The International Auditing and Assurance Standards Board (IAASB) today released the exposure draft of proposed International Standard on Auditing (ISA) 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)s.

Proposed ISA 600 (Revised) deals with special considerations for audits of group financial statements (group audits). Group audits are often more complex and challenging than single-entity audits because a group may have many entities or business units across multiple jurisdictions, and component auditors may be involved.

“This proposed standard is critically important as many of today’s audits are group audits, including audits of the largest and most complex organizations around the world,” said Tom Seidenstein, IAASB Chair. “The proposed revised standard addresses quality risk issues identified by audit regulators and benefits from the input of a wide range of stakeholders.”

The proposed standard introduces an enhanced risk-based approach to planning and performing a group audit. This approach appropriately focuses the group engagement team’s attention and work effort on identifying and assessing the risks of material misstatement of the group financial statements, and designing and performing further audit procedures to respond to those assessed risks. The proposed standard recognizes that component auditors can be, and often are, involved in all phases of a group audit. In these circumstances, the proposed standard highlights the importance of the group engagement team’s involvement in the component auditor’s work.

In addition, the proposed standard:

• Clarifies the scope and applicability of the standard.
• Emphasizes the importance of exercising professional skepticism throughout the group audit.
• Clarifies and reinforces that all ISAs need to be applied in a group audit through establishing stronger linkages to the other ISAs, in particular to proposed ISA 220 (Revised), ISA 315 (Revised 2019) and ISA 330.
• Reinforces the need for robust communication and interactions between the group engagement team, group engagement partner and component auditors.
• Includes new guidance on testing common controls and controls related to centralized activities.
• Includes enhanced guidance on how to address restrictions on access to people and information.
• Enhances special considerations in other areas of a group audit, including materiality and documentation.

In consideration of COVID-19’s impact, the IAASB is departing from the Board’s normal 120-day comment period for public consultations. Therefore, the exposure draft of proposed ISA 600 (Revised) is open for public comment until October 2, 2020.

The IAASB invites all stakeholders to comment on the Exposure Draft via the IAASB’s website.

The International Public Sector Accounting Standards Board (IPSASB) today announced that it is extending the comment period for Exposure Drafts (EDs) 70-72 to November 1, 2020. The extension responds to the additional challenges facing stakeholders as a result of the COVID-19 pandemic, and will provide them with additional time to undertake outreach and prepare their responses. 

These three EDs, released in February this year, pioneer new approaches for some of the most prevalent public sector transactions, including government transfers and grants for the delivery of key government services to citizens. 

Stakeholders can learn more about the Exposure Drafts, and submit their comments, by visiting the below links:

• Exposure Draft 70: Revenue with Performance Obligations
• Exposure Draft 71: Revenue without Performance Obligations
• Exposure Draft 72: Transfer Expenses

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About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org. 

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

The COVID-19 pandemic is a global health and humanitarian crisis. Beyond the significant challenges that lay ahead in all facets of life, it also poses unprecedented risks to the world economy. The International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) are committed to doing our part to support a strong global response.

IAASB and IESBA are committed to continuing our work, albeit virtually, and seizing opportunities to adapt how we work, and what we work on, considering global needs and priorities.

In the short-term, we have transitioned to fully digital platforms to execute day-to-day work, plenary meetings and stakeholder outreach. In addition, we are developing, or will consider commissioning and/or sourcing reference materials, as appropriate for each Board, to help our stakeholders continue their work. To that end, we will be creating web resources on each board’s website with COVID-19 related messages and materials.

We are coordinating with the Public Interest Oversight Board (PIOB), regulatory authorities, and national standard setters on our approach. We are also discussing with the PIOB the best way to balance timeliness and the very real operational constraints many stakeholders face. These discussions will consider our stakeholders’ ability to provide feedback according to existing timelines and whether flexibility is required.

We are adapting rapidly and trying to be sensitive to many difficulties. We will place a priority on remaining closely linked with all our stakeholders during these trying times and will continue to review our response, as we may not get it right the first time, and may need to adjust further as the global situation changes. The IAASB, IESBA, and their staff stand ready to help where and when possible.  

We continue our work for the public interest. We understand the unprecedented crisis will bring unprecedented challenges. And we will meet them with a decisive and timely response.

