IAASB propose amendments to auditing standards to operationalise transparency

IAASB propose narrow scope amendments to ISA 700 (Revised) and ISA 260 (Revised)

Overview

Given heightened expectations about auditor independence for audits of public interest entities (PIEs), recent revisions by the International Ethics Standards Board for Accountants’ (the IESBA) to the International Code of Ethics (the IESBA Code) introduce a transparency requirement for a firm to publicly disclose whether the PIE independence requirements have been applied. We are proposing to adopt the recent IESBA revisions in PES 1. Our current consultation can be found here.

In order to operationalise the proposed transparency requirement, the International Auditing and Assurance Standards Board (IAASB) has released an ED proposing narrow scope amendments to ISA 700 (Revised), Forming and Opinion and Reporting on Financial Statements and ISA 260 (Revised), Communication with Those Charged with Governance.

In the New Zealand context, adopting these proposals would mean that where the PIE requirements are applied, the auditor’s report will be required to disclose this as well as disclosing that the auditor is independent of the entity.

Proposed new application material highlights that the auditor’s statement to those charged with governance may include whether the PIE independence requirements were applied for the audit.

Consultation Document

Commenting on the Proposal

You can submit your comments to the XRB by 16 September 2022 or to the IAASB (with a copy to the XRB) by 4 October 2022.

We intend on publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 1993 also applies.