The International Federation of Accountants (IFAC) has submitted a comment letter to the International Auditing and Assurance Standards Board (IAASB) on its Exposure Draft for the proposed amendments to Standards resulting from revisions to the definitions of listed entity and public interest entity (PIE) 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:
- Existing expectations gaps could be compounded by language implying that standards should be required to meet heightened stakeholder expectations for PIEs.
- Further clarity 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 should also set clearer timings for when this should take place.
- Considering the level of activity that will be needed for implementation, the proposed 18 to 24-month period following approval of these amendments might not be sufficient.
IFAC will remain engaged with the IAASB’s consultation process until the publication of a final standard and supporting guidance materials.