The International Auditing and Assurance Standards Board (IAASB) published its Strategy for 2020‒2023 (the Strategy) and Work Plan for 2020‒2021 (the Work Plan) , this week (April 15, 2020). We have also signaled our sensitivity to the current circumstances created by the COVID-19 outbreak. The purpose of this note is to update stakeholders on the progress of support material under development and the evolution of our thinking on our Work Plan.

Staff Alerts under Development

A core element of our COVID-19 response is to develop Staff Alerts on several targeted topics to support the application of our standards under current circumstances. Our goal is to support the public interest and the role auditors must play in sustaining trust in financial and other external reporting. We are coordinating with others, such as National Standard Setters (NSS) and the International Federation of Accountants (IFAC) and its Professional Accountancy Organization (PAO) members, as well as engaging with regulators and oversight bodies.

In addition to the IAASB Staff Alert, Highlighting Areas of Focus in an Evolving Audit Environment Due to the Impact of COVID-19, we are drafting Staff Alerts on the following topics:

• Auditor Reporting
• Going Concern
• Subsequent Events
• Auditing Accounting Estimates
• Public Sector Audit Considerations

The Staff Alerts on Auditor Reporting and Going Concern will be issued next and are expected to be available within the next two weeks.

Work Plan

The IAASB is calibrating its efforts to account for COVID-19’s impact on our capacity to deliver, and the capacity of our stakeholders to absorb what we deliver. Our comprehensive review of our work program includes an assessment of priorities, upcoming Board meeting agendas, and timelines (e.g., consultation periods and effective dates). We are taking this through our internal processes as well as ensuring that we benefit from the input of the Public Interest Oversight Board (PIOB) and other key stakeholders. Changes will be communicated with the publishing of individual proposed or final pronouncements. We anticipate publishing revisions to the Work Plan on the IAASB website during the first half of May, after our consultations are complete.

We will continue to adapt our ways of working. The IAASB appreciates the immense constraints and pressure experienced by all. Our thinking about how we can best contribute to the broader financial reporting ecosystem at this time is evolving and we will continue to post updates on the IAASB Website.

Visit our COVID-19 Reource Page to learn more.

In the third video in the series, Chair of the IAASB, Tom Seidenstein and Deputy Chair, Fiona Campbell discuss the scalability of audit standards, the challenges for small and medium firms and SME audits, and overall complexity of standards, all of which are the focus of the IAASB’s ‘Audits of Less Complex Entities’ working group.

In the second video in the series, Chair of the IAASB, Tom Seidenstein and Deputy Chair, Fiona Campbell discuss the scalability of audit standards, the challenges for small and medium firms and SME audits, and overall complexity of standards, all of which are the focus of the IAASB’s ‘Audits of Less Complex Entities’ working group.

The International Auditing and Assurance Standards Board (IAASB) today released conforming amendments to the IAASB’s International Standards as a result of the recently restructured and revised International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code).

The conforming amendments aim to align the IAASB’s International Standards with the revisions to the IESBA Code, thus ensuring that they can continue to be applied together with the IESBA Code. 

“The IAASB and IESBA have prioritized their cooperation and coordination because many jurisdictions use both the IAASB’s International Standards and the IESBA Code. The completion and publication of these conforming amendments fulfills the public interest to ensure that the two sets of standards work in concert,” said Tom Seidenstein, Chair of the IAASB. “These conforming amendments will give jurisdictions yet another reason to adopt and implement both tools to strengthen public confidence in the global auditing and assurance profession.”

The conforming amendments fall under the umbrella of IAASB-IESBA coordination, a strategic commitment of the two Boards to better align for enhanced connectivity and to better serve the public interest.

“I commend the IAASB for completing this necessary project in a timely manner,” said Dr. Stavros Thomadakis, Chairperson of IESBA, adding “Our two boards are committed to seeking alignment in our standards and coordination of our standard-setting activities on issues of common concern to help serve the public interest.” 

The conforming amendments to the IAASB’s International Standards become effective as of July 15, 2020.

For more information click here.

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 Ethics Standards Board for Accountants® (IESBA®) today announced that it is extending by one month the comment period on the Exposure Drafts (EDs): Proposed Revisions to the Non-Assurance Services Provisions of the Code and Proposed Revisions to the Fee-related Provisions of the Code. The extension will provide stakeholders who are experiencing disruptions caused by the coronavirus (COVID-19) pandemic additional time to comment. 

The new comment deadline is June 4, 2020. Stakeholders who are able to submit their feedback by May 4, 2020, the original comment deadline, are encouraged to do so. 

