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Audit Evidence

Updated September 2023

Since the public consultation on proposed ISA 500 (Revised), Audit Evidence closed in April 2023, the IAASB has been considering respondents’ feedback. Key matters that have been discussed to respond to the feedback from the consultation include:

Further enhancements to the standard to modernize the requirements and application guidance for the auditor’s use of automates tools and techniques in audits of financial statements.

Clarifying key concepts to support practical application of the standard, such as the definition of audit evidence and the interrelationship between sufficiency, appropriateness, and persuasiveness of audit evidence.

Enhancements to the requirements for evaluating the relevance and reliability of information to be used as audit evidence, including the conditional requirement to obtain audit evidence for accuracy and completeness.

The stand-back requirement to evaluate the audit evidence obtained.

The next discussion will be at the December 2023 IAASB meeting, when the IAASB will consider revisions to the text of the standard. 

For further information, visit the Audit Evidence project page.

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Audits of Financial Statements of Less Complex Entities

Updated September 2023

The IAASB approved the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) at its September meeting. The final standard will be issued following the Public Interest Oversight Board’s due process approval, expected in December 2023. ISA for LCE will be effective for audits of financial statements for periods beginning on or after December 15, 2025, with early adoption allowed.

The IAASB is now focused on supporting stakeholders’ adoption and implementation efforts. Key matters being considered by the IAASB includes:

  • Implementation materials to help clarify and implement the requirements included in the ISA for LCE. This will include non-authoritative supplemental guides on the Authority of the standard and reporting under the standard. In addition, a first-time implementation guide will be developed.
  • Recognizing the importance of providing sufficient, appropriate and timely support for the adoption of the ISA for LCE, the IAASB is developing adoption materials and outreach with stakeholders.

Please note that adoption and implementation materials will be issued into Q1 & Q2 of 2024. For further information, visit the ISA for LCE project page.

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Updated September 2023

The IAASB is revising ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Since the approval of the project proposal in December 2021, the IAASB discussed this project at its 2022 meetings and 2023 June and September. Key proposed changes in ISA 240 aimed at promoting consistent practice and changing auditor behavior include:

  • Clarifying and emphasizing the auditor’s responsibilities related to fraud. Changes are being proposed to focus on the auditor’s responsibilities regarding fraud in audits of financial statements and reduce the ambiguity between the inherent limitations of an audit and the auditor’s responsibilities.
  • Reinforcing the exercise of professional skepticism throughout the audit. Enhancements are being proposed to reinforce the importance of maintaining professional skepticism when performing procedures related to fraud.
  • Emphasizing the importance of ongoing communications throughout the audit with management and those charged with governance (TCWG) about matters related to fraud. The IAASB is proposing changes that embody the ongoing nature of communications with management and TCWG about fraud related matters in all stages of the audit as reflected throughout the standard.
  • Applying a fraud lens on risk identification and assessment. The IAASB is proposing revisions to enhance and clarify requirements and application material to incorporate changes resulting from ISA 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement. The proposed changes are intended to focus on incentives/pressures, opportunities, and attitudes/rationalizations for fraud (i.e., fraud risk factors), including those arising from the entity’s tone at the top and performance measures.
  • Including robust work effort requirements if fraud or suspected fraud is identified. The IAASB is proposing to designate a separate section for required audit procedures when fraud or suspected fraud is identified, either through developing new requirements, relocating existing requirements, or elevating existing application material to requirements.
  • Including Key Audit Matters (KAMs) related to fraud in the auditor’s report to enhance transparency. The IAASB is proposing that additional disclosures on fraud should be included in the auditor’s report of listed entities and clearly signposted such that the users of the financial statements are readily able to find the KAMs related to fraud. The IAASB is proposing using a filter, similar to that used in ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report, for determining and communicating KAMs related to fraud.
  • Enhancing audit documentation requirements. The IAASB is proposing new or enhanced documentation requirements for specific aspects of the auditor’s work related to fraud.

The next discussion with the IAASB is at the December 2023 meeting, when an exposure draft of proposed ISA 240 (Revised) will be presented for IAASB approval.

For further information, visit the Fraud project page


Going Concern

Updated September 2023

In April 2023, the IAASB released an exposure draft on proposed ISA 570 (Revised 202X), Going Concern, for public comment until August 24, 2023.

The key proposed enhancements include:

  • Defining the term “material uncertainty” (related to going concern) and providing clarity for other terminology used in the standard (e.g., the intended meaning of the phrase “may cast significant doubt”).
  • Changing the commencement date of the period of management’s assessment of an entity’s ability to continue as a going concern to at least twelve months from the date of approval of the financial statements.
  • Strengthening requirements that:
    • Drive the auditor to obtain information that is relevant to the timely identification of events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern; and
    • Require a more robust evaluation of management’s assessment, including evaluating the method, assumptions and data used by management.
  • New requirements when management’s plans for future actions include financial support by third parties or related parties, including the entity’s owner-manager, for the auditor to evaluate the intent and ability of those parties to maintain or provide the necessary financial support.
  • Enhancing requirements and application material to enable a more robust exercise of professional skepticism when performing audit procedures, including when evaluating whether there are indicators of possible management bias.
  • Enhancing application material addressing scalability, which includes examples that demonstrate how the nature and extent of the auditor's procedures may vary based on the nature and circumstances of the entity.
  • With respect to the auditor’s work related to going concern:
    • Emphasizing how information from sources external to the entity may be leveraged; and
    • Modernizing the standard for the impact of technology.
  • Strengthening the requirements for timely, two-way communications with those charged with governance and including new requirements for communication with appropriate external parties.
  • Enhancing transparency about going concern in the auditor’s report, including:
    • Providing explicit statements about going concern in all instances (i.e., for audits of financial statements of all entities); and
    • For audits of financial statements of listed entities, describing how the auditor evaluated management’s assessment.

