The International Auditing and Assurance Standards Board (IAASB) today released International Standard on Auditing (ISA) 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements, and conforming amendments to other International Standards, which respond to new requirements in the International Ethics Standards Board for Accountants (IESBA)’s Code of Ethics for Professional Accountants addressing non-compliance with laws and regulations (NOCLAR). The revisions enable the IAASB’s International Standards to continue to be applied effectively alongside the IESBA Code, and clarify and emphasize key aspects of the IESBA Code in the IAASB’s Standards.

“The IESBA has established clear expectations for professional accountants in responding to non-compliance with laws and regulations, representing an important contribution to the public interest,” said IAASB Chairman Prof. Arnold Schilder. “It is only fitting that the IAASB’s International Standards acknowledge and reflect these important changes, and, thereby, reinforce the public interest role played by auditors and professional accountants who provide services covered by our Standards.”

ISA 250 (Revised) will be effective for audits of financial statements for periods beginning on or after December 15, 2017. Amendments to the IAASB’s International Standards for other services have a similar effective date.

“Among other enhancements, the changes to ISA 250 prompt the auditor to think about whether to report identified or suspected NOCLAR to an appropriate authority outside the entity, taking into consideration the provisions of laws, regulations, or relevant ethical requirements in their jurisdiction, and to consider the impact of NOCLAR on the audit,” explained James Gunn, Managing Director, Professional Standards. “It is important that the IAASB and IESBA have acted contemporaneously on such an important public interest matter.”

Also available is a staff-prepared At a Glance document, explaining the main changes from the extant ISA and other International Standards, and Basis for Conclusions, explaining the IAASB’s rationale for its decisions.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

In July 2016, the International Ethics Standards Board for Accountants (IESBA) introduced new requirements to the Code of Ethics for Professional Accountants (the IESBA Code) addressing non-compliance with laws and regulations (NOCLAR), which becomes effective on July 15, 2017.

The International Auditing and Assurance Standards Board (IAASB)’s Data Analytics Working Group is furthering its work to understand how the use of technology, and more specifically data analytics, is able to enhance audit quality. Today, the IAASB released a Request for Input, Exploring the Growing Use of Technology in the Audit, with a Focus on Data Analytics. Supplementing this publication is a call for nominations for a newly formed Project Advisory Panel to further advise the IAASB and the Data Analytics Working Group (DAWG) on developments relevant to standard setting.

“Technological change is occurring at a rapid pace, ushering in the capability to capture and communicate data digitally, on an unprecedented scale and almost instantaneously. With this change comes increased stakeholder expectations about how technology can be used to enhance the effectiveness and efficiency of audits of financial statements,” said IAASB Chairman Prof. Arnold Schilder. “With this publication we hope to bring together relevant stakeholders to meet these expectations, which starts by fostering a dialogue about how innovative techniques can be used.”

The Request for Input provides insights into the opportunities and challenges with the use of data analytics in the audit of financial statements and outlines the insights gained from the DAWG’s activities to date. The purpose of the Request for Input is to:

• Inform stakeholders about the IAASB’s ongoing work to explore effective and appropriate use of technology, with a focus on data analytics, in the audit of financial statements; and
• Obtain stakeholder input and perspectives on whether all of the considerations relevant to the use of data analytics in a financial statement audit have been identified.

“We are encouraged by the work accounting firms, national standard setters, and others are doing to explore how data analytics can be used in the audit,” noted Bob Dohrer, IAASB member and DAWG Chair. “While the International Standards on Auditing do not prohibit the use of data analytics, the standards need to better address increasing complexity, taking into account the rapidly changing technological developments in both the business and audit environment. The Request for Input highlights that timely feedback about innovations in this area, including views about the potential implications to the audit of today, will be of use in a number of the IAASB’s current projects.”

The Working Group is seeking input from investors, preparers, those in governance roles, standard setters, practitioners, internal auditors, regulators, academics, and other stakeholders in the external reporting supply chain. The input will assist the IAASB in effectively responding to these developments in the public interest, including determining whether new or revised international standards or guidance may be necessary. Comments to the Request for Input are requested by February 15, 2017.

