CA ANZ has lodged a submission jointly with the ACCA on the IAASB’s exposure draft that proposes narrow scope amendments to ISA 700 Forming an Opinion and Reporting on Financial Statements and ISA 260 Communication with Those Charged with Governance. This is as a result of the revisions to the IESBA Code that require a firm to publicly disclose when it has applied the independence requirements for public interest entities (PIEs).

Overall, we support the IAASB’s proposals, however our submission raised some concerns for the IAASB to consider before finalising the proposed amendments.

Holistic approach

We encourage the IAASB to consider any proposed changes to the content of the auditor’s report with a holistic lens. Other current IAASB projects, such as fraud, and going concern, will likely result in further changes to the auditor’s report and the overall impact of the combined changes needs to be considered to ensure they are effective.

Need for jurisdictional flexibility

We believe that the IAASB should include an option for auditors to use other relevant mechanisms available in their local jurisdiction to make the required independence disclosures where appropriate. 

Transparency/understandability

While we understand the intention of the IESBA in introducing the disclosure requirement is to improve transparency, we heard mixed views as to whether the disclosure is achieving this aim. 

Review standards

We believe the IAASB should consider undertaking a broader revision of ISRE 2400 and ISRE 2410 to bring the standards for review engagement into alignment with the ISAs on this matter and other changes which have been made to the ISAs since the review standards were last revised.