IESBA proposes holistic approach to defining a PIE (Public Interest Entity)

IESBA proposes holistic approach to defining a PIE (Public Interest Entity)

• 15 February 2021
• Accounting
• South African Accounting Academy

IESBA proposes revisions to the definitions of Listed Entity and Public Interest Entity (PIE) in the Code of Conduct, and this has implications for South Africa.

When an entity falls within the definition of a Listed Entity and/or a Public Interest Entity (PIE) relevant laws and regulations may impose additional requirements relating to objectivity, independence, reporting, disclosure, and other requirements on the entity's auditors and may affect the entity. These additional requirements are designed to enhance confidence in audits of those entities. Firms may also be applying these definitions within their systems of quality management, reporting systems and policies and procedures. Accordingly, these proposed amendments need to be carefully considered by all practitioners.

Among other matters, the proposed revisions:

• Introduce an overarching objective for additional requirements to enhance confidence in the audit of financial statements of PIEs;
• Provide guidance on factors to consider when determining the level of public interest in an entity;
• Broaden the definition of PIE to additional categories of entities;
• Replace the term 'listed entity' with the term 'publicly traded entity' and redefine the PIE category;
• Introduce new requirements for firms to determine if additional entities should be treated as PIEs, for independence purposes, and to publicly disclose if an audit client was treated as a PIE; and
• Recognise and encourage local regulators to refine the PIE categories to cater for national conditions.

The IESBA invites all stakeholders to comment on the Exposure Draft by visiting the IESBA website. Comments are requested by 3 May 2021.

IRBA invites registered auditors and others to submit any comments regarding the Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code Exposure Draft, as IRBA prepares their response to the IESBA. Comments, in Word and PDF formats, should be sent to [email protected] and submitted by 19 April 2021.

Click here to access the Exposure Draft.

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