NZAuASB Meeting 24 July 2019

  • Auditing
  • Review
  • Professional & Ethical
  • Other Assurance
Event Date 24 July

Date And Time

Location:
Level 7
50 Manners Street
Wellington

This event has already taken place.

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Here is a summary of the main matters considered:

IAASB consultation on Less Complex Entities (LCEs)

The Board considered and approved the outreach plan to receive feedback from stakeholders and discussed preliminary draft responses on the matters raised in the discussion paper.

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The scope of the paper is limited to those matters within the IAASB’s direct control (for example, technological solutions to make the ISAs more accessible, while an obviously attractive option, are not considered). Matters such as the style and scalability of the ISAs are within the scope. The paper is asking for feedback on three possible actions:

  1. Reviewing the ISAs
  2. Developing a separate auditing standard for audits of LCEs; and
  3. Developing guidance for auditors of LCEs or other related matters.

The definitional question of what is an LCE assumes greater importance were option 2 to be considered. The Board discussed the working definition proposed by the paper, which draws on the current ISA definition of a “smaller entity”.

The Board will consider feedback received from the outreach conducted and approve its submission to the IAASB at its September meeting.


New Zealand Quality Management Standards

The Board has started to consider possible compelling reason amendments to the IAASB’s quality management proposals in order to develop a New Zealand exposure draft. The Board agreed that some of the extant New Zealand paragraphs are no longer required (including additional material to address public sector considerations, as these are addressed by the standards issued by the Auditor-General).

The Board further agreed to defer the development of a New Zealand ED until the finalisation of the IAASB standards. The main reasons for this are:

  • The mandate of the XRB may be expanded prior to the finalisation of the international standards to include “related services”, through the Bill that is currently before Parliament. If the mandate is expanded there may not be a need for the NZAuASB to amend the scope of the IAASB standard, which already includes related services.
  • If the IAASB does not address the need for additional support for the smaller firms to implement the proposals, it may be appropriate for the NZAuASB to consider the compelling reason test to address some of the key matters it raised in its submission on the international ED, such as the need to develop a “thinking list” to enhance risk-based quality management. The Board is unable to assess these needs until the IAASB has considered the submissions on the exposure draft and finalised the international standard.

New Zealand Conforming Amendments to the Auditing and Assurance Standards

The Board considered proposed changes to domestic standards and New Zealand paragraphs in auditing and assurance standards to address inconsistencies with the revised and restructured Professional and Ethical Standard 1[1]. The project is concurrent with the IAASB’s project to align the international auditing and assurance standards with the revised and restructured IESBA Code.

The Board intends to issue an exposure draft of New Zealand changes concurrently with the IAASB exposure draft, which is expected towards the end of the year.


Consideration of matters raised by the FMA

The Board considered a request by the FMA to review the existing requirement of our standards in relation to situations where, subsequent to issuing the audit opinion, the audit opinion is found to have been either incorrect or the evidence no longer supports the opinion.

The Board agreed that it would be helpful to include some more guidance about possible steps the auditor could take to prevent reliance on the auditor’s report. The proposed changes will be approved at a future meeting.


[1] Professional and Ethical Standard 1, International Code of Ethics for Assurance Practitioners (including International Independence Standards) (New Zealand)