IFAC SMP Committee Comment Letter on the IAASB Exposure Draft for Proposed ISA 220

The SMPC noted that the responsibilities of the engagement partner now exceed those of extant ISA 220. Under extant ISA 220, the engagement team can rely on the firm’s quality control unless there are indications to the contrary. In the Committee’s view, this remains a pragmatic approach. We believe it is appropriate for the engagement partner and the engagement team to be required to go through an exercise of evaluation on a case-by-case basis as to whether the firm has implemented sufficient QM responses to quality risks and, if so, whether additional measured need to be taken to address any ‘gaps’ so identified. This should be confined to certain areas only at the engagement level. The IAASB has also proposed a change to the definition of engagement team from “all partners and staff performing the audit engagement, and any individuals engaged by the firm or a network firm who perform audit procedures on the engagement” in extant ISA 220 to “all partners and staff performing the audit engagement, and any other individuals who perform audit procedures on the engagement, including individuals engaged by the firm or network firm”. We do not believe this proposed change is appropriate. Our concerns were further described in the said letter of comment.