IRBA Staff Audit Practice Alert 9: Guidance on EAR Rule for PIEs

---

IRBA Staff Audit Practice Alert 9: Guidance on EAR Rule for PIEs

• 21 September 2023
• Accounting
• South African Accounting Academy

This is complementary to the Independent Regulatory Board for Auditors (IRBA) Rule on Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities (EAR Rule) published on 15 September 2023. Refer to Alert of 19 Sep 2023

This IRBA Staff Audit Practice Alert contains guidance on how auditors may apply the EAR Rule in their independent auditor's report on the audit of financial statements of public interest entities. 

Overview of the guidance contained in the Alert:

1. Final materiality

• An explanation of the final materiality disclosed and how the auditor may describe the significant judgements applied in determining materiality, using language that is understandable to all users.

2. Scope of the audit of group financial statements

• This describes considerations in disclosing the scope of the audit in the context of group audits, as defined in the International Standard on Auditing (ISA) 600 (Revised), and the significant judgements applied by auditors in determining the group audit scope.

3. A description of how the auditor evaluated management's assessment of the entity's ability to continue as a going concern, where a material uncertainty related to going concern exists

• The Alert uses the existing guidance on Key Audit Matters (KAMs) contained in ISA 701 when describing how the auditor evaluated management's assessment.

4. KAMs for public interest entities, as well as outcomes and observations for Key Audit Matters

• A consideration of existing guidance on KAMs and guidance on avoiding discrete opinions on separate elements of the financial statements by giving examples of how outcomes and/or observations can be described in the KAMs, as well as the wording that can be avoided.

5. Fee-related matters

• The Alert applies the International Ethics Standards Board for Accountants (IESBA) guidance on fee-related matters, including considerations of what defines "fees". It also describes the application of the EAR Rule on fees for group audit and joint audit situations.

Remember that the EAR rule is effective for audits of financial statements of public interest entities for periods ending on or after 15 December 2024. Early adoption is permitted if the EAR Rule is early adopted.

The IRBA will also publish shortly, the proposed revisions to SAAPS 3 (Revised), Illustrative Reports. These revisions will provide practical assistance to operationalise the EAR Rule in the content and format of the auditor's report. 

Click here to download the Staff Alert:

https://www.irba.co.za/upload/IRBA%20Staff%20Audit%20Practice%20Alert%209_EAR%20Guidance.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Members of IRBA should stay up-to-date with the latest developments and plans that affect registered auditors.

• IRBA Rules issued must be adhered to by all registered auditors, as non-compliance may lead to disciplinary action.

• This new EAR Rule will apply to all your PIE clients. 

• Practitioners must be aware of the content of any guidance issued by IRBA in this regard.

Relevance to Your Clients:

• None

0 COMMENTS

LEAVE A COMMENT