19 May 2016 — Consultation Response
The Federation of European Accountants submitted its comments on the IAASB’s Invitation to Comment on Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits.
The Federation notes that a number of important issues have been identified in the ITC and supports most of the actions aimed at enhancing audit quality.
We express concern that a large number of the issues are predominantly regulatory-driven and thus are likely to have been developed from observations regarding large and complex audits. Also, the spirit of the clarity project is gradually getting lost; the IAASB should be careful not to end up at a point where standards will become overly complex. In addition, the IAASB should be careful to maintain a workable list of standards of usable length, especially when some are only relevant to large complex audits. The standards should be kept flexible enough for small- and medium-sized practitioners (SMPs) and have sufficient room so as not to inhibit innovations that will happen in the near future.
The ITC addresses the most relevant public interest issues. The fundamental public interest angle is public confidence in high quality financial reporting, and therefore audit quality. The Federation notes that the standards need to continue emphasising the need for professional scepticism and professional judgement to be applied, especially in the context of accounting estimates.
Please refer to the comment letter below for more information.
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