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Location: Amsterdam
In March 2018, the International Auditing and Assurance Standards Board (IAASB) released a summary of its March 12-16 meeting.
The following topics were discussed at the meeting:
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB discussed a current draft of ISA 540 (Revised). The Board focussed on the need to improve the alignment of ISA 540 (Revised) with extant ISA 315 (Revised), particularly regarding the spectrum of risk and noting that certain provisions in the ISA are intended to only apply to significant accounting estimates. Furthermore, the Board also requested the ISA Task Force to consider ways to reduce the length of the ISA, which resulted in the removal of two appendices. It was also agreed that the term “significant data” should not be used and that the ISA 540 Task Force should clarify the linkage between various work effort requirements and the documentation requirements of the ISA. The Board intends to discuss aspects of the draft ISA at an IAASB teleconference on April 24, 2018 and a final draft of the proposed standard will be presented to the IAASB for approval at its meeting in June 2018.
At its meeting on March 12-16, 2018, the IAASB discussed a current draft of ISA 540 (Revised). The Board focussed on the need to improve the alignment of ISA 540 (Revised) with extant ISA 315 (Revised), particularly regarding the spectrum of risk and noting that certain provisions in the ISA are intended to only apply to significant accounting estimates. Furthermore, the Board also requested the ISA Task Force to consider ways to reduce the length of the ISA, which resulted in the removal of two appendices. It was also agreed that the term “significant data” should not be used and that the ISA 540 Task Force should clarify the linkage between various work effort requirements and the documentation requirements of the ISA. The Board intends to discuss aspects of the draft ISA at an IAASB teleconference on April 24, 2018 and a final draft of the proposed standard will be presented to the IAASB for approval at its meeting in June 2018.
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB discussed the proposed changes to the requirements and application material in draft proposed ISA 315 (Revised). The Board continued to broadly support the direction of the proposals, but noted further clarity was needed in a number of areas, in particular relating to some aspects of the definitions and the requirements for the identification and assessment of the risks of material misstatement. The Board requested that the ISA 315 Task Force reassess whether the identification of risks of material misstatement related to fraud could be made more prominent in the standard, in particular as it relates to the inherent risk factors and the proposal to broaden these risk factors to include matter related to both intentional and unintentional misstatements. There was general support for the new introductory paragraphs however, these were seen to be complex, introduced terms too early in the standard and in some cases were not consistent with the wording in the relevant other standards. The Board decided that further clarification and guidance was needed in relation to general IT controls, while also supporting the ISA 315 Task Force’s suggested guidance in relation to IT and the use of data analytics (subject to further consideration about the term to be used to mean ‘data analytics’). The Board also agreed that more needed to be done to address scalability. Aspects of draft ISA 315 (Revised) will be discussed at an IAASB teleconference on May 22, 2018, and the ISA 315 Task Force will continue to progress the proposed changes to the proposed standard for approval as an exposure draft at the June 2017 IAASB meeting.
At its meeting on March 12-16, 2018, the IAASB discussed the proposed changes to the requirements and application material in draft proposed ISA 315 (Revised). The Board continued to broadly support the direction of the proposals, but noted further clarity was needed in a number of areas, in particular relating to some aspects of the definitions and the requirements for the identification and assessment of the risks of material misstatement.
The Board requested that the ISA 315 Task Force reassess whether the identification of risks of material misstatement related to fraud could be made more prominent in the standard, in particular as it relates to the inherent risk factors and the proposal to broaden these risk factors to include matter related to both intentional and unintentional misstatements.
There was general support for the new introductory paragraphs however, these were seen to be complex, introduced terms too early in the standard and in some cases were not consistent with the wording in the relevant other standards.
The Board decided that further clarification and guidance was needed in relation to general IT controls, while also supporting the ISA 315 Task Force’s suggested guidance in relation to IT and the use of data analytics (subject to further consideration about the term to be used to mean ‘data analytics’). The Board also agreed that more needed to be done to address scalability. Aspects of draft ISA 315 (Revised) will be discussed at an IAASB teleconference on May 22, 2018, and the ISA 315 Task Force will continue to progress the proposed changes to the proposed standard for approval as an exposure draft at the June 2017 IAASB meeting.
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB was supportive of a draft of proposed ISRS 4400 (Revised). The Board agreed with the AUP Task Force’s proposal to use the term ‘findings’ instead of the ‘factual findings,’ which is included in extant ISRS 4400, and requested the Task Force to further clarify the proposed changes. The IAASB agreed with a requirement for disclosure of non-independence in the AUP report and supported the AUP Task Force’s collaboration with the IESBA to develop criteria for determining whether the practitioner is independent. With respect to the flexibility of the standard, the IAASB agreed that the AUP standard should be sufficiently flexible to address the various circumstances when an AUP engagement is performed (e.g., AUP engagements in the public sector environment). Within this premise, the IAASB directed the AUP Task Force to consider whether it is appropriate to elevate some of the application material to requirements. The AUP Task Force will proceed to amend the working draft and actively monitor developments relating to ISQC 1 and the new revised IESBA Code of Ethics to ensure the draft is aligned.
