“Considerable advances have been made in recent years to strengthen the International Independence Standards, further reinforcing the important role of the independent audit to the integrity of financial markets worldwide,” said IESBA Chair Gabriela Figueiredo Dias. “This timely benchmarking analysis answers many questions we have received and provides much insight into how the provisions in the Code compare with those of a major jurisdiction like the U.S., and will ultimately instill greater public confidence in the robustness of the Code.”
The IESBA launched the benchmarking study to promote awareness and further adoption of the Code. Without making judgments as to the relative merits of the two independence frameworks, the report highlights the similarities and key differences between the Code and the U.S. SEC and PCAOB rules in areas of greatest interest to stakeholders, including the permissibility of non-assurance services to audit clients, fees, long association with an audit client, and business and financial relationships. The IESBA will consider the findings of the benchmarking analysis in developing its 2024-2027 Strategy and Work Plan.
Alongside the detailed report, the IESBA Staff has published an abridged report that provides an overview of the main similarities and differences, as well as an additional publication with further information on the background and objectives of the initiative.
The webinar is scheduled for May 25, 10am EDT. Click here to register.
The one-hour live-streamed event will be presented by Mike Ashley, IESBA Public Interest Entity (PIE) Task Force Chair, and Andrew Mintzer, IESBA PIE Rollout Working Group Chair.
The revised provisions extend the scope of application of additional independence requirements for audits of financial statements of PIEs through enlarging the universe of entities that are PIEs. The revised provisions recognize the essential role relevant local bodies play in identifying the specific entities that should be scoped in as PIEs in their jurisdictions, encouraging them to properly refine the PIE categories in the expanded IESBA definition and adding any other PIE categories relevant to their environments. The revised provisions provide guidance to the local bodies in this regard. There is also a new transparency requirement for firms to publicly disclose the application of independence requirements for PIEs where they have done so.
The webinar will be held in English and available on YouTube.
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.
On January 1, 2022, Ms. Gabriela Figueiredo Dias of Portugal became the first Chairwoman of the IESBA. On January 25, 2022, Ms. Dias offered insights into her background, why she is excited to lead the Board, and what she sees ahead for the IESBA and the accountancy profession.
The New Chairwoman of the International Ethics Standards Board for Accountants
The proposed revisions 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.
“Auditor independence, in fact and in appearance, is fundamental to public trust and confidence in the financial statement audit, which in turn plays a major role in safeguarding the integrity of the financial system,” said IESBA Chair Ms. Gabriela Figueiredo Dias. “These proposals bring much needed clarifications and reinforcement in an area of auditor independence that can be especially challenging, given that many audits are performed for the largest and most complex groups around the world. I wish to acknowledge the close coordination with, and support of, the IAASB in developing those proposals.”
Among other matters, the proposals:
Establish new defined terms and revise a number of existing terms, including for application with respect to independence in a group audit context.
Clarify and enhance the independence principles that apply to:
Individuals involved in a group audit.
Firms engaged in the group audit, including firms within and outside the group auditor firm’s network.
More explicitly set out the process to address a breach of an independence provision at a component auditor firm, including reinforcing the need for appropriate communication between the relevant parties and with those charged with governance of the group.
Align a number of provisions in the Code to conform to changes in the IAASB’s Quality Management standards.
The development of the proposals has benefited from close coordination with the IAASB’s group audits and quality management projects.
How to Comment
The IESBA invites all stakeholders to comment on the ET-GA ED by visiting the IESBA’s website. Comments are requested by May 31, 2022.
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).
Proposes Revisions to the International Independence Standards to Clarify and Strengthen Independence Requirements in a Group Audit
