SOCPA Shares Its Comments on IAASB Exposure Draft Regarding amendments to ISA 700 and ISA 260

The International Auditing and Assurance Standards Board (IAASB) published an exposure draft regarding narrow-scope amendments to ISA 700 and ISA 260 concerning disclosure of independence requirements when auditing public interest entities (PIEs). The amendments are meant to align audit standards with the amendments the International Auditing and Assurance Standards Board (IAASB) is working on, which aim to set different ethical requirements (including independence requirements) for auditors to uphold and apply when auditing financial statements of PIEs. 

The proposed amendments revolve around adding professional requirements that oblige the auditor to disclose in his report these ethical requirements (including concerning independence), in addition to indicating this in his communications with those charged with governance on the Audit client's side. To implement this, IAASB has proposed in its exposure draft the use of a conditional approach to ISA 700 and ISA 260. The approach mandate that if the ethical requirements the auditors adhere to in their work oblige them to follow different ethical requirements (including Independence) when reviewing PIEs, then they must disclose these other requirements in their communication with the client's governance officers and in their professional report.  

IAASB has also asked in the draft for public feedback on whether it should consider similar amendments to ISRE 2400 “Engagements to Review Financial Statements”.

SOCPA, represented by the Auditing Standards Board, expressed its support in principle for adding the proposed amendments to ISA 700 and ISA 260. SOCPA believes that these amendments would enhance the harmony between professional and ethical requirements that the auditor must comply with and should prepare them to meet the stakeholders' high expectations regarding the audit of certain types of facilities "PIEs" SOCPA also supported the suggestion of adding similar amendments to ISRE 2400 due to the limited proposed amendments and to prevent the confusion that may occur due to the discrepancy between the requirements issued by IAASB and those by the International Board of Professional Ethics (IESBA). 

SOCPA detailed remarks can be found here.