The EDs were released on January 21, 2020 and include proposals aimed at strengthening the non-assurance services (NAS) and fee-related independence provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards). 

For additional information about the EDs, including webinars that highlight key aspects of the proposals, please visit the IESBA’s website. 

About the IESBA

The International Ethics Standards Board for Accountants (IESBA) is an independent global standard-setting board. The IESBA serves the public interest by setting ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards)

The IESBA believes a single set of high-quality ethics standards enhances the quality and consistency of services provided by professional accountants, thus contributing to public trust and confidence in the accountancy profession. The IESBA sets its standards in the public interest with advice from the IESBA Consultative Advisory Group (CAG) and under the oversight of the Public Interest Oversight Board (PIOB).

The International Auditing and Assurance Standards Board (IAASB) today released International Standard on Related Services (ISRS) 4400 (Revised), its revised standard for performing agreed-upon procedures engagements.

In an agreed-upon procedures engagement, the practitioner performs the procedures that have been agreed upon by the practitioner and the engaging party, and the practitioner communicates those procedures and the related findings in the agreed-upon procedures report. A wide range of stakeholders use agreed-upon procedures reports for a variety of reasons; for example, regulators, funding bodies, creditors and others ask for agreed-upon procedures reports to support or complement information, such as audited financial statements or loan or grant applications.

“Agreed-upon procedures engagements are widely used in many jurisdictions and the demand for such engagements continues to grow, particularly in relation to the need for increased accountability around funding and grants,” said Tom Seidenstein, IAASB chair. “This revised standard is responsive to such trends, relating to both financial and non-financial subject matters, and the enhancements in the requirements and application material will promote consistency in the interpretation and performance of agreed-upon procedures engagements by practitioners.”

In addition to having been redrafted using the clarity drafting conventions to be consistent with other IAASB International Standards, some of the significant enhancements to ISRS 4400 (Revised), Agreed-Upon Procedures Engagements, include:

• Responding to the needs of stakeholders – Broadening the scope of the standard to meet demand for agreed-upon procedures engagements and introducing requirements and application material to address evolving engagement circumstances, such as the use of a practitioner’s expert in an agreed-upon procedures engagement.
• Providing transparency in the AUP report – Introducing requirements and application material to clarify whether or not the practitioner is required to comply with independence requirements and, if so, the determination and disclosure of the relevant independence requirements.
• Enhancing consistency in the performance of AUP engagements – Clarifying how professional judgment is exercised in an agreed-upon procedures engagement and introducing requirements and application material on engagement acceptance and continuance conditions and documentation.

ISRS 4400 (Revised) will be effective for AUP engagements for which the terms of engagement are agreed on or after January 1, 2022.

The IAASB also released an ISRS 4400 (Revised) Fact Sheet to provide implementation support in relation to the more significant changes to the standard and to help practitioners navigate and apply the revised standard. Please visit the IAASB website.  

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 COVID-19 pandemic is a global health and humanitarian crisis. Beyond the significant challenges that lay ahead in all facets of life, it also poses unprecedented risks to the world economy. The International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) are committed to doing our part to support a strong global response.

IAASB and IESBA are committed to continuing our work, albeit virtually, and seizing opportunities to adapt how we work, and what we work on, considering global needs and priorities.

In the short-term, we have transitioned to fully digital platforms to execute day-to-day work, plenary meetings and stakeholder outreach. In addition, we are developing, or will consider commissioning and/or sourcing reference materials, as appropriate for each Board, to help our stakeholders continue their work. To that end, we will be creating web resources on each board’s website with COVID-19 related messages and materials.

We are coordinating with the Public Interest Oversight Board (PIOB), regulatory authorities, and national standard setters on our approach. We are also discussing with the PIOB the best way to balance timeliness and the very real operational constraints many stakeholders face. These discussions will consider our stakeholders’ ability to provide feedback according to existing timelines and whether flexibility is required.

We are adapting rapidly and trying to be sensitive to many difficulties. We will place a priority on remaining closely linked with all our stakeholders during these trying times and will continue to review our response, as we may not get it right the first time, and may need to adjust further as the global situation changes. The IAASB, IESBA, and their staff stand ready to help where and when possible.  

We continue our work for the public interest. We understand the unprecedented crisis will bring unprecedented challenges. And we will meet them with a decisive and timely response.