Audit Conduct

call (631) 849-2392

IESBA project proposals on Sept 2018 sgenda target fees and nonaudit services

The International Ethics Standards Board for Accountants (IESBA) meets in NYC on Sept 17-20, 2018. (Agenda and documents are available here.) Two of many topics on the agenda are fees and nonassurance (nonaudit) services, two areas that have been the subject of intense data-gathering in the past year or so (e.g., fees questionnaire, bench-marking reviews and global round-table discussions). Working groups responsible for each area have developed project proposals, which the IESBA will discuss and consider approving at the September meeting. A summary of each proposal follows: 

Project Proposal - Fees: 

  • Objective is to review the IESBA Code (Code) provisions pertaining to fee-related matters within the project scope and recommend any changes considered necessary for the Code to remain robust and appropriate in enabling professional accountants to meet their responsibility to comply with the fundamental principles and, where applicable, be independent.
  • Project scope: level of audit fees for individual audit engagements; fee dependency at the firm, office or partner level for public interest entity (PIE) audit clients (also considering whether a certain threshold would be appropriate for non-PIE audit clients); and fee related safeguards in the Code.
  • Other IESBA working groups and the IESBA planning committee will address two related topics, respectively: ratio of non-audit services fees to audit fees and firm business models.
  • Develop plan for coordinating efforts with the IAASB (International Auditing and Assurance Standards Board); also coordinate efforts with the work of the nonassurance services (NAS) or other working groups, as needed.
  • Update staff document, Ethical Considerations Relating to Audit Fee Setting in the Context of Downward Fee Pressure, to align it to the Code.
  • Timetable: An exposure draft recommending changes to the code expected in September 2019.
  • Resources: Project task force consisting of four individuals, supported by the IESBA staff.

Project Proposal - Nonassurance (NAS) Services: 

  • Objective is to ensure that the NAS provisions in the Code are robust enough and of high quality for global application.
  • Project scope: international 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.
  • Resources: Project task force consisting of four - five individuals, supported by the IESBA staff.