The International Ethics Standards Board for Accountants (IESBA) has published an advisory paper to survey public views on considerations of auditor independence when reviewing the financial statements of investment funds and pension funds
. In the published paper, the Board explained the distinctive nature of funds compared to traditional business enterprises, including their importance to a wide range of stakeholders and the fact that their activities (functions and services) are usually carried out by other parties (Connected Parties) (such as fund managers, fund trustees, advisors...) Instead of employees who carry out such activities in traditional business enterprises. Accordingly, the Board noted in its paper that the magnitude of the complexities relating to the relationships, circumstances and interests associated with those funds makes it important for the auditor to take into account, when assessing the extent of his independence, those relationships, circumstances and interests relevant to the parties associated with the funds to which the definition of "related entities" and "audit client" and other guidance contained in the Charter may not explicitly apply. In the paper, the Board presents its views on the lack of adequate and explicit guidance in the Charter covering such relationships and circumstances for the funds, and the need to develop some additional guidance to bridge this gap; such as providing some determinants in the Charter that can be used as guidance in identifying the parties associated with the funds and whose relationships, circumstances and interests should be taken into account when assessing the independence of the auditing team.
The Saudi Organization for Chartered and Professional Accountants, represented by the Professional Conduct and Ethics Committee, expressed its support in principle for the justifications presented in the paper regarding the distinctive nature of investment funds and pension funds, and for the importance of providing additional guidance in the Charter that contributes to clarifying those relationships, circumstances and interests related to the parties associated with the funds that an auditor must take into account when assessing their independence when reviewing the financial statements of the funds. SOCPA also drew the Board's attention to some issues that it considered important to consider when developing this additional guidance.
SOCPA's detailed point of view can be found by
clicking here.