IFAC SMP Response to the IESBA PIE Exposure Draft

The IFAC SMP Advisory Group believes that the approach for a global PIE definition should be narrow, rather than broad. Otherwise the situation arises where PIEs at an international level are not PIEs under local legislation in several parts of the world and it leads to inconsistent practices. Whilst going beyond this may be necessary in a few jurisdictions and for certain cases (i.e., this would be determined in legislation), exclusions of entities or additions by individual firms would be far less appropriate from a stakeholder’s and public interest perspective. The SMPAG is particularly concerned about the potential practical impact of the proposals for individual auditors to go beyond the definition of a PIE in national law, with a requirement to consider this and disclose it. It believes there is a risk of inconsistent application, further confusion and misunderstanding in the marketplace, as well as potential unintended consequences. The SMPAG also believes that achieving consistency between international standard setters is critical and strongly encourages the International Standard Setting Board’s to work together to eliminate the differences and harmonize the definitions.