NOCLAR

In light of the issuance of the second IESBA NOCLAR exposure draft, potential changes to the International Standards on Auditing (ISAs) may be warranted to address actual or perceived inconsistencies of approach, or the scope of laws and regulations considered, with the IESBA Code when the final NOCLAR revisions become effective.

The IAASB agreed at its March 2015 meeting that it should consider issuing an exposure draft of any warranted limited amendments to the ISAs on an expeditious basis and, if possible, before the close of the comment period on the current  IESBA’s exposure draft on NOCLAR. This would enable stakeholders to consider any proposed limited amendments to the ISAs alongside the IESBA’s NOCLAR proposals, thereby facilitating a coordinated review of, and response to, both IAASB and IESBA proposals by stakeholders.

The IAASB unanimously approved a project proposal to consider the implications of the IESBA’s project on responding to non-compliance or suspected NOCLAR on the IAASB’s International Standards.

The IAASB agreed that, while it is not necessary to fundamentally revise the way the IAASB’s standards address NOCLAR, limited amendments to certain of the Board’s International Standards, in particular ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements, would be in the public interest. Accordingly, the IAASB unanimously approved an exposure draft that includes those amendments that the IAASB has determined are necessary to resolve inconsistencies of approach or scope or to clarify and emphasize key aspects of the NOCLAR proposals in its International Standards. The exposure draft was issued on July 23, 2015 with a comment period for a 90-day period. This timing allows for respondents to consider the IAASB’s proposals concurrently with the IESBA’s revised proposals and for the IAASB to provide feedback to the IESBA before it finalizes its proposals later this year.