AUASB Consultation on Proposed IAASB Changes to the Auditor’s Report Regarding the Independence Requirements Applied

Thursday, July 21, 2022

The AUASB has released a Consultation Paper seeking public comment on the IAASB’s Exposure Draft issued in response to recent Revisions to the IESBA Code which introduce a transparency requirement for firms to publicly disclose when the independence requirements for PIEs have been applied.

In addition to the invitation to comment on the Paper, the AUASB is hosting a Webinar on 26 August to take stakeholders through the key proposals of the IAASB ED, and to provide stakeholders an opportunity to provide feedback directly.

In order to operationalise the new IESBA Code transparency requirement, the IAASB is proposing narrow scope amendments to ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised) Communication with Those Charged with Governance.

The proposals include revisions to the “Basis for Opinion” section of the auditor’s report which would require an auditor to specifically indicate which independence requirements were applied in circumstances when the relevant ethical requirements require public disclosure about whether differential independence requirements for certain entities (such as PIEs) were applied.

The two key questions considered by the IAASB as part of its consultation on the proposed narrow scope amendments are:

whether the Auditor’s Report is the appropriate mechanism through which to make the public disclosures required by the revised IESBA Code; and
if the disclosures are made in the Auditor’s Report, what is the best approach for dealing with this in the report.

AUASB Consultation

The AUASB invites all stakeholders to comment on all or some of the questions contained in the AUASB Consultation Paper by 15 September 2022 via the AUASB website. Stakeholders may elect to provide comments directly to the IAASB. In this case, the AUASB request a copy is provided to us.

Stakeholders’ feedback will be used to inform the AUASB in its formal response to the IAASB on the IAASB Exposure Draft.

To register your interest for the AUASB Webinar on this topic scheduled to take place 26 August 2022, click here.

Any queries about the Consultation Paper and the AUASB’s associated outreach activities should be directed to Johanna Foyster, AUASB Senior Manager, at [email protected].