The proposals in the Exposure Draft establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team―a concept central to an audit of financial statements―in the International Auditing and Assurance Standards Board's (IAASB) International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements. The proposals were developed in close coordination with the IAASB's group audits and quality management projects.
Comments to the exposure draft are requested by May 31, 2022.
Looking Beyond 2023! IESBA Calls for Stakeholder Input on Future Strategy
The IESBA Strategy Survey 2022 is open to the public and seeks stakeholder input on what key trends, developments or issues the IESBA should consider as it begins the process of developing its Strategy and Work Plan (SWP) 2024-2027. The SWP is expected to be finalized by the end of 2023 for release in early 2024.
The International Ethics Standards Board for Accountants (IESBA) today released a public survey seeking broad stakeholder input to inform the development of its Strategy and Work Plan (SWP) 2024-2027. The survey can be downloaded from the IESBA’s website. Responses are requested by Friday, July 8, 2022.
“The accountancy profession plays a critically important role in supporting economic growth and stability worldwide in these uncertain and rapidly changing times,” said IESBA Chair Gabriela Figueiredo Dias. “The IESBA must therefore be open, agile and proactive in evolving the Code so that it remains robust and relevant in safeguarding public trust and confidence in the work of professional accountants as the context and the challenges change. The ultimate purpose of IESBA’s future SWP is to actively respond to the changing needs of the economic system by providing appropriate and relevant standards for professional accountants as they adapt their professional activities and work methods and evolve their services to meet those changing needs.”
The survey seeks input from all stakeholders on what key trends, developments or issues the IESBA should consider as it begins the process of developing its SWP 2024 – 2027. The SWP is expected to be finalized by the end of 2023 for release in early 2024.
“The concept of a PIE is central to the application of the IIS and determines how far an auditor must go in meeting the fundamental requirement to be independent,” said IESBA Chair Gabriela Figueiredo Dias. “The revised definition and related provisions represent the third pillar in our package of measures to significantly strengthen auditor independence in the public interest, following the release of our revised Non-Assurance Services and Fees standards last year.”
To recognize diversity in jurisdictional contexts, the IESBA has taken a novel approach of expanding the PIE definition globally at a high level while providing guidance to regulators, national standard setters and other relevant local bodies on tailoring the broad definition for jurisdictional specificities. Among other matters, the revisions also:
Articulate an overarching objective for additional independence requirements for audits of financial statements of PIEs.
Provide guidance on factors to consider when determining the level of public interest in an entity.
Replace the term “listed entity” with a new term “publicly traded entity,” providing a definition of the latter term.
Recognize the essential role local bodies responsible for the adoption of the Code play in delineating the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories and adding any other categories relevant to their environments.
Introduce a transparency requirement for firms to publicly disclose the application of independence requirements for PIEs where they have done so.
The IESBA coordinated the development of these revisions closely with the International Auditing and Assurance Standards Board (IAASB) given that some of the terms and concepts that were considered are common to both Boards’ standards. The IAASB is pursuing a project to consider a number of matters relevant to its standards arising from the finalization of the IESBA’s PIE provisions, including whether and how to address the transparency requirement noted above in the IAASB’s standards.
The revised PIE definition and related provisions become effective for audits of financial statements for periods beginning on or December 15, 2024. Early adoption is permitted and encouraged.
The IESBA is also releasing a number of conforming amendments to the Code as a result of the issuance of the IAASB’s suite of quality management standards in December 2020. These conforming amendments will be effective as of December 15, 2022.
Expanded Public Interest Entity (PIE) Definition Complements Recently Strengthened International Independence Standards (IIS) in Relation to Non-Assurance Services and Fees Paid by Audit Clients
In December 2020, the International Auditing and Assurance Standards Board (IAASB) issued its suite of quality management standards (ISQM 1, ISQM 2, and ISA 220 (Revised)). As a result of the finalization of those standards, the IESBA considered it is necessary to make certain conforming amendments to the Code.
These conforming amendments will be effective as of December 15, 2022.
