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Update from IESBA

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On 28 April 2021, the International Ethics Standards Board for Accountants (IESBA) made revisions to the Non-Assurance Service (NAS) provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The revised provisions include certain new requirements that expressly prohibit firms and network firms from providing certain types of NAS to their audit clients, especially when they are Public Interest Entities (PIEs). In this regard, IESBA staff released a Questions and Answers (Q&As) publication for explaining the key revisions to the NAS provisions of the Code. The publication comprises of the following five sections:

  1. General prohibitions and applying the conceptual framework to NAS,
  2. Applying provisions relating to a self-review threat to independence, including when providing advice and recommendations to an audit client,
  3. Provisions relating to specific types of NAS,
  4. Firm communication with Those Charged With Governance (TCWG) about NAS, and
  5. Other matters.

Some of the key issues and revisions to the NAS provisions discussed in the publication include prohibition on assuming management responsibility when providing NAS to an audit client, identification and evaluation of threats to independence in relation to providing NAS to audit clients, additional considerations required in cases where multiple NAS are provided to the same audit client, exceptions to self-review threats and so on.

To access the text of the publication, please click here

Action Points for Auditors

  • The revised NAS provisions are effective for audits of financial statements for periods beginning on or after 15 December 2022. While similar provisions have not been included in the code of ethics issued by ICAI and applicable to audit firms in India, auditors undertaking assignments involving reporting to a parent entity/regulator outside India may need to comply with these provisions. Auditors may refer this publication to understand the entity-specific situations and events illustrated with the help of examples.
  • In line with the revisions being made to the Code, IAASB is pursuing a project to consider a number of matters relevant to the International Standards on Auditing, including whether and how to address the transparency requirements. Auditors should thus, watch this space for further developments.

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