1. Professional Skepticism and Professional Judgment
Richard Fleck, Task Force Chair
IESBA CAG Meeting
Madrid, Spain
September 12-13, 2017

2. Objectives
To note report back on March 2017 CAG discussion
To discuss feedback on IESBA’s May 2017 ED and obtain Representatives’ views on Task Force response

3. Overview of Proposals
New AM to describe linkage b/w FPs and PS in the context of audits, reviews and other assurance engagements
Focus on how compliance with FPs support exercise of PS
Illustrative examples using three FPs with focus on f/s audits only
New AM to emphasize importance of PAs understanding facts and circumstances to exercise professional judgment when applying the CF to comply with FPs

4. Overview of ED Responses
Category of Respondent
Number of Respondents
Regulators and Oversight Authorities 2
National Standard Setters
Public Sector Organizations 1
Firms 9
IFAC Member Bodies 22
Other Professional Organizations 6
Total 42
Deadline for comments was July 25, 2017

5. Feedback on ED and Task Force Proposals
Professional Skepticism
Feedback on ED and Task Force Proposals
Support from majority of respondents, some believe that
IESBA should focus on LT PS project
PS guidance not necessary because it states what is implicit in Code
Drafting suggestions provided to clarify the description of linkage and to improve examples
Several revisions made to clarify how each FP example supports PS in a f/s audit

6. Matter for CAG Consideration
Professional Skepticism
Matter for CAG Consideration
Representatives are asked for views about Task Force’s revised proposals relating to PS

7. Feedback on ED and Task Force Response
Professional Judgment (PJ)
Feedback on ED and Task Force Response
General support, but some mixed views e.g.,
Some suggest elevating to a req’t while others believe AM is unnecessary because it states what is already implicit in Code
Improvements suggested to
Align even more closely to description of PJ in IAASB standards
Avoid using the word “sufficient”
Revisions address many respondents’ suggestions

8. Matter for CAG Consideration
Professional Judgment
Matter for CAG Consideration
Representatives are asked for views about Task Force’s revised proposals relating to PJ

9. Views about Longer Term PS Initiative
Feedback on ED
Views about Longer Term PS Initiative
No question asked, but some took opportunity to comment
Substantive majority of those who commented believed that PS should apply to all PAs
Exercise of PS is important for tax and consulting engagements; Code should explain role of PS for those NAS
Code should acknowledge that PS enables compliance with FPs
Coordination among IAASB, IESBA and IESBA
Approach taken by IAESB seems appropriate for the Code
Some cautioned against potential unintended consequences

10. Longer Term PS Initiative
June 2017 – IESBA considered Task Force proposals for progressing a longer term initiative which involve
Analysis of underlying concerns that lead to stakeholder calls for greater exercise of PS
Exploration of how to address issues at their root causes, mindful of need to avoid unintended consequence and meet public expectations
IESBA to consider draft PS consultation in March 2018
Task Force to further consider feedback about LT initiative