The International Auditing and Assurance Standards Board (IAASB) is requesting public comments on its Exposure Draft addressing changes in some of its standards and framework resulting from the new and revised quality management standards. Comments are requested by May 24, 2021.

The Exposure Draft aligns the IAASB’s standards related to review, assurance and related services, as well as its framework, with the quality management standards through conforming amendments. This will ensure that the IAASB's international standards continue to be applied as intended. The proposed changes will also modify IAASB standards to reflect aspects of the new quality management approach and emphasize the importance of firm-level quality management to consistent quality engagements.

Please submit your comments via the IAASB 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 Monitoring Group (MG), the International Federation of Accountants (IFAC), and the Public Interest Oversight Board (PIOB) are pleased to announce the establishment of an Interim Nominating Committee to select the Chair of the International Ethics Standards Board for Accountants (IESBA) for the 2022-2024 term. This appointee will succeed Dr. Stavros B. Thomadakis, who has been the IESBA Chair since 2015.

The Interim Nominating Committee will be chaired by Mr. Makoto Sonoda, chair of IOSCO’s Committee on Issuer Accounting, Auditing and Disclosure, and will include Ms. Kathryn Byrne, Dr. Simon Longstaff, Sir David Tweedie, and Mr. Eddy Wymeersch. The Interim Nominating Committee meetings will be observed by MG representative, Jonathan Bravo of the IOSCO general secretariat, IFAC President, Alan Johnson and Chair of the PIOB, Linda de Beer.

By establishing an Interim[1] Nominating Committee for the selection of the next IESBA Chair, the MG has designed a nominating process based on the principles of the MG Recommendations published in July 2020.[2]  The next IESBA Chair will be nominated through an open call, appointed using a skills matrix that prioritizes the public interest and fosters a strategic mindset, and selected by a majority vote of the Interim Nominating Committee.

Sagar Teotia and Jean-Paul Servais, Co-Chairs of the MG stated: “The Chair of the IESBA plays a crucial role in ensuring that high quality ethics and independence standards and other pronouncements for professional accountants worldwide are developed in the public interest.  The new Chair will, amongst other key tasks, lead the strategic priorities of IESBA and its standard-setting agenda.  With the Interim Nominating Committee’s multi-stakeholder composition described above, we are confident this will contribute to a selection of the next IESBA Chair that is in the public interest.”

Alan Johnson, IFAC President stated: “Ethics and the public interest are the foundations on which the accountancy profession is built.  IFAC continues to support robust processes and strong governance in the selection of the standard setting board members and chairs. As such, we also strongly support the establishment of the Interim Nominating Committee, which further advances this important objective.”

Linda de Beer, PIOB Chair stated: “The PIOB very much welcomes the MG initiative to set up an independent nominating committee to select the next IESBA Chair. The prioritization of the public interest in the selection of this important role cannot be overstated, as the PIOB collaborates with stakeholders to strengthen public interest in international audit and ethics standard-setting.”

MEDIA ENQUIRIES

Mr. Jonathan Bravo
Email: j.bravo@iosco.org
Website: www.iosco.org/about/?subsection=monitoring_group

Ms. Jennifer DiClerico
Email: Jenniferdiclerico@ifac.org
Website: www.ifac.org

Ms. Rocio Goudie
Email: rgoudie@ipiob.org
Website: www.ipiob.org

IFAC welcomes today’s announcement from the IFRS Foundation Trustees to take further, timely steps to assess the possibility of establishing a new Sustainability Standards Board (SSB). We concur that there is “broad demand for the IFRS Foundation to play a role.” A Sustainability Standards Board is best positioned to lead the ongoing rationalization of a coherent global system for reporting requirements addressing enterprise value creation, sustainable development, and evolving stakeholder expectations. We agree with the Trustees’ conclusion that moving with urgency is a key factor for success. This can be accomplished by leveraging the expertise and standards that already exist as a result of the work by CDP, CDSB, GRI, IIRC, SASB, as well as the TCFD. For example, the recently released report on climate-related disclosure demonstrates the value of their continued collaboration to this global system.  

IFAC CEO Kevin Dancey, said “IFAC encourages our members and stakeholders to remain focused on this important initiative, to continue to engage in discussions and consultations that foster greater alignment and harmonization, and to offer their expertise to the establishment of this new Sustainability Standards Board and a global solution to the current fragmented reporting ecosystem.”

IFAC reiterates its support for this initiative, and stands ready to assist the Trustees as they move forward on this important work.

See IFAC's response to the IFRS Foundation's Consultation Paper on Sustainability Reporting and Enhanced Corporate Reporting: The Way Forward.

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.