Draft Minutes of the Public Session of the Meeting of the INTERNATIONAL ETHICS STANDARDS BOARD FOR ACCOUNTANTS CONSULATIVE ADVISORY GROUP (CAG)

Transcription

1 Meeting: IESBA Meeting Lcatin: New Yrk, USA Meeting Date: March 12-14, 2018 Agenda Item 1-E Draft Minutes f the Public Sessin f the Meeting f the INTERNATIONAL ETHICS STANDARDS BOARD FOR ACCOUNTANTS CONSULATIVE ADVISORY GROUP (CAG) Held n September 12-13, 2017 in Madrid, Spain PRESENT Kristian Kktvedgaard (Chair) Myles Thmpsn Némi Rbert Vãnia Brgerth Member Organizatins BusinessEurpe Accuntancy Eurpe (AE) AE Assciaçã Brasileira de Instituições Financeiras de Desenvlviment Niclaas van der Ende Basel Cmmittee n Banking Supervisin (Basel Cmmittee) Mhini Singh CFA Institute Cnchita Manabat Internatinal Assciatin f Financial Executives Institutes Eurpe, Middle East, and Africa Regin (IAFEI-EMEA) Jean-Jacques Dussutur Atsushi Ilnuma Huseyin Yurdakul Jim Dalkin Gaylen Hansen Henri Frtin Wei Meng Internatinal Assciatin f Insurance Supervisrs (IAIS) Internatinal Organizatin f Securities Cmmissins (IOSCO) IOSCO Internatinal Organizatin f Supreme Audit Institutins (INTOSAI) Natinal Assciatin f State Bards f Accuntancy (NASBA) Wrld Bank (WB) Wrld Federatin f Exchanges (WFE) Observer Organizatins Dawn McGeachy-Clby Simn Bradbury IFAC Small and Medium Practices (SMP) Cmmittee Internatinal Mnetary Fund (IMF) Prepared by: IESBA Staff (February 2018) Page 1 f 11

2 Martin Baumann U.S. Public Cmpany Accunting Oversight Bard IESBA Members, Representatives and Staff Dr. Stavrs Thmadakis Richard Fleck Helene Agélii Gary Hannafrd Sylvie Sulier Dn Thmsn James Gunn Ken Sing Diane Jules Jhn Mrrw Geffrey Kwan IESBA Chairman IESBA Deputy Chair Prfessinal Skepticism Task Frce Chair IESBA Member and Part C Task Frce Chair IESBA Member and Safeguards Task Frce Chair IESBA Member and IAASB Crdinatin Liaisn Structure Task Frce Chair Managing Directr, Prfessinal Standards Technical Directr Deputy Directr Manager, Standards Develpment and Technical Prjects Manager, Standards Develpment and Technical Prjects Public Interest Oversight Bard (PIOB) Michael Hlm APOLOGIES Marie Lang Erik Bradbury Obaid Saif Hamad Ali Al Zaabi Sanders Shaffer Anne Mlyneux Nigel James Paul Sbel Jaseem Ahmed Lucy Ellitt Gayani Perera Member Organizatins Eurpean Federatin f Accuntants and Auditrs fr SMEs (EFAA) Financial Executives Internatinal (FEI) Gulf States Regulatry Authrities (GSRA) IAIS Internatinal Crprate Gvernance Netwrk (ICGN) IOSCO Institute f Internal Auditrs (IIA) Islamic Financial Services Bard (IFSB) Organisatin fr Ecnmic Cperatin and Develpment (OECD) Sri Lanka Accunting and Auditing Standards Mnitring Bard (SLAASMB) Page 2 f 11

