ThinkTWENTY20

Propose revisions to ISA 315 (Revised), “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment,” to establish more robust requirements and appropriately detailed guidance to drive auditors to perform appropriate risk assessment procedures in a manner commensurate with the size and nature of  an entity. These revisions are intended to enhance the auditor’s approach to understanding the entity, its environment (including its internal control) and risk assessment activities in light of the changing environment. The ISA 315 Task Force presented its initial responses to the comments received to the IAASB at a March 2019 meeting.

A project on restructuring ISQC 1, “Quality Management at Firm Level,” which would impose additional requirements or guidance within the standard or additional guidance in support of the standard. Specific aspects within ISQC 1 and ISA 220, “Quality Controls for an Audit of Financial Statements,” being explored include: governance, engagement partner responsibilities, engagement quality control reviews, monitoring, remediation, alternative audit delivery models and specific issues pertaining to small- and medium-sized practices. An exposure draft has been released for comment by July 1, 2019.

A project on enhancing ISQC 2, “Engagement Quality Reviews, “ by:

• setting more robust criteria for firms to apply when determining which engagements should be subject to an EQC review,
• establishing the objective of an EQC review,
• clarifying the nature, timing and extent of the EQC review and
• enhancing the requirements for the eligibility of the individuals who perform the review.

In doing so, consideration will also be given to maintaining the appropriate balance between the respective roles and responsibilities of the EQC reviewer and the engagement partner who retains overall responsibility for the engagement.  Comments due July 1, 2019.

Revising ISA 600, “Group Audits.” The aim is to determine the nature of the IAASB’s response to issues relating to group audits that have been identified during the ISA Implementation. These will be discussed at monitoring projects and outreach activities, inspection reports from audit regulators and responses to the IAASB’s Work Plan consultation (i.e., whether standard-setting activities are appropriate to address the issues, and if so, whether specific enhancements within ISA 600 or a more holistic approach to the standard would be more appropriate).

A project to redraft ISRS 4400, “Agreed-Upon Procedures,” using the clarity drafting conventions so that this standard is consistent with other IAASB International Standards  and to revise the standard to better reflect practice in AUP engagements.

Revising ISAE 3000 (Revised) “Extended External Reporting (EER) Assurance” to enable more consistent and appropriate application of the standard to emerging forms of external reporting (EER) and greater trust in the resulting assurance reports by users of EER. This will be achieved primarily through: developing non-authoritative guidance in applying ISAE 3000 (Revised) to EER; continuing to provide thought leadership on assurance issues in relation to EER; and coordinating the work of the project with related initiatives of other relevant international organizations.

The aim of a project on the “Audits of Less Complex Entities” is to explore possible actions to address perceived issues when undertaking audits of less complex entities for further IAASB consideration. In its initial phases.

Professional skepticism: Another project in its initial information gathering phase is to make recommendations on how to more effectively respond to issues related to professional skepticism.

A Data Analytics Working Group (DAWG) is exploring emerging developments in the effective and appropriate use of technology, including data analytics, to enhance audit quality and exploring how the IAASB most effectively can respond to these emerging developments via new or revised International Standards on Auditing or non-authoritative guidance (including Staff publications) and in what timeframe.