NZAuASB Meeting Highlights 26 July 2017
Here is a summary of the main matters considered.
The Audit of Service Performance Information
The NZAuASB considered an updated draft Invitation to Comment (ITC) and Exposure Draft (ED) on the audit of service performance information. The Board intends to approve the ITC and ED soon, and issue a Communique requesting comments.
Proposed international standard on auditing accounting estimates
The NZAuASB approved its submission to the IAASB on its proposed changes to ISA 540 Auditing and Accounting Estimates and Related Disclosures.
Overall, the Board supports the efforts of the IAASB, but raised significant concerns, with the main concerns being:
- the focus on the audit of financial instruments to the exclusion of estimates of the type common for SMEs and in the public sector;
- the introduction of new risk concepts; and
- an overly rules-based approach that is reflected in both the body of the standard and what is considered unnecessary content in the (very extensive) application material.
IESBA Exposure Draft Considered
The NZAuASB approved its submission to the International Ethics Standards Board for Accountants’ (IESBA) Exposure Draft – Proposed Application Material Relating to Professional Scepticism and Professional Judgment.
The Board supports the proposed additions to clarify what is already implicit in the Code.
Frequently Asked Questions Approved
The NZAuASB approved FAQs for:
The FAQs are based on those issued by staff of the International Ethics Standards Board for Accountants. They explain important aspects of the revised standard, including additional guidance relevant to the effective date and transitional arrangements, and how the requirements apply to group scenarios.
We considered it important to issue the FAQs now, even though the revised provisions are still out for consultation in New Zealand (submissions closed this week on 31 July). The Board will consider these at their next meeting.
These address further implementation issues that have been identified, in conjunction with the Australian Auditing and Assurance Standards Board (AUASB), including:
- differences in the auditor’s responsibility statements according to the type of entity;
- making reference to the XRB website in the auditor’s responsibility statements;
- the inclusion of a “Material Uncertainty Related to Going Concern” paragraph in the auditor’s report; and
- matters regarding special purpose financial statements and summary financial statements.
Guidance for prescribers of assurance requirements
The NZAuASB provided feedback on a first draft of guidance being developed for prescribers of assurance engagements, for example, policy makers and regulatory supervisors.
The objective of the proposed guidance is to clarify the correct terms to use when setting assurance requirements in accordance with the NZAuASB standards.
The Board will consider an updated draft at its next meeting, with a view to issue the guidance before the end of December 2017.
6 September 2017