The Framework describes the IAASB’s operating processes and procedures for advancing standard-setting and other related activities. By being more deliberate and evidence-based, the IAASB will be more responsive to the key public interest challenges in audit and assurance. The Framework sets out the following key components:

• Information gathering and research activities;
• Revising and developing standards;
• Narrow scope maintenance of standards; and
• Activities to support standards’ implementation.

A new video on the suite of quality management standards is now available from the IAASB. It addresses considerations for firms when preparing to implement the standards, such as what may be retained from current systems, the time and resources needed, the impact on the firm as a whole, and various ways to approach implementation. The video emphasizes the need for firms to start early and prepare for implementation.

The IAASB suite of new and revised quality management standards was released in December 2020; they will become effective on December 15, 2022.

Amid a rapidly changing world, the first digital native generation is entering the workforce. This joint report from ACCA (the Association of Chartered Certified Accountants) and IFAC (the International Federation of Accountants) draws upon the responses of 9,000+ 18-25 year olds to gain insights into how Generation Z’s top concerns may influence what they want from their careers, what attracts them to organizations, and their views on accountancy, business, and the impact of COVID-19.

The International Auditing and Assurance Standards Board (IAASB) today published its Public Report detailing its progress to support the public interest between July 2019 and December 2020. During this 18-month period, the IAASB completed five major standards aimed at enhancing audit and assurance quality, adopted a four-year strategy focused on the public interest, and established a new work plan focused on emerging issues. The IAASB also responded to a new environment sparked by the global pandemic by issuing guidance and engaging with a broad range of stakeholders in order to sustain trust in audit and assurance.

The Public Report showcases the IAASB’s efforts to be a responsive, agile and innovative standard setter, closely connected with its stakeholders. The report highlights completed and in progress standard-setting projects, other new initiatives to respond to stakeholder needs, and our efforts to improve the agility of the standard-setting process. The report also includes reflections from IAASB Chair Tom Seidenstein on his first 18 months in this role.

In March 2021, the IESBA reflected on the progress made to date on its technology Initiative, and considered next steps and timing, also recognizing the increased burdens stakeholders have shouldered as a result of the pandemic.

Click on the IESBA Update below to learn more.

Marking a significant step forward in supporting assurance for non-financial reporting, the International Auditing and Assurance Standards Board (IAASB) today published Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements.

The Guidance responds to ten key stakeholder-identified challenges commonly encountered in applying International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The guidance promotes consistent high-quality application of ISAE 3000 (Revised) in extended external reporting assurance engagements to:

• strengthen the influence of such engagements on the quality of extended external reporting;
• enhance trust in the resulting assurance reports; and
• increase the credibility of extended external reports so that they can be trusted and relied upon by their intended users.

“The IAASB is not a newcomer to assurance of what is commonly referred to as non-financial information reporting. For years, we have been active in this area as the landscape has continued to evolve,” according to IAASB Chair Tom Seidenstein. “Together with ISAE 3000 (Revised) and ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, this guidance forms a strong package that will help enhance confidence in assurance reports and improve their reliability, including enabling practitioners to respond to new reporting regimes. We will continue to closely monitor current global developments to establish a coherent set of sustainability reporting standards, and are prepared to act to enhance our standards, frameworks and guidance to support progress.”

The Guidance addresses a number of overarching matters, including applying appropriate competence and capabilities, exercising professional skepticism and professional judgement, and the preconditions for an assurance engagement, as well as more specific technical matters. The Guidance also provides further explanation and examples to better understand the distinction between limited assurance and reasonable assurance engagements.

The IAASB expresses its sincere appreciation for the collaboration and funding provided by the World Business Council for Sustainable Development and the Gordon and Betty Moore Foundation.

