NZAuASB Meeting 6 June 2018

Event Date 06 June

Date And Time

Location:
Level 7
50 Manners Street
Wellington

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Here is a summary of the main matters considered:

Audit of Service Performance Information

The NZAuASB considered submissions received in response to the exposure draft, ED NZAuASB 2017-2 New Zealand Auditing Standard XX The Audit of Service Performance Information

The Board proposed changes to the draft as a result of the submissions and further discussions with the New Zealand Accounting Standards Board and the Office of the Auditor-General.

It expects to perform a full read of a revised draft standard at its July meeting.

Due to the extent of likely changes to the standard, the Board intends to make the revised draft available to submitters on the ED for a limited “fatal flaw review” re-exposure, before final approval which is now expected to happen in September. The Board will also signal that it will undertake a post implementation review in three to four years after the standard is effective.

Independence requirements for other assurance engagements

The NZAuASB continued its discussion from its previous meeting on whether it remains appropriate to apply the stricter independence requirements in PES-1 for assurance practitioners conducting other assurance engagements, compared to the requirements in the international Code.

The Board considered whether the existing New Zealand provisions continue to meet the compelling reason test, acknowledging the recent enhancements made to the International Code, and being mindful of the NZAuASB’s mandate.

The Board agreed with the recommendations of its subcommittee that the compelling reason test for some of the proposals may no longer be met, noting that a principles-based rather than rules-based approach to independence in relation to other assurance engagements (i.e., those other than audits or reviews) is appropriate in line with the international approach. However, the Board intends to seek constituency views on a limited number of the extant requirements when it exposes the Code for comment. This is likely to happen following the Board’s July meeting.

The Board also decided that it will further consider the need to retain the extant long association provisions for other assurance engagements for regulated entities. Any potential changes will need to be considered against the compelling reason test.

Guidance for Audit Committees

As part of the ongoing co-operation between the NZAuASB and the Australian Auditing and Assurance Standards Board (AUASB), which includes reviewing the suitability of each other’s publications for use in their respective jurisdictions, the  Board considered the 3rd Edition of Audit Committees: A Guide to Good Practice published recently by the AUASB, the Australian Institute of Company Directors and the Institute of Internal Auditors.

The Board saw strong merit in the Australian publication, but noted that professional organisations, the Office of the Auditor-General, and some firms have already published guidance for audit committees in New Zealand. Given the extent of the guidance available, and being mindful of the mandate of the Board, the Board discussed whether there is a need to develop similar guidance in New Zealand.

The Board asked its staff to undertake further work on the matter, which it will consider when setting the 2018-2019 work plan.  

Submission to the IESBA on its strategy and work plan 

The NZAuASB discussed its proposed response to the IESBA Consultation Paper, Proposed Strategy and Work Plan 2019-2023, Elevating Ethics in a Dynamic and Uncertain World.

The Board agreed to emphasise the importance of the proposed work streams addressing trends and developments in technology and emerging or newer models of service delivery; to recommend acceleration of post implementation reviews of the recent changes to the long association and non-compliance with laws and regulations provisions (in light of the issues some jurisdictions are facing in implementing the provisions); and to reinforce the importance of the principles based approach in relation to the Code. It will also encourage the IESBA to consider alternate resourcing structures to achieve its ambitious work plan.

We encourage you to make a submission on the consultation paper. Submissions to IESBA are due on 16 July 2018.