The International Ethics Standards Board for Accountants (IESBA) has made changes to the auditors’ code, to enhance the independence provision of the Code of Ethics for Professional Accountants (the Code)
The changes will be effective from 15 April 2016 with early adoption permitted.
In future, auditors will no longer be permitted to provide certain prohibited non-assurance services (NAS) to public interest entity (PIE) audit clients in emergency situations, and ensure that they do not assume management responsibility when providing non-assurance services to audit clients.
The revisions include the removal of provisions that permitted an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations, as these were susceptible to being interpreted too generally.
In addition, the revised provisions include new and clarified guidance regarding what constitutes management responsibility; and clarified guidance regarding the concept of ‘routine or mechanical’ services relating to the preparation of accounting records and financial statements for audit clients that are not PIEs.
The revisions also include corresponding changes to the Code’s non-assurance services provisions with respect to other assurance clients.
IESBA chairman, Dr. Stavros Thomadakis, said: ‘These enhancements will not only further reinforce independence, but also promote greater consistency of application of the Code’s provisions in the 100-plus jurisdictions around the world where the Code is currently in use.’
The IESBA has also launched a new project to review the clarity, appropriateness, and effectiveness of the safeguards against threats to auditor independence in the Code, ‘particularly as these relate to the provision of non-assurance services to audit clients’, said IESBA technical Director, Ken Siong.
The details are available (login required) at http://www.ifac.org/publications-resources/changes-code-addressing-certain-non-assurance-services-provisions-audit-and-a