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By Helena Barton, Partner – Sustainability, Deloitte Denmark
Member, ACCA Global Forum for Sustainability
Chair, GRI Stakeholder Council

The revised ISAE 3000 standard brings welcome guidance to assurance practitioners engaged to obtain assurance on sustainability reports.

A key feature is that the ISAE 3000 now ‘stands alone’, i.e. practitioners can use it without reference to other auditing standards. One of the other changes is the ‘opening up’ of the standard to use by non-accountants, who are not subject to the same independence and ethics codes as professional accountants. It was clear that a growing number of non-accountants were (and are) declaring that they “complied with” or performed the assurance engagement “in accordance with” ISAE 3000, without stating which independence requirements and ethical frameworks they had complied with to perform the engagement – or perhaps without even realising that some significant ethics requirements and quality control standards underpinned ISAE 3000.

So to encourage greater transparency and correct misapplication of the standard, the IAASB decided to make it explicit that non-professional accountants can use ISAE 3000 as a standard for performing assurance engagements provided that they comply with professional or legal requirements for independence and ethics which are at least as demanding as those in the IESBA Code of Ethics for professional accountants and that they identify such requirements in the assurance report.

However, this revision might present a hurdle for some assurance practitioners who have not yet put in place the comprehensive ethics frameworks and quality control programmes that enable compliance. We may therefore continue to see unsupported formulations of reports which reference ISAE 3000 – and they may go unchallenged, unless somebody takes it upon themselves to do so.

The revised ISAE 3000 clarifies the scope and work effort for limited assurance engagements through the inclusion of tables which allow practitioners to more clearly see how a limited assurance engagement differs from a reasonable assurance engagement in practice.

It also provides more guidance for limited assurance engagements, which includes a better understanding of risk and response. And it requires practitioners to provide more detail in the assurance report on the actual work performed. Particularly for a Limited Assurance engagement, a description of the “nature, timing and extent of procedures performed” helps the users to really understand the conclusion made in the assurance report.

All in all, these are good developments, which we welcome. Users are entitled to expect objectivity, quality and professional scepticism to underpin any independent assurance engagement, and increased transparency around the work effort and controls to ensure this.


oil barrels

By David York, head of auditing practice, ACCA

There is an old saying that a fool can ask a question that a wise man cannot answer. Actually, in the age of the Internet I should not say that. Not particularly because of a change in the tools available to the wise man, but because I ought to check the actual wording of the statement and clarify whether it is a saying, a proverb, a truism or some other particular part of the English language.

Just for once, I’m not going to reach for the tools. Instead, let’s examine a question: ‘Do users of audited financial statements believe the introduction of a new section in the auditor’s report describing the matters the auditor determined to be of most significance in the audit will enhance the usefulness of the auditor’s report? If not, why?’ It is best not to examine the wording of the question too closely else we begin speculating on the meaning of ‘useful’ in this context, or on whether those answering can be expected to predict the future.

The question is the first posed in a public consultation by the International Auditing and Assurance Standards Board (IAASB). This ‘exposure draft’ is huge at 200 pages and is hugely important. There is a proposed new auditing standard on communicating ‘Key Audit Matters’, major revisions to five existing standards and a raft of conforming amendments to others. This will bring about the most visible change in auditing globally for well over a decade. For a listed entity, the auditor will publicly report the most important of the matters already communicated privately to, for example the company’s Audit Committee. This is not just a cut and paste, as the audiences are different and the very fact of disclosure will inevitably affect how preparers and auditors treat a matter.

The exposure draft is a significant stage in a project that has been firmly based on research and extensive outreach to stakeholders. Indeed, ACCA has already provided views in response to a 2011 Consultation Paper and a 2012 Invitation to Comment. Our own activities, including roundtables and research, have confirmed the need for change because investors are demanding more informative reporting.

In parallel with the exposure draft, which is open for comment up to 22 November 2013, the IAASB is proposing a field test to enable auditors and companies to experiment and the IAASB to learn whether its standards need further refinement to enhance the usefulness of the auditor’s report.

To get an answer to the question, using the internet as the research tool, it might be foolish to suggest that the IAASB would like every user of audited financial statements on the planet to state their belief and explain why, or why not, the proposals are good:

‘Do users of audited financial statements believe the introduction of a new section in the auditor’s report describing the matters the auditor determined to be of most significance in the audit will enhance the usefulness of the auditor’s report? If not, why?’

You can do that on the IAASB website (you will need to register). If you are an ACCA member or student you can also email your view to us and we will take your views into account when we respond to the consultation. See

A staff-prepared document highlighting considerations that may be of assistance to those who plan to undertake field testing is available on the IAASB website.

By Sue Almond, technical director, ACCA



I was fortunate to chair a roundtable on the future of audit while MEP Karim, rapporteur for the JURI committee on the EC audit proposals, was in New York recently on a fact-finding visit to understand more about the US and the global audit market, to consider the broader impact of the EU audit proposals. The roundtable attracted a wide range of attendees, and it was interesting to hear the perspectives from the US. Not surprisingly, much of the debate focussed on the critical EU proposals such as mandatory auditor rotation, tendering and non-audit services.

There were some general recurring themes that arose at the roundtable:

  • Although a single country, the US state system is not so different to EU member states – for example auditors are required to be registered with the state.
  • The distinction between public company audit (regulated by PCAOB and SEC) and private company audit (AICPA and state) is quite significant.
  • The rules on audit committees are set by the SEC. These tend to relate to the legal requirements, including independence of Audit Committee (AC) members, rather than the functioning of the AC, and there was strong support for an enhanced, and more transparent, role for the AC. There was general support for the role of the AC in evaluating non-audit service provision.
  • There was very strong disagreement with mandatory audit rotation across almost all sectors (in line with the feedback to the recent PCAOB consultation on the topic), and in fact the day before the roundtable a motion was tabled in Congress to prohibit any proposed rules on this. The practical impact on global businesses of potentially different mandatory rotation requirements in different jurisdictions was noted. However, it appears PCAOB may still be interested in pursuing rotation.
  • FASB will shortly publish going concern proposals. This is important because the current position is that management in the US have no requirement/responsibility to make a going concern assessment – it is purely the role of the auditor. This is causing significant problems for the IAASB in its auditor reporting project, where there is pressure for the auditor not to be generating ‘new’ information.
  • There was support for global standards, e.g. ISAs (International Standards on Auditing) and IESBA Code of Ethics.

MEP Karim published his final proposed amendments for the EU Audit proposals for vote just after the roundtable. They are very much in line with the position ACCA took on the original proposals more than 18 months ago:

  • We support adoption of global standards (e.g. ISAs, including on auditor reporting, IESBA Code, independence/non-audit services, ISQC1)
  • We support strengthening the role of the audit committee and increased transparency
  • We do not support mandatory rotation of auditors as we do not believe that there is evidence that supports an improvement in audit quality as a result
  • We do not support restricting the role of professional bodies, particularly in relation to the monitoring of auditors of unlisted entities.

Following the approval on MEP Karim’s report, the focus now moves to the Council. Let’s hope that they will recognise the good work that has been done in the Parliament as they now work on their revisions to the audit proposals …