3 A. Opening Remarks Mr. Kkvedgaard welcmed all participants t the meeting. He welcmed, in particular, Mr. Hlm as the PIOB Observer, and the new Representative fr the IAFEI, Dr. Manabat. Mr. Kkvedgaard bid farewell t Messrs. Arteagitia and Bradbury and thanked them fr their cntributins t CAG. The minutes f the March 2017 meeting were apprved as presented. B. Prfessinal Skepticism (PS) and Prfessinal Judgement (PJ) Mr. Fleck intrduced the tpic, recapping the bjective f the prject t develp new applicatin material t: (a) (b) Describe hw cmpliance with the fundamental principles in the Cde supprts the exercise f PS in the cntext f audit and ther assurance engagements; and Emphasize the imprtance f prfessinal accuntants (PAs) btaining a sufficient understanding f the facts and circumstances knwn t them when exercising PJ in applying the cnceptual framewrk t cmply with the fundamental principles and where applicable, be independent. Representatives nted and had n cmments n the reprt-back n the March 2017 CAG discussin. SHORT-TERM PROJECT Mr. Fleck then summarized respndents feedback n the May 2017 Expsure Draft, Prpsed Applicatin Material Relating t Prfessinal Skepticism and Prfessinal Judgment (PS-PJ ED) and the Task Frce s related respnses. Representatives expressed general supprt fr the Task Frce s prpsed revisins t the text f the PS- PJ ED. Amng ther matters, the fllwing were raised: Mr. Kktvedgaard questined the apprpriateness f the wrd cmmensurate as used in the secnd sentence f paragraph A1 1 which reads Prfessinal judgment in turn invlves the applicatin f prfessinal knwledge, skill and experience, cmmensurate t the nature and scpe f the prfessinal activity... Mr. Dalkin questined whether the new applicable material relating t PJ in the Cde was cnsistent with the material relating t PJ in the IAASB s Internatinal Standards. Mr. Hansen wndered abut the wrd supprts in the statement describing the relatinship between the fundamental principles and PS in paragraph A1, nting that it can be cnfusing which way it shuld wrk. Mr. Fleck explained that there are brader issues relating t PS that will be addressed as part f a lnger-term prject. He nted that as an interim step, the fcus f the shrt-term prject is n explaining the relatinship between PS and the fundamental principles in terms f hw the latter supprt the frmer in the cntext f audits and ther assurance engagements. Mr. Iinuma nted that the Cde establishes the expectatins f PAs regarding cmpliance with the fundamental principles. Firms rle in that regard is essential in that it is imprtant fr them t establish a quality cntrl system t enable all their prfessinal staff t cmply with the Cde. Accrdingly, he hped that the IESBA wuld crdinate its wrk n the lnger-term with the 1 Part 1 Cmplying with the Cde, Fundamental Principles and Cnceptual Framewrk, Sectin 120, The Cnceptual Framewrk Page 3 f 11

