Audit Policy Update

• Our new publication on audit quality indicators 
• CEAOB publishes documents on enforcement measures and inspections methodology 
• IAASB consults on its Strategy and Work Plan for 2024-27 
• Spain changes requirements for mandatory audit firm rotation

Our new publication on audit quality indicators

It is a common objective for all parties in the corporate reporting ecosystem to improve the quality of financial reporting. Consistently delivering high-quality audits is an essential element to achieve this. However, further work is needed to agree on the definition, drivers and indicators of audit quality.  

To support this objective and build on our factsheet (May 2022), our new publication Key factors to develop and use audit quality indicators (AQIs): 

• defines key concepts related to audit quality   
• presents considerations for developing AQIs 
• explains what can and cannot be achieved by AQI reporting  

AQIs are not ends themselves but are one important means to increase the audit work’s transparency and support consistent, high-quality audits. A blend of AQIs can help focus on the areas where improvement is needed. 

CEAOB publishes documents on enforcement measures and inspections methodology

The Committee of European Auditing Oversight Bodies (CEAOB) has made, amongst others, the below documents available.   

 Its report on the 2022 enforcement questionnaire: 

• relates to investigations and sanctioning by competent authorities and delegated authorities in European countries in 2021 
• focuses on administrative measures and sanctions linked to PIE and non-PIE statutory audits 

Read the main considerations, findings and statistics in the full report here. 

As part of the ongoing enhancement of the CEAOB inspection methodology, the Inspections sub-group (ISG) members adopted the common audit inspection methodology (CAIM) Firmwide Suite of working papers based on ISQM (International Standard on Quality Management). A public version of the working papers has been published on the CEAOB’s website. 

EU Digital Services Act requires audit of large online platforms and search engines

Providers of very large online platforms and very large online search engines shall be subject to independent audits at their own expense and at least once a year. This is to assess compliance with the selected obligations – for further details, refer to Article 37 of the Act. 

The European Commission is yet to publish here the delegated act with the details of the rules, methodology etc., for these audits. This should happen in the coming weeks. 

The Digital Services Act shall be fully applicable for all entities in scope from 17 February 2024. 

Read more 

IFAC releases new implementation tool for auditors on identifying and assessing risks of material misstatement

The tool aims to help auditors implement the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Auditing (ISA) 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement. The standard is effective for audits of financial statements for periods beginning on or after 15 December 2021. 

Read more 

IAASB consults on its Strategy and Work Plan for 2024-27

The International Auditing and Assurance Standards Board (IAASB) issued a public consultation proposing its proposed strategy and work plan for 2024-2027. 

The IAASB invites all stakeholders to comment on the proposed strategy and work plan by 11 April 2023. Accountancy Europe has already started working on its comment letter. 

Read more 

IAASB proposes a new section to its LCE auditing standard for group engagements

The IAASB proposes a group audit-specific section to the draft auditing standard for less complex entities (LCEs). The public consultation is open until 2 May 2023. Accountancy Europe will provide its input. 

Read more 

Accountancy Europe responds to PCAOB consultation on quality control systems

The US Public Company Accounting Oversight Board (PCAOB) opened a consultation proposing a new standard on current quality control standards. 

We submitted a high-level comment letter that addresses global aspects with a public interest lens and focuses on audit quality. 

Read more 

Spain changes requirements for mandatory audit firm rotation

Spain has amended its Audit Law concerning the mandatory audit firm rotation requirements in the following way: 

• from the maximum duration of the audit engagement set at 10 years + 4 years with joint audit. For details see our publication on countries’ rotation regimes from May 2022 
• to 10 + 10 years following a tender if one auditor, and to 10 + 14 years when joint audit