Auditor independence is vital to public trust in audited financial statements and contributes to audit quality. In recent years, audit firms’ provision of non-assurance services (NAS) to audit clients has come up as an issue that is perceived to affect auditor independence. 

To gain greater clarity on this, ISCA Ethics Committee set up a working group to formulate recommended practices that will strengthen auditor independence in relation to the provision of NAS. 

ISCA’s report captures findings from the survey of audit committee members regarding the recommendations as well as matters which impact auditor independence when offering NAS. 

Please click here for the full report.

ISCA also published an article to outline findings from the above survey report to obtain views of audit committee members on matters concerning auditor independence when providing NAS to audit clients, and how to address NAS independence concerns.

Please click here for the article.

Non-Assurance Services

IESBA issued the Exposure Draft (ED), Proposed Revisions to the Non-Assurance Services Provisions of the Code, in January 2020. The proposed revisions to the NAS provisions of the code include:

• A prohibition on providing NAS to an audit client that is a public interest entity (PIE) if a self-review threat to independence will be created;
• Further tightening of the circumstances in which materiality may be considered in determining the permissibility of a NAS;
• Strengthened provisions regarding auditor communication with those charged with governance (TCWG), including, for PIEs, a requirement for NAS pre-approval by TCWG; and
• Stricter requirements regarding the provision of some NAS, including certain tax and corporate finance advice.

ISCA went through a rigorous due diligence process to deliberate over the proposals in the ED which included soliciting feedback from the ISCA Ethics Committee, a one-month public consultation and survey of audit committee members.

Please refer to our section ISCA Comment Letters for more details on IESBA ED and ISCA comment letter submitted to IESBA in June 2020.

Fees

IESBA issued the ED, Proposed Revisions to the Fee-related Provisions of the Code, in January 2020. The proposed revisions to the fee-related provisions of the code include:

• A prohibition on firms allowing the audit fee to be influenced by the provision of services other than audit to the audit client;
• In the case of PIEs, a requirement to cease to act as auditor if fee dependency on the audit client continues beyond a specified period; and
• Communication of fee-related information to TCWG and to the public to assist their judgments about auditor independence.

ISCA went through a rigorous due diligence process to deliberate over the proposals in the ED which included soliciting feedback from the ISCA Ethics Committee, a one-month public consultation and survey of audit committee members.