Revised Definition of Public Interest Entity (PIE)

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The NZAuASB has issued Exposure Draft 2017-3 (ED) Proposed Amendments to Professional and Ethical Standard 1 (Revised) Definition of Public Interest Entity .

The international Code of Ethics defines ‘public interest entity’ to be all listed entities and any entity:

  1. defined by regulation or legislation as a public interest entity; or
  2. for which the audit is required by regulation or legislation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities.

Professional and Ethical Standard 1 (Revised) aligns the existing definition of a public interest entity with all those entities that report using the Tier 1 financial reporting requirements  as per the accounting standards framework. It includes those entities that are legally required to as well as those entities that elect to report using the Tier 1 accounting standards.

Defining a public interest entity in this way results in a much broader application of the public interest entity requirements. In particular, the NZAuASB acknowledges that this is far broader in application than the IESBA Code.

In response to feedback received on its consultation of ED 2017-1, the NZAuASB is proposing to amend the definition of Public Interest Entity in Professional and Ethical Standard 1 (Revised).

Accordingly, the NZAuASB proposes to amend the definition of Public Interest Entity to exclude those entities that are not legally required, but choose, to report in accordance with the Tier 1 accounting standards.

The NZAuASB believes that the proposed amended definition remains consistent with the spirit of the IESBA Code.

The NZAuASB proposes that the standard be effective on 15 December 2018.

We encourage all assurance practitioners—as well as other interested parties—to comment on the exposure draft.

Given the limited nature of the proposed amendment, the submission period is limited to 30 days.  Send your comments—both formal or informal—by 27 November 2017 to the NZAuASB.

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