IESBA Meeting New York September 26-30, 2016 Long Association Richard Fleck, Task Force Chair IESBA Meeting New York September 26-30, 2016

June 2016 Tentative IESBA Decisions Three-year cooling-off period for EQCRs on audits of all PIEs Retain jurisdictional provision, i.e. cooling-off period for EPs on PIE audits may be reduced to three years where: Independent regulatory inspection regime in place; and Time-on period shorter than seven years; or mandatory firm rotation or mandatory re-tendering after a predefined period; or joint audits Revised but less complex formulation re how long to cool off if service in combination of roles

Final proposed Refinements Clarifications to emphasize that time-on period is determined on a cumulative (not consecutive) basis Explanatory paragraph 290.154 added; not representing a change in principle Deletion of references to ISQC 1 Cooling-off requirement applies to EQCRs on all PIEs, however appointed Clarifications to jurisdictional provision Not limiting joint audit condition to a predefined period Body responsible for independent regulatory inspection regime need not be the same legislator or regulator that establishes MFR, etc

Do IESBA members agree with TF responses? IOSCO Comments No issues being raised not previously considered No fundamental opposition to direction taken on remaining issues Detailed TF responses in Agenda Item 5-E Do IESBA members agree with TF responses?

September 2016 CAG Feedback Strong support for tentative Board decisions on the three remaining issues Three-year cooling-off period for EQCRs Jurisdictional provision If service in combination of roles, how long to cool off

September 2016 CAG – Matters Raised Clarify what a joint audit is TF proposal to clarify paragraph 290.163(a)(iii): “Joint audits where more than one firm has been engaged in the audit engagement and the audit report is signed by each of the firms.” Issue of EP moving immediately into an EQCR role Subject to further coordination with IAASB as IAASB’s review of ISQC 1 develops

Definition of Familiarity Threat Two options considered by LA and Safeguards TFs: Option 1 The threat that due to a long or close relationship with a client or employer, or with the financial information or other subject matter or subject matter information relating to an audit or other assurance engagement, a professional accountant will be too sympathetic to their the interests of the client or employer or too accepting of their the work produced by them. Option 2 The threat that due to a long or close relationship with a client, client information, or employer, a professional accountant will be too sympathetic to their interests or too accepting of their work.

Definition of Familiarity Threat Mixed views from the TFs Option 1 too complicated and unclear? Option 2 creating potential for unintended consequences? Safeguards TF suggestion to stay with extant definition until Board decides to review definition comprehensively Also, reference to “employer” in extant definition raising question of how Part C address PAIBs’ familiarity with their employers Views?

Proposed IESBA Staff Q&As (Agenda Item 5-G) Draft Q&As updated to reflect changes to re-ED Some Q&As deleted where not adding greater clarity Comments?

Proposed Restructured Text (Agenda Item 5-H) Comments?

Next Steps Timing Action Dec 2016 PIOB approval of due process for close-off document IESBA approval of restructured text for exposure Sept 2017 Full review of comments on ED of restructured text Dec 2017 Approve final restructured text