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Page 3 | Proprietary and Copyrighted Information Overview of Responses Generally broad support for response framework across stakeholder groups Significant improvement vs. first ED Substantially the “right balance” Approach proportionate Concerns about operability and potential for unintended consequences addressed Balances expectations of PA vs responsibilities of management/TCWG
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Page 1 | Proprietary and Copyrighted Information
NOCLAR – Preliminary Update on ED Responses
Caroline GardnerNOCLAR Task Force Chair
IESBA CAG Meeting
New York
September 14, 2015
Page 2 | Proprietary and Copyrighted Information
Overview of Responses as of September 8
Category of Respondents #Regulators and public authorities 7
National standard setters 2
IFAC member bodies 23
Firms 8
Other professional organizations 9
Individuals and others 7
Total 56
• Many late submissions still to come….
Page 3 | Proprietary and Copyrighted Information
Overview of Responses
• Generally broad support for response framework across stakeholder groups
Significant improvement vs. first ED
Substantially the “right balance”
Approach proportionate
Concerns about operability and potential for unintended consequences addressed
Balances expectations of PA vs responsibilities of management/TCWG
Page 4 | Proprietary and Copyrighted Information
• Some split views on aspects of the proposals within the following stakeholder categories:– Regulators and public authorities
– IFAC member bodies
– Other professional organizations
• A few respondents not supportive of IESBA addressing the topic– Addressing PAs’ responsibilities regarding NOCLAR should be left to law or regulation
– The Code’s conceptual framework sufficient; proposals overly complex and prescriptive
Overview of Responses
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• Broad support for key aspects of the proposals:– Overall objectives
– Alignment of scope with ISA 250
– Differential approach among the four categories of PA
– Proposed courses of action and factors to consider in determining need for and nature and extent of further action
– Third party test re further action to meet objectives
– Documentation
Overview of Responses
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• Recurring concerns among some, e.g.: – No clear definition or guidance on meaning of “public interest” in objectives
– Entry threshold too low (“other than clearly inconsequential”)
– Potential for increased public expectations gap
– Adverse impact on trust relationship between PAs in public practice and clients
– PAs being placed at competitive disadvantage vs non-PAs
– Forensic-type/insolvency engagements scoped in
– High risk of retaliation for PAIBs
Selected Key Concerns
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• A “de facto” requirement to disclose to an appropriate authority?• Too much subjectivity in factors to consider (e.g. “substantial harm”)
• Lack of clear test will discourage disclosure; PAs erring on side of caution• Extension of auditor’s work effort and documentation beyond ISAs• Implications for cross-border engagements adequately addressed?• “Passing the buck” to auditors re non-auditors communicating to auditors?• Ethical for PA to accept bounty by disclosing in compliance with proposals?
Selected Key Concerns
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Next Steps
Timing Action
Oct 2015 Task Force meeting
Oct Update to IFIAR, Forum of Firms and EAIG
Dec Full IESBA review of ED comments; update to IAASB
March 2016Discussion with CAG and IAASB
IESBA approval under current structure and drafting conventions
June IESBA approval of restructured text for exposure
