The International Ethics Standards Board for Accountants (IESBA) approved revisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the IESBA Code) to the definitions of the terms “listed entity” and “public interest entity” (PIE) in December 2021.
The International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs) include requirements specific to listed entities and refer to entities with public interest.
As a result, the International Auditing and Assurance Standards Board (IAASB) approved a narrow scope maintenance of standards project on listed entity and public interest entity with objectives to:
- achieve to the greatest extent possible convergence between the definitions and key concepts underlying the definitions used in the revisions to the IESBA Code and the ISQMs and ISAs to maintain their interoperability;
- establish an objective and guidelines to support the IAASB’s judgments regarding specific matters for which differential requirements for certain entities are appropriate;
- determine whether, and the extent to which, to amend the applicability of the existing differential requirements for listed entities in the ISQMs and ISAs to meet the heightened expectations of stakeholders regarding the performance of audit engagements for certain entities, thereby enhancing confidence in audit engagements performed for those entities; and
- determine whether the auditor’s report is an appropriate mechanism to enhance transparency about the relevant ethical requirements for independence applied for certain entities when performing an audit of financial statements.
The IAASB project will follow two tracks:
- Track 1 – a faster moving track to address (d) above, with a goal of having the same effective date as the IESBA revisions.
- Track 2 – a slower moving track to address (a), (b) and (c).
The Canadian profession complies with Canadian Codes of Conduct, which may differ from the IESBA Code. This project follows activities the IAASB is undertaking, as the AASB adopts revisions to ISQMs and ISAs in Canadian equivalent standards. The AASB will gather information to understand the differences between Canadian Codes of Conduct and the IESBA Code and their implications on possible revisions to Canadian Standards on Quality Management and Canadian Auditing Standards.