NZAuASB Meeting 5 June 2019
Date And Time
- Level 7
50 Manners Street
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Here is a summary of the main matters considered at the public session:
IAASB’s Exposure Drafts on Quality Management Standards
The Board considered the draft submissions on the IAASB’s suite of quality management exposure drafts, which were informed by the feedback received from outreach activities.
The main discussion of the Board focused on the submission on ED-ISQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.
The key message in the submission on ED-ISQM 1 is that the Board is supportive of the risk-based approach in enhancing audit quality management at the firms but is concerned that in their current form the proposals would be challenging to implement in practice, particularly for smaller practices and sole practitioners.
In its submission, the Board urges the IAASB to clearly articulate the benefits of the new approach and to develop implementation tools and guidance to assist small and medium sized practices (SMPs) with the resourcing challenges to implement the changes.
The Board also encourages the IAASB to consider the drafting conventions used in the exposure draft as the length and the density of the material may be a barrier to effective adoption.
The Board approved its submission out-of-session after considering feedback through the domestic submissions process, and from the outreach conducted in Australia and the Australian Auditing and Assurance Standards Board (AUASB) discussions on the proposals, to identify any common issues to highlight.
The Board approved the following submissions on:
- The IAASB’s Consultation Paper Extended External Reporting (EER) Assurance
- The IESBA ED, Proposed Revisions to Part 4B of the Code to Reflect Terms and Concepts Used in ISAE 3000 (Revised)
NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity
As previously reported, the Board approved the Exposure Draft New Zealand Standard on Review Engagements NZ SRE 2410, subject to the Australian Auditing and Assurance Standards Board's (AUASB) approval of an exposure draft of the equivalent Australian standard. The AUASB subsequently approved the Australian exposure draft, with some amendments to the review report requirements.
The two staff teams worked closely together to ensure the Trans-Tasman standards are harmonised. The NZAuASB intends to approve the updated New Zealand draft out of session during the first week in July.
Meeting with Rob Everett, Chief Executive, Financial Markets Authority
The Board had a very useful discussion with Rob Everett about the audit space in the current capital markets.
A challenge for the capital markets is the decrease in participation in listed markets and how to ensure confidence in the markets remain feasible. A key issue is the expectation gap investors have about the role of the auditor, as highlighted in the survey the FMA recently conducted.
The Board agreed it is important to continue to work with the regulator and others to try to address the expectation gap and specifically explore what we as standard setters can do to reduce the gap.