Commissioner McGuinness presented (see her full speech here) on 7 December the European Commission’s (EC) current thinking on:
Sustainability reporting and its assurance
The ongoing corporate reporting ecosystem initiative
The new CEPS/Milieu/Europe Economics study, see also the Executive summary, assesses the impact of the 2014 EU Audit Directive and Regulation and how the legislation achieved its objectives. Some of the main findings include the following:
The 183 amendments mostly add to, rather than extensively modify, the draft report’s existing recommendations. Several amendments relate to the provision of tax services by intermediaries or the recently announced division of activities of one of the major accounting firms.
ECON Committee is scheduled to vote on the draft report on 31 January 2023. This is a non-legislative procedure. Neither EC nor the member states are obligated to take legislative action based on the report’s recommendations.
The Council approved the Corporate Sustainability Reporting Directive (CSRD) on 28 November. After being signed by the President of the European Parliament and the President of the Council, the CSRD will be published in the Official Journal of the EU and come into force 20 days after its publication (before the end of 2022).
Accountancy Europe published FAQs providing a snapshot of the changes that the CSRD brings.
The International Federation of Accountants (IFAC) released the first instalment of a three-part publication series to help small- and medium-sized practices implement the International Auditing and Assurance Standards Board’s (IAASB) new quality management standards.
This supporting material aims to provide tips and guidance for practical implementation of the IAASB’s standards.
The IAASB’s suite of quality management standards was issued in December 2020 and will become effective on 15 December 2022.
The IAASB approved the exposure draft on a new Part of its less complex entities standard that addresses group audits on 9 December. It also approved the consultation paper on its 2024–2027 Strategy and Work Plan. Both should be issued for public consultation in mid-January.
The new policy paper provides an overview of the UK Financial Reporting Council’s (FRC) work on competition in the audit market to support an ongoing dialogue with stakeholders. It focuses on:
FRC states it wants competition that drives higher audit quality and market resilience.
Stakeholders can provide feedback on this paper to inform FRC’s ongoing work by 28 February 2023.
Read also about the FRC’s plan to introduce new support measures for smaller audit firms as their market share grows.
The FRC has issued a consultation on an Audit Committee Standard. This follows the Government’s White Paper Restoring Trust in Audit and Corporate Governance.
The Standard will apply to FTSE 350 companies. The draft Standard focuses on the audit committees’ responsibilities, including auditor tendering. In this context, it refers to the public interest in audit market diversity and the market as a whole having sufficient resilience, capacity and choice.
The deadline for comments on the draft Standard is 8 February 2023.
The US Public Company Accounting Oversight Board (PCAOB) proposed a new standard that would entirely replace the current quality control standards. The new standard follows a risk-based approach where a firm’s quality control system is grounded in proactively identifying and managing risks to quality.
The deadline for comments is 1 February 2023, and Accountancy Europe will submit high-level comments on the proposals.