EP 100 (revised on 7 September 2022) – Expected to be Effective 15 December 2022

Section

Revision

325

Objectivity of an Engagement Quality Reviewer and Other Appropriate Reviewers

The new Section 325 explicitly refers to and supports the requirement in Singapore Standard on Quality Management (SSQM) 2, Engagement Quality Reviews (SSQM 2) for a firm to establish, as a condition for eligibility, a cooling-off period of two years before an engagement partner can assume the engagement quality reviewer role on the same engagement.

The enhanced provisions emphasizes that this cooling-off requirement in SSQM 2 serves the dual objective of supporting compliance with the fundamental principle of objectivity and the high quality of engagements.

410

Fees

Key revisions to Section 410 of EP 100 to adopt the Fees FP and revised SG410.27A are as follows:

• Recognition that threats to independence are created when fees are negotiated with and paid by the audit or assurance client.
• New prohibition for firms not to allow fees for services other than audit to influence the audit fees.
• New guidance to help firms determine what would constitute a large proportion of fees for services other than audit to audit fee.
• Strengthened provisions to address undue fee dependency on audit clients that are public interest entities (PIEs).
• New provisions relating to fee dependency on non-PIE audit clients.
• New provisions to enhance transparency of fees paid by PIE audit clients to assist stakeholder judgments about auditor independence.
• For the revised SG410.27A, introduction of a new term, “audit-related services” (ARS) (defined in the Glossary of EP 100), applicable to audit clients that are listed entities to better inform the views and decisions of those charged with governance (TCWG). The revised SG410.27A will replace the extant SG410.4A and scope out from the fee proportion computation:
  • Non-audit services fees earned by the firm or its network firms from the audit client’s parent and sister entities; and
  • ARS fees.

600

Provision of Non-Assurance Services to an Audit Client

Key revisions to Section 600 and topic-specific Subsections 601 to 610 of EP 100 to adopt the NAS FP are as follows:

• New prohibition on audit firms from providing NAS that might create a self-review threat to PIE audit clients.
• Elimination of materiality as a factor in determining NAS permissibility for PIE audit clients.
• New provisions to enable more robust engagement between firms and TCWG of PIE audit clients about independence matters relating to NAS.

QM-related conforming amendments

The IAASB issued its suite of quality management (QM) standards in December 2020. This suite of standards which has been adopted locally comprises:

• SSQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
• SSQM 2 Engagement Quality Reviews; and
• Singapore Standard on Auditing (SSA) 220 (Revised) Quality Management for an Audit of Financial Statements.

As a result of the finalisation of the QM standards, EP100 (revised on 7 September 2022) contains conforming amendments to make reference to concepts and terminologies used in SSQM 1, SSQM 2 and SSA 220 (Revised).