Learn more about the IAASB’s new and revised quality management standards with two on-demand video panel discussions from IFAC

Aug 02, 2022

In order to support implementation and help small- and medium-sized practices (SMPs) understand, navigate and apply the revised standards, IFAC in collaboration with the Forum of Firms held two video panel discussions. These focus on providing an overview of International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, how firms are planning its implementation, and sharing practical examples, tips and suggested good practices.

These videos are available in English; translated transcripts are also available in Spanish and French and consist of:

  • ISQM 1: Getting Ready for the New Risk-Based Approach – a discussion of the standard and the shift in mindset needed to apply the new risk-based approach.
  • ISQM 1: Early Lessons Learned and Next Steps - a discussion on how to get started on implementation and tips and best practices.

Re­view the press re­lease and videos on IFAC’s web­site.

IAASB issues new FAQ Publication for Reporting Going Concern Matters in the Auditor’s Report

Aug 01, 2022

On August 1, 2022, the IAASB issued a non-authoritative publication to address some of the common questions related to reporting going concern matters in the auditor’s report. Specifically, the publication focuses on the use of and interrelationship of the Material Uncertainty Related to Going Concern and Key Audit Matters sections, and the Emphasis of Matter paragraphs, in an auditor’s report prepared in accordance with the International Standards on Auditing (ISAs).

The FAQ publication does not amend or override the International Standards on Auditing, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

For further information, refer the IAASB’s press release and FAQ publication.

New implementation guide available for identifying and assessing the risks of material misstatement in an audit of financial statements

Jul 27, 2022

On July 27, 2022, the International Auditing and Assurance Standards Board (IAASB) released its "First-Time Implementation Guide for ISA 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement".

The guide focuses on the more substantial changes that were made to International Standard on Auditing (ISA) 315 (Revised 2019) and will help stakeholders understand and apply the revised standard as intended.

ISA 315 (Revised 2019) is effective for audits of financial statements for periods beginning on or after December 15, 2021. This publication does not amend or override ISA 315 (Revised 2019), the text of which alone is authoritative. Reading this publication is not a substitute for reading the standard.

Review the press release and guide on the IAASB's website.

IAASB offers support for ISSB proposals and comments on assurability of the two draft sustainability reporting standards

Jul 26, 2022

On July 26, 2022, the International Auditing and Assurance Standards Board (IAASB) submitted a response to the International Sustainability Standards Board (ISSB) on its exposure drafts on sustainability- and climate-related disclosures. In its response, the IAASB noted the importance of reliable, high-quality, globally consistent sustainability reporting that investors and regulators are able to trust.

The IAASB highlighted the value of long-term cooperation between the IAASB and ISSB, as well as the International Ethics Standards Board for Accountants, to strengthen the connectivity between sustainability reporting external sustainability assurance, and ethical standards—especially as standards become increasingly refined and enhanced. External assurance should play a crucial role in enabling organizations to demonstrate that the sustainability information reported is reliable and credible.

The IAASB has begun its journey to sustainability reporting assurance standards: at the June 2022 IAASB meeting, the IAASB committed to its next steps in developing a bespoke assurance standard for sustainability reporting.

Review the press release and response on the IAASB's website. 

Spearheading change to enhance confidence in audits and assurance

Jul 19, 2022

On July 19, 2022, the International Auditing and Assurance Standards Board (IAASB) published its Public Report detailing its support for the public interest for the year ended December 31, 2021.

During this 12-month period, the IAASB approved the final revised standard on group audits, agreed its Work Plan for 2022-2023 that included a dedicated workstream on enhanced sustainability assurance standards, and developed and implemented its Framework for Activities, among other actions.

Review the press release and report on the IAASB's website.

IAASB Proposes Narrow Scope Amendments to Operationalize Changes to the IESBA Code that enhance Transparency about Independence

Jul 06, 2022

On July 6, 2022, the In­ter­na­tional Au­dit As­sur­ance and Stan­dards Board (IAASB) released proposed narrow scope amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised), Communication with Those Charged with Governance. The proposed amendments will help operationalize recently approved changes to the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) related to listed and public interest entities. The changes to the IESBA Code require firms to publicly disclose when the independence requirements for public interest entities have been applied in an audit of financial statements.

