The IAASB is consulting on its progress in developing draft guidance in the first phase of its EER Assurance project. Public input is requested by June 21, 2019.
EER encapsulates many different forms of reporting, including, but not limited to, integrated reporting, sustainability reporting and other reporting by entities about environmental, social and governance matters.
This communiqué is part of a series from the IAASB Professional Skepticism Working Group, providing updates on the IAASB’s efforts to appropriately reflect professional skepticism in its standards, together with other relevant news and information. The previous edition is available online.
Johanna Field, CPA, CA, is a Principal, Auditing and Assurance Standards, at Chartered Professional Accountants Canada (CPA Canada), supporting the activities of the Canadian Auditing and Assurance Standards Board. Specifically, she supports the Canadian Board in the revisions to International Standard on Auditing (ISA) 500, Audit Evidence, and determining guidance needed to support assurance on extended external reporting.
Ms. Field spent the first decade of her career with Grant Thornton LLP in audit and assurance. For six of those years, she worked in a national audit and assurance role, where she developed and delivered training, researched and wrote policy and publications, and maintained the firm's audit methodology under changing standards.
Ms. Field is a Chartered Professional Accountant (CPA) and Chartered Accountant (CA) and a member of CPA Canada and the Chartered Professional Accountants of Ontario. Ms. Field also has a bachelor’s degree in business administration from the University of Prince Edward Island (Canada).
Kai Morten Hagen became a member of the IAASB in January 2019. He was nominated by the Nordic Federation of Public Accountants (NRF).
Mr. Hagen is currently Technical Director at the Norwegian Institute of public accountants (DnR). In this role, he supports the auditing standard setting board in Norway and is responsible for DnR’s work relating to audit and assurance matters.
Prior to joining the DnR, Mr. Hagen worked 12 years at Deloitte. His experience with Deloitte included audit and assurance engagements, national office activities relating to audit and assurance in Norway, and audit and assurance methodology project at the global office.
Mr. Hagen studied accounting and auditing at BI Norwegian Business School, and qualified as a state authorized public accountant in 2004.
The International Auditing and Assurance Standards Board (IAASB) seeks public comment by July 1, 2019 on three interrelated standards that address quality management. The proposals bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements.
The proposed standards include a new proactive risk-based approach to effective quality management systems within firms that establish the foundation for consistent engagement quality. The new approach improves the scalability of the standards because it promotes a system tailored to the nature and circumstances of the firm and its engagements.
The IAASB proposals are intended to improve engagement quality through:
Modernizing the standards for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers;
Increasing firm leadership responsibilities and accountability, and improving firm governance;
More rigorous monitoring of quality management systems and remediating deficiencies;
Enhancing the engagement partner’s responsibility for audit engagement leadership and audit quality; and
Addressing the robustness of engagement quality reviews, including engagement selection, documentation, and performance.
Given the significance of the changes and the need for firms to adjust how they manage quality, the IAASB has also developed draft guidance and tools, such as examples and frequently asked questions. These materials will help firms understand the proposals, including how to apply them in different circumstances.
Exposure Drafts
Overall Explanatory Memorandum, The IAASB’s Exposure Drafts for Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews
Proposed International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements (previously ISQC 1)
Proposed International Standard on Quality Management 2, Engagement Quality Reviews
Proposed International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements
Comments on the Exposure Drafts are requested by July 1, 2019.
About the IAASB
The IAASB 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
Proposed ISA 220 (Revised) will improve the management of quality at the engagement level for audits of financial statements. It contains enhanced and revised requirements and guidance to:
