IESBA staff have developed a new publication, Ethical Considerations Relating to Audit Fee Setting in the Context of Downward Fee Pressure, in response to stakeholder concerns about downward pressure on fees and its potential to adversely impact audit quality. The publication highlights important considerations in the Code of Ethics for Professional Accountants (the Code) for auditors in relation to the setting of audit fees.

Among other matters, the publication outlines some of the reasons for downward pressure on audit fees and focuses on the key fundamental principles in the Code to which auditors must pay particular attention in these circumstances. It also highlights the different, but important, roles that those charged with governance, entity management, regulators, and other stakeholders can play in ensuring that financial considerations related to audit fees do not drive actions and decisions that undermine audit quality.

The publication will be relevant to auditors when considering tendering for a new audit engagement, or when proposing or agreeing fees for recurring audit engagements. It may also be of interest to those charged with governance, preparers, regulators and audit oversight bodies, investors, and others with an interest or role in auditors’ work and their independence.

Log in to the IESBA site to access the publication now: Ethical Considerations Relating to Audit Fee Setting in the Context of Downward Fee Pressure.

ISA 805 (Revised) deals with special considerations in the application of the ISAs to an audit of a financial statement or a specific element, account, or item of a financial statement.

It includes limited amendments to provide clarity about how the new and revised Auditor Reporting standards apply in the context of special purpose financial statements. These amendments are not intended to substantively change the underlying premise of these engagements in accordance with the extant ISAs.