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The IAASB’s final position is different from the position that was presented in the Exposure Draft of the IAASB PIE Track 2 Project due to a divergence issue between the IAASB PIE proposals and the IESBA PIE Revisions. The IAASB decided to finalise the narrow scope amendments to the ISQMs and ISAs by taking the following overarching standard-setting actions:
- Adopting the definition of Publicly Traded Entity (PTE), as defined in the IESBA Code, as a replacement term for “listed entity/entities” in the ISQMs and ISAs.
- Adopting the overarching objective and purpose for differential requirements in the ISQMs and ISAs, including the framework to determine when it may be appropriate to apply a differential requirement to entities other than PTEs.
- Amending the applicability of the extant differential requirements in the ISQMs and ISAs that apply to listed entities, to apply to PTEs.
The definition of PIE has not been adopted for the ISQMs and ISAs and therefore the extant differential requirements that apply to listed entities will only apply to PTEs for now.
This development is aligned to the position taken in our feedback to IAASB submitted in April 2024 on the previous exposure draft, which highlighted concerns about imposing differential requirements to all PIEs (including subjecting audits of PIEs to engagement quality review and reporting on KAMs, among other requirements).
Response to IAASB
We are generally supportive of IAASB’s revised position and provided the following comments:
- To allow early adoption of the amendments to provide firms an option to align the definition of PTE across the ethics standards (effective from 15 December 2024) and auditing standards.
- To apply the differential auditing requirements to PIEs conditionally, based on risk profile and jurisdictional scope.
Click here to read our detailed comments.
Click here for the IAASB Post-Exposure Consultation.