Do you know your RITP from your IES 8?
Recent changes to the Ethical Standard for Auditors in Ireland mean that there is much less chance of auditing being a dull profession! The changes are the first to arise since the previous standard was issued in April 2017 and, following representations from the professional bodies, were postponed by over a year to allow for the impact of Covid-19.
Over the course of the next few weeks, we will be writing a number of blogs on the changes to the Ethical Standard for Auditors that have become effective since 15 July 2021 and as time moves on, implementation and the implications of these changes becomes more and more important , especially where they are not fully appreciated at the outset.
The first of these changes that we want to speak about is the change in emphasis of the definition of the ‘Reasonable and Informed Third Party’ (‘RITP’) which is a test of auditor independence.
This test applies especially at the planning stage but also, all throughout the audit, when the auditor is considering the independence of the audit firm and the audit team. Ethical Standard 1 now requires consideration of independence matters to be evaluated by reference to the perspective of an objective ‘RITP’.
The new definition of the ‘RITP’ refers to third party stakeholders which include, for example, the Revenue Commissioners, suppliers, customers, employees, management and shareholders of the audited entity. The previous definition referred to the ‘RITP’ as another audit practitioner. The change in emphasis could become a little more rigorous and challenging in certain circumstances.
There has also been a change in the scope and emphasis of the International Education Standard 8 (IES 8), which focuses on the reflection and planning of Audit Partner’s training requirements, but more on that next week.
For more details and implementation support on these changes, please refer to our just published Audit Quality Control Manual (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control). View the Table of Contents here.
We also have an up to date Anti-Money Laundering Procedures Manual (September 2021) – View the Table of Contents here.