The two-part document covers firstly topics relevant to all professional accountants, and secondly, topics pertinent to auditors and other professional accountants in public practice. Dr. Stavros Thomadakis, Chairman of the IESBA, offers his thoughts in the publication’s foreword.
The document can be found on the IESBA’s COVID-19 resource page, which serves as the Board’s landing page for topics related to COVID-19, including links to useful resources.
(New York, New York, May 1, 2020) – The International Ethics Standards Board for Accountants (IESBA) is pleased to announce the extension of Dr. Stavros Thomadakis as IESBA Chairman until the end of 2021. This appointment was proposed by the International Federation of Accountants Nominating Committee and recently approved by the Public Interest Oversight Board.
“I am honored to continue to lead the IESBA for a final term.” said Dr. Thomadakis. “We’ve gained considerable momentum with respect to global adoption of the IESBA Code, with approximately 80 countries adopting or in process of adopting the restructured 2018 version, and I am keen on expanding that further. In addition to pursuing IESBA’s priority standard-setting projects in the public interest, a key activity will be to assist IESBA’s stakeholders as they navigate the unprecedented challenges and ethical dilemmas arising from the COVID-19 pandemic. In this regard, the IESBA is working to expand its cooperation with others, including its ongoing coordination with the International Auditing and Assurance Standards Board (IAASB).”
Dr. Thomadakis is Emeritus Professor of financial economics at the University of Athens and an active member of the Hellenic Council for Corporate Governance, and of the Board of Trustees of the Cyprus Institute. He has taught at US universities (Baruch College CUNY, MIT), and has been a visiting scholar at Stern School of Business, NYU, and Yale University. He also served in many leadership roles, including as the first Chairman of the Public Interest Oversight Board (2005 to 2011) and Chairman of the Hellenic Capital Market Commission (1996-2004). Until late 2015, he also served as a member of the Securities and Markets Stakeholders Group of the European Securities and Markets Authority.
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The Covid-19 pandemic is an accelerator for the adoption of technology. Many firms are now operating virtually and supporting employees through flexible work arrangements. These extraordinary circumstances also offer practitioners significant opportunities to adapt and service a rapidly changing world. As trusted business advisers, they are best positioned to provide clients with a range of services to help navigate these difficult and uncertain times.
SMPs may still be in a ‘fire-fighting’ phase but want to be proactive and ready to adapt to radical and unplanned changes. Effective transformation requires strong leadership, new approaches to training and continued learning, and an emphasis on providing relevant, value-added services.
The Plan was developed with advice and guidance from the IFAC SMP Committee and recognizes that every firm will be different. The actions taken will need to be tailored to each firm’s circumstances and objectives to be successful.
We’ve created a dedicated ‘practice transformation’ web page, featuring case studies, examples of how Member Organizations are supporting their firms to innovate and evolve, as well as additional tools and resources.
Now is the time for practitioners to lead and become part of the solution for their clients and for their own future as we enter a whole new world.
On April 29, IAASB issued their official guidance on auditor considerations relating to going concern in light of changing environment due to the COVID-19 pandemic.
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 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.
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.
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.
Courtesy of Chartered Accountants Australia and New Zealand
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.
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.
