Audit Conduct

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Ethics Board approves projects for nonassurance services, fees, professional skepticism and ISAE 3000 Revised

At its September 2018 meeting in New York City, the International Ethics Standards Board for Accountants (the Ethics Board) agreed to move forward with four projects, including projects that will examine the independence rules for performing nonassurance services (NAS) and the ethical and independence implications of various fee situations.

Summary of the Fees Project: 

Project scope: impact of low audit/assurance fees (including the role of professional accountants in
business in approving the level of audit fees); fee dependency at the firm, office or partner level for public interest entity (PIE) audit clients (and whether a certain threshold would be appropriate for non-PIE audit clients); and fee-related safeguards in the Code.

  • Coordinate efforts with the IAASB (International Auditing and Assurance Standards Board) and the NAS or other working groups, as needed.
  • Timetable: An exposure draft recommending changes to the Code expected in September 2019.

Summary of NAS Project:

Project scope: independence standards related to the provision of NAS to audit clients, including: whether the code should prohibit NAS that create self-review threats; whether to retain the use of materiality as a factor in evaluating threats; whether NAS provisions applicable to non-PIE vs. PIE audit clients should differ or be identical; new and emerging NAS (especially those involving new technologies), and whether they are adequately addressed in the code; requirements for the auditor's communication with those charged with governance (IAASB requirements and pre-approval of NAS); and NAS disclosure requirements.

  • Coordinate efforts with the IAASB, Fees Task Force and appropriate working groups, as needed.
  • Timetable: An exposure draft recommending changes to the Code expected in September 2019.

Other Projects: 

The Ethics Board also approved projects to address the exercise of "professional skepticism" for all professional accountants (not solely auditors). In light of comments received on the Board's consultation paper and roundtable discussions, the Board will reserve the use of the term "professional skepticism" for the audit and assurance context. The project will be re-titled, "promoting the role and mindset expected of professional accountants" with an exposure draft expected in 2019. 

ISAE 3000 revised is the subject of the fourth project and will involve a review of the terms and concepts in Part 4B of the revised and restructured Ethics Code (independence standards applicable to assurance services other than financial statement audits and reviews). An initial proposal is expected in December 2018 and exposure draft in March 2019.

The Board's podcast provides highlights and further details.