and repositioning (k) (ii) within the competence area of personal; and indicating that IESs 2, 3, and 4 are building blocks to IES 8. The IAESB decided not to accept the taskforce’s proposal of a January 1st, 2017 effective date for IES 8, but decided on July 1st, 2016 because output-based approaches already exist in the marketplace and can be adapted by PAOs to their already existing input-based approaches to CPD. The IAESB also agreed with the taskforce’s proposals of amending the wording of the Introduction, Objective, Requirements, and Explanatory Materials sections to improve clarity. These amendments addressed issues that improved the understanding without substantially changing the content of these paragraphs. Following discussion of the editorial amendments, the IAESB approved the final content of International Education Standard (IES) 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised).
June 2014: The IAESB received an Analysis of Respondents Comments document on the Re-Exposed Draft of IES 8 and an Issues paper that identified the substantial issues as a result of comments from respondents. The IAESB agreed with task force proposals on: (1) reviewing the wording of the objective and requirement to recognize the importance of practical experience in developing and maintaining professional competence; (2) agreeing that the requirement of IES 8 targets professional accountants performing the role of an audit engagement partner and responsible for audits of financial statements, (3) recognizing that professional competence is demonstrated by the achievement of learning outcomes which includes those provided in the requirement, (4) reviewing the content of learning outcomes on specialists, audit strategy , (5) specifying the role of CPD in developing and maintaining professional competence; and (6) addressing the applicability of IES 8 to the reviews of interim financial information. The comments and suggestions of IAESB members on these matters will be used by the task force to develop a revised draft of IES 8 for discussion by the IAESB at its October 2014 meeting with the aim of approving the final content of the IES.
October 2013: The IAESB reviewed a revised draft of IES 8 and discussed task force’s proposals on content issues relating to the revised draft. The IAESB agreed with the task force’s proposals to (1) change the title of IES 8 to “Professional Competence for Engagement Partners Responsible for Audits of Financial Statements,” which is consistent with a role-specific standard that is achieved through Continuing Professional development (CPD); rewording the objective statement and accompanying paragraphs in the Explanatory Material section to focus on establishing professional competence that needs to maintained and further developed through CPD; rewording to improve clarity of learning outcomes for competence areas of: audit of financial statements; financial accounting and reporting; intellectual; interpersonal and communication; professional skepticism and professional judgment; (3) remove the proficiency levels associated with the competence areas; (4) improve the clarity of the scope by defining important terms and explaining how various stakeholders have responsibility in impacting the professional competence of engagement partners; and (5) improve the explanation of the table on learning outcomes for the professional competence of an engagement partner. After a page-by-page review of the revised draft the IAESB approved the content of the Re-Exposure Draft of IES 8 for a 120-day public exposure period ending on April 17th, 2013. A copy of the exposure draft can be obtained at the following link: IES 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Proposed Revision)
June 2013: The IAESB received an Issues paper and a presentation that identified significant issues resulting from the drafting of the revised version of IES 8, Professional Development for Engagement Partners Responsible for Audits of Financial Statements. The IAESB’s discussion of these issues covered the scope and objective of the revised IES 8. More specifically, the IAESB agreed with the task force’s proposals on: continuing to revise IES 8 and to develop separately guidance which assists in the implementation of IES 8; amending the scope to reflect a broader perspective than IFAC member bodies; describing the relationships between IES 8 and ISQC 1, as well as IES 8 and ISAs 200 and 220 in the Introduction or Explanatory Material sections of IES 8; retaining Table A of the Requirements section of IES 8 and providing a more comprehensive preamble to assist the reader; removing the column for proficiency level from Table A because at this level, engagement partners either be able or are not able to demonstrate the learning outcomes in the provided competence areas; focusing IES 8 on the engagement partner rather than aspiring engagement partner and removing the distinction between newly appointed and serving engagement partner; focusing IES 8 only on the audit engagement of financial statements and suggesting that areas such as assurance services should be covered by new IESs or guidance; clarifying that IES 8 requirements apply to all engagement partners irrespective of size of practice or firm and that there is no difference in respect of competence areas or learning outcomes based on the size of practice of the engagement partner, just a difference in respect of depth of use depending on the nature of the engagement; removing paragraph 19 on the basis that it repeated the Requirements identified in IES 7; and removing the term, “complex engagement,” from the requirements of IES 8 to avoid misinterpretation. As a result of these discussions the IAESB directed the IES 8 task force to consult with the IAESB CAG at its September 2013 meeting with the aim of preparing a revised draft of IES 8 for discussion by the Board at its October 2013 meeting.
