Date posted: 2/05/2019 5 min read

Auditors of public interest entities - new training assessment required from 1 July 2019

The CA ANZ Board has approved changes to the continuing professional development requirements for auditors of public interest entities. The changes mirror those already in place for licensed auditors in New Zealand.

On 27 March the CA ANZ Board approved amendments to CA ANZ Regulation CR 7 Continuing Professional Development (CR 7). The changes require engagement partners conducting audits of public interest entities (PIEs) to make an assessment of their competencies in the areas of technical competence, professional skills and professional values, ethics and attitudes by 1 July 2019. The changes mirror those introduced in New Zealand in 2016 for auditors licensed under the New Zealand Auditor Regulation Act 2011.

The amendments incorporate the requirements of International Education Standard 8 Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (IES 8) issued by the International Education Standards Board. Adoption of these standards is a requirement of CA ANZ's membership of the International Federation of Accountants.

IES 8, and now CR 7, require engagement partners to apply an output based approach when making an assessment of their professional competence. To assist engagement partners comply, Appendix A of Schedule 3 to CR 7 includes a list of learning outcomes across a number of competence areas.

Audit engagement partners should read CR 7 immediately, please follow the link below.

Key Steps to achieve compliance with CR 7 Schedule 3

  • Before 1 July 2019 you must have completed (and documented) an assessment of your competence against each of the learning outcomes in Appendix A. This can be a self-assessment, as part of a performance evaluation process or similar evaluation. New Zealand licensed auditors will have already completed this step.
  • Identify any required learning, it is possible to assess that you have no learning activities in relation to a particular learning outcome(s), this should be documented.
  • Develop a plan to complete the required learning, the plan should prioritise the learning requirements.
  • The plan should ensure that the learning is completed in a reasonable period, this should not exceed three years.
  • On an annual basis update your evaluation of your competencies and your learning plan. Consider changes to your role, accounting or auditing standards, legislation and your clients.
  • Have your documentation ready to provide if requested by CA ANZ as part of our compliance and monitoring activities.

Frequently Asked Questions

Why do the new rules only apply to auditors?

The new IES 8 specifically applies to audit engagement partners.

Why do the new rules only apply to public interest entities?

IES 8 is applicable for all engagement partners. CA ANZ has initially mandated its application to engagement partners of PIEs as we feel that this is the sub-set of auditors that hold the greatest public responsibility and presents the greatest risk to the public if high standards of competency are not maintained.

What does output based mean?

The existing International Education Standards allow for IFAC member bodies to establish Continuing Professional Development (CPD) rules based on an input basis, an output basis or a mixed approach.

An output based approach "requires professional accountants to develop and maintain professional competence that is demonstrated by achieving learning outcomes relevant to performing their role as professional accountants" and an input based approach "requires professional accountants to develop and maintain professional competence that is demonstrated by completing a specified amount of learning and development activity relevant to performing their role as professional accountants".

At present the CPD regulations that apply to all members of CA ANZ are primarily input based, i.e. they are based on a certain number of hours of CPD over a period. However, in addition, IES 8 requires an output based approach for audit engagement partners, i.e. an approach based on the learning outcomes achieved.

Can I apply the requirements even if I don't audit any Public interest Entities?

Yes, in fact all audit engagement partners are encouraged to complete a voluntary self-assessment.

I am not the engagement partner can I apply the requirements?

Yes, in fact all audit partners and staff are encouraged to complete a voluntary self-assessment. Member's should adjust the learning outcomes to reflect their experience and career stage.

Do I still need to meet specific hour requirements for CPD?

The new requirements are intended to focus a member's learning activities in specific areas relevant to their role as an engagement partner. The requirement to complete 120 hours of relevant CPD per triennium remains unchanged.

Do I still need to meet specific hour requirements for audit and financial reporting training?

Australian members - Yes, CR 7 paragraph 4(a) requires members "to undertake at least 40% of your minimum CPD requirements in an area appropriate to the registration or licence that you hold" is unchanged and remains in place. You should plan your CPD to meet this requirement. If after your self assessment you have identified that you don't have any required learning activities you should contact us to seek an exemption from this element of CR 7.

New Zealand members - There is no specific hours requirement for the auditing and financial reporting components. CPD must be relevant and appropriate to demonstrate competence in the IES 8 learning outcomes.

What kind of learning activities can be included in my learning plan?

Any learning activity that helps you develop and maintain competence and contribute to one or more of your learning outcomes can be included in your learning plan. Examples include:

  • Participation in courses, conferences, and seminars;
  • Self-directed learning;
  • On-the job training;
  • Participation in and work on technical committees;
  • Developing or delivering a course or CPD session in an area related to professional responsibilities;
  • Formal study related to professional responsibilities;
  • Participation as a speaker in conferences, briefing sessions, or discussion groups;
  • Writing articles, papers, or books of a technical, professional, or academic nature;
  • Research, including reading professional literature or journals, for application in the professional accountant's role;
  • Professional re-examination or formal testing;
  • Providing professional development support as a mentor or coach; and
  • Receiving professional development support from a mentor or coach.

The outcome of the learning activity is of key importance, i.e. that it helps you develop and maintain competence relevant to your role.

What evidence do I need to keep to support my CPD records?

You should keep a record of the learning activities undertaken and the learning outcomes achieved as a result. The following examples suggest evidence that may be used to support different learning activities.

  • Attending a training course: a certificate of attendance or copy of the course notes;
  • Mentoring assistance: a copy of the mentor’s report or notes;
  • Private research in connection with a new audit engagement: a copy of your notes from the research or a relevant file note from the audit file;
  • Provision of training to staff: a copy of the speaking notes or the agenda;
  • Developing organisational skills: describing an example of an audit engagement that required significant project management;
  • Promoting audit quality: a copy of a communication to staff relating to audit quality

Read CR 7 Continuing Professional Development

Read CR 7 - Continuing Professional Development to understand the changes to CPD requirements for audit partners of public interest entities.

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