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IAASB Proposes Narrow Scope Amendments to Operationalize Changes to the IESBA Code that Enhance Transparency about Independence

17-Aug-2022

NEW YORK - The International Auditing and Assurance Standards Board (IAASB) released proposed narrow-scope amendments to International Standard on Auditing 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance. The proposed amendments will help operationalize recently approved changes to the ‘International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) related to listed and public interest entities. The changes to the IESBA Code require firms to publicly disclose when the independence requirements for public interest entities have been applied in an audit of financial statements.

“There are heightened expectations about auditor independence for audits of public interest entities. The recent changes to the IESBA Code, reinforced through the IAASB’s proposed changes to the ISAs, will enhance transparency to the public about the application of independence requirements for audits of financial statements of public interest entities,” said IAASB Chair Tom Seidenstein. “This is a further sign of enhanced IAASB-IESBA coordination, a strategic commitment of both boards in our joint effort to better serve the public interest.”

This Exposure Draft is part of a broader IAASB project that responds to recent revisions to the IESBA Code related to listed and public interest entities, which are undertaken as two tracks—this is Track 1. Other narrow-scope amendments that may be considered in Track 2, on a separate timeline and with a later effective date, include:

Aligning to the greatest extent possible the definitions and key concepts underlying the definitions in the International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs) related to listed and public interest entities to IESBA’s definitions and key concepts in the revisions to the IESBA Code; and

• Considering the applicability of existing differential requirements for listed entities in the ISQMs and ISAs, and whether these need to be amended in light of IESBA’s revisions that address the definitions of “publicly traded entity” and public interest entities.  

Source: www.ifac.org