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IAASB encourages broad stakeholder participation in iesba consultation on public interest entity definition

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Feb 01, 2021

On February 1, 2021, 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 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.

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.

Review the press release on the IAASB's website.

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