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

2. 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

3. Final proposed Refinements
Clarifications to emphasize that time-on period is determined on a cumulative (not consecutive) basis
Explanatory paragraph 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

4. 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?

5. 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

6. September 2016 CAG – Matters Raised
Clarify what a joint audit is
TF proposal to clarify paragraph (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

7. 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.

8. 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?

9. 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?

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

11. 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