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Definition of Engagement Team
New York, December 2012
Page 1 | Confidential and Proprietary Information
Definition of Engagement Team
Overview of responses
Category of
respondent
Supportive
Some concerns
Not supportive
Member bodies
24
2
2
Firms
6
0
0
Regulators and
Public Authorities
1
1
2
Individuals &
others
1
0
1
Other professional
organizations
5
1
0
Total
37
4
5
Page 2 | Confidential and Proprietary Information
Definition of Engagement Team
Overview of responses
• Not supportive
– 11 audit regulators from EU (representing Czech Republic, France,
Luxembourg, Malta, The Netherlands, Norway, Portugal, Romania,
Slovenia, Spain and Switzerland)
– ICAC (Regulator - Spain)
– IDW and WPK (Germany)
• Some concerns
–
–
–
–
IOSCO
APESB (Australia)
ACCA (UK)
CPAA (Australia)
Page 3 | Confidential and Proprietary Information
Definition of Engagement Team
Overview of responses
• IOSCO comments:
– IOSCO members have varying positions on direct assistance
– Should not imply direct assistance is appropriate but aim to assist external
auditors conduct their work where direct assistance is permitted
– IAASB and IESBA should jointly consider objectivity in situations where
direct assistance is permitted
– Safeguarding requirements should be modified to cover following aspects
of direct assistance:
•
•
•
•
Re-performance
Should not represent significant portion of total audit work
Should not include matters of high risk or of high judgment
Should not use direct assistance if there is significant threats to objectivity of
the internal audit function
– Reference to these safeguards should be made in the Code
Page 4 | Confidential and Proprietary Information
Definition of Engagement Team
Conclusions of the combined IAASB and IESBA
Task Forces
• To address concerns raised in the IOSCO teleconferences
and EAIG meeting the following changes are being
proposed to ISA 610:
– IAASB proposes adding guidance on when safeguards would be unable to
reduce threats to objectivity of the internal auditor to acceptable level (see
paragraph A32x)
– Wording in paragraph 27 to include requirement to make inquiries of the
internal auditor
– “stand-back” requirement for auditor to evaluate the planned use of the
intrenal audit function (similar to the stand-back requirement for use of
direct assistance)
– In paragraph 27 emphasize the need for the external auditor to
independently evaluate the extent to which DA can be used
Page 5 | Confidential and Proprietary Information
Definition of Engagement Team
Conclusions of the combined IAASB and IESBA
Task Forces
Proposed Revised Definition
Engagement team—All partners and staff performing the engagement, and
any individuals engaged by the firm or a network firm who perform assurance
procedures on the engagement. This excludes external experts engaged by
the firm or by a network firm.
In the case of an audit engagement, the term “engagement team” also
excludes individuals within the client’s internal audit function providing direct
assistance on the engagement in accordance with ISA 610 (Revised), Using
the Work of Internal Auditors.1 This exclusion is relevant and applies only
where such direct assistance is not prohibited by law or regulation.
1 ISA
610 (Revised) establishes requirements and provides guidance addressing the use of such
direct assistance on an audit engagement
Page 6 | Confidential and Proprietary Information
Definition of Engagement Team
Conclusions of the combined IAASB and IESBA
Task Forces
Effective Date
Proposal in Exposure Draft—Three months after publication
of change
Revised proposal—Same effective date as ISA 610
(Revised) which is proposed to be for audits of financial
statements ending on or after December 31, 2014
Page 7 | Confidential and Proprietary Information