At its meeting on March 12-16, 2018, the IAASB was supportive of a draft of proposed ISRS 4400 (Revised). The Board agreed with the AUP Task Force’s proposal to use the term ‘findings’ instead of the ‘factual findings,’ which is included in extant ISRS 4400, and requested the Task Force to further clarify the proposed changes. The IAASB agreed with a requirement for disclosure of non-independence in the AUP report and supported the AUP Task Force’s collaboration with the IESBA to develop criteria for determining whether the practitioner is independent. With respect to the flexibility of the standard, the IAASB agreed that the AUP standard should be sufficiently flexible to address the various circumstances when an AUP engagement is performed (e.g., AUP engagements in the public sector environment). Within this premise, the IAASB directed the AUP Task Force to consider whether it is appropriate to elevate some of the application material to requirements. The AUP Task Force will proceed to amend the working draft and actively monitor developments relating to ISQC 1 and the new revised IESBA Code of Ethics to ensure the draft is aligned.
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB discussed and supported the proposed exposure draft of ISQC 1 (Revised) including its structure and the objective. The Board discussed the length of the standard and the need for additional guidance, and encouraged the Quality Control Task Force to analyze the application material, develop additional guidance addressing the spectrum of firms, and explore positioning guidance outside of the standard (including the appendix). In addition to suggesting a new term for the quality risk assessment process, the Board suggested further refinement of the requirement and definitions in relation to the identification and assessment of quality risks. The Board recommended that the quality risk assessment process should be applied to monitoring and remediation, which would result in a restructure of the component. The Board agreed that ISQC 1 should strongly encourage firms to communicate, as appropriate, with external stakeholders about the firm’s system of quality management (such as through transparency reports). In relation to monitoring and remediation, the Board suggested directly addressing quality objectives and quality risks in the framework for the identification of deficiencies and in the definition of deficiencies. The Board discussed how to address concerns raised by certain stakeholders who are seeking requirements specifically for networks, and encouraged the Quality Control Task Force to further explore these concerns and how best they can be addressed. In June 2018, the Quality Control Task Force plans on presenting further proposals on networks and monitoring and remediation, with a final version of the proposed exposure draft presented to the Board for approval in September 2018.
At its meeting on March 12-16, 2018, the IAASB discussed and supported the proposed exposure draft of ISQC 1 (Revised) including its structure and the objective. The Board discussed the length of the standard and the need for additional guidance, and encouraged the Quality Control Task Force to analyze the application material, develop additional guidance addressing the spectrum of firms, and explore positioning guidance outside of the standard (including the appendix).
In addition to suggesting a new term for the quality risk assessment process, the Board suggested further refinement of the requirement and definitions in relation to the identification and assessment of quality risks. The Board recommended that the quality risk assessment process should be applied to monitoring and remediation, which would result in a restructure of the component.
The Board agreed that ISQC 1 should strongly encourage firms to communicate, as appropriate, with external stakeholders about the firm’s system of quality management (such as through transparency reports). In relation to monitoring and remediation, the Board suggested directly addressing quality objectives and quality risks in the framework for the identification of deficiencies and in the definition of deficiencies.
The Board discussed how to address concerns raised by certain stakeholders who are seeking requirements specifically for networks, and encouraged the Quality Control Task Force to further explore these concerns and how best they can be addressed. In June 2018, the Quality Control Task Force plans on presenting further proposals on networks and monitoring and remediation, with a final version of the proposed exposure draft presented to the Board for approval in September 2018.
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB discussed the Professional Skepticism Subgroup’s (Subgroup) recommendations related to a requirement to seek contradictory evidence as part of the concept of professional skepticism. The Board supported the conclusion of the Subgroup to not add a requirement to seek inconsistent evidence, in all circumstances, within the ISAs. The IAASB also received an update on activities and matters of coordination relating to professional skepticism of the IESBA and the International Accounting Education Standards Board.
At its meeting on March 12-16, 2018, the IAASB discussed the Professional Skepticism Subgroup’s (Subgroup) recommendations related to a requirement to seek contradictory evidence as part of the concept of professional skepticism. The Board supported the conclusion of the Subgroup to not add a requirement to seek inconsistent evidence, in all circumstances, within the ISAs. The IAASB also received an update on activities and matters of coordination relating to professional skepticism of the IESBA and the International Accounting Education Standards Board.
Review the summary, including the podcast, on the IAASB's Web site.
At its meeting on March 12-16, 2018, the IAASB received an update on work completed by the EER Task Force to date. This included understanding the conceptual and contextual background of EER reporting frameworks, as well as discussions to start developing the non-authoritative guidance for applying ISAE 3000 (Revised) in respect of the materiality challenge. The IAASB expressed support for the work completed so far, and provided helpful comments and feedback on the areas presented during the meeting. There was also support for the detailed planning for the project that has been undertaken, as well as for the recently established EER Assurance Project Advisory Panel (PAP). The project will be discussed further in June 2018.
At its meeting on March 12-16, 2018, the IAASB received an update on work completed by the EER Task Force to date. This included understanding the conceptual and contextual background of EER reporting frameworks, as well as discussions to start developing the non-authoritative guidance for applying ISAE 3000 (Revised) in respect of the materiality challenge. The IAASB expressed support for the work completed so far, and provided helpful comments and feedback on the areas presented during the meeting. There was also support for the detailed planning for the project that has been undertaken, as well as for the recently established EER Assurance Project Advisory Panel (PAP). The project will be discussed further in June 2018.
Review the summary, including the podcast, on the IAASB's Web site.