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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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If withdrawn, consider whether there should be more guidance in the Code on how breaches, particularly immaterial breaches, should be handled

9. 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

10. 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

11. 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

12. 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

13. 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

14. Questions?

15. The Ethics Board