AUASB September Meeting

The AUASB meeting, held on 9^th and 11^th September 2020 dealt with a number of issues including:

• Businesses that qualified for the first round of JobKeeper, but are unable to qualify for JobKeeper 2.0 because they no longer satisfy the 30 per cent decline in turnover test, will still be able to access temporary Fair Work Act provisions for a further six months if they are experiencing a 10 per cent decline in turnover. The AUASB staff have worked closely with the Attorney-General’s Department to advise on the requirements for an independent accountant to provide the necessary ‘Decline in Turnover’ certificate which supports this.

• IESBA (the Ethics oversight body for accountants and auditors) is looking at audit firms who provide technology services to clients – it is likely that these will not be blacklisted so audit firms will be able to provide them to clients without independence being compromised.

• The Public Interest oversight Board (an international organisation for overseeing audit standards and ethics) will continue to oversee separate ethics and standards boards.  They will still be run by IFAC. This is important as there was a concern that the regulators might end up controlling audit standards. However, regulators will be asked to contribute financially so it will still be important that they do not exert too much influence – my concern has been that if regulators start setting unreasonable audit expectations, costs could increase significantly for no real benefit.

• Domestically, the AASB will be responsible for drafting non-financial reporting standards.  We are yet to see how these will interact with ASIC’s guidance on the OFR.

• It was noted in some offshore jurisdictions that the regulator or exchange had actually informed participants that it expected audited financial reports to take longer due to the coronavirus . Here, although allowed, it appears that market expectations and demands meant that for most of us meant that we adhered to the normal timetable, which may not have been ideal.

• The AUASB will be looking at doing a sector analysis for Key Audit Matters, particularly around going concern.  They will also look at feedback on how stakeholders have been reacting to the KAMs, so I will point them in the direction of the External Reporting Group.

• Doug Niven has changed roles within ASIC (promoted to Chief Accountant). He will focus on strategy, policy and technical matters relating to financial reporting and audit for ASIC. This includes ASIC’s international work with IOSCO and IFIAR.

• Thea Eszenyi will be Senior Executive Leader of ASIC’s Financial Reporting and Audit team (currently Senior Executive Leader of the Insolvency Practitioners team which will continue).  Thea will oversee operational matters relating to the audit firm inspection work and financial reporting surveillances.

• GS12 on Prudential Reporting for ADIs is going to be reissued.  It should be noted that APRA expect the financial statements auditor to be the prudential auditor but it is a case of emphasising this delicately to the public

• The IAASB (international Auditing and Assurance Standards Board) is going to be issuing a Discussion Paper on Fraud and Going Concern, tow of the areas highlighted by the PJCC in their interim report. A focus will be on cyber, and what needs to change from an auditing perspective in these areas. This will be important – the G100 noted in its response to the interim report that this was an area that had the potential to increase costs significantly without benefit and increase duplication unless it was reviewed carefully, so this Paper is timely. Most companies operate in a continuous disclosure environment and under ASX Listing Rules have to state that the financials are based on a sound system of internal controls that have been operating effectively, and the AUASB are well aware of this environment (and have the ability to ensure that International Standards meet local regulatory requirements).

• Finally, the FRC will be doing a survey of Audit Committee Chairs, so any encouragement or support that you can give to the Chairs to complete the survey and provide feedback in these unusual (I hope) times would be much appreciated.

The next AUASB regular meeting will be held on 1st December 2020.

Further discussion of the meeting highlights will be available shortly via the AUASB September 2020 Meeting Podcast featuring the AUASB Chair and Technical Staff Members.

For the official AUASB meeting minute please click here.