On January 31, the Staff of the International Ethics Standards Board for Accountants (IESBA) released several frequently asked questions (FAQs) on the IESBA's recently revised fee-related provisions of The International Code of Ethics for Professional Accountants (including International Independence Standards). The new FAQs are split into two groups (one applicable to the audits of non-Public Interest Entities (PIEs) and the other applicable to audits performed for PIEs only).
Among other things, the FAQs address the following for non-PIE audit engagements:
• The meaning of various terms used in the revised fee provisions
• How factors included in the provisions impact the evaluation of threats created by fees paid by an audit client
• The relevance of a firm’s quality management system to the level of self-interest threat created by a client’s payment of audit fees
• What is meant by a “large proportion” of fees charged by a firm or network firm for services other than the audit
Among other things, the FAQs address the following for PIE audit engagements:
• Whether an engagement quality review performed according to ISQM 1 and 2 would be a sufficient safeguard when a firm identifies a fee dependency on an audit client
• Use of a joint audit to safeguard independence after five (5) consecutive years of fee dependency on an audit client
• Legal provisions preventing a firm from resigning as auditor after five (5) consecutive years of fee dependency on an audit client
• Timing of fee-related disclosure to those charged with governance of an audit client
The FAQs complement the Basis for Conclusions for the final fees standard and should assist national standards setters, professional accountancy organizations, and practitioners and firms as they adopt and implement the revised provisions. You can also read the Fees provisions here and the FAQs here.