Our latest publication focuses on how the coronavirus outbreak impacts business environment and it aims to support European auditors in adapting their work on ongoing audits. To this end, we have analysed corona crisis related auditing guidance, issued by global institutions, national regulators and professional institutes. We highlight the main matters for auditors in 4 categories:
This paper supplements our previous publication Coronavirus’ impact on auditing for 2019 year-ends and beyond. As the situation evolves, we keep collecting new guidance on our webpage Coronavirus resources for European accountants
Accountancy Europe sent a letter to the International Auditing and Assurance Standards Board (IAASB), ahead of its crucial meeting, calling for progress towards a draft standard for auditing less-complex entities (LCEs).
This is especially urgent as:
We believe in using the existing ISA framework to draft a standard that is no longer too complex for LCEs’ needs as the current ISAs are. This will ensure consistent audit approaches globally.
During its meeting in the week of 15 of June, the IAASB decided to move forward with both workstreams as suggested in this agenda paper from the meeting:
Non-financial information (NFI) is vital for companies and stakeholders to make sound business decisions. It makes environmental, social and governance impacts transparent to support moving to more sustainable economies.
As the importance of NFI is growing, stakeholders also need to know if the information can be trusted. Independent, external assurance enhances the reported NFI’s reliability, strengthens confidence in markets and contributes to the global sustainable finance objectives.
Our new publication explores 3 conditions to develop and ensure high-quality NFI assurance:
We have responded to the European Commission’s (EC) public consultation on the Non-Financial Reporting Directive (NFRD) revision. In our response, we highlight the following to the EC:
On 18 June, the European Parliament (EP) Plenary adopted its non-binding own-initiative report on EU competition policy.
During the vote, the Plenary also adopted an amendment (see here nr. 45) tabled by Renew Europe Group as a whole, arguing that there is a ‘quasi monopoly’ of the audit market dominated by the Big Four. The amendment calls on the European Commission (EC) to separate audit from consulting services and to set up mandatory joint audits.
The amendment passed by a huge margin of 528 in favour, 95 against and 74 abstentions.
Although the EP’s report and the amendment are non-binding opinions, they do demonstrate the current mood in the EP.
The Public Company Accounting Oversight Board (PCAOB) issued the 2018 inspection reports for the six largest U.S. audit firms in a new, redesigned format.
This new inspection report format streamlines the report’s content to enhance readability. It also includes new information not previously communicated in inspection reports to enhance transparency, which is one of the PCAOB’s strategic goals.
An analysis carried out by Audit Analytics notes that overall, the number of inspections has been declining over the years. However, the percentage of audits that were considered to be deficient has been relatively steady since 2012, remaining between 35 and 40%. On average, the PCAOB has found about two issues per deficient inspection.
The IAASB issued illustrative examples for auditing accounting estimates. This is an implementation guidance which does not amend, extend or override the requirements of ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures. The two examples given illustrate how an auditor could address certain requirements of ISA 540 (Revised) for simple and complex accounting estimates, respectively.
Accountancy Europe submitted its comment letters to IESBA for Proposed Revisions to the Non-Assurance Services (NAS) Provisions of the Code and for Proposed Revisions to the Fee-related Provisions of the Code.
Following the shake-up in the audit sector, BDO has increased their market share and now audits the second-highest number of listed entities in the UK. It is the first time a mid-tier auditor has been in second place for listed client numbers. The rise suggests a shift in boardroom attitudes.