IAASB amends standards to enhance auditor focus on non-compliance with laws and regulations

Friday, 7 October 2016 00:49 - - {{hitsCtrl.values.hits}}

The International Auditing and Assurance Standards Board (IAASB) has released International Standard on Auditing (ISA) 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements, and conforming amendments to other International Standards, which respond to new requirements in the International Ethics Standards Board for Accountants (IESBA)’s Code of Ethics for Professional Accountants addressing non-compliance with laws and regulations (NOCLAR).

The revisions enable the IAASB’s International Standards to continue to be applied effectively alongside the IESBA Code, and clarify and emphasise key aspects of the IESBA Code in the IAASB’s Standards.

“The IESBA has established clear expectations for professional accountants in responding to non-compliance with laws and regulations, representing an important contribution to the public interest,” said IAASB Chairman Prof. Arnold Schilder. “It is only fitting that the IAASB’s International Standards acknowledge and reflect these important changes, and thereby reinforce the public-interest role played by auditors and professional accountants who provide services covered by our standards.”

ISA 250 (Revised) will be effective for audits of financial statements for periods beginning on or after 15 December, 2017. Amendments to the IAASB’s International Standards for other services have a similar effective date.

“Among other enhancements, the changes to ISA 250 prompt the auditor to think about whether to report identified or suspected NOCLAR to an appropriate authority outside the entity, taking into consideration the provisions of laws, regulations, or relevant ethical requirements in their jurisdiction, and to consider the impact of NOCLAR on the audit,” explained Professional Standards Managing Director James Gunn. “It is important that the IAASB and IESBA have acted contemporaneously on such an important public interest matter.”

Also available is a staff-prepared document explaining the main changes from the extant ISA and other International Standards, and Basis for Conclusions, explaining the IAASB’s rationale for its decisions.