The International Auditing and Assurance Standards Board (IAASB) welcomes the release by the International Ethics Standards Board for Accountants (IESBA) of its Exposure Draft, Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code.

The IESBA Exposure Draft broadens the definition of a public interest entity (PIE) to include more categories of entities, given the level of public interest in their financial condition. It also replaces the term “listed entity” as a PIE category with “publicly traded entity” and redefines the category.

“The IAASB closely coordinated with IESBA on this project, recognizing that public interest entities play crucial roles in global markets. Convergence between audit and ethics standards on terms and concepts is in the public interest and is a leading priority,” said IAASB Chair Tom Seidenstein. “The IAASB has reflected on the possible implications for its Standards and urges all IAASB stakeholders to participate in the consultation because of the possible future implications for IAASB Standards.”

The aspects of the IESBA proposals that may have implications for the IAASB Standards, include:

• The introduction of an overarching objective for additional requirements to enhance confidence in the audit of financial statements of PIEs.
• The broadening of the definition of PIE to include additional categories of entities, and applying an approach whereby the categories are specified at a high level and expecting regulators, national standard setters or other relevant local bodies to refine these high-level categories so that the right entities in the local context are captured.
• Replacing the term “listed entity” with the term “publicly traded entity” and redefining that PIE category. In this regard, the Explanatory Memorandum explains the use of “listed entity” in IAASB Standards and the outcome of the IAASB’s preliminary deliberations in relation to the possible review of the use of “listed entity” and PIE in the IAASB Standards.
• Introducing a new requirement in the IESBA Code for firms to publicly disclose if an audit client was treated as a PIE. The Explanatory Memorandum provides information regarding the IAASB’s preliminary consideration of options in pursuing the possibility of transparency through the auditor’s report.

To enhance understanding of the Exposure Draft and encourage participation in the public consultation, the IESBA will publish additional guidance materials in February and host two webinars in March.

The IAASB encourages all stakeholders to participate in the public consultation, especially Question 15, which will help the IAASB conduct a preliminary assessment of relevant aspects of the proposal, by May 3, 2021 via the IESBA website.

About the IAASB
The International Auditing and Assurance Standards Board 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 IAASB is looking for highly qualified volunteers to serve on the International Auditing and Assurance Standards Board (IAASB) for an initial term of up to 3 years, commencing January 1, 2022.

The IAASB is an independent standard-setting body that serves the public interest by setting high-quality international standards for auditing, quality control, review, other assurance, and related services.

The nominations process, with public interest oversight, aims to select the most suitable candidates for the available positions. Transition to a multi-stakeholder model in line with the Monitoring Group reforms[1] will be taken into consideration during the selection process.

All stakeholders, including the general public, are invited to apply or nominate candidates. The Nominating Committee is interested in candidates from a wide range of relevant backgrounds, including:

• users of audited financial statements or assurance reports, including institutional investors and analysts, audit committee members, and individuals from the corporate governance community;
• nominees from regulatory and audit inspection or oversight bodies;
• preparers of financial reports;
• academics;
• national standard setters;
• those working in the government sector; and
• those who have expertise in technology as it relates to the audit and accountancy profession.

Candidates should ideally have experience with auditing and/or assurance issues and sufficient knowledge of the subject matters considered by the IAASB to be able to contribute effectively to the board’s work. English proficiency (both written and oral) is essential.

Nominations of highly qualified candidates from all regions are encouraged, with a particular emphasis on nominations from the Africa–Middle East and Latin America–Caribbean regions. Nominations of female candidates are also strongly encouraged.

Financial support to cover travel costs for attending board meetings is available for qualifying individuals and public members who do not have a nominating organization.

For more information, including details on number of open positions and positions where renewal of existing members is possible, and to learn how to submit an application, please see the Call for Nominations for IAASB in 2022, also available in Arabic, French and Spanish. The deadline for submitting applications is February 15, 2021.

About the IAASB
The International Auditing and Assurance Standards Board 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).

During its December 2020 meeting, the IAASB held its first public discussions on the draft of a separate standard being developed for an audit of less complex entities and the official project proposal to complete and publish the draft standard for public consultation in 2021. The IAASB approved the project proposal and early draft.

Following these decisions, the IAASB today published a new communique detailing plans for the new standard, including current thinking on what the standard will look like, what entities it will apply to, and the development timeline.

For additional information on the IAASB’s efforts to balance the needs of all its stakeholders by addressing complexity, understandability, scalability and proportionality in the International Standards on Auditing, please see its November 2020 communique.

The International Auditing and Assurance Standards Board (IAASB) today released its three quality management standards. The standards promote a robust, proactive, scalable and effective approach to quality management and mark a significant evolution of the existing quality control standards.

“These standards will drive the audit profession to an enhanced approach to quality ‘management’ rather than ‘control’, which better enables the consistent performance of quality engagements, including audits,” according to IAASB Chair Tom Seidenstein. “The standards place greater responsibility on firm leadership for continuously improving the quality of their engagements and remediating when deficiencies are found. When effectively implemented, the standards should help ensure that a commitment to quality is at the heart of firm strategy and operations.”

The suite of standards includes:

• International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
• ISQM 2, Engagement Quality Reviews; and
• International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements. 

The standards become effective on December 15, 2022.

The IAASB has also developed Bases for Conclusions and factsheets to support the implementation of the new standards, which are available on the IAASB’s website. Additional support materials will be published in 2021.

