SMPAG Response to the IAASB’s Exposure Draft of proposed International Standard on Auditing 500 (Revised), Audit Evidence

The SMPAG supports the IAASB’s principles-based approach and limited number of requirements. We recognize the importance of the IAASB reacting to changes in the environment, including with advancements in different technologies being used both by auditors and entities they are auditing. We support the fact that ISA 500 (Revised) should apply to all information intended to be used as audit evidence, irrespective of its source. We also agree with the clarification that not all information is itself audit evidence. It is therefore important that the auditor’s working papers make clear which information recorded by the auditor is intended to be used as audit evidence and has been subject to audit procedures, but it should not lead to additional documentation than would already be expected to be the case.

We are concerned about the number of changes proposed, the volume and nature of some of the application material and the numerous cross references to other ISAs. We believe that there could have been stronger evidence presented on what specific problems the Board is aiming to solve (i.e., what is going wrong in practice) and how the changes will have an impact on auditors’ behavior, including clarity on documentation. Once the proposals are finalized, we recommend that the Board prepare a short summary and explanation of the changes, which includes the practical implications for SMPs and what they are expected to do differently in practice. This would also be extremely useful to Professional Accountancy Organizations and their members, as well as other stakeholders.