The exposure draft addresses in detail independence considerations for firms and individuals involved in an engagement to perform an audit of group financial statements. It also addresses the implications of the change in the definition of an engagement team in International Standard on Auditing (ISA) 220, Quality Management for an Audit of Financial Statements.

Among other matters, the proposals:

• Establish new definitions and revise a number of existing terms, including for application with respect to independence in a group audit context.
• Clarify and enhance the independence principles that apply to:
  • Individuals involved in a group audit.
  • Firms engaged in the group audit, including firms within and outside the group auditor firm’s network.
• More explicitly set out the process to address a breach of an independence provision at a component auditor firm, including reinforcing the need for appropriate communication between the relevant parties and with those charged with governance of the group.
• Align a number of provisions in the Code to conform to changes in the IAASB’s Quality Management standards.

With respect to the IESBA’s other exposure draft on amendments to the Code relating to technology, see “New on WPK.de” of 25 February 2022.