1. Proposed ISRS 4400 (Revised)
Ron Salole, Agreed-Upon Procedure Task Force Chair
IAASB Meeting, New York
Agenda Item 5
September 18, 2018

2. Activities since March 2018
Task Force Activities since March 2018
1 physical meeting and 2 teleconferences
Presented 2 issues to the IAASB at the August 2018 teleconference
Outreach and coordination with other IAASB Task Forces
Teleconference with IESBA staff in August 2018 and ongoing communications with IESBA staff and the IESBSA member responsible for coordination with the IAASB
Meeting with the SMPC’s International Rapid Response Task Force in June 2018
Teleconference with Chair and staff of the ISQC Task Force in July 2018

3. Support for Support for project to revise ISRS 4400
CAG Discussion
Support for Support for project to revise ISRS 4400
Diverse views on independence
Some representatives were of view that independence should be required
IESBA Code doesn’t have separate standard on independence for AUP engagements
Others supported Task Force’s proposals
Should the nature of the AUP engagement drive independence requirements?
Questioned the change from ‘factual findings’ to ‘findings’
Suggestion made to enhance the illustrative reports
General support for proposals exposure period and effective date

4. SMPC Comments Project is very important
Support the engaging party and intended users assessing for themselves the procedures and findings reported by the practitioner, and drawing their own conclusions
Require a statement in the report where independence is required but the practitioner is not independent but render such a statement optional where independence is not mandatory
Clarify that AUP engagements exclude the use of Professional Judgment in the performance of procedures after they have been agreed
Agree that restrictions on the AUP report should not be required
Refer to the Engagement Partner having review responsibilities in Engagement Level Quality Control

5. Public Interest Considerations
Updating ISRS 4400 to better meet the needs of users for increased accountability around the use of grants that are often provided from public funds, and facilitating innovation and enhancing services available to entities of all sizes
Broadened scope to include both financial information and non-financial information.
Added examples of AUP engagements that satisfy users, such as regulators and others.
Explained that the term “information” encompasses all matters on which AUP are performed
Modernized the ISRS by adding requirements dealing with the role that professional judgment plays in an AUP engagement

6. Public Interest Considerations
Updating ISRS 4400 to better meet the needs of users for increased accountability around the use of grants that are often provided from public funds, and facilitating innovation and enhancing services available to entities of all sizes
Added application material that identifies areas in which professional judgment is applied
Enhanced explanations of what distinguishes assurance engagements and AUP engagements
Enhanced requirements dealing with compliance with laws and regulations and fraud

7. Public Interest Considerations
Providing clarity in the AUP report—Enhancing the report for clearer, more consistent language which will help clarify what was done and the results therefrom, thereby reducing confusion that may arise in practice about AUP engagements.
Enhanced requirements and application material on ensuring language used is clearer and more consistent
Added a requirement that the AUP report include a statement on the independence of the practitioner and referring to the ethical requirements followed

8. Public Interest Considerations
Reducing inconsistency in the performance of AUP engagements—redrafting using the clarity drafting conventions and other changes for clarification and enhancement
Drafted proposed ISRS 4400 (Revised) in clarity convention
Added a clear description of what an AUP engagement is and the value it provides
Set an objective and establishing the practitioner’s obligation on relation to that objective

9. Public Interest Considerations
Reducing inconsistency in the performance of AUP engagements—redrafting using the clarity drafting conventions and other changes for clarification and enhancement
Clarified the obligations imposed on practitioners by the requirements of proposed ISRS 4400 (Revised)
Eliminated any possible ambiguity about the requirements a practitioner needs to fulfil
Improved the overall readability and understandability of proposed ISRS 4400 (Revised)

10. Overarching Considerations
Option 3: Replicate ISRS 4410 (Revised) paragraphs 4, 23, A6-A11 and A25-A27 ISRS 4400 (Revised)
References to Quality Control
Effective date of ISRS 4400 (Revised) will not be contingent on revised ISQC 1 becoming effective
Facilitate the drafting of conforming amendments to both ISRS 4400 (Revised) and ISRS 4410 (Revised) when the revised ISQC 1 is finalized
Allow for a more holistic approach to addressing conforming amendments arising from the revised ISQC 1

11. Question 1
The Board is asked for its views on the Task Force’s proposed approach to address references to quality control in ISRS 4400 (Revised).

12. Significant Items in Exposure Draft
Scope of this ISRS
Para. 1-3, A1-A7
The AUP Engagement
Professional judgment – fraud and non-compliance with laws & regulations
Para. 4-7
Authority of this ISRS
Para. 8-11

13. Significant Items in Exposure Draft
Effective Date
18-24 months after issuance of final standard
Para. 12
Objectives
Para. 13
Definitions
Findings
Para. 14 and A10A

14. Significant Items in Exposure Draft
Conduct of an AUP Engagement
Para
Relevant Ethical Requirements
Practitioner’s independence
Reporting on relevant ethical requirements and independence (para. 29(f))
Coordination with the IESBA
Para. 18, A11-A13

15. Significant Items in Exposure Draft
Professional Judgment
Role of professional judgment in an AUP engagement
Fraud and non-compliance with laws and regulations (as discussed in para. 7)
Knowledge acquired from other engagements
Para. 19, A15-17
Engagement Level Quality Control
As discussed in References to Quality Control
Para. 20, A19-A21

16. Significant Items in Exposure Draft
Engagement Acceptance and Continuance
Clear understanding of procedures to be performed
Terminology
Other changes to engagement acceptance and continuance
Para and A22-A36; Appendix 1
Performing the AUP Engagement
Written representations
Para. 26, A37-A38

17. Significant Items in Exposure Draft
Using the Work of a Practitioner’s Expert
Additional example of a practitioner’s expert
Referring to a practitioner’s expert in an AUP report (para. 30 & A46)
Other considerations
Para. 27, A39-A40

18. Significant Items in Exposure Draft
The AUP report
Matters as previously discussed
Relevant ethical requirements – para. 29(f)
Referring to a practitioner’s expert in an AUP report – para. 30 and A46
Illustrations of AUP reports
Date of report
Other changes to reporting
Para and A42-A46; Appendix 2

19. Significant Items in Exposure Draft
Undertaking an Agreed-Upon Procedures Engagement at the Same Time as another Engagement
Para. 32 and A47
Documentation
Para. 33 and A48

20. Matters for Explanatory Memorandum
Other Matters
Matters for Explanatory Memorandum
Public interest
Significant changes
Quality control
Key issues – Findings; Relevant Ethical Requirements; Professional Judgment; Engagement Acceptance; and Practitioner’s Expert
Exposure Period – 120 days
Effective Date – months after issuance of final standard

21. The Board is asked for its views on:
Question 3
The Board is asked for its views on:
Whether there are any other matters that should be addressed in the Explanatory Memorandum.
The exposure period and the planned effective date.