Update

Audit Policy

 Cannot read this email? Open in your browser.September 2019 
 

Audit Policy Update

September 2019

 
 
 
 

Accountancy Europe’s Members’ Engagement Day

 
 
 

On 2 October, we organised members’ only event which also featured several very interesting sessions on audit.

 
 
 
 
 

New IAASB Chair at Accountancy Europe

 
 
 

Tom Seidenstein – new IAASB Chair & Beverley Bahlmann – IAASB Deputy Director joined our audit experts' meeting.

 
 
 
 

Highlights

 
 
 
 
  • New IAASB Chair Tom Seidenstein at Accountancy Europe
  • Accountancy Europe recommends developing a separate standard for audit of less complex entities
  • New report examines the relationship between multidisciplinary firms and audit quality
  • Netherlands: Committee for the future of the accountancy sector publishes preliminary findings of its review
  • UK: Public anger towards auditors alarms Sir Donal Brydon, UK expert reviewing the audit sector
  • UK: FRC is proposing to introduce a white list of permitted services for auditors of PIEs
 
 
 
 
 

Feature story

 
 
 
 

Accountancy Europe recommends developing a separate standard for audit of less complex entities (LCEs)

One year and a half after our call for action to the IAASB, we were delighted to respond to the IAASB Discussion Paper on audit of LCEs.

What priorities do we propose for the IAASB?

Our response highlights the following 3 priorities for the IAASB:

  • as the first priority, develop a separate standard for LCE audits based on the ISAs
  • in the longer term, revise the ISAs following a ‘think simple first approach’; use the separate standard as the basis for this
  • anticipate and plan the convergence of the above exercises

Next steps

Some EU Member States’ experiences in applying a separate national LCE standard could serve as a starting point for the IAASB to develop its standard. Accountancy Europe can act as a platform where the IAASB and our members from relevant countries can exchange and collaborate on this issue.

 
 
 
 
 

EU Developments

 
 
 
 

CEAOB publishes report on its 2018 enforcement questionnaire

The second enforcement questionnaire brought the following findings:

In comparison to the first CEAOB questionnaire, which addressed year 2016, there was notable increase in the number of administrative measures and sanctions in year 2017. However, these two surveys are not directly comparable due to different methodology used. Moreover, during the first CEAOB questionnaire, many Member States were still at the early stage of their Audit Reform implementing processes.

There seem to be significant differences in national competent authorities’ (NCAs) approach when imposing administrative measures and sanctions on auditors and audit firms. The numbers of these measures do not seem to compare with the size of the population of auditors nor any other generally known indicator. This CEAOB survey report does not explain the rationale and criteria behind the administrative measures and sanctions, but the report is merely descriptive.

It is important to note that many Members States have yet to start imposing administrative measures and sanctions in line with the EU Audit Reform legislation. Read more

 
 
 
 
 

International Developments

 
 
 
 

New report examines the relationship between multidisciplinary firms and audit quality

This report concludes that the multidisciplinary model is one of the best mechanisms to develop the skills, expertise and consistency needed for quality audits.

It was co-authored by the Chartered Accountants Australia and New Zealand (CA ANZ), the Association of Chartered Certified Accountants (ACCA) and the International Federation of Accountants (IFAC).  A review of existing research and other related literature reveals evidence that multidisciplinary firms fill a valuable market need. It also highlights the fact that the recently evolved rules mitigate risks associated with audit firms providing non-audit services to some audit clients.

Read more

 
 
 
 
 

National Developments

 
 
 
 

Netherlands: Committee for the future of the accountancy sector publishes preliminary findings of its review

On 1 October, the Committee for the future of the accountancy sector (CTA), which has been looking into the audit market in the Netherlands with the ultimate aim to improve audit quality, published its preliminary report. It discusses mainly these 6 themes:

  • Expectation gap
  • Joint responsibility of the financial reporting chain
  • Definition of audit quality [lack of it]
  • Firm culture and its implications
  • Audit market competition
  • Supervision of auditors

Report with final findings is expected to be published in December 2019. Read more (available in Dutch only)

UK: Public anger towards auditors alarms Sir Donal Brydon, UK expert reviewing the audit sector

At the ICAEW Audit Conference on 4 October, Sir Donald spoke publicly for the first time since starting his review on the quality and effectiveness of audit. While accepting that audit performance must improve, he mentioned that the current heavy criticism and blaming of auditors troubles him. Read more

UK: Financial Reporting Council (FRC) strengthens Going Concern audit standard

The revised standard (ISA UK 570) follows concerns about the quality and rigour of audit and increases the work auditors are required to do when assessing whether an entity is a going concern. It means UK auditors will follow significantly stronger requirements than those required by the current ISAs. Read more

UK: FRC is proposing to introduce a white list of permitted services for auditors of public interest entities (PIEs)

The main change proposed is the introduction of a white list of permitted services that auditors of PIEs can provide. These are the services which are closely related to audit and/or required by law and regulation.

This means that the current list of prohibited non-audit services that auditors of PIEs can provide to audited entities would be removed.

The consultation period closed on 27 September. Read more

 
 
 
 
 

Other news

 
 
Financial Times
 
Thomas Cook Auditor not to blame
 

This curated content was brought to you by Júlia Bodnárová, Accountancy Europe Senior Advisor since 2017. You can send her tips by email and connect with her on LinkedIn.

 
Subscribe / Unsubscribe / Manage your subscriptions



Sign up for our newsletter