About the IAASB
The International Auditing and Assurance Standards Board 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.

Together with ICAEW, The International Federation of Accountants (IFAC) today released the third installment in its Anti-Money Laundering: The Basics educational series: Installment 3: Company Formation.  

The publication is part of a 6-month short series helping accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest. Installment three examines company formation, one of the services performed by professional accountants that is most susceptible to money laundering risk.

Anti-Money Laundering: The Basics is featured on both the IFAC and ICAEW websites and available for download for free. With installment three, IFAC is featuring the series on a new landing page alongside other relevant information on anti-money laundering (AML).

To be globally relevant, the Anti-Money Laundering: The Basics  series uses the risk-based approach of the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog -- as a starting point. 

For more information about IFAC, visit www.ifac.org.

For more information about ICAEW, visit https://www.icaew.com/.

The IFAC Nominating Committee is seeking to fill six vacancies on the International Public Sector Accounting Standards Board (IPSASB). New Board Members will serve an initial term of up to 3 years, commencing January 1, 2022.

Candidates will ideally have a public sector background and/or experience in standard setting to be able to contribute value to the work of the Board. English proficiency (both written and oral) is essential, as this is the language in which the IPSASB operates.

The IPSASB is an independent standard-setting body that serves the public interest by setting high-quality accounting standards for use by public sector entities around the world in the preparation of general purpose financial reports. Nominations from a wide range of relevant backgrounds are sought, including, but not limited to, candidates from:

• Users of general purpose financial reports, such as parliamentarians, budget offices, and credit-rating agencies.
• Preparers of accrual-based financial statements, such those reporting directly or indirectly in accordance with IPSAS or being in the process of transitioning to IPSAS or another accrual-based accounting framework.
• Ministries of Finance and Treasury departments.
• International and regional development organizations.
• Public sector external auditors.

The Nominating Committee aims to maintain diversity on the IPSASB in terms of gender, regional, and professional background. For these reasons, nominations of qualified female candidates, and qualified candidates from the Africa–Middle East and Asia regions, as well as from jurisdictions where English is not the native language, are particularly encouraged.

All stakeholders, including the general public, governments, IFAC member organizations, and public sector auditors are invited to nominate candidates.

Deadline for submitting applications is January 31, 2021. Please see the Call for Nominations for more details and information on how to submit an application.

The IAASB has published video introductions to the new and revised quality management standards in English, French and Spanish. The videos explain the key aspects of the three standards to help stakeholders begin their implementation efforts.

The IAASB recently approved the suite of new and revised quality management standards, which will be released following approval from the Public Interest Oversight Board of the due process later this year. The new and revised quality management standards will become effective on December 15, 2022.

The International Auditing and Assurance Standards Board (IAASB) Technology Working Group today released a new non-authoritative frequently asked questions publication on using automated tools and techniques in identifying and assessing risks of material misstatements in accordance with International Standard on Auditing 315 (Revised 2019), Identifying and Assessing Risks of Material Misstatement. 

The publication assists auditors to understand the types of automated tools and techniques that can be used, and how they can be used, in performing risk assessment procedures. It also addresses considerations regarding the entity’s use of machine learning or artificial intelligence when performing risk assessment procedures.

This publication does not amend or override the International Standards on Auditing (ISAs), the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

Today the IAASB released a key takeaways publication following three recent virtual roundtables with experts and leaders exploring issues and challenges related to fraud and going concern. These roundtables focused on:

1. The impact of technology advancements on fraud perpetration and detection;
2. The “expectation gap”, or differences between public perceptions and the auditor’s responsibilities for fraud and going concern; and
3. Fraud and going concern in audits of less complex entities.

Today’s publication details the roundtables and what we heard. The input from these roundtables comprise one aspect of the IAASB’s broader information-gathering activities related to fraud and going concern that will be considered in determining possible future actions.

The full roundtable recordings, including individual breakout sessions, are available on the IAASB’s YouTube channel:

• Fraud Technology Roundtable
• Expectation Gap Roundtable
• Fraud and Going Concern Procedures in Less Complex Entities Roundtable

If you would like to know more about the IAASB’s work on fraud and going concern, please visit the project pages on fraud and going concern for further information. The IAASB also encourages all interested stakeholders to respond to the IAASB’s related Discussion Paper, Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit, which is currently open for consultation until February 1, 2021.

Fraud and going concern are important public interest issues for the IAASB. To allow adequate time for all of our stakeholders to respond to the IAASB’s Discussion Paper, Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit, the closing date of this consultation has been extended to February 1, 2021. This extension takes into account the upcoming holidays and our stakeholder’s capacity this year and is in response to stakeholder requests.

The Discussion Paper aims to gather perspectives from all our stakeholders across the financial reporting ecosystem about the role of the auditor in relation to fraud and going concern in an audit of financial statements, and to obtain input on matters about whether our standards related to fraud and going concern remain fit-for-purpose in the current environment. The input from this consultation, together with other information gathering and outreach activities, will inform IAASB decisions about possible further actions on these topics.

If you would like to know more about the IAASB’s work on fraud and going concern, including the recent roundtables on these topics, please visit the project pages on fraud and going concern. The IAASB also encourages all interested stakeholders to respond to this Discussion Paper, including investors and other users of financial statements, those charged with governance of entities, preparers of financial statements, national standard setters, professional accountancy organizations, academics, regulators and audit oversight bodies, auditors and audit firms, and others where interested.