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IESBA Proposed changes to Part 4B of the Code to align it to changes to terms and concepts in the IAASB’s International Standard on Assurance Engagements (ISAE) 3000 (Revised) [ED]

The comment period on the Exposure Draft ends on June 26, 2019

Next steps:

Following review by the Public Interest Oversight Board, the revised Part 4B of the Code will be issued, and will be effective for periods commencing on or after June 15, 2021

Last up­dated:

September 2019

 

Overview

Har­mo­nized provin­cial Rule 204 sets out the Cana­dian pro­fes­sion’s stan­dards that en­sure Char­tered Pro­fes­sional Ac­coun­tants (CPAs) main­tain au­di­tor in­de­pen­dence dur­ing en­gage­ments they un­der­take or par­tic­i­pate in. It sets the stan­dards and re­quire­ments CPAs must main­tain as part of their pro­fes­sional con­duct. Ethics stan­dards adopted by Cana­dian provin­cial bod­ies are cre­ated in align­ment with the Code of Ethics for Pro­fes­sional Ac­coun­tants is­sued by the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA).  Hence, changes to the IESBA Code of Ethics will need to be re­flected in Rule 204.

The IESBA has undertaken a project to review and compare the terms and concepts in the revised and restructured Code (specifically the International Independence Standards, Part 4B – Independence for Other Assurance Engagements Other than Audit and Review Engagements) and the IAASB’s ISAE 3000 (Revised), Assurance Engagements other than Audits or Reviews of Historical Financial Information.

It is anticipated that the resulting proposals will be limited to consequential amendments, and will clarify the independence provisions that apply to the various parties involved in an assurance engagement.

On March 27, 2019, the IESBA released for public comment an Exposure Draft, Proposed Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised).

The proposals in the Exposure Draft include:

  • Changes in key terminology, including a revised definition of the term “assurance client”;
  • Enhanced and clarified independence requirements for attestation engagements;
  • Clarification of the types of assurance engagement addressed in Part 4B; and
  • Simplified guidance on assurance engagements that refer to the definitive source of explanatory material on such engagements in IAASB literature.

The proposals were developed in close cooperation with representatives of the IAASB, as part of the coordination program of the two standard-setting boards. Comments on the Exposure Draft are requested by June 26, 2019 from all stakeholders.

For fur­ther de­tails about the pro­ject, re­fer to the IESBA’s pro­ject sum­mary.

 

Other de­vel­op­ments

March 2019

On March 27, 2019, the IESBA released for public comment an Exposure Draft, Proposed Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised).

 

Related Discussions

Part 4B of the Code and ISAE 3000 - IESBA

September 2019

  • At its meeting on September 16-19, 2019, the IESBA reviewed a summary of the 26 responses received from a broad range of stakeholders on the Exposure Draft. Overall, the respondents were supportive of the proposed changes to Part 4B and many noted that they helped to clarify the requirements of the Code. As a result of the comments made: (i) the IESBA confirmed that the term “assurance client” was appropriately defined and included in the revised Part 4B of the Code; (ii) the IESBA agreed that, due to the nature of assurance services, it is necessary to consider the impact on additional parties in respect of such work (compared to an audit) and decided that it would be appropriate to include additional application material in Part 4B to cover this; (iii) the IESBA agreed that it would also be helpful to provide more guidance outside of the Code such as in the form of a staff publication, and decided that this will be done; and (iv) the IESBA concluded that the revised Part 4B of the Code should be effective for periods ending on or after June 15, 2021. Subject to the review by the Public Interest Oversight Board of IFAC, all of the members of the IESBA voted to approve the revised Part 4B of the Code, including the changes made during the meeting.

March 2019

  • At its meet­ing on March 11-13, 2019 , the IESBA unanimously approved an exposure draft of proposed changes to Part 4B of the Code to align it to changes to terms and concepts in the IAASB’s International Standard on Assurance Engagements (ISAE) 3000 (Revised). Among other matters, the exposure draft includes (i) a proposed revised definition of the term “assurance client” and a new definition of the term “responsible party”; (ii) proposed revisions to describe more clearly the circumstances in which the firm needs to be independent of the measurer or evaluator with regard to attestation engagements; and (iii) clarification of the types of assurance engagement addressed in Part 4B.  The ED will be open for public comment for 90 days.  

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