4 IAASB s Quality Cntrl prject. Mr. Fleck nted that the way firms establish a quality cntrl system t enable cmpliance with independence and ther ethical requirements is a separate issue nt within the scpe f this prject. Whether there shuld be an equivalent f an ISQC 1 fr ethics has nt been discussed by the IESBA. Mr. Frtin wndered abut the merit f establishing the linkage between the fundamental principles and PS in the shrt-term prject when the definitin f PS will nt be reviewed until the lnger term initiative. Mr. Fleck respnded that the starting pint is PS as clearly defined in the IAASB s standards. Mr. Frtin nted that PS is precisely abut being cncerned abut a matter and acting n it. He added that he wuld have an issue if the auditr was cncerned abut a matter but failed t take apprpriate actin knwing that smething was nt right. He therefre perceived a discnnect between the fundamental principle f integrity and PS. Mr. Bradbury cncurred, nting that the example which explains hw the fundamental principle f integrity supprts the exercise f PS in an audit shuld capture this pint mre crisply. Mr. Fleck acknwledged the pint, nting that the Task Frce wuld revisit the example. Mr. Kktvedgaard asked CAG Representatives whether they had any cncerns t the shrt-term PS prject being taken frward t its final stage. N cncerns were raised. LONGER-TERM PS INITIATIVE As a fllw-up t the jint IAASB and IESBA CAG sessin n the tpic f PS, Mr. Fleck updated the CAG n the IESBA s lnger-term initiative in relatin t PS. He explained that at its June 2017 meeting, the IESBA had cnsidered a tentative apprach t respnd t stakehlders cncerns abut the applicability f the cncept f PS t all PAs, and that it had agreed t develp a cnsultatin paper t address the lnger term cnsideratins. He nted that the IESBA was sensitive t the cncerns expressed at the IAASB and by sme stakehlders abut nt diluting the cncept f PS as it applies t audits. At the same time, it was necessary t respnd t the cncerns f the PIOB and ther stakehlders regarding the applicability f PS t all PAs. He added that a draft f the cnsultatin paper wuld be discussed at the March 2018 CAG meeting. Dr. Thmadakis nted that the lnger term initiative represents an utcme f the wrk f the jint IAASB- IESBA-Internatinal Accunting Educatin Standards Bard (IAESB) Wrking Grup. Accrdingly, there will be further cnsultatin with the ther tw standard-setting Bards as the initiative mves frward. Mr. Hlm wndered abut the timeline fr this initiative. Dr. Thmadakis respnded that the Bard intended t prceed cautiusly and that the cnsultatin paper wuld be imprtant in this case as the Bard was aiming t break new grund n the issues. He added that while many stakehlders believe the IESBA shuld address the questin f the applicability f PS t all PAs, he wuld nt prejudge the utcme f the lnger term initiative. Mr. Fleck added that the Bard s previus experience indicated that a cnsultatin paper wuld help accelerate a prject. N cmments were made by the Representatives. C. Structure f the Cde Mr. Thmsn intrduced the tpic cvering the sessin s bjectives, the current status f the prject, the features f the restructuring, and the prject timeline. He explained that this sessin wuld serve as the final CAG discussin f the Structure prject prir t its anticipated cmpletin in December Mr. Page 4 f 11

5 Thmsn then invited Representatives t cmment n the significant matters arising frm the feedback n the January 2017 Expsure Draft: Imprving the Structure f the Cde f Ethics fr Prfessinal Accuntants Phase 2 (Structure ED-2) and the Task Frce s related respnses. Amng ther matters, the fllwing were raised: STAKEHOLDER PARTICIPATION IN RESPONDING TO EDS Ms. Manabat nted that there were 40 respndents t Structure ED-2, and inquired abut whether there was a prcess in place t engage with all stakehlders in rder t ensure that the IESBA achieved a gd balance in the representatin f stakehlders wh cmment n its EDs. Mr. Thmsn explained that the respnses were quite extensive because a number f the respndents represent cllective views. He nted in particular that: The members f IOSCO regulate mre than 95 percent f the wrld s securities markets in mre than 115 jurisdictins. He als nted that the Task Frce held a telecnference with representatives f IOSCO Cmmittee 1 in July 2017 t further understand its cmments. The IESBA rutinely seeks input n its prjects frm all stakehlders, including: Natinal standard setters (NSS), wh are very engaged in the prcess thrugh the annual IESBA-NSS liaisn meeting; and Firms (meetings at least twice a year with each f the Frum f Firms and the IFAC SMP Cmmittee). In additin t prject utreach, he nted that the IESBA had issued a cnsultatin paper as well as tw EDs, and cnducted stakehlder interviews fr purpses f the prject research. Accrdingly, the input that the IESBA had received frm stakehlders was very cmprehensive. Reflecting n Mr. Thmsn s respnse, Mr. Kktvedgaard added that in his view, Ms. Manabat s cmment suggested the need fr a brader cnsideratin abut the actins that might be taken by the IESBA and the CAG t slicit input n the IESBA s EDs frm stakehlders wh d nt typically respnd. Acknwledging Mr. Kktvedgaard s cmment, Dr. Thmadakis bserved that the challenge in btaining input frm certain stakehlders (specifically investrs and thse charged with gvernance) is nt unique t the IESBA. He added that the IESBA welcmes suggestins abut hw best t encurage thse stakehlders t respnd t its EDs, in particular n technical prjects such as Structure. Ms. Singh explained that due t resurce limitatins and the current pace f changes in standards relating t financial reprting mre bradly, investrs are frced t be selective in determining which cnsultatins they respnd t. She further explained that in the case f Structure ED-2, the CFA Institute did nt submit a respnse simply because it priritized its resurces n respnding t the IAASB s Expsure Draft relating t Accunting Estimates. NATURE OF CHANGES TO EXTANT CODE Mr. Hansen expressed supprt f the cmpilatin f the restructured Cde, nting that he believed it was mre lgically rganized, and that it had clarified the prvisins f the Cde. Ms. Manabat questined the nature f the revisins being made t the extant Cde, wndering in particular abut the meaning f the wrd restructuring. She als asked fr clarificatin abut the prcess that the IESBA used t ensure that the current prvisins in the Cde were nt weakened Page 5 f 11