This Exposure Draft is part of a broader IAASB project that responds to recent revisions to the IESBA Code related to listed and public interest entities, which are undertaken as two tracks—this is Track 1. Other narrow-scope amendments that may be considered in Track 2, on a separate timeline and with a later effective date, include:

  • Aligning to the greatest extent possible the definitions and key concepts underlying the definitions in the International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs) related to listed and public interest entities to IESBA’s definitions and key concepts in the revisions to the IESBA Code; and
  • Considering the applicability of existing differential requirements for listed entities in the ISQMs and ISAs, and whether these need to be amended in light of IESBA’s revisions that address the definitions of “publicly traded entity” and public interest entities.

Comments are requested by October 4, 2022.

Re­view the press re­lease on the IAASB's web­site.

PCAOB Issues Staff Overview for Planned 2022 Inspections

Jun 30, 2022

On June 30, 2022, the Public Company Accounting Oversight Board (PCAOB) released a new Spotlight publication, “Staff Overview for Planned 2022 Inspections.”

A reference point for audit committee members, auditors, investors, and others, this publication highlights the following selected areas of planned 2022 inspections:

  • Fraud and other risks
  • IPOs and M&A activity
  • Audit firms’ execution challenges
  • Broker-dealer-specific considerations
  • Independence
  • Use of service providers in the confirmation process
  • Critical audit matters
  • Audit areas with continued deficiencies        
  • Firms’ quality control systems
  • Technology

Review the publication on the PCAOB's website.

Exposure Draft – Joint Policy Statement Concerning Communications between Actuaries Involved in the Preparation of Financial Statements and Auditors

Jun 30, 2022

On June 30, 2022, the Auditing and Assurance Standards Board (AASB) and the Canadian Actuarial Standards Board (ASB) issued a joint Exposure Draft on the Joint Policy Statement Concerning Communications between Actuaries Involved in the Preparation of Financial Statements and Auditors. Comments are requested by September 19, 2022.

The JPS is intended to facilitate communications between an auditor and an actuary as the two professionals conduct their respective engagements relating to an entity’s financial statements. 

Review the following on the AASB's website:

FRC publishes professional judgement guidance for auditors

Jun 23, 2022

On June 23, 2022, the Financial Reporting Council (FRC) published professional judgement guidance for auditors to improve how they exercise professional judgement.

The new guidance includes a framework for making professional judgements followed by a series of illustrative examples showing how professional judgement might be applied in practice.  The FRC anticipates that the guidance will improve audit quality by enhancing the consistency and quality of professional judgement exercised by auditors.
The guidance will be of particular use for auditors and central technical teams but will also have wider interest for those interested in audit quality, such as audit committee members and investors.  It is non-authoritative and is intended to be persuasive rather than prescriptive, encapsulating good practice.  However, practitioners who chose not to use or consider this guidance will need to be prepared to explain how they have complied with the relevant engagement standards.

Review the following on the FRC's website:

PCAOB Adopts New Requirements for Lead Auditor’s Use of Other Auditors

Jun 21, 2022

On June 21, 2022, the Public Company Accounting Oversight Board (PCAOB) adopted amendments to its auditing standards to strengthen requirements that apply to audits involving multiple audit firms. The amendments, which benefited from three comment solicitations, aim to improve the quality of audits where other accounting firms or individual accountants perform important work on the audit.

Working with other auditors can differ from working with people in the same firm, creating challenges in coordination and communication. These challenges can lead to misunderstandings about the nature, timing, and extent of the other auditors’ work and can reduce audit quality.

To address such situations, the amendments, which include changes to existing standards and adoption of a new standard, improve PCAOB standards principally by:

  • Specifying certain procedures for the lead auditor to perform when planning and supervising an audit that involves other auditors; and
  • Applying a risk-based supervisory approach to the lead auditor’s oversight of other auditors for whose work the lead auditor assumes responsibility.

The amendments apply to all audits conducted under PCAOB standards. Subject to approval by the Securities and Exchange Commission, the amendments will take effect for audits of financial statements for fiscal years ending on or after December 15, 2024.

Review the press release and amendments on the PCAOB's website.

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