Audit Policy Update

• The outcome of the CEAOB survey on materiality  
• IOSCO encourages standard-setters’ work on assurance of sustainability–related corporate reporting 
• The IAASB consults on revised audit evidence standard

The outcome of the CEAOB survey on materiality

The Committee of European Auditing Oversight Bodies (CEAOB) looked into the concept of materiality in its survey. CEAOB investigated how the Big 4 firms apply the concept in practice on a sample of Public Interest Entities (PIEs) audits and how audit committees perceive materiality in European Economic Area (EEA) countries.  

The survey noted similarities between audit firms and audit committees but also discrepancies and inconsistencies. It includes these recommendations: 

• standard setters may enhance the requirements on audit materiality while recognising the fundamental role of judgment in assessing audit materiality 
• auditors need to stand back and may reconsider certain aspects of their practice when assessing audit materiality 
• audit committees need to enhance dialogue with auditors on materiality matters 

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European Parliament publishes draft report on Pandora Papers

The draft report is the Parliament’s follow-up to the Pandora Papers leaks that appeared in October 2021. Niels Fuglsang (S&D/Denmark), the Member of the European Parliament (MEP), prepared the draft. Alongside with tax-related recommendations, it calls on the European Commission (EC) “to propose measures to clearly separate accountancy firms from financial or tax service providers as well as all advisory services”. 

The file is a non-legislative own-initiative report. The Parliament’s Committee on Economic and Monetary Affairs (ECON) is scheduled to vote on it on 31 January 2023.  

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IOSCO encourages standard-setters’ work on assurance of sustainability–related corporate reporting

The Board of the International Organization of Securities Commissions (IOSCO) welcomes the plans of the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) in this context.  

The plans include working towards high-quality, global assurance and ethics (including independence) standards. These will be profession-agnostic and can support limited, and ultimately, reasonable assurance of sustainability-related information. 

IAASB and IESBA acknowledge the growing trend of stakeholders seeking assurance of sustainability-related information. Responding to market demands with robust standards applicable to all sustainability assurance providers is vital, as they show with this work. 

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2023 appointments and re-appointments to the IESBA and the IAASB

The Public Interest Oversight Board (PIOB) has approved the 2023 appointments and re-appointments to the IESBA and IAASB. This is the final step in its newly established nominations process carried out with the Standard-setting Boards Nomination Committee (SSB NomCo). 

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The IAASB consults on revised audit evidence standard

The IAASB issued a public consultation on proposed changes to the International Standard on Auditing (ISA) 500, Audit Evidence. All stakeholders are invited to comment on the exposure draft by 24 April 2023. 

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