1. IESBA Meeting New York September 17-20, 2018
Fees
Ian McPhee, IESBA Member and
Working Group Chair
IESBA Meeting
New York
September 17-20, 2018

2. Objectives of the Session
Receiving update on the view on the CAG to WG’s final report
Presenting the Project Proposal to address fee-related matters

3. Activities Since June 2018 Meeting
August - WG teleconference to prepare the Project Proposal
Coordination with Non Assurance Services WG (Chair and Staff level)
September - IESBA CAG meeting

4. Views of CAG Representatives
General support to the Final Report and the Project Proposal, including:
Approach to level of fees
Updating Staff Publication
Care would be required with arrangements for pre-approval and public disclosure - responsibilities would need to be clear
Discussion mainly on overlapping issue of Business Model and NAS
WG was encouraged to:
Coordinate with IAASB in relation to review of ISQC1
Consider guidance and educational materials to raise awareness

5. SMPC is generally supportive of project proposal
Views of SMPC
SMPC is generally supportive of project proposal
Strong support to limitation to audit engagements
Agrees to consider role of PAIB and raising awareness of the risk related to fee pressure
Concerns to the global application of potential changes to fee-dependency
Encourage coordination with IAASB (ISQC1 and ISA 220)

6. Project Proposal
IESBA decision in June 2018:
Initiate a project proposal to address fee- related issued identified in the final report
Coordinate with NAS WG on overlapping issues

7. Project Proposal
Scope of the Project
A review of the provisions of the Code with respect to the level of audit fees for individual audit engagements;
A review of the provisions of the Code with respect to fee dependency at a firm, office and partner level for all PIE audit clients,
including considering a specific threshold for non-PIE audit clients;
A review of the fee-related safeguards in the Code pertaining to the scope of this project.

8. The project will not address:
Project Proposal
Out of Scope Matters
The project will not address:
Ratio of non-audit services fees to audit fees paid by an audit client → NAS WG
Business model of firms → Planning Committee

9. Outline of the Project – Level of Fees
Project Proposal
Outline of the Project – Level of Fees
Review the responsibilities of the engagement partner and the firm for fees quoted to audit clients,
need for further enhancement to the Code ?
Review the responsibilities of PAIBs, with respect to the level of audit fees when taking part in appointing or reappointing auditors,
need to establish expectations in the Code ?
Level of
Fees

10. Outline of the Project – Level of Fees
Project Proposal
Outline of the Project – Level of Fees
Consider whether the provisions in the Code related to level of fees quoted continue to be robust and appropriate
they should be further strengthened ?
Review the transparency regarding how audit fees are quoted
need to include provisions to the Code?
Level of
Fees

11. Outline of the Project – Fee Dependency
Project Proposal
Outline of the Project – Fee Dependency
The Project will:
Review the application material in the Code in relation to fee dependency from all audit clients;
Review the requirements in the Code pertaining to fee dependency in relation to PIE audit clients;
Review how threats relating to fee dependency for non-PIEs might be addressed
including for example through use of thresholds.

12. Outline of the Project – Safeguards
Project Proposal
Outline of the Project – Safeguards
The Project will:
Review the fee-related safeguards in the Code
they are clear, appropriate and effective ?

13. Project Outputs The Project will include:
Project Proposal
Project Outputs
The Project will include:
New or revised requirements and application material
An updated version of the January 2016 IESBA Staff publication on fees aligned to the Code.
The Task Force may also provide recommendations to IESBA to
Commission off-Code guidance (i.e. staff publication)

14. Timing Indicative Timing Milestone September 2018
Project Proposal
Timing
Indicative Timing
Milestone
September 2018
Discussion of project proposal with IESBA CAG
IESBA approval of project proposal
March 2019
IESBA CAG and IESBA: Discussion of issues
June 2019
Discussion with national standard setters
First-read proposed changes to the Code
September 2019
Discussion with IESBA CAG
IESBA approval of Exposure Draft

15. Matters for Consideration
Views or any matters of emphasis?

16. Matters for Consideration
Do IESBA members approve the Project Proposal?