IRBA issued an exposure draft of the Proposed IRBA Rules Arising from the International Standards on Quality Management (The proposed IRBA Rules) for public comment.
The exposure draft highlights the following proposed IRBA rules:
Proposed Rule 1: Firm Chief Executive Officer (CEO) A firm’s CEO should be a registered auditor (RA), subject to firms being allowed to appoint CEOs for their assurance divisions (the CEO must be an RA), if a different nonRA CEO is to be appointed for the non-assurance division (the CEO can be an RA or any other suitable individual).
Proposed Rule 2: Transparency Reports The mandatory annual preparation of transparency reports for firms, as defined in the Auditing Profession Act, as amended, that audit financial statements of listed entities.
Proposed Rule 3: Engagement Quality Reviews An engagement quality review should be performed for all audits of financial statements of public interest entities, as defined in the IRBA Code, in addition to those engagements scoped in by International Standard on Quality Management (ISQM) 1.
Proposed Rule 4: Engagement Quality Reviewer (EQR) and an Assistant to an EQR The engagement quality reviewer must be registered with the IRBA as a registered auditor. Further, an assistant to an engagement quality reviewer must have, as a minimum, three years of relevant expertise.
Proposed Rule 5: Assembly and Retention of Audit Documentation
- The assembly of the final engagement file shall not exceed 60 days;
- The retention period for the engagement documentation should be a minimum of five years, or such longer period as determined by other laws and regulations or firm policies/procedures; and
- The retention of documentation for the system of quality management should be a minimum period of five years, or such longer period as determined by other laws and regulations or firm policies/procedures.
IRBA recommends the following implementation timeline:
Proposed IRBA Rules 1-4 be effective 24 months (two years) after the IRBA Board’s prescription and/or publication of the Rules.
Proposed IRBA Rule 5 (Assembly and Retention of Audit Documentation) be effective 12 months (one year) after the IRBA Board’s prescription and/or publication of the Rule.
Context for the beginner Read the fact sheet about the Quality Management System here:
Read the Exposure Draft here
Comment on the Exposure draft
In Word and PDF formats, should be sent to email@example.com and submitted by 19 August 2022.