Long Association Task Force Marisa Orbea Task Force
![Long Association Task Force Marisa Orbea, Task Force Chair IESBA Meeting September 16 -18, Long Association Task Force Marisa Orbea, Task Force Chair IESBA Meeting September 16 -18,](https://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-1.jpg)
Long Association Task Force Marisa Orbea, Task Force Chair IESBA Meeting September 16 -18, 2013 Sydney, Australia Page 1
![Long Association Background • Summary of research • Key issues – Structural changes affecting Long Association Background • Summary of research • Key issues – Structural changes affecting](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-2.jpg)
Long Association Background • Summary of research • Key issues – Structural changes affecting the profession – General principles in paragraph 290. 150 – Rotation requirements that currently apply to PIEs – Exceptions to the rotation requirements – Requirements for non-PIEs Page 2
![Long Association Structural changes • • Mandatory firm rotation and mandatory tendering debates European Long Association Structural changes • • Mandatory firm rotation and mandatory tendering debates European](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-3.jpg)
Long Association Structural changes • • Mandatory firm rotation and mandatory tendering debates European Commission Green Paper UK FRC Corporate Governance Code U. S House of Representatives vote in favor of prohibiting PCAOB requiring mandatory firm rotation Page 3
![Long Association Paragraph 290. 150 • Research Findings – Familiarity vs. audit quality – Long Association Paragraph 290. 150 • Research Findings – Familiarity vs. audit quality –](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-4.jpg)
Long Association Paragraph 290. 150 • Research Findings – Familiarity vs. audit quality – Self Interest – Other safeguards • TF Considerations – Revision of framework – Enhancement of 290. 150 Page 4
![Long Association Paragraph 290. 150 • TF Proposals – Strengthen framework in 290. 150 Long Association Paragraph 290. 150 • TF Proposals – Strengthen framework in 290. 150](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-5.jpg)
Long Association Paragraph 290. 150 • TF Proposals – Strengthen framework in 290. 150 – Clearer introductory paragraph – Factors to consider when evaluating significance of potential threats – Examples of safeguards – If rotation is applied as a safeguard, other factors to be considered Page 5
![Long Association Involvement of Those Charged with Governance • Research Findings ‒ Majority believe Long Association Involvement of Those Charged with Governance • Research Findings ‒ Majority believe](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-6.jpg)
Long Association Involvement of Those Charged with Governance • Research Findings ‒ Majority believe that TCWG should not have a decision making role • TF Considerations ‒ TF agree that TCWG should not have a decision making role ‒ Consultation when exceptions sought ‒ Concerns over independence of auditor • TF Proposals ‒ TCWG involvement in rotation decision is not a safeguard Page 6
![Long Association Rotation Requirements for PIE Audits • • Who should be subject to Long Association Rotation Requirements for PIE Audits • • Who should be subject to](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-7.jpg)
Long Association Rotation Requirements for PIE Audits • • Who should be subject to rotation Duration of “time on” period Duration of “cooling off” period Permissible activities during “cooling off” period Page 7
![Long Association Who Should be Subject to Rotation • • • Lead Audit Engagement Long Association Who Should be Subject to Rotation • • • Lead Audit Engagement](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-8.jpg)
Long Association Who Should be Subject to Rotation • • • Lead Audit Engagement Partner Quality Control Review Partner Other partners assigned to the audit engagement Managerial staff assigned to the audit engagement Junior staff assigned to the audit engagement Page 8
![Long Association Duration of “Time On” Period • Research Findings – No clear preference Long Association Duration of “Time On” Period • Research Findings – No clear preference](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-9.jpg)
Long Association Duration of “Time On” Period • Research Findings – No clear preference - five and seven-year most common • TF Considerations – Familiarity vs. Audit Quality – Reduce vs. Maintain – Longer / shorter “time on” for certain PIEs • TF Proposals – Familiarity vs. Audit Quality – correct balance Page 9
![Long Association Duration of “Cooling off” Period • Research Findings – Two-year most common Long Association Duration of “Cooling off” Period • Research Findings – Two-year most common](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-10.jpg)
Long Association Duration of “Cooling off” Period • Research Findings – Two-year most common • TF Considerations – Perception concern – Increase vs. Maintain • TF Proposals – Considering no decrease in “time on” – split views on whether to increase two-year “cooling off” – Consider also whether all KAPs vs. LAEP Page 10
![Long Association Permissible Activities During “Cooling Off” Period • Research Findings – Responses split Long Association Permissible Activities During “Cooling Off” Period • Research Findings – Responses split](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-11.jpg)
Long Association Permissible Activities During “Cooling Off” Period • Research Findings – Responses split • TF Considerations – Exclusion from Engagement Team – Ability to impact audit outcome • TF Proposals – Additional guidance Page 11
![Long Association Exceptions to Rotation • Research Findings – Current exception requirements appropriate • Long Association Exceptions to Rotation • Research Findings – Current exception requirements appropriate •](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-12.jpg)
Long Association Exceptions to Rotation • Research Findings – Current exception requirements appropriate • TF Considerations – Audit quality vs. familiarity – IOSCO letter • TF Proposals – No further exception paragraphs – Amend 290. 154 Page 12
![Long Association Mandatory Rotation for Non-PIE Audits • Research Findings – Majority against mandatory Long Association Mandatory Rotation for Non-PIE Audits • Research Findings – Majority against mandatory](http://slidetodoc.com/presentation_image/48e358f93aab2a71aa99b971cfc21785/image-13.jpg)
Long Association Mandatory Rotation for Non-PIE Audits • Research Findings – Majority against mandatory rotation • TF Considerations – No evidence for mandatory rotation – Audit of financial institutions • TF Proposals – Improve guidance - 290. 150 Page 13
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