IAASB consults on proposed global sustainability assurance standard

Aug 03, 2023

On August 3, 2023, the International Auditing and Assurance Standards Board (IAASB) issued a proposed International Standard on Sustainability Assurance (ISSA) 5000 “General Requirements for Sustainability Assurance Engagements”.

The proposed ISSA 5000 is a principles-based, overarching standard suitable for both limited and reasonable assurance engagements on sustainability information reported across any sustainability topic. The IAASB drafted the standard to work with sustainability information prepared under any suitable reporting framework. The proposed standard is profession agnostic, supporting its use by both professional accountant and non-accountant assurance practitioners.

Comments on the proposed ISSA are requested by December 1, 2023.

Re­view the exposure draft and the additional supporting material on IAASB’s website.

CAQ’s organizes sign-on letter addressing concerns regarding PCAOB’s Proposed Auditing Standard on NOCLAR

Jul 26, 2023

On July 26, 2023, the Center for Audit Quality (CAQ) published a “sign-on letter” addressing the concerns that audit committees have about the PCAOB’s proposed new auditing standard , AS 2405, A Company’s Noncompliance with Laws and Regulations, or “NOCLAR” for short. The CAQ will submit this sign-on letter, on behalf of audit committee members.

The CAQ believes that audit committee members should speak out on this topic to let the PCAOB know:

  1. Any change should keep the auditor focused on NOCLAR that could materially impact the financial statements, such as material penalties or loss contingencies.
  2. Any requirement of the auditor should be risk-based and consider the role the company’s compliance program plays in detecting NOCLAR that could be material to the audited financial statements.

Comments on the proposal are due by August 7, 2023.

Access the sign-on letter on CAQ’s website and the proposal on the PCAOB website.

Proposed International Standard on Sustainability Assurance 5000 approved for public consultation by unanimous vote

Jun 28, 2023

On June 28, 2023, the IAASB announced that it has approved by unanimous vote the draft International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, for public consultation. The consultation will be open by early August until early December 2023.

Once finalized, ISSA 5000 will serve as a comprehensive, stand-alone standard suitable for limited and reasonable sustainability assurance engagements. It will apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks. Moreover, the standard will be profession-agnostic, enabling its use by professional accountants and other professionals performing sustainability assurance engagements.

Access the news release on the IAASB website.

PCAOB Proposes Amendments to Auditing Standards Related to Audit Procedures That Involve Technology-Assisted Analysis

Jun 27, 2023

On June 27, 2023, the PCAOB has issued for public comment proposed amendments that would improve audit quality by addressing “audit procedures that involve technology-assisted analysis of information in electronic form.”

Specifically, the proposal would:

  • Clarify “the differences between tests of details and analytical procedures and emphasize the importance of appropriate disaggregation or detail of information.”
  • Specify “the auditor’s responsibilities when using audit evidence for more than one purpose.”
  • Outline “considerations for the auditor’s investigation of items when designing or performing substantive audit procedures.”
  • Address the auditor’s “responsibilities for evaluating the reliability of certain audit evidence.”

Comments on the proposed amendments are due by August 28, 2023.

Re­view the proposed amendments on PCAOB’s website.

FRC publishes thematic review findings on fair value measurement

Jun 16, 2023

On June 16, 2023, the UK Financial Reporting Council (FRC) has published a thematic review on IFRS 13 'Fair Value Measurement'.

The FRC’s review highlights:

  • Fair value measurements should use market participants’ rather than the company’s own assumptions.
  • There is scope for improvement of the disclosures provided by many companies, especially regarding reporting about the valuation approach, underlying assumptions, management judgement and estimation uncertainty.
  • Companies should consider using specialist third party advice when valuing a material item and where there is no internal expertise.

Re­ad the full review on the Financial Reporting Council website.

PCAOB Issues Publication on Inspection Observations Related to Crypto Assets

Jun 14, 2023

On June 14, 2023, the Public Company Accounting Oversight Board (PCAOB) has issued Spotlight: Inspection Observations Related to Public Company Audits Involving Crypto Assets. The publication discusses audit deficiencies in which the auditor failed to perform certain procedures in public-company audits of transactions involving crypto assets or crypto mining activities.

Specifically, audit deficiencies were observed in the following areas:

  • Fraud and significant unusual transactions.
  • Crypto asset ownership.
  • Relevance and reliability of information used as audit evidence.
  • Revenue recognition related to the transfer of crypto assets.
  • Arrangements with mining pool operators.

In addition, the publication addresses best practices and reminders for auditors to consider when performing their audit procedures.

Re­view the publication on PCAOB’s website.

AASB Decision Summary – June 12-13, 2023

Jun 12, 2023

On June 12, 2023, the Auditing and Assurance Standards Board (AASB) discussed issues related to auditor’s responsibilities relating to fraud in an audit of financial statements, audits of less complex entities (LCEs), IAASB’s project to develop International Standard on Sustainability Assurance (ISSA) 5000, the AASB strategic plan

Fraud: The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

Listed Entity/Public Interest Entity Track-1: The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity,” including proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance.

Audits of Less Complex Entities (LCEs): The AASB discussed issues related to the IAASB’s project to develop an ISA for Audits of Financial Statements of Less Complex Entities (ISA for LCE).

Sustainability Assurance: The AASB discussed issues related to the IAASB’s project to develop International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements.  

Access the meeting summary on the FRAS Canada website.

PCAOB Issues Proposal to Increase Auditor Vigilance Against Fraud and Other Forms of Noncompliance with Laws and Regulations

Jun 07, 2023

On June 7, 2023, the PCAOB issued for public comment, a proposal that would “strengthen auditor requirements to identify, evaluate, and communicate noncompliance with laws and regulations.”

The proposal would, among other things, “establish specific requirements for auditors to understand management’s processes regarding compliance with laws and regulations, which can provide insight into the company’s control environment, and to identify, through inquiry and other procedures, laws and regulations applicable to the company with which noncompliance could reasonably have a material effect on the financial statements.” Comments on the proposal are due by August 7, 2023.

Re­view the press release on PCAOB’s website and our project summary.

IBA and IFAC announce Memorandum of Understanding between global bodies for the legal and accounting professions

May 31, 2023

On May 31, 2023, the International Bar Association (IBA) and the International Federation of Accountants (IFAC) have announced a Memorandum of Understanding (MoU) that formalizes and demonstrates a commitment to closer cooperation between the two organizations and the legal and accountancy professions.

This MoU provides a framework for expanding the cooperation between the IBA and IFAC, with a particular focus on anti-corruption and how the professions can work more closely together in the fight against money-laundering and economic crime., with key stakeholders such as the United Nations and Financial Action Task Force. Other areas of cooperation include maintaining the reputations and integrity of the accountancy and legal professions; ensuring that initiatives to regulate both professions are proportionate and fit-for-purpose; and enhancing the strength of the IBA and IFAC’s collective voice on global policy issues so that the legal and accountancy professions are in the best position to serve the public interest.

Access the news release on the IFAC website.

IAASB Digital Technology Market Scan: Internet of Things

May 24, 2023

On May 24, 2023, the IAASB released a Digital Technology market scan exploring the Internet of Things Tecnology, focusing on Networks for Asset Monitoring and Data Generation, a technology that enables real time tracking, managing and monitoring of business processes and assets.

Topics covered include:

  • What is the Internet of Things? Why is it important?
  • The latest developments
  • What this might mean for the IAASB

Access the market scan on the IAASB website.

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