This consultation follows on from the IAASB’s ED PIE – Track 2 and proposes to extend the differential requirements in the auditing standards (ISAs NZ) and quality management standard (PES 3), that currently only apply to financial market conduct reporting entities considered to have a higher level of public accountability, to all public interest entities (PIEs).

The main impacts would be requiring an engagement quality review (EQR) and the reporting of key audit matters (KAM) for large public sector entities and large not-for-profit entities (i.e., charities and soon to be incorporated societies).

In our joint submission with CPA Australia, we support the same definition of a PIE being used for the ISAs NZ, PES 3 and Code of Ethics (PES 1). However, there is little support for extending the EQR requirements to PIEs, and mixed views on extending the requirement to report KAMs to PIEs. The difficulty in reconciling such views may point to the need to revise the New Zealand definition of a PIE to better reflect an appropriate balance of entities subject to the differential requirements in the ISAs NZ, PES 1 and PES 3.