NZAuASB Meeting 2 September 2020
Public Session Meeting Papers
NZAuASB Public Session Agenda 2 September 2020File size: 262 KB
NZAuASB Public Session Meeting Papers 2 September 2020File size: 6 MB
3.2 NZAuASB Technology presentationFile size: 5.3 MB
8.1 NZAuASB Board Meeting Summary Paper Compelling reason Sep 2020 updatedFile size: 325 KB
8.2 NZAuASB and AUASB Agreed Principles of Convergence and Harmonisation Jul 2014 - Revised Sep 2020File size: 336 KB
NZAuASB Public Session Minutes 2 September 2020File size: 211 KB
Here is a summary of the main matters considered at the public session:
IESBA Technology project
Brian Friedrich, IESBA member and Technology Task Force Chair, provided the Board with an update on the IESBA’s technology project. The project aims to enhance the IESBA Code’s provisions in response to the transformative effects of and development in technology to address the ethical and independence implications of technology.
The IESBA is planning to issue an exposure draft in June 2021. The Board provided feedback on the preliminary views of the Technology Task Force to help inform the development of the exposure draft.
The Board considered and provided feedback on a draft submission on the IAASB exposure draft ISA 600 (Revised), Special Considerations – Audits of Group Financial Statements (including the Work of Component Auditor).
The Board established a working group to support staff in finalising the submission, specifically in relation to matters raised in the submission received from the Accounting and Finance Association of Australia and New Zealand (AFAANZ) that may further inform the NZAuASB response.
The submission to the IAASB is due on 2 October and the Board will approve it out of session. The final submission will be made available on the XRB website.
Meeting with the Deputy Controller and Auditor-General
Greg Schollum, Deputy Controller and Auditor-General, discussed with the Board the impact of COVID-19 on the public sector and the OAG’s response to COVID-19.
Mr. Schollum noted that entities and their auditors are dealing with extra complexity, uncertainty and audit risk. The OAG has been encouraging entities to “tell their story” about the impact of COVID-19. Also, to draw attention to and help readers to navigate to COVID-19 disclosures, the OAG requires all audit reports that do not include key audit matters to include an emphasis of matter paragraph.
Discussions also touched briefly on the OAG’s views on the Monitoring Group’s report recommendations and the OAG’s approach to non-assurance services.
Part 2 of the Code
The Board considered the proposed amendments to Professional and Ethical Standard 1 to include Part 2 of the IESBA Code, in light of the comments made in the submission received.
In the conforming amendment to paragraph 300.5 A1, the Board questioned the appropriateness of the example given of preparing and presenting financial information for the assurance practitioner’s client, given this situation would be prohibited by the Code in respect of the assurance practitioner’s assurance client. The Board requested that this be clarified in the example.
The Board approved the amendment to Professional and Ethical Standard 1 to adopt Part 2, subject to out of session confirmation of the clarification to paragraph 300.5 A1.
Monitoring Group Report
The Board considered an analysis of the Monitoring Group’s recommendations and made the following comments:
- The composition of a multi-stakeholder board, the structure of the XRB, together with the opportunity to consult with the XRAP, strongly supports a broader consultation process, already reflecting the public interest.
- The broader non-financial information context seems to be particularly relevant to New Zealand.
- Whilst recognising that the public interest framework has been broadened usefully beyond a listed entity focus, there is a need to broaden it out further, to include the public sector, and all entity sizes.
- While it is important to be transparent, and have good documentation, the Board cautioned against building in a timely, onerous process that may slow the standard setting process down. There is a need to be flexible and nimble to address public interest matters.
- The Board cautioned against overly focusing on the characteristics of the public interest, while recognising the public interest responsiveness factors.
Agreed Principles of Convergence and Harmonisation Policy
The Board considered and provided preliminary feedback on proposed amendments to the compelling reason test and harmonisation policy as set out in the agreed Principles of Convergence to International Standards of the International Auditing and Assurance Standards Board (IAASB), and to the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA Code), and Harmonisation with the standards of the Australian Auditing and Assurance Standards Board (AUASB).
This review is being performed jointly with the AUASB, which also considered and provided preliminary feedback on the proposed amendments at their meeting in September. The objective of the review is to determine if the policy remains fit for purpose in the current auditing and assurance environment, both globally and in the two jurisdictions.
Staff from the two Boards will jointly consider the feedback received from both Boards resulting from the September meetings and develop a joint position for the two Boards to consider at a joint meeting in October.
Role and Mindset
The Board received an update on proposed amendments to the IESBA’s exposure draft, Proposed Revisions to the Code to Promote the Role and Mindset Expected of Professional Accountants, in response to feedback received from stakeholders.
The amendments are consistent with the feedback the NZAuASB provided to the IESBA in its submission on the ED, other than IESBA not accepting the Board’s suggestion to include in the Code that the professional accountant is responsible for maintaining and enhancing the public trust in the profession. The Board will consider whether to include this in PES-1 when considering the amendments in New Zealand, with reference to the compelling reason test.
The Board received an update on the compelling reason changes the AUASB was considering making at its September meeting in response to stakeholder feedback on its exposure draft on Agreed-Upon Procedures (AUP), and the rationale therefor. The Board considered and provided initial views on whether those changes would be appropriate in New Zealand.
The international AUP standard does not preclude restricting the use of the AUP report, whereas current practice in New Zealand and Australia is to do so. The international standard does require, in the AUP report, identification of the purpose of AUP report and a statement that the AUP report may not be suitable for another purpose.
Board members in favour of restricting the use of the AUP report expressed concern that users do not understand the purpose of the AUP engagement and may inappropriately rely or take assurance from the AUP report. Those with opposing views questioned whether mandating a restriction in all cases is in the public interest and whether the compelling reason test would be met.
The AUASB has since approved the international standard for adoption in Australia with some limited “compelling reason” changes. These include a restriction on use requirement that ties back to the terms in the AUP engagement and is therefore less of a blanket requirement than in the extant Australian and New Zealand standards.
The NZAuASB will consider those changes for adoption in New Zealand at its October meeting when it intends to approve the AUP standard, after considering submissions received and whether any proposed amendments meet the compelling reason test, in line with the harmonisation policy with the AUASB.
Please note that submissions on the NZAuASB ED are due on 15 September 2020.
Date And Time
- By video conference
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