Non-assurance Services Richard Fleck, IESBA Deputy and Working Group Chair IESBA Meeting Athens, Greece June 18-20, 2018

Objective To receive a preliminary report-back on the Washington DC and Paris roundtables

Activities Since March 2018 Meeting NSS meeting Forum of Firm meeting Finalization of NAS briefing paper Two roundtables Washington DC and Paris APESB offered to host additional roundtable in Australia jointly with NZ XRB

Topics Discussed at Roundtables General Policy Objective Materiality PIE and non-PIE provisions Unconditional NAS prohibitions (i.e., “black list”) New and emerging services Auditor communication with TCWG Disclosure and other matters

About Roundtables ½ day NAS session Introduction: Stavros Thomadakis NAS scene setting Washington DC: Richard Fleck Paris: Jens Poll NAS Breakout Sessions Washington DC: Chaired by Jens Poll and Gary Hannaford Paris: Chaired by Richard Fleck and David Clark NAS Report-back: Ken Siong and Diane Jules

Participants Attendees Washington DC Paris Investors, user advocates and regulators 5 3 Public sector organization 1 TCWG and preparers 4 Firms, including SMPC representative 11 13 NSS and IFAC member body 2 10 Academics - Other, including IAASB and IAESB representatives Observers – PIOB, CAG, Basel, PCAOB, H3C 34 37 Richard to mention that list of attendees are posted at the Roundtable webpage on the IESBA’s website

Feedback from RT Participants (1) Need for clearer and more explicit prohibitions Useful to continue to have a common set of NAS provisions at the global level Divergent views about how to achieve right balance Concept of “black list” has challenges Would make Code rules-based Important to continue to link NAS prohibitions to general provisions in CF to explain rationale for why prohibitions exist

Feedback from RT Participants (2) Materiality Divergent views about whether to retain as a qualifier General recognition that term is unclear Concern that it is subject to misuse or abuse If concept is retained, consider whether different terminology might be more appropriate If withdrawn, consider whether there should be more guidance in the Code on how breaches, particularly immaterial breaches, should be handled

Feedback from RT Participants (3) Materiality (cont.) Consider whether to use other terms like “acceptable” and “trivial and inconsequential” Calls for more guidance Too early to tell if new guidance in restructured Code is helpful Suggestions for a more explicit link to concept of RITP

Feedback from RT Participants (4) PIE and Non-PIE provisions Concern that SMPs may not have resources to implement PIE provisions and may opt out of providing audits Different descriptions/definitions of PIE contribute to complexity Typically PIEs = listed; decrease in number of listed entities in many jurisdictions Doubt about whether PIE and non-PIE continues to be appropriate approach (e.g., increasing trends for alternate funding sources) Urged to consider alternate approach

Feedback from RT Participants (5) New and emerging services Advancing technologies are blurring the lines b/w professional services and business relationships Inventory and understand new services and the types of threats that they might create Fundamental principles and general provisions in CF continue to be relevant, but interpretive guidance needed

Feedback from RT Participants (6) Communication with TCWG, Disclosure and Other Matters No support for fee caps Strong support for increased transparency about NAS and NAS fees Support for requiring auditors to obtain NAS preapproval from TCWG Auditor will still need to assert compliance with independence

Next Steps Further roundtables (Tokyo and Melbourne) IESBA Sept 2018 meetings Full review of roundtable and any NAS input on SWP CP WG recommendations Scope of possible standard-setting project IESBA CAG Sept 2018 discussion Project proposal anticipated by Q4 2018 Issues  Approach Proposed timeline

Questions?

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