As we mentioned in last week’s blog, we are writing a series of blogs on the recent changes to the Ethical Standard for Auditors that have been become effective since 15 July 2021 and some changes to the ISQC1 ‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and other Assurance and Related Services Engagements’.
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, under 14 competency headings. IES 8 is issued by the International Accounting Education Standards Board (IAESB) sets out the competencies that you are expected to have if you are a responsible individual (RI), which the standard refers to as an ‘engagement partner’. The 14 competencies are too numerous to mention here – but they can be accessed at this link.
In brief terms the Audit Partner must:
- Reflect on what your CPD needs are
- Act – carry out the CPD activity or activities you have planned
- Impact – subsequently evaluate whether the plan was achieved and adjust if necessary
- Declare – be able to demonstrate with appropriate records that the required CPD has been fulfilled.
The ICAEW actually calls this the ‘RAID’ acronym – to make it easier to remember.
From 15 July 2021 the Ethical Standard for Auditors (paragraph 1.21) requires audit firms to file annual reports of breaches of the Ethical Standard on a calendar year basis:
- to the Irish Audit & Accounting Supervisory Authority; and
- their professional body;
- and also to those charged with governance of the audit entity concerned ‘in a timely manner’.
Where no breaches have occurred, ‘Nil’ reports are not necessary. The first reports will be due for the period 15/7/2021 to 31 December 2021. At the time of going to press, ACCA and Chartered Accountants Ireland have issued guidance on the correct approach and format of the reports.
An example of such a reportable breach would be where an audit firm is obliged to have an Engagement Quality Control Review (EQCR or hot file review) carried out, and did not do so, this would be a reportable breach.
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.