The IESBA issued an exposure draft in relation to proposed changes to the Code of Ethics relating to the definitions of ‘engagement team’ and ‘group audits’ following the IAASB’s revision of ISA 600 (Revised) Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors). CA ANZ and ACCA prepared a joint submission which was lodged on 31 May.

We connected with a wide range of members, including participating in several face-to-face and web-based sessions with various member groups, and obtained feedback from members who perform group audits.

The key points of our submission are:

• We generally agree with the proposed changes to the Code related to the revised definition of the term engagement team to ensure consistency between the IESBA Code and the ISAs. We are also generally supportive of the proposed changes to the definitions of the terms audit team, review team and assurance team, particularly in recognising that EQRs can be engaged both from inside and outside a firm, aligning these definitions with the IAASB’s ISQM 2.
• We have some concerns with the clarity of the drafting in relation to paragraph 400.C and when experts are considered members of the engagement team or audit team which could have unintended consequences.
• While we agree that firms and members of the engagement team should ideally be subject to the same level of independence requirements, we do have some reservations regarding some of the proposed requirements as they relate to component auditors outside the group auditor’s network having to comply with the PIE international independence standards irrespective of whether the component is a PIE or not. This could lead to unintended consequences to the audit market and audit quality, and we suggest the board consider whether it may be appropriate to include a consideration of both risk and significance of the component in determining whether PIE requirements should be applied.