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Auditor Reporting – Listing of Independence/Ethical Sources

Auditor Reporting – Listing of Independence/Ethical Sources . Bruce Winter, IAASB Member and DT-700 Chair IESBA Board Meeting – Agenda Item 8 April 8, 2014. IAASB – Auditor Reporting Project . Dominant project on IAASB’s current agenda

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Auditor Reporting – Listing of Independence/Ethical Sources

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  1. Auditor Reporting – Listing of Independence/Ethical Sources Bruce Winter, IAASB Member and DT-700 Chair IESBA Board Meeting – Agenda Item 8 April 8, 2014

  2. IAASB – Auditor Reporting Project • Dominant project on IAASB’s current agenda • 2011 Discussion Paper/2012 Invitation to Comment/ 2013 Exposure Draft • Targeting final standard to be approved September 2014

  3. Auditor Reporting Project – Headlines • Key audit matters • Going concern • Enhanced descriptions of management and auditor responsibilities • Engagement partner name • Explicit statement about independence/ethics

  4. Statement about Independence and Ethics • Two aspects to the proposed statement required in the ED • (i) Auditor required to make an explicit statement that “we are independent of the Company within the meaning of…and have fulfilled our other responsibilities under those ethical requirements.” • (ii) Auditor required to list specific sources of independence and ethical codes that were applicable to the audit • Prominent placement of statement within “Basis of Opinion” paragraph

  5. Independence and Ethical Requirements – IAASB and DT-700 Discussions To Date • Retain a statement about independence and ethical requirements responds to calls for greater emphasis in this area • Clarification of wording in the illustrative auditor’s report needed to address concerns • Acknowledge practical challenges of proposed requirement to list sources particularly in multi-jurisdictional audits • However, value in seeking an option that will provide some transparency about sources • Options are being explored to seek middle ground in this regard

  6. Options Being Considered – Para. 20 (a) and (d) of Agenda Item 8 • Option #1 – Retain the approach in ED and require that the auditor list all source(s) of independence and ethical requirements • Option #4 – Withdraw the proposed requirement to list sources in ED • Include application material to explain voluntary listing of sources

  7. Options Being Considered – Para. 20 (b) and (c) of Agenda Item 8 • Option #2 – List [principle] sources applicable to group engagement team • Option #3 – Refer to country [or jurisdiction] of underlying independence and ethical sources

  8. Matters for IESBA Consideration IESBA members are asked for views about: • The options being considered in Agenda Item 8 for a statement about listing the sources independence and ethical requirements in the auditor’s report • Their preference for a particular option, or whether there are alternate options that should be considered

  9. Auditor Reporting Project Timeline and Status

  10. Drafting Team Structure and Responsibilities for the Auditor Reporting ISAs Continuing to be nimble in determining the best way to progress rapidly – Formed new Drafting Team (DT-570) post-exposure; ISA 720 TF addressing other information

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