Audit Policy Update

• EC to reduce all EU reporting requirements by 25%  
• IAASB’s overarching standard for sustainability assurance to be exposed three months earlier than planned 
• Accountancy Europe responds to IAASB’s Strategy and Work Plan consultation

EC to reduce all EU reporting requirements by 25%

The European Commission’s (EC) President Ursula von der Leyen (see her speech) and subsequently Commissioner McGuinness (see her speech) gave speeches in March announcing new concrete proposals to streamline all EU reporting requirements by reducing them by 25%. The proposals are expected to come this autumn.  

Commissioner McGuinness also informed that the EC requested the European Financial Reporting Advisory Group (EFRAG) to postpone its work on the sector-specific European Sustainability Reporting Standards (ESRS) potentially by one year. Instead, EFRAG was asked to develop additional guidance for companies to apply the first set of horizontal ESRS. As noted by the Commissioner, this would help to avoid overlapping consultations and burden on stakeholders willing to provide their input.  

EC intends to cover “all” EU reporting requirements in its widest meaning (financial included). The intention is to look into both existing and upcoming reporting requirements, but the allocation of the 25% is yet to be determined. Implications for audit requirements, if any, included in the EU Accounting Directive, are therefore yet to be seen too.

IAASB’s overarching standard for sustainability assurance to be exposed three months earlier than planned 

The International Auditing and Assurance Standards Board (IAASB) is developing a new overarching standard for sustainability assurance engagements, the proposed International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements (ISSA 5000).  

The project proposal envisaged the exposure draft (ED) to be approved in September 2023. However, considering the importance of having a global standard as soon as possible, the IAASB now plans to approve the ED in June 2023. 

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Accountancy Europe responds to IAASB’s Strategy and Work Plan consultation

The IAASB issued a public consultation proposing its strategy and work plan for 2024-2027. 

Our response to the consultation: 

• recognises the importance of the sustainability assurance project acknowledging the quality and speed of the work done so far 
• invites IAASB to assess the impact of recent and ongoing revisions to the International Standards on Auditing (ISAs) on audit quality 
• reiterates that the standards should be understandable, scalable and proportionate for consistent implementation 
• reminds the need to modernise standards considering technological advancements   

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IESBA’s proposed Strategy and Work Plan for 2024-2027

The International Ethics Standards Board for Accountants (IESBA) released its proposed strategy and work plan 2024-2027 for public comment.   

Stakeholders are invited to submit their responses until 7 July 2023. 

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Launch of the International Foundation for Ethics and Audit

The International Foundation for Ethics and Audit (IFEA, the Foundation) is a new entity created to house two organisations as recommended by the Monitoring Group. 

The objective in establishing the Foundation is to move the IESBA and IAASB to a new entity that is independent of the International Federation of Accountants (IFAC). 

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ACCA provides insights into sustainability assurance

The Association of Chartered Certified Accountants (ACCA) issued a report that: 

• provides an overview of the current landscape for sustainability assurance, a fast-growing area for professional accountants and others  
• introduces the standard and guidance for sustainability assurance by the IAASB  
• discusses skills and competencies required for undertaking sustainability engagements  

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