20 June 2022

Comment Letter:
IESBA Consultation on Amendments to the Code of Ethics relating to the Definition of Engagement Team and Group Audits

On 24 May 2022, the WPK issued a comment letter on the proposed amendments to the Code of Ethics relating to the definition of engagement team and group audits.

In particular, the opinion critically refers to the following matters:

  • The market concentrations that could already be foreseen in ISA 600 (Revised) are further enhanced by these proposals. The background to this is the increased requirements to maintain independence for component auditors outside the network of the group auditor. Accordingly, reference was made to the WPK’s opinion on ISA 600 (Revised) (“New on” of 3 July 2020 – in German).
  •  A detailed analysis of the costs vs. benefits is not apparent and should be conducted before adoption.
  • Before adoption, the proposed regulations should be subjected to a field test to try out practical feasibility.
  • Some of the proposed definitions are hard to understand, which makes it difficult for the individuals concerned to assess whether they are subject to the independence requirements or not.
  • The use of the repeatedly used phrase “directly influencing the outcome” is unclear and should be more precisely defined.