6 r inadvertently changed. Mr. Baumann inquired whether any f the extant Cde s requirements had been demted t applicatin material. In respnse t Ms. Manabat and Mr. Baumann, Mr. Thmsn summarized the nature f the restructuring changes made t the Cde. He explained in particular that: The bjective f the Structure prject was t imprve the structure and drafting cnventin fr the Cde t make it clearer and mre understandable, and that a key bjective f the prject was t nt weaken the extant Cde. In this regard, he nted that the Task Frce had cmpared each paragraph f the extant Cde t thse in the restructured Cde and published mapping tables and tables f cncrdance t enable stakehlders t satisfy themselves abut the nature f the changes. The restructured Cde als include safeguards-related revisins develped by the Safeguards prject and that sme f thse revisins are t clarify the applicatin f the cnceptual framewrk and imprve the clarity, apprpriateness and effectiveness f the examples f safeguards thrughut the Cde. Ms. Manabat questined whether, even thugh there were n changes in principles, the restructured Cde was nw mre rules-based rather than principles-based. Mr. Thmsn explained that similar t the extant Cde, the restructured Cde is principles-based. He explained that the restructured Cde, hwever, includes mre rbust, prminent and explicit requirements relating t: Cmplying with the fundamental principles f ethics; Being independent when perfrming audits, reviews and ther assurance engagements; and Applying the cnceptual framewrk t identify, evaluate and address threats t cmpliance with the fundamental principles and independence. Mr. Thmsn nted that the imprvements t the restructured Cde wuld make it implementatin by prfessinal accuntants easier and mre enfrceable. MATTERS OUTSIDE THE SCOPE OF THE PROJECT Ms. Meng inquired abut the IESBA s plans fr dealing with matters that are determined t be utside the scpe f the prject (e.g., requests fr clarificatin abut the cncept f clse and immediate family ). Mr. Thmsn explained that the IESBA will cnsider these matters as part f the develpment f its future Strategy and Wrk Plan which the IESBA anticipates finalizing by the end f OTHER MATTERS Mr. Hansen inquired at what pint pilt testing wuld be undertaken as this wuld prvide valuable input. Mr. Thmsn explained that the Bard had explred this in Phase 1 f the prject in that it had encuraged firms and NSS t cnsider the prpsals and flag any ptential implementatin challenges. The IESBA has nt labeled this as pilt testing per se but it prvided a basis fr the Bard t be made aware f ptential implementatin issues. He als explained that the Bard planned t undertake a pst-implementatin review f the restructured Cde, and in this regard it anticipates having t wrk clsely with all stakehlders, in particular firms, regulatrs and audit versight authrities. Mr. van der Ende nted that lcal jurisdictins have different appraches t the level f prescriptiveness in their lcal cdes. Fr example, he nted that sme jurisdictins have lcal Page 6 f 11

