Non-assurance Services Richard Fleck, Working Group Chair IESBA CAG Meeting New York March 5, 2018

Objectives To obtain Representatives’ input on planned approach and timing for the NAS initiative To inform CAG about plans for stakeholder outreach/ roundtables on the topic

Overview of Initiative WG established in December 2017 To respond to PIOB and regulatory concerns Focus is on independence provisions applicable to the provision of NAS to audit or assurance clients WG attaches great importance to stakeholder input and reaction to the WG’s initial analysis and proposed approach

Overview of Developments Re NAS 2013 IESBA NAS Benchmarking 2015 Limited changes to NAS Provisions 2017 Revisions to NAS provisions as a result of enhanced CF and structural changes to Code Other developments New NAS requirements in local laws, regulations and Codes IESBA November 2017 Fees Questionnaire

Summary of WG Observations WG identified a number of specific issues in relation to which it seeks views at an early stage Whether to allow firms to take into account whether a potential threat is material or significant in deciding whether to provide a NAS Whether to distinguish between PIE and non PIE clients Extent of auditor communication with TCWG Nature of any requirements to disclose NAS fees Merits/achievability of alignment of NAS provisions in the Code with NAS provisions in local ethics req’ts

Planned Fact-finding Activities To define the parameters and scope of a future NAS project the WG plans to Review and analyze those issues raised by stakeholders in relation to existing NAS prohibitions Identify and understand any differences between the NAS provisions in the Code and ethics requirements in the G-20 jurisdictions Undertake stakeholder outreach → Global roundtable Take into account the final recommendation of Fees WG

Issues Identified (1) Revised and Restructured Code Resulted in significant enhancement of the NAS provisions Improvements to CF and examples of NAS safeguards But, respondents to Safeguards ED called for Code to be more closely aligned with local ethics req’ts Identified as a public interest matter by PIOB Code would be stronger and more credible with a clear list of prohibitions NAS should be approved by TCWG

Questions about whether NAS provisions in Code should Issues Identified (2) Questions about whether NAS provisions in Code should Include more prohibitions in relation to firms and networks Be strengthened in relation to communication with TCWG Include more disclosure requirements related to fees Establish fee caps Address audit fee related matters

WG Views and Observations Rationale for having global principle-based provisions PIEs versus non PIEs Applying the Conceptual Framework Materiality Advocacy Threats Reconciliation of NAS Provisions in G-20 Jurisdictions

Planned Approach and Timeline to Roundtables Date Planned Activities March 2018 Initial IESBA and CAG Discussions April 2018 WG meeting June-July 2018 Roundtables August 2018 September 2018 IESBA and CAG Discussions – Consideration of RT feedback December 2018 Report of fact-finding and WG recommendations

Matters for CAG Consideration Representatives are asked for views about: The issues identified and the WG’s views and observations The WG’s planned approach to fact-finding, including its plan for roundtables The WG’s planned timeline