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.

Investors, stakeholders, and society at large need to understand the value of companies beyond what they can glean from conventional financial reports – and this need is even more pressing during uncertain times such as the present.

IFAC today published its response to Accountancy Europe’s consultation, Interconnected Standard Setting for Corporate Reporting, which addresses the evolution of standard setting to enhance corporate reporting at the global level.

The current corporate reporting system needs to evolve quickly to deal with the challenge posed by a myriad of different jurisdictional requirements and an absence of widely agreed standards in various areas beyond financial reporting. The result is variable quality and lack of comparability, leading to greater cost and inefficient capital allocation for both companies and investors.

As indicated in the IFAC point-of-view on enhancing corporate reporting, a global solution is needed to achieve relevant, reliable, and comparable narrative information and metrics.

“The current reporting ecosystem does not best serve the interests of capital markets, companies or their stakeholders,” said IFAC CEO Kevin Dancey. “The options set out by Accountancy Europe to change the corporate reporting system are useful for furthering the dialogue toward a global and coherent solution. We look forward to continuing this conversation with key stakeholders.”

In its response to the consultation, IFAC endorsed six recommendations to secure an integrated global reporting structure. These include development of a global approach to international standard-setting, a conceptual framework for corporate reporting, and an oversight structure.

A global approach to these three elements— oversight, framework, and standards—is urgently needed in order to enhance corporate reporting.  While this is a challenging time for investors, companies and capital markets, the competition for capital will become more challenging, and the demand for relevant and candid information about organizations will be needed to reliably inform decisions about capital allocation and investor and other stakeholder’s assessments of long-term value creation.

Feedback on the consultation is due by April 30.  IFAC encourages stakeholders to contribute their views to this valuable consultation.

IFAC today released the latest installment of its Exploring the IESBA Code educational series: The Conceptual Framework–Step 3, Addressing Threats.

Exploring the IESBA Code is a twelve-month series providing an in-depth look at the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). Each installment focuses on a specific aspect of the Code using real-world situations in a manner that is relatable and practical. Readers will gain a better understanding of the thought process behind important aspects of the Code through storytelling and expert analysis from professionals involved in developing the standards.

Previous installments of Exploring the IESBA Code looked at the Code’s five fundamental principles and key aspects of the conceptual framework, which is a specified approach that all professional accountants are required to use to identify, evaluate and address threats to compliance with those principles. Installment four focuses on addressing threats.

A professional accountant can often come across complex or challenging situations that are not black and white. These challenging situations require ethical considerations, some of which are expressly dealt with in the Code. This  unique and informational series was developed by IFAC in collaboration with the International Ethics Standards Board for Accountants (IESBA) to help explain how the Code assists in navigating some of these challenges.

To read and download this and future installments, visit the IFAC website.

Exploring the IESBA Code was published by IFAC and does not form part of the Code. It is non-authoritative and is not a substitute for reading the Code.

For more information about the Code, please click here. 

All stakeholders are invited to register and participate.

The IESBA invites you to join a 45-minute webinar on Monday, April 20, 2020 at 4pm EDT to hear about its initiative on exploring the ethics implications arising from the transformative effects of technological trends and developments on the accounting, assurance, and finance functions. 

During the webinar, the IESBA’s Technology Task Force Chair, Brian Friedrich, will outline the background to the initiative and explain the key findings and recommendations in the IESBA’s Technology Working Group’s Phase 1 Report. Don’t miss out on this wonderful opportunity to learn about the IESBA’s work in this strategic area for the global accountancy profession.

This webinar will be recorded. If you are interested in joining but unable to attend, please register and a link to the recording will be provided.

Click the link below to register:

• Monday April 20, 2020 at 4pm Eastern

If you have any questions, please email Astu Tilahun at astu@ethicsboard.org.

The COVID-19 pandemic is a global health and humanitarian crisis. Beyond the significant challenges that lay ahead in all facets of life, the pandemic has the potential to significantly impact the way that audits are undertaken.

The IAASB has created a COVID-19 web page to help our stakeholders, and the larger accounting community, navigate some of the challenges ahead.

Click HERE to learn more.

Organizations are increasingly reporting about their broader performance or impact (“Extended External Reporting” or “EER”) either voluntarily or as required by law or regulation, and there is a growing demand for assurance engagements on such reporting. In response, the International Auditing and Assurance Standards Board (IAASB) has developed for feedback it’s non-authoritative EER Guidance and is requesting public input by July 13, 2020.

