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Emerging Issues
Jim Gaa, Member – Emerging Issues
and Outreach Committee
IESBA CAG Meeting
New York, USA
September 9, 2014
Page 1 | Confidential and Proprietary Information
Emerging Issues and Outreach Committee
• To consider fixed agenda, starting with Oct 2014 IESBA
meeting
– Presentation on potential emerging issues
– Update on developments in key jurisdictions
– Update on global adoption of the Code
– Strategy for outreach
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Status of Global Adoption of IESBA Code
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SWP 2014-18 commitment to formalize monitoring of adoption
Data as of March 2014
Information to be made available on IESBA website
IESBA noted:
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Regular updates useful
–
Helpful to understand how jurisdictions have adopted
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Beneficial to have more granular data
–
Responsibility for overseeing adoption?
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Example of Tracking
Adopted (84)#
Europe (30)
Azerbaijan, Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, Georgia, Hungary, Iceland, Ireland,*† Kosovo, Latvia, Lithuania,
Luxembourg, Macedonia, Moldova, Montenegro, Poland,* Romania, Serbia, Slovakia,
Slovenia, Sweden, Turkey, UK,† Ukraine
Americas (14)
Barbados, Bolivia, Brazil, Cayman Islands, Chile, Colombia, El Salvador, Guatemala,
Guyana, Mexico, Panama, Peru, Trinidad and Tobago, Uruguay
Asia / Oceania (18)
Australia, Bangladesh,* Brunei Darussalam, Cambodia, Fiji, Hong Kong SAR, Japan,
Kazakhstan, Kyrgyzstan, Malaysia, Mongolia, Nepal, New Zealand, Philippines, Russian
Federation, South Korea, Sri Lanka,* Uzbekistan
Africa / Middle East
(22)
Benin, Botswana, Côte d’Ivoire, Ghana, Jordan, Kuwait, Lesotho, Kenya, Madagascar,
Malawi, Mauritius, Namibia, Palestine, Rwanda, Senegal, Sierra Leone, South Africa,*
Swaziland, Tanzania, Uganda, Zambia, Zimbabwe
#
Parts A, B and C of the 2009 Code, effective January 1, 2011
* Country has more than one professional body at different stages of convergence
† UK/Ireland audits subject to UK FRC’s independence requirements, compliance with which will ensure compliance with IESBA Code
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Example of Tracking
G20 Countries
Adopted / Based on (12)
Converging (4)
Australia
South Africa
Canada
Brazil
Saudi Arabia
Indonesia
China
South Korea
Germany
Italy
Mexico
USA (Unlisted entities)
Japan
Turkey
Russia
United Kingdom
Committed to adopt (1)
India
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Recent Audit Inspection Reports
• International Forum of Independent Audit Regulators
(IFIAR)
• UK Financial Reporting Council (FRC)
• Canadian Public Accountability Board (CPAB)
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Recent Audit Inspection Reports
International Forum of Independent Audit Regulators
• Report highlights:
– For audits of listed PIEs, SIFIs and G-SIBs
– Inspections of quality control systems
– Recurrence of inspection findings
• Matters pertaining to independence
• Need for Board to work more closely with IFIAR
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Recent Audit Inspection Reports
UK Financial Reporting Council
• Report highlights:
– Improvement in overall standard of audit work
– Increase in proportion of audits of entities outside FTSE 350
– Increased focus on professional skepticism and effectiveness of
independence & ethical policies and procedures
• Key areas requiring improvement
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Recent Audit Inspection Reports
UK Financial Reporting Council
• Matters pertaining to independence
– Nature and extent of issues continues to concern
– Audit committees should challenge firms to demonstrate independence
• Matters pertaining to Ethics
– Targets for cross-selling of NAS in partner appraisal
– Appropriateness of contingent fee arrangements for certain tax services
– Identification and monitoring of KAPs from other network firms involved in
audits
– Disposal of shareholdings in audited entities
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Recent Audit Inspection Reports
Canadian Public Accountability Board
• Trend in audit quality is positive
• Canadian firms taking challenge to improve audit quality
seriously
• Improvements mainly due to action plans
• No access to audit work done in foreign jurisdictions
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Other Matters
• Big Data / Data Analytics
– Availability of data and science of examining this data
– Firms moving quickly into this – auditing and consulting
– Could change the way audits performed (internal and external)
– Ethical and independence issues – e.g., self-review threats
• European Union (EU) Audit Reform
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The Ethics Board
www.ethicsboard.org