We support the introduction of a generic requirement to disclose in the report that an auditor is independent and that the auditor has auditor’s fulfilled the other ethical responsibilities under relevant ethical auditor’s requirements. However, we are not convinced that, even for an audit conducted within a single jurisdiction, it is practicable to refer to all of the sources of the relevant ethical requirements. In addition, it is not clear to us what benefit users of the report would have from such auditor’s disclosures in terms of decision-usefulness. For example, in Germany a reference to such sources for an audit performed entirely within Germany would need to include the Wirtschaftsprüferordnung [Public Auditor Law], the independence requirements in the Handelsgesetzbuch [German Commercial Code], and the requirements of the Berufssatzung [Professional Statute]. For firms in the Forum of Firms, an additional reference to the IESBA Code of Ethics may also be required. We are not convinced that these disclosures are helpful to users, particularly since there is considerable overlap between these requirements. We therefore suggest that the requirement in paragraph 28 (c) be phrased in generic terms such as the following: a statement that the auditor is independent and has fulfilled “Includes the other responsibilities under relevant ethical auditor’s requirements”. We note that paragraph 28 (c) in the draft uses the phrase “independent of the The relates not only to the entity, but entity”. term “independence” to parties and other conditions that are connected with the entity as defined by the Code. In addition, the auditor is required to be independent of the financial statements prepared by management to avoid the threat. For this reason, we believe the are both words “of entity” misleading and technically incorrect and therefore ought to be deleted. Disclosure of the Name of the Engagement Partner What are views as to the proposal to require respondents’ disclosure of the name of the engagement partner for audits of financial statements of listed entities and include a way “harm’s What difficulties, if any, may arise at the national level exemption”? as a result of this requirement?
We support the introduction of a generic requirement to disclose in the auditor’s report that an auditor is independent and that the auditor has fulfilled the auditor’s other ethical responsibilities under relevant ethical requirements. However, we are not convinced that, even for an audit conducted within a single jurisdiction, it is practicable to refer to all of the sources of the relevant ethical requirements. In addition, it is not clear to us what benefit users of the auditor’s report would have from such disclosures in terms of decision-usefulness. For example, in Germany a reference to such sources for an audit performed entirely within Germany would need to include the Wirtschaftsprüferordnung [Public Auditor Law], the independence requirements in the Handelsgesetzbuch [German Commercial Code], and the requirements of the Berufssatzung [Professional Statute]. For firms in the Forum of Firms, an additional reference to the IESBA Code of Ethics may also be required. We are not convinced that these disclosures are helpful to users, particularly since there is considerable overlap between these requirements. We therefore suggest that the requirement in paragraph 28 (c) be phrased in generic terms such as the following: “Includes a statement that the auditor is independent and has fulfilled the auditor’s other responsibilities under relevant ethical requirements”. We note that paragraph 28 (c) in the draft uses the phrase “independent of the entity”. The term “independence” relates not only to the entity, but to parties and other conditions that are connected with the entity as defined by the Code. In addition, the auditor is required to be independent of the financial statements prepared by management to avoid the threat. For this reason, we believe the words “of entity” are both misleading and technically incorrect and therefore ought to be deleted. Disclosure of the Name of the Engagement Partner What are respondents’ views as to the proposal to require disclosure of the name of the engagement partner for audits of financial statements of listed entities and include a “harm’s way exemption”? What difficulties, if any, may arise at the national level as a result of this requirement?
IDWCommentletterIAASBReportingonAuditedFinancialStatements_FINAL.docx