Overall, our submission supports the IESBA’s proposals to revise the global definition of a Public Interest Entity (PIE). In Australia and New Zealand, the local standard setting boards have adopted a more specific PIE definition that is broader than the extant PIE definition in the International Code, and broadly consistent with the expansions proposed in the ED.
We support the objectives set out regarding enhancing confidence in the audit of financial statements and also appreciate the IESBA’s proposal to develop a list of high-level categories for PIEs which also broadly align with the PIE definition in the local ethical standards in Australia and New Zealand. We provide recommendations to clarify the current drafting of objectives to better articulate that the need for additional independence requirements for PIE audits. We further recommend promoting global consistency, as these proposals are finalised, the IESBA facilitates focused education sessions/webinars in conjunction with local bodies to assist in harmonising the jurisdictional requirements where possible.
We generally support the proposed list of factors set out for determining the level of public interest in an entity but emphasised that it is important to balance these factors against each other when applying the proposed requirements to avoid an entity being classified as a PIE based on one factor alone. We suggested further outreach to better understand the precise information needs of investors and other users in relation to transparency disclosure for firms to disclose when additional entities are treated as PIEs and what if any, additional disclosure/information is necessary to achieve the intended benefits of providing this disclosure.
We acknowledge and support the ongoing efforts between the IESBA and International Auditing and Assurance Standards Board (IAASB) to achieve global consistency in setting international standards and recommend the boards continue to work together to harmonise definitions and other requirements in the standards.