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IESBA Proposes Revisions to Independence Standards

By Nancy Fass
February 1, 2020
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The International Ethics Standards Board for Accountants released two exposure drafts that would further reinforce auditor independence.

 

Proposed Revisions to the Non-Assurance Services Provisions of the Code and Proposed Revisions to the Fee-Related Provisions of the Code are aimed at strengthening the nonassurance services (NAS) and the fee-related independence provisions of the International Code of Ethics for Professional Accountants.

 

Proposed changes to the NAS provisions include a prohibition on providing NAS to an audit client that’s a public interest entity (PIE) if a self-review threat to independence would be created; further tightening of the circumstances in which materiality may be considered in determining the permissibility of an NAS; strengthened provisions regarding auditor communication with those charged with governing; and stricter requirements regarding the provision of some NAS.

 

Proposed changes to the fee-related provisions include a prohibition on companies allowing the audit fee to be influenced by the provisions of services other than audit to the audit client; a requirement for PIEs to cease to act as auditor if fee dependence on the audit client continues beyond a specified period; and communication of fee-related information to those charged with governance and to the public.

 

The deadline for comments on the proposed changes is May 4, 2020. Comments can be submitted at ethicsboard.org.

 

Nancy Fass is a senior editor for IMA® (Institute of Management Accountants). She can be reached at nfass@imanet.org.
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