March 2013: The IAESB received an Analysis of Respondents Comments document on the Exposure Draft of IES 8 and an Issues paper that identified the substantial issues as a result of comments from respondents. The IAESB agreed with task force proposals on: (1) continuing to develop IES 8 and to develop separately guidance to assist in the implementation of IES 8; (2) amending the Objective paragraph, but to indicate that the responsibility was shared and needed to have a broader perspective than IFAC member bodies which should be reflected in the scope of IES 8; (3) on retaining Table A of IES 8, but the column for proficiency level was not necessary and could be removed from Table A; (4) on continuing to focus IES 8 on the engagement partner rather than aspiring engagement partner and to remove the distinction between newly appointed and serving engagement partner; (5) on continuing to focus IES 8 only on the audit engagement of financial statements, but indicated that other IESs or guidance should cover areas such as assurance services; (6) on redrafting the explanatory material to make it clear that requirements apply to all engagement partners irrespective of size of practice or firm and that there is no difference in respect of competence areas or learning outcomes based on the size of practice of the engagement partner, just a difference in respect of depth of use depending on the nature of the engagement; and (7) withdrawing withdraw Requirement paragraph 19 of IES 8 . The IAESB also requested that the mastery level be removed from Appendix 1 of IES 8. As a result the IAESB instructed the task force to consult with the CAG on these issues and then to develop a revised draft that included the suggestions of the IAESB and CAG.
June 2012: The IAESB reviewed a revised draft of IES 8 and discussed task force’s proposals on drafting issues relating to the revised draft. The IAESB agreed with the task force’s proposals on (1) on a requirement for continuing professional development for those serving as engagement partners and on explanatory material which provides explanation on how serving engagement partners can participate in appropriate learning and development activities; (2) the definitions for aspiring engagement partner, partner authorization criteria, and engagement team. After a page-by-page review of the revised draft the IAESB approved the content of the Exposure Draft of IES 8 for a 120-day public exposure period ending on December 11th, 2012. IES 8, Professional Development for Engagement Partners Responsible for Audits of Financial Statements
March 2012: The IAESB reviewed a revised draft of IES 8 and discussed task force’s proposals on content issues relating to the revised draft. The IAESB agreed with the task force’s proposals on (1) the diagram of competence progression, (2) the structure and content of the competence matrix for the aspiring engagement partner, (3) the roles of Engagement Partners, Audit Teams and Sole Practitioners; (4) the requirement on professional development for engagement partners serving on complex audit engagements; and (5) the explanation of professional judgment and professional skepticism. IAESB members requested further clarification on the definitions of aspiring engagement partner, partner authorization, learning outcomes, and professional knowledge. The IAESB directed the task force to develop a revised version of IES 8 which includes any amendments resulting from the comments of the Board for discussion at its June 2012 meeting.
October 2011: The IAESB received a revised draft of the revised IES 8 and Issues paper which identified proposal for a requirement on competence matrix for the audit engagement partner. The IAESB discussed issues relating to: (1) clarifying the scope section; (2) clarifying the format and content of the competence framework; and (3) including competence requirements for complex, transnational and publicly traded entity audits. As a result of the IAESB discussion the Board instructed the task force to consult with the CAG on issues discussed by the IAESB and then to prepare a revised draft for IAESB discussion at the next meeting.
May 2011: The IAESB received a first draft of the revised IES 8 and Issues paper which identified proposal for a requirement on competence matrix for the audit engagement partner. The IAESB discussed issues relating to: the aspiring audit engagement partner; the need for bright lines; and how to address more complex audit engagements. As a result of the IAESB discussion, the Board instructed the task force to develop a proposed requirement that includes a presentation of competences to be associated with the development of audit engagement partner for discussion at the next meeting.
March 2011: The IAESB discussed content issues with the aim of developing 1st draft of IES 8. The IAESB agreed that the IAASB definition of an engagement partner was appropriate for IES 8, but the Standard needed to describe the progression of competence that occurs to become an engagement partner within a team environment.
November 2010: The IAESB reviewed and discussed the findings from the consultation paper on IES 8. The IAESB agreed to:
- direct the requirements of the proposed Standard to member bodies but to set out the implications of the requirements to other interested stakeholder groups through the Explanatory Materials section;
- focus the Standard's scope on the audit engagement of historical financial engagements;
- eliminate the term 'advanced level' as this implied some sort of prestige for auditors as compared to other accounting professionals; and
- direct the requirements of the proposed IES 8 do not go beyond the requirements inherent in the ISAs/ISQC1 and that the content of the proposed IES 8 is focused on 'education' principles common to all audit engagements;
May 2010: The IAESB received a report on the progress of the task force's deliberation of preliminary consultation findings and on the next steps for preparing an Issues paper to present at the November meeting.
February 2010: The IAESB identified key issues and questions for the public consultation paper on the revision of IES 8.
October 2009: The IAESB considered the project proposal and agreed a project direction for revising the eight International Education Standards.
June 2009: The IAESB identified key issues that should be covered in the project's proposal.
Following PIOB’s approval of due process activities, IES 8 was published on December 15, 2014 at https://www.ifac.org/news-events/2014-12/iaesb-finalizes-standard-professional-competence-audit-engagement-partner.
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