1. Page 1 | Confidential and Proprietary Information Emerging Issues Jim Gaa, Member – Emerging Issues and Outreach Committee IESBA CAG Meeting New York, USA September 9, 2014

2. Page 2 | Confidential and Proprietary Information To consider fixed agenda, starting with Oct 2014 IESBA meeting –Presentation on potential emerging issues –Update on developments in key jurisdictions –Update on global adoption of the Code –Strategy for outreach Emerging Issues and Outreach Committee

3. Page 3 | Confidential and Proprietary Information SWP 2014-18 commitment to formalize monitoring of adoption Data as of March 2014 Information to be made available on IESBA website IESBA noted: –Regular updates useful –Helpful to understand how jurisdictions have adopted –Beneficial to have more granular data –Responsibility for overseeing adoption? Status of Global Adoption of IESBA Code

4. Page 4 | Confidential and Proprietary Information Adopted (84) # Europe (30)Azerbaijan, Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Georgia, Hungary, Iceland, Ireland,* † Kosovo, Latvia, Lithuania, Luxembourg, Macedonia, Moldova, Montenegro, Poland,* Romania, Serbia, Slovakia, Slovenia, Sweden, Turkey, UK, † Ukraine Americas (14)Barbados, Bolivia, Brazil, Cayman Islands, Chile, Colombia, El Salvador, Guatemala, Guyana, Mexico, Panama, Peru, Trinidad and Tobago, Uruguay Asia / Oceania (18)Australia, Bangladesh,* Brunei Darussalam, Cambodia, Fiji, Hong Kong SAR, Japan, Kazakhstan, Kyrgyzstan, Malaysia, Mongolia, Nepal, New Zealand, Philippines, Russian Federation, South Korea, Sri Lanka,* Uzbekistan Africa / Middle East (22) Benin, Botswana, Côte d’Ivoire, Ghana, Jordan, Kuwait, Lesotho, Kenya, Madagascar, Malawi, Mauritius, Namibia, Palestine, Rwanda, Senegal, Sierra Leone, South Africa,* Swaziland, Tanzania, Uganda, Zambia, Zimbabwe # Parts A, B and C of the 2009 Code, effective January 1, 2011 * Country has more than one professional body at different stages of convergence † UK/Ireland audits subject to UK FRC’s independence requirements, compliance with which will ensure compliance with IESBA Code Example of Tracking

5. Page 5 | Confidential and Proprietary Information G20 Countries Converging (4) Canada Indonesia Germany USA (Unlisted entities) Committed to adopt (1) India Adopted / Based on (12) AustraliaSouth Africa BrazilSaudi Arabia ChinaSouth Korea ItalyMexico JapanTurkey RussiaUnited Kingdom Example of Tracking

6. Page 6 | Confidential and Proprietary Information International Forum of Independent Audit Regulators (IFIAR) UK Financial Reporting Council (FRC) Canadian Public Accountability Board (CPAB) Recent Audit Inspection Reports

7. Page 7 | Confidential and Proprietary Information Report highlights: –For audits of listed PIEs, SIFIs and G-SIBs –Inspections of quality control systems –Recurrence of inspection findings Matters pertaining to independence Need for Board to work more closely with IFIAR Recent Audit Inspection Reports International Forum of Independent Audit Regulators

8. Page 8 | Confidential and Proprietary Information Report highlights: –Improvement in overall standard of audit work –Increase in proportion of audits of entities outside FTSE 350 –Increased focus on professional skepticism and effectiveness of independence & ethical policies and procedures Key areas requiring improvement Recent Audit Inspection Reports UK Financial Reporting Council

9. Page 9 | Confidential and Proprietary Information Matters pertaining to independence –Nature and extent of issues continues to concern –Audit committees should challenge firms to demonstrate independence Matters pertaining to Ethics –Targets for cross-selling of NAS in partner appraisal –Appropriateness of contingent fee arrangements for certain tax services –Identification and monitoring of KAPs from other network firms involved in audits –Disposal of shareholdings in audited entities Recent Audit Inspection Reports UK Financial Reporting Council

10. Page 10 | Confidential and Proprietary Information Trend in audit quality is positive Canadian firms taking challenge to improve audit quality seriously Improvements mainly due to action plans No access to audit work done in foreign jurisdictions Recent Audit Inspection Reports Canadian Public Accountability Board

11. Page 11 | Confidential and Proprietary Information Big Data / Data Analytics –Availability of data and science of examining this data –Firms moving quickly into this – auditing and consulting –Could change the way audits performed (internal and external) –Ethical and independence issues – e.g., self-review threats European Union (EU) Audit Reform Other Matters

12. www.ethicsboard.org The Ethics Board