Extended External Reporting
Extended external reporting encapsulates many different forms of reporting, including but not limited to, sustainability or environmental, social and governance (ESG) reporting, integrated reporting, reporting on corporate social responsibility, greenhouse gas statements, and service performance reporting in the public sector. These kinds of extended reporting are growing in frequency and importance, and address matters that are becoming increasingly critical to decision-making by investors and other users.

Additional Support Material
Two additional items of non-authoritative support material have also been published. These are not integral to the Guidance—the Guidance can be used without the need to refer to these materials but they are available as additional resources should practitioners wish to refer to them: (1) Credibility and Trust Model Relating to EER Reporting, and (2) Illustrative Examples of Selected Aspects of EER Assurance Engagements. The latter includes examples that cover a broad range of reporting frameworks.

About the IAASB
The International Auditing and Assurance Standards Board develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

At its March 2021 meeting last week, the IAASB approved Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements, which will be published in April. This guidance marks a significant step forward in supporting the evolving field of assurance for non-financial reporting. EER encapsulates many different forms of reporting, including, but not limited to, sustainability or ESG (environmental, social and governance) reporting, integrated reporting, reporting on corporate social responsibility, greenhouse gas statements, and service performance reporting in the public sector.

The Guidance builds on our existing, well-tested assurance standard, International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The Guidance responds to practitioner and user-identified challenges in the practical application of the standard to assurance engagements on EER.

Together with ISAE 3000 (Revised) and ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, the Guidance forms a strong package aimed at enhancing confidence in and improving the reliability of assurance reports for their intended users. We believe this package of standards and Guidance is sufficiently robust to enable practitioners to respond to new reporting regimes, including those under consideration in the European Union and elsewhere. However, as gaps emerge, the IAASB remains ready to act.

Benefitting from our due process, the approval of the Guidance completes the work that we commenced in 2017 with the support of the World Business Council for Sustainable Development (WBCSD).

The Guidance Addresses Growing Demands for Extended External Reporting & Non-Financial Information Reporting

Non-financial information has become an important topic in reporting circles. As reporting evolves, auditors are increasingly asked to provide assurance on sustainability or ESG reporting. Where this type of reporting, and assurance thereon, have often been undertaken on a voluntary basis by entities, there is an increasing (and nowadays, urgent) focus on this being mandated by law or regulation. We at the IAASB have taken the view that we must rise to the challenge and assist, particularly as users of corporate reports are demanding a broader base of information to inform capital allocation decisions.

The Guidance responds to ten key stakeholder-identified challenges commonly encountered in applying ISAE 3000 (Revised), the umbrella standard for assurance engagements, in EER assurance engagements.

In response to strong requests from stakeholders, the Guidance also provides further explanation and examples to facilitate a better understanding of the distinction between limited assurance and reasonable assurance engagements as contemplated in ISAE 3000 (Revised).

Some may wonder why we chose the term “Extended External Reporting (EER)” rather than ESG or other forms of reporting now in common parlance. We chose EER to ensure broad-based impact of the Guidance. ISAE 3000 (Revised) applies to any assurance engagement other than an audit or review of historical financial information, including different forms of reporting of non-financial information as I have highlighted at the start.

EER information may be presented as a section(s) in an entity’s annual report or other mainstream periodic report, or in a regulatory filing, or it may be presented as a separate report(s) or statement(s) issued by an entity. Similarly, when an assurance engagement is requested, the EER information subject to assurance may be the whole report or may be one or more metric(s), section(s) or statement(s) within a report. ISAE 3000 (Revised) and the Guidance accommodate all these variations.

EER Engagements Must Include a Commitment to Quality and the Highest Ethical Standards

The Guidance supports the application of ISAE 3000 (Revised), which is the IAASB’s authoritative pronouncement. The Guidance does not introduce any further requirements beyond those in the standard or override or change any of the requirements or application material in the standard. Importantly, requirements related to quality and ethics are already deeply embedded in the standard.

