IFAC Response to the IAASB’s Proposed Narrow Scope Amendments to International Standards

IFAC welcomes the opportunity to provide input to the International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft for the Proposed Narrow Scope Amendments to Standards as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity in the IESBA Code.

IFAC appreciates the efforts of the IAASB in working with the IESBA to harmonize definitions and terminology in this important area and is broadly supportive of the proposed changes. Within our response we raise several challenges. Wording around standards being required to meet heightened stakeholder expectations for public interest entities (PIEs) could compound existing expectation gaps by legitimizing unreasonable expectations from a broad range of actors. Further clarity also needs to be provided about the extent of work the auditor is required to carry out to identify PIEs that are not labelled as such by law, regulation, or other requirements. The extension of the requirement to provide written confirmation of auditor independence to those charged with governance (TCWG) could also set clearer timings for when this should take place. Finally, considering the level of activity that will be needed to implement, there are significant challenges to whether an 18-24 month period following approval of these amendments will be sufficient.