For further information, visit the Going Concern project page.


Listed Entities and Public Interest Entities (PIEs)

Updated September 2023

The IAASB is making narrow-scope revisions to the ISAs and ISQMs to respond to recent revisions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) regarding listed and public interest entities (PIEs). The project has two tracks:

  • Track 1: A faster-moving track focused on enhancing transparency about independence in the auditor’s report.
  • Track 2: Exploring revisions to the ISAs and ISQMs regarding the differential requirements for listed entities and the definitions of listed entity and PIE, including whether the extant differential requirements should apply to PIEs.

Track 1

In June 2023, the IAASB approved revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance, as a result of the revisions to the IESBA Code that require a firm to publicly disclose when it has applied the independence requirements for PIEs. The final pronouncement will be released in October 2023, subject to approval of due process by the PIOB. The revisions will be effective for audits of financial statements for periods beginning on or after December 15, 2024.

Track 2

There have been no new developments for Track 2 since the IAASB’s December 2022 meeting. At that time, the IAASB discussed:

  • Adopting the objective in paragraph 400.8 of the IESBA Code, which supports the purpose for establishing differential requirements for PIEs.
  • Extending the differential requirements in the ISQMs and ISAs for listed entities to apply to PIEs. The IAASB agreed to propose extending the differential requirements, with the exception of those in ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.
  • Adopting the IESBA definitions of PIE and “publicly traded entity” in the ISQMs and ISAs.
  • Incorporating a central list of factors and examples in ISQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements or Other Assurance or Related Services Engagements, and ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. The factors and examples would be:
    • Used to guide a firm or auditor in determining whether it is appropriate to apply differential requirements applicable to PIEs to entities other than PIEs.
    • Relevant to all differential requirements across the ISQMs and ISAs, to support consistency in application and judgment.

The next IAASB discussion will be at the December 2023 IAASB meeting, when the narrow scope amendments for Track 2 will be presented to the IAASB for approval of the exposure draft for public consultation.

For further information, visit the Listed Entities and PIE Track 1 and Track 2 project pages.

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Sustainability Assurance

Updated September 2023

In August, the IAASB issued proposed International Standard on Sustainability Assurance (ISSA)™ 5000, General Requirements for Sustainability Assurance Engagements (ED-5000) for public comment by December 1, 2023.

The IAASB has been developing this new, overarching standard for sustainability assurance engagements since September 2022. Key consideration in developing ED-5000 were:

  • Project objectives supporting the public interest: Proposed ISSA 5000 is responsive to the public interest need for a timely standard that supports the consistent performance of quality sustainability assurance engagements, and is suitable across all sustainability topics, information disclosed about those topics, and reporting frameworks, and is implementable by all assurance practitioners (i.e., profession agnostic).
  • Identified priority areas in developing the standard: ED-5000 addresses the conduct of an assurance engagement in its entirety (i.e., all elements of an assurance engagement). However, the IAASB specifically considered the requirements and application material for the following six priority areas as identified in the project proposal (i.e., providing more specificity and guidance): difference in work effort between limited and reasonable assurance; suitability of reporting criteria; the scope of the engagement; obtaining and evaluating evidence; the entity's system of internal control; and practitioner’s materiality.
  • Additional areas of focus: In finalizing ED-5000, other areas that required focus included certain key definitions; quality management; consolidated sustainability information; double materiality; fraud; sustainability-specific examples; and reporting, including the form and content of the assurance report.
  • The approach to drafting the new standard: The standard was developed leveraging existing IAASB standards and guidance. This entailed using material adapted from ISAE 3000 (Revised), ISAE 3410 (Assurance Engagements on Greenhouse Gas Statements) and the IAASB’s non-authoritative guidance on sustainability and other extended external reporting assurance engagements. In addition, certain ISAs were considered, to the extent the material is relevant to sustainability assurance engagements and are deemed necessary to supplement the other sources mentioned in providing an appropriate degree of specificity, but commensurate with proposed ISSA 5000 being an overarching standard.

The IAASB has a comprehensive plan for effective global outreach during the ED-5000 comment period that supports the actual and perceived quality of the IAASB’s due process by involving representatives of the broad range of relevant stakeholders across geographic regions and constituencies to enhance the IAASB’s understanding of technical, operational, and regulatory considerations affecting sustainability assurance engagements. The IAASB plans to provide an update and discuss feedback received from the global outreach activities undertaken at the December 2023 IAASB meeting.

To access the proposed standard and related materials, please visit the dedicated web page:

To follow the journey to the proposed standard, including IAASB meeting papers, visit the Assurance on Sustainability Reporting project page.

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Technology – Disruptive Technologies

Updated April 2023

The IAASB is taking an ongoing, dual approach to Technology matters:

  • Current and future workplan actions – Exploring how the IAASB can most effectively respond to technology via new or revised international standards or nonauthoritative guidance.
  • Impact of disruptive technologies – Exploring the effect on audit and assurance (in the current and future environments) in order to be prepared for technology disruption and able to respond appropriately to support audit and assurance quality.

The IAASB has released a number of resources, which are available on our technology focus area page. The IAASB meeting in March 2023 included updates on Disruptive Technology, as well as findings related to technology adoption and barriers to adoption from outreach. The IAASB provided their views and feedback, including suggested ways forward.

For further information, visit the Technology project page