ISAE 3000 (Revised) requires that:

• The practitioner is a member of a firm that is subject to International Standard on Quality Control 1, or other professional requirements or legal or regulatory requirements that are at least as demanding. This requirement will be updated and aligned with our new and revised quality management standards that were issued in December 2020.
• The practitioner and members of the engagement team are subject to the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants or other professional requirements or legal or regulatory requirements that are at least as demanding.
• The practitioner complies with the requirements of the standard addressing their own competence (including assurance skills and techniques) and the competence of others who perform the engagement.

Ensuring the Right Conditions Exist

The practitioner is only permitted to accept or continue an assurance engagement in accordance with ISAE 3000 (Revised) when the preconditions for an assurance engagement are present. Such preconditions relate to, among other matters, whether the engagement has a rational purpose taking into account, for example, the needs of users of the subject matter information, and the suitability of the criteria applied in the preparation of the information (e.g., a reporting framework or set of reporting standards that satisfies the requirements of the standard).

A significant part of the Guidance is devoted to supporting practitioners as they navigate the requirements of ISAE 3000 (Revised) relating to determining whether the preconditions are present.

The current global developments to establish a coherent set of sustainability reporting standards also will go a long way to address the preconditions for assurance engagements by providing suitable criteria.

Additional Support Material

We received considerable encouragement from respondents to our public consultation on the Guidance, which was accompanied by two supplements, to advance the development of certain elements of the supplements for publication; in particular, the supplement that provides longer worked examples relating to EER assurance engagements. Therefore, two additional items of non-authoritative support material will be published at the same time as the Guidance (note, these are not integral to the Guidance; the Guidance can be used without the need to refer to these materials, but they are available as additional resources, should practitioners wish to refer to them): (1) Credibility and Trust Model Relating to EER Reporting, and (2) Illustrative Examples of Selected Aspects of EER Assurance Engagements. The latter includes examples that cover a broad range of reporting frameworks.

What Lies Ahead

Together with ISAE 3000 (Revised) and ISAE 3410, the Guidance provides a solid foundation for consistent performance of quality assurance engagements relating to non-financial information reporting. At the same time, we know that this will not be our last action in this rapidly evolving area.

The IAASB is prepared to act to enhance our standards, frameworks and guidance to support progress. We will closely monitor relevant developments, engage with our stakeholders as part of our outreach program and seek a place at the table involving policy discussions that may impact our standards and our role as global auditing and assurance standard setter.

IFAC supports steps announced today by the IFRS Foundation in its ongoing consideration of whether to establish a new Sustainability Standards Board (SSB) alongside the IASB and under the existing governance structure of the IFRS Foundation. IFAC welcomes the engagement of IOSCO in this important initiative, as outlined in the IFRS Trustee statement as well as in IOSCO’s February 24 media release.

We agree with the Trustees’ strategic views that the new SSB should focus on information material to decisions of investors and other providers of capital and that the new board would initially focus its efforts on climate-related reporting, while also working toward meeting the information needs of investors on other ESG (environmental, social and governance) matters.

Likewise, we agree that a building blocks approach facilitates both the use of existing standards and frameworks (including TCFD) and the flexibility for coordination on reporting requirements that capture wider sustainability impacts, as IFAC articulated in its Way Forward roadmap.

IFAC CEO Kevin Dancey said, “IFAC continues to support the ongoing rationalization of a coherent global system. The IFRS Foundation is uniquely qualified and positioned to lead here, including engagement with existing sustainability-related initiatives and standard setters from key jurisdictions. IFAC looks forward to providing input to the forthcoming IFRS Foundation Constitution consultation and encourages our member bodies and stakeholders to take an active interest in these next steps.”

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

The Technology Working Group of the International Auditing and Assurance Standards Board (IAASB) today released non-authoritative support material to help auditors address the risk of overreliance on technology, whether it arises from using automated tools and techniques or from using information produced by an entity’s systems.  

The publication does not amend or override the International Standards on Auditing (ISAs), the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.