page 1 | confidential and proprietary information definition of engagement team new york, december...
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Page 1 | Confidential and Proprietary Information
Definition of Engagement Team
New York, December 2012
Page 2 | Confidential and Proprietary Information
Category of respondent
Supportive Some concerns Not supportive
Member bodies 24 2 2
Firms 6 0 0
Regulators and Public Authorities
1 1 2
Individuals & others
1 0 1
Other professional organizations
5 1 0
Total 37 4 5
Overview of responsesDefinition of Engagement Team
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• Not supportive– 11 audit regulators from EU (representing Czech Republic, France,
Luxembourg, Malta, The Netherlands, Norway, Portugal, Romania, Slovenia, Spain and Switzerland)
– ICAC (Regulator - Spain)– IDW and WPK (Germany)
• Some concerns– IOSCO– APESB (Australia)– ACCA (UK)– CPAA (Australia)
Overview of responses Definition of Engagement Team
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• IOSCO comments:– IOSCO members have varying positions on direct assistance– Should not imply direct assistance is appropriate but aim to assist external
auditors conduct their work where direct assistance is permitted– IAASB and IESBA should jointly consider objectivity in situations where
direct assistance is permitted– Safeguarding requirements should be modified to cover following aspects
of direct assistance:• Re-performance• Should not represent significant portion of total audit work• Should not include matters of high risk or of high judgment• Should not use direct assistance if there is significant threats to objectivity of
the internal audit function– Reference to these safeguards should be made in the Code
Overview of responsesDefinition of Engagement Team
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• To address concerns raised in the IOSCO teleconferences and EAIG meeting the following changes are being proposed to ISA 610:– IAASB proposes adding guidance on when safeguards would be unable to
reduce threats to objectivity of the internal auditor to acceptable level (see paragraph A32x)
– Wording in paragraph 27 to include requirement to make inquiries of the internal auditor
– “stand-back” requirement for auditor to evaluate the planned use of the intrenal audit function (similar to the stand-back requirement for use of direct assistance)
– In paragraph 27 emphasize the need for the external auditor to independently evaluate the extent to which DA can be used
Conclusions of the combined IAASB and IESBA Task Forces
Definition of Engagement Team
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Proposed Revised Definition
Engagement team—All partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform assurance procedures on the engagement. This excludes external experts engaged by the firm or by a network firm.
In the case of an audit engagement, the term “engagement team” also excludes individuals within the client’s internal audit function providing direct assistance on the engagement in accordance with ISA 610 (Revised), Using the Work of Internal Auditors.1 This exclusion is relevant and applies only where such direct assistance is not prohibited by law or regulation.
1 ISA 610 (Revised) establishes requirements and provides guidance addressing the use of such direct assistance on an audit engagement
Conclusions of the combined IAASB and IESBA Task Forces
Definition of Engagement Team
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Effective Date
Proposal in Exposure Draft—Three months after publication of change
Revised proposal—Same effective date as ISA 610 (Revised) which is proposed to be for audits of financial statements ending on or after December 31, 2014
Conclusions of the combined IAASB and IESBA Task Forces
Definition of Engagement Team