This report offers a comprehensive overview of the IAASB’s progress in addressing key public interest issues and reiterates its strategic direction to continue bolstering confidence in audits and assurance engagements.
Today, the staff of the International Ethics Standards Board for Accountants (IESBA) released an updated Questions & Answers (Q&A) publication. This updated IESBA staff Q&A publication introduces two revisions:
A new question and answer addressing the scenario where a jurisdiction either lacks a PIE definition or has excluded one or more of the mandatory categories in the IESBA PIE definition.
An amendment to align with the revisions to ISA 700 (Revised) arising from Track 1 of the IAASB’s project to use the auditor’s report to enhance transparency about the relevant ethical requirements for independence applied for certain entities, such as PIEs, when performing an audit of financial statements.
The IAASB and IESBA have worked closely together throughout their respective Listed Entity and Public Interest Entity (PIE) projects. Track 1 of the IAASB’s project was completed in June 2023 and Track 2 is ongoing. Among other project objectives, Track 2 aims to achieve convergence to the greatest extent possible between the boards’ PIE definitions and key concepts.
Considering the importance of the interoperability of IAASB and IESBA standards, the IAASB PIE project team has incorporated the clarified IESBA position reflected in 1 above into its deliberations. The IAASB will consider different options for Track 2 at the September 2024 IAASB meeting.
The IAASB’s narrow scope revisions to ISA 700 (Revised) and 260 (Revised) arising from Track 1 of its project will become effective for audits of financial statements for periods beginning on or after December 15, 2024, coinciding with the effective date of the PIE definition changes in the IESBA’s International Code of Ethics for Professional Accountants (including International Independence Standards).
This update includes a new Q&A (16) to address the scenario where a jurisdiction has no PIE definition or excluded one or more of the mandatory categories in the IESBA PIE definition. In addition, Q&A 20 has been updated following the finalization of Track 1 of IAASB’s PIE project and the IAASB’s agreement to update ISA 700 (Revised) so that the auditor’s report can be used as a mechanism for firms to comply with the transparency requirement set out in the IESBA PIE revisions.
The IESBA and the IAASB coordinated closely throughout the development of the IESBA’s revised PIE definition and Track 1 of the IAASB’s PIE project. This high level of coordination has been ongoing as the IAASB works towards finalizing Track 2 of its PIE project. Such coordination is critical to ensure the interoperability of both Boards’ standards.
The Q&A publication is designed to highlight, illustrate or explain aspects of the PIE revisions in the Code and is intended to complement the Basis for Conclusions for the final pronouncement. It aims to assist national standards setters, professional accountancy organizations, and firms in adopting and/or implementing the PIE revisions.
The PIE revisions are effective for audits of financial statements for periods beginning on or after December 15, 2024. Read the revisions here.
Note: References to paragraph numbers in the updated Q&A publication were updated to reflect the 2024 version of the IESBA Code.
About IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
The revisions relating to the definition of a public interest entity which, among other matters, specifies a broader list of mandatory public interest entity categories, including a new category “publicly traded entity” to replace the category of “listed entity.”
The revised public interest entity definition and related provisions will be effective for audits of financial statements for periods beginning on or after December 15, 2024.
Changes to the definitions of “audit client” and “group audit client” in the Glossary arising from the approved revisions to the definitions of listed entity and public interest entity.
The revised definitions will be effective for audits of financial statements and group financial statements for periods beginning on or after December 15, 2024.
Technology-related provisions of the Code.
The technology-related revisions to Parts 1 to 3 will be effective as of December 15, 2024.
The technology-related revisions to Part 4A will be effective for audits and reviews of financial statements for periods beginning on or after December 15, 2024.
The back of the 2024 Handbook contains the IESBA-approved revisions to the Code addressing Tax Planning and Related Services, which will become effective after June 2025.
Reproducing and Translating the IESBA Handbook To help adoption and implementation of the IESBA standards, stakeholders are invited to submit requests for permission to reproduce or translate the IESBA Handbook online via the Online Permissions Requests or Inquiries system on the IFAC website.
About IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting high-quality, international ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
