NZAuASB Meeting 12 February 2020

Here is a summary of the main matters considered at the public session:

New Standards Approved

The NZAuASB approved three new standards at its February meeting:

• The Board confirmed its approval of ISA 315 (Revised) Identifying and Assessing the Risk of Material Misstatement and conforming amendments. In the Board’s view the final standard is a significant improvement on the ED and it is particularly helpful to have the requirements condensed to a manageable size.
• The Board approved limited proposed changes to ISA (NZ) 560, Subsequent Events, to clarify the timing communications and possible actions the auditor may take when a fact becomes known after issuing the auditor’s report and, had it been known to the auditor at the date of the report, may have caused the auditor to amend the auditor’s report. The change responds to concerns raised by the Financial Markets Authority through its liaison relationship with the NZAuASB about how to ensure that investors and other stakeholders are informed in a timely manner that they cannot rely on the audit opinion.
• The IESBA has recently issued its amendments to Part 4B[1] of the Code to align the terminology in the Code with the revised terms and terminology in ISAE 3000 (Revised)[2]. The Board approved amendments to Part 4B in the equivalent New Zealand standard, Professional and Ethical Standard 1, International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand).

[1] Part 4B, Independence for Assurance Engagements Other Than Audit and Review Engagements.

[2] ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information

Proposed amendments to PES 1 to incorporate Part 2 of the IESBA Code

The Board considered a draft on proposed amendments to Professional and Ethical Standard 1 to incorporate Part 2[3] of the IESBA Code. The Board will continue its discussions and intends to approve the exposure draft at its next meeting.

[3] Part 2, Professional Accountants in Business

IESBA’s EQR objectivity proposals

The Board considered and provided feedback on the IESBA’s Exposure Draft, Proposed Revision to the Code Addressing the Objectivity of Engagement Quality Reviewers.

The NZAuASB remains of the view that the Code should deal with the rotation requirements and will stress that in its submission.

Non-Assurance Services and Fees NZ outreach

The IESBA EDs on non-assurance services and fees raise significant public interest issues which are relevant both globally and in the New Zealand context. The Board is keen to stimulate a considered discussion in New Zealand on whether the IESBA’s global proposals in relation to public interest entities, in particular, are sufficient to meet the public interest in relation to auditor independence in our jurisdiction. The Board is keen to ensure that it gives all stakeholders an opportunity to comment on the proposals. Its planned outreach will seek the views of practitioners, those charged with governance, users, and other stakeholders including the Auditor-General and the Financial Markets Authority.