More information and updates on the project, are available on the IAASB’s project page.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

The International Auditing and Assurance Standards Board (IAASB) is currently seeking nominations for its newly created Data Analytics Project Advisory Panel (the “PAP”).

Background to the IAASB’s Work on Data Analytics

The IAASB established the Data Analytics Working Group (DAWG) to inform the Board as to how and when to respond to developments in technology, in particular data analytics, most effectively in the public interest. Since its inception in mid-2015, the DAWG has performed outreach with various stakeholders, including accounting firms, National Auditing Standard Setters (NSS), audit regulators and oversight authorities, International Federation of Accountants (IFAC) member bodies and representatives of the IFAC Small and Medium Practices Committee. In September 2016, the IAASB released the DAWG’s Request for Input, Exploring the Growing Use of Technology in the Audit, with a Focus on Data Analytics, which provides insights into the opportunities and challenges with the use of data analytics in a financial statement audit and outlines the insights gained from the DAWG’s activities to date. The Request for Input is open for public comment through February 15, 2017, feedback from which will help the IAASB further consider its next steps.

Overview of Plans for a Project Advisory Panel (PAP)

A PAP provides the opportunity for the IAASB to further engage directly with subject matter experts and other interested parties on a particular topic. The objective of this PAP is to provide the IAASB’s DAWG and staff with additional expert insight on strategic and technical aspects related to using data analytics in a financial statement audit. The composition of the PAP is intended to provide the DAWG with perspectives from practitioners who have expertise in the area of data analytics, and others with a particular expertise or interest in data analytics more broadly. This may include, for example, financial statement preparers, users of financial statements, internal auditors, audit committee members, regulators, audit oversight authorities, academics, NSS, and IFAC member bodies.

How the PAP Will Contribute to the IAASB’s Work on Data Analytics

It is anticipated that the PAP would contribute to further informing the IAASB’s work on data analytics by:

• Advising the DAWG (and other IAASB Task Forces and Working Groups as necessary) on the developments in the use of data analytics in the audit, thereby further informing the IAASB’s thinking and approach to its standard-setting activities in this area. For example, the PAP could provide input on matters relevant to how data analytics can be used in risk assessment, a matter being considered as part of the IAASB’s project to revise International Standard on Auditing (ISA) 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
• Serving as a technical resource to the IAASB and DAWG and providing an external perspective related to making use of data analytics in a financial statement audit.
• Acting as a sounding board to the DAWG in its consideration of feedback from the Request for Input and when exploring the potential way forward, including the implications of various course of action and the timing in which those actions should be undertaken.
• Providing input to the development of any guidance or materials the IAASB may determine is necessary.

As the role of the PAP is of an advisory nature, there is no need for consensus to be reached on issues, or for votes to be taken; however, input from all members will be considered by the DAWG.

Submitting Nominations

The membership of the PAP is likely to consist of between 15-20 individuals with diverse experiences from various geographic locations. The ideal candidates will have a background in technology or subject matter expertise in field of data analytics. Please submit a brief profile citing why you are interested in being a member of the PAP to IAASBmeetings@iaasb.org by no later than October 15, 2016. The IAASB expects to inform those individuals who have been selected to be a member of the PAP by December 15, 2016.

The PAP will not hold physical meetings, but will conduct its discussions and information sharing via teleconferences or electronically. The PAP teleconferences will be convened and chaired by Bob Dohrer, IAASB member and Chair of the DAWG. At present, the PAP is anticipated to utilize quarterly teleconferences, although the frequency of the teleconferences may change as the IAASB’s Data Analytics initiative involves. In the future, the IAASB may decide to conduct seminars, roundtables, public forum, or other meetings with interested stakeholders to explore aspects of making use of data analytics in a financial statement audit. To the extent a PAP member is invited to one of these events, any travel, accommodation or other related costs are to be met by the member, the member’s employer, or other organization sponsoring the member.

For More Information

More information and updates on the project are available on the IAASB's project page.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB CAG, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).