Page 1 | Proprietary and Copyrighted Information Long Association Task Force Marisa Orbea, Task Force Chair IESBA Meeting November 30-December 4, 2015 New York, USA
Page 2 | Proprietary and Copyrighted Information Report-Back September 2015 CAG – Cooling-off period for the EQCR Long Association Support not unanimous However recognition of careful balance reached between –EP and EQCR having the same cooling-off –Potential hardship Concerns expressed about complexity
Page 3 | Proprietary and Copyrighted Information Report-Back October 2015 Board Teleconference – Cooling-off for the EQCR Long Association General view that the draft reflects the Board’s intention Continuing concerns about complexity Questions about clarity of provisions and their application –FAQs drafted
Page 4 | Proprietary and Copyrighted Information Report-Back September 2015 CAG – Restrictions on Activities During Cooling-off Period Long Association No consensus view reached: either “off is off” or activities appropriate Some support for limited consultation after 2 years in the interests of audit quality No new perspectives
Page 5 | Proprietary and Copyrighted Information Report-Back October 2015 Board Teleconference – Restrictions on Activities During Cooling-off Period Long Association Concerns with tight restriction in E (limited consultation after 2 years) Some adjustments made by Task Force: –“individual within the firm” changed to partner within the firm –Limited to the firm expressing the audit opinion –Concerns with “no other individual with the expertise” Provision should apply whether cooling-off period is 3 years or 5 years
Page 6 | Proprietary and Copyrighted Information Report-Back October 2015 Board Teleconference – Recognizing Different Jurisdictional Safeguards Long Association Some wording changes to make provisions clearer: –Reorder of conditions –Deleted “following appropriate due process and based on jurisdictional circumstances” –Recommend leaving inclusion of an “independent standard setter” Concerns raised regarding: –Use of 10 years as a measure –Lack of alignment with EU regime unless joint audits are recognized
Page 7 | Proprietary and Copyrighted Information Joint Audits and Application of Jurisdictional Safeguards Long Association EU: initial firm rotation period of 10 years can be extended once up to a maximum additional 10 years with tender or 14 years with joint audit Current provision does not recognize joint audits as a safeguard Adding joint audit is consistent with EU regime, but –Adds further complexity –Leads firm to 24 year maximum term (instead of 20 years with retender) Should jurisdictional provision include reference to joint audit?
Page 8 | Proprietary and Copyrighted Information To Re-expose or not to Re-expose? Task Force Considerations Long Association Consider there is no need for further consultation before voting on the provisions Consider due process for re-exposure: (a)Substantial change to a proposal not aired in the ED so commentators have not had an opportunity to make their views known (b)Substantial change arising from matters not previously deliberated by the Board (c)Substantial change to the substance of a proposed international pronouncement
Page 9 | Proprietary and Copyrighted Information To Re-expose or not to Re-expose? Task Force Considerations Long Association Task Force recommends re-exposure for: –Jurisdictional safeguards provision –Cooling-off period for the EQCR –EP for part of the seven-year time-on period Task Force does not recommend re-exposure of any of the remaining provisions
Page 10 | Proprietary and Copyrighted Information Other Matters Long Association Frequently Asked Questions –To be included in the explanatory memorandum Effective date –Deferred pending Board consideration of re-exposure –Tentative extension of one year (to 2018) from the 2017 date proposed in original ED If ED approved Board will be invited to consider the questions to be included in the EM
The Ethics Board