Professional Skepticism and Professional Judgment

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Presentation transcript:

Professional Skepticism and Professional Judgment Richard Fleck, Task Force Chair IESBA Meeting Livingstone, Zambia December 4-8, 2017

Approach to Presentation Introductory remarks “Walk-through” revisions to proposed texts Summarize input since last meeting CAG meeting IAASB representatives of PSWG Thanks for advance input, including editorial refinements TF meeting this evening to turnaround document

Revisions Made Since Sept 2017 IESBA Meeting No changes of substance Changes responsive to suggestions received 120.13: Examples developed – general introduction followed by examples and then conclusion 120.5: Broadened range of areas to be considered Split final paragraph

120.13 A1/2: Fatal flaw comments from IAASB PSWG The drafted language in 120.13 A1, in particular the use of “and” appears to imply that currently, the exercise of professional skepticism supports compliance with the fundamental principles, a matter to be addressed by the IESBA’s Long Term PS project commencing in 2018 as noted in Agenda Item 5A. The manner in which the examples have been drafted in 120.13 A2 related to Integrity, Objectivity, and Professional Competence and Due Care suggest that profession skepticism is exercised simply through compliance with the fundamental principles.

120.5 - Application Material General Comment: Concern that the application material has implications for non-assurance engagements (e.g. Agreed-Upon Procedures and Compilations) - in particular at the effect on the work effort that may be required to determine that the fundamental principle of due care has been complied with.

120.5 A2: Fatal flaw comments from IAASB PSWG The phrase “obtain an understanding” used within the ISAs is associated with considerable work effort in an audit context—to avoid confusion, suggest using the phrase “understand” in paragraph 120.5 A2. The drafted language within paragraph 120.5 A3 appears to obligate the professional accountant to obtain additional information above and beyond the ‘known facts and circumstances,’ which is inconsistent with the drafting in 120.5 A2.

Fatal Flaw Comments from PSWG IAASB Reps Discussion