“Extended external reporting and the role it has to play will only continue to grow in importance,” said Tom Seidenstein, Chair of the IAASB. “It’s a very exciting time for the IAASB as the work we’re undertaking today to develop international assurance guidance for non-financial information in the form of EER will, we believe, pave the way for much greater engagement and consistency in this area.  We welcome and encourage all feedback during our comment period, which runs through July 13, and look forward to learning from the comments we receive.”

EER encapsulates many different forms of reporting including, but not limited to, integrated reporting, sustainability reporting and other reporting by entities about financial and non-financial matters, including environmental, social and governance matters, related to an entity’s activities.

The purpose of the IAASB’s Public Consultation on Proposed Guidance, Extended External Reporting Assurance is to promote consistent high-quality application of ISAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information so as to:

• Strengthen the influence of EER assurance engagements on the quality of EER reports;
• Enhance user trust in the resulting assurance reports; and
• Engender greater confidence in the credibility of, trust in and reliance upon EER reports by their intended users.

The draft non-authoritative guidance addresses Special Considerations in Performing Assurance Engagements on Extended External Reporting.

Importance of Feedback

Input received will assist the IAASB in finalizing the non-authoritative guidance document. Comments are also invited on two supplementary documents, should respondents wish to comment on their content, structure and relationship to the draft guidance document – Supplement A: Credibility and Trust Model and Background and Contextual Information and Supplement B: Illustrative Examples.

The IAASB invites input from all stakeholders, especially those with practical experience in this evolving area of reporting, including practitioners and other experts involved in performing EER assurance engagements, preparers of EER reports, investors and other users of EER reports and assurance reports on them, standard setters, and regulators.

The IAASB’s EER Assurance project is being run with the support of the World Business Council for Sustainable Development. This work is part of a conservation and financial markets collaboration among Ceres, World Business Council for Sustainable Development, World Wildlife Fund and the Gordon and Betty Moore Foundation. For more information, please visit www.moore.org

Aspects for Consideration

This draft non-authoritative guidance covers the following aspects of the performance of an EER assurance engagement where practitioners commonly encounter challenges in applying ISAE 3000 (Revised):

• Applying appropriate competence and capabilities to an EER engagement;
• Exercising professional skepticism and professional judgment in the context of an EER engagement, where there may be a heightened need to do so;
• Determining preconditions and agreeing the scope of an EER assurance engagement;
• Determining the suitability and availability of criteria (reporting framework(s), standards or preparer-developed criteria) used to prepare the EER report;
• The preparer’s governance and internal control over its process to prepare the EER report;
• Considering an entity’s process to develop preparer-developed criteria to determine the topics to be reported on in the entity’s EER report (sometimes referred to as a preparer’s ‘materiality process’);
• The types of misstatements that may occur in the EER report (using assertions);
• Obtaining evidence;
• Considering the materiality of misstatements in the EER report;
• Preparing the assurance report;
• Considerations in addressing qualitative EER information; and
• Considerations in addressing future-oriented EER information.

Click HERE for more info.

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.

Out of an abundance of caution, the International Auditing and Assurance Standards Board (IAASB) has decided to host their upcoming board meeting virtually by video teleconference instead of gathering in New York City March 16 – 20.

More info: https://www.iaasb.org/meetings

Due to the ongoing COVID-19 pandemic, the International Ethics Standards Board for Accountants (IESBA) will host their upcoming board meeting virtually by video teleconference instead of gathering in New York City June 8 - 12 & 15.

More info here: https://www.ethicsboard.org/meetings

IFAC today released the latest installment of its Exploring the IESBA Code educational series: The Conceptual Framework–Step 2, Evaluating Threats.

Exploring the IESBA Code is a twelve-month series providing an in-depth look at the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). Each installment focuses on a specific aspect of the Code using real-world situations in a manner that is relatable and practical. Readers will gain a better understanding of the thought process behind important aspects of the Code through storytelling and expert analysis from professionals involved in developing the standards.

The first installment of the Series looked at the Code’s five Fundamental Principles, which establish the standard of behavior expected of all professional accountants. The second installment highlighted the Code’s Conceptual Framework with a focus on identifying threats, while this third installment focuses on how to evaluate those identified threats.

A professional accountant can often come across complex or challenging situations that are not black and white. These challenging situations require ethical considerations, some of which are expressly dealt with in the Code. The unique and informational series was developed by IFAC in collaboration with the International Ethics Standards Board for Accountants (IESBA) to help explain how the Code assists in navigating some of these challenges.

To read and download this and future installments, visit the IFAC website.

The Exploring the IESBA Code was published by IFAC and does not form part of the Code. It is non-authoritative and is not a substitute for reading the Code.

For more information about the Code, please click here.