The revised provisions include an expanded definition of “public interest entity” (PIE) in the Code by specifying a broader list of PIE categories, including a new category “publicly traded entity” to replace the category “listed entity.” The revised provisions also recognize the essential role local bodies responsible for the adoption of the Code play in delineating the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories in the expanded definition and adding any other categories relevant to their environments.
The IESBA’s technology exposure draft represents the IESBA’s firm response to the transformative effects of technology by enhancing the Code’s robustness and expanding its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide. The proposed revisions build on the role and mindset changes that became effective last December, and the revised Non-Assurance Services (NAS) provisions that will become effective in December 2022.
The early-April event was attended by participants in over 76 jurisdictions globally.
April 19, 2022, from 10:00-11:30 am Greenwich Mean Time.
Each webinar will include an opportunity for stakeholders to participate in a questions and answers session. The first webinar will be presented by Ms. Caroline Lee, IESBA Deputy Chair and Chair of the IESBA’s Engagement Team – Group Audits Independence (ET-GA) Task Force, and Ms. Denise Canavan, former IESBA Technical Advisor and member of the ET-GA Task Force. The second webinar will be presented by Ms. Caroline Lee and Mr. Andrew Pinkney, IESBA Technical Advisor and member of the ET-GA Task Force. Both webinars will be held on Zoom.
The proposals in the Exposure Draft establish provisions that comprehensively address independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. The proposals also address the independence implications of the change in the definition of an engagement team―a concept central to an audit of financial statements―in the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements. The proposals were developed in close coordination with the IAASB’s group audits and quality management projects.
The webinars will be held in English and available on YouTube.
The Technology Working Group of the International Ethics Standards Board for Accountants (IESBA) is pleased to announce the members of the recently established IESBA Technology Experts Group (TEG).
Experienced in using and implementing technology, TEG members will act as a “sounding board” to the IESBA’s Technology Working Group, providing advice and other input to help inform the Working Group’s fact-finding work and deliverables.
The TEG will be chaired by IESBA Member and Chair of the Technology Working Group, Mr. Brian Friedrich. TEG members are:
Jason Bradley, Financial Reporting Council, United Kingdom
Clinton Firth, Ernst & Young, Middle East and North Africa
William Gee, PricewaterhouseCoopers, Mainland China and Hong Kong
Loreal Jiles, Institute of Management Accountants, North America
Mario Malouin, Université du Québec en Outaouais, North America
The TEG is expected to hold its first meeting before the IESBA’s June 2022 Board Meeting. The TEG will receive technical staff support from Jon Reid, Senior Technical Manager at the Australian Accounting Professional & Ethical Standards Board (APESB), a member of the IESBA-National Standard Setters liaison group.
About the IESBA’s Technology Initiatives
The IESBA is progressing multiple technology workstreams in a coordinated manner. This includes:
The development of technology-related revisions to the Code so that it remains relevant and fit for purpose as technology advances (the Technology project). On February 18, 2022, the IESBA released its Exposure Draft: Proposed Technology-related Revisions to the Codewith a comment period until June 20, 2022.
Fact finding to identify and assess the potential impact of technology on the behavior of professional accountants and the applicability of the Code in relation to ethics and independence.
The development of technology-related thought leadership and other materials in relation to ethics and independence for professional accountants and the wider stakeholder community.
Additional information about the IESBA’s technology workstreams is available on the IESBA’s website.
This one-hour webinar will also include an opportunity for stakeholders to participate in a questions and answers session with the presenters, Mr. Richard Huesken, IESBA member and Chair of the Technology Task Force, and Mr. Gregory Driscoll, IESBA technical advisor and member of the Technology Task Force. It will be held on Zoom.
The IESBA’s technology exposure draft represents the IESBA’s firm response to the transformative effects of technology by enhancing the Code’s robustness and expanding its relevance in an environment being reshaped by rapid technological advancements. The proposed amendments will guide the ethical mindset and behavior of professional accountants in business and in public practice as they deal with changes brought by technology in their work processes and the content of the services they provide. The proposed revisions build on the role and mindset changes that became effective last December, and the revised Non-Assurance Services (NAS) provisions that will become effective in December 2022.
The webinars will be held in English and available on YouTube following the session.