7 cdes that are mre prescriptive and rules-based in cmparisn t the Cde s principles-based prvisins. He then asked abut whether and hw the Bard planned t deal with this issue in cnsidering the rllut and implementatin activities fr the restructured Cde. Mr. Thmsn highlighted that the new architecture fr the Cde emphasized the prvisins relating t cmpliance with the fundamental principles, juxtapsed with specific requirements where apprpriate. This apprach helps achieve the right balance between principles and rules. He believed that this wuld lead t a change in practice as PAs wuld n lnger be able t cnsider a requirement in islatin. Dr. Thmadakis added that the Structure prject was infrmed by glbal utreach invlving all categries f stakehlders. He nted that stakehlders had expressed cnsistent supprt fr a principles-based Cde. PROPOSED EFFECTIVE DATE Mr. Hansen inquired abut the effective date fr the restructured Cde. Mr. Thmsn explained that the IESBA wuld cnsider respndents feedback n this matter during its September 2017 meeting and the Task Frce s recmmendatin. Mr. Sing explained that the prvisins relating t inducements are being revised as part f a separate prject, and that the IESBA expects t finalize these prvisins by June He als explained that the Task Frce wuld prpse t the IESBA that the revised inducements prvisins have the same effective date as that f the restructured Cde. Mr. Kktvedgaard expressed supprt fr the Task Frce s recmmendatin. Mr. Kktvedgaard asked CAG Representatives whether they had any cncerns t the Structure prject being taken frward t its final stage. N cncerns were raised. D. Review f Part C f the Cde Ms. Agélii intrduced the tpic, explaining that the aim f the sessin was t (i) discuss with the CAG the significant cmments raised by respndents t the January 2017 Expsure Draft, Prpsed Revisins t Clarify the Applicability f Prvisins in Part C f the Extant Cde t Prfessinal Accuntants in Public Practice (Applicability ED), and (ii) reprt back n the March 2017 CAG discussin relating t the revisin f the inducements prvisins in the Cde. APPLICABILITY PROJECT Ms. Agélii recapped the bjective f the prject, i.e., t clarify the circumstances in which the prvisins in Part C shuld als apply t prfessinal accuntants in public practice (PAPPs) as they may face ethical issues similar t thse encuntered by prfessinal accuntants in business (PAIBs). She explained that the Bard wuld cnsider respndents feedback and the Task Frce s revised prpsals during the September 2017 IESBA meeting with a view t finalizing the prpsed text in December Dr. Manabat asked whether, n the whle, the prpsed changes t the Cde were substantive r editrial in nature. Ms. Agélii explained that the aim f the prject was t clarify the statement in the extant Cde t the effect that PAPPs may in sme circumstances find the prvisins in Part C relevant. S, in that regard, the prpsed changes were mre f a clarificatin. Dr. Thmadakis nted that the Bard had already revised Part C substantively ver the last three years. Mr. Sing added that the prpsed text in the Applicability ED went beynd clarificatin because it intrduced a new requirement fr PAPPs t cnsider and apply the relevant prvisins in extant Part C, fr example, the prvisins relating t NOCLAR and pressure t breach the fundamental principles. Page 7 f 11

8 Mr. Kktvedgaard asked CAG Representatives whether they had any cncerns t the Applicability prject being taken frward t its final stage. N cncerns were raised. INDUCEMENTS PROJECT Ms. Agélii intrduced the tpic, explaining the key milestnes fr the prject since the March 2017 CAG meeting, including the release f the Expsure Draft Prpsed Revisins t the Cde Pertaining t the Offering and Accepting f Inducements (Inducements ED) n September 8, CAG Representatives nted and had n cmments n the reprt-back n the March 2017 CAG discussin. Ms. Agélii then explained the key features f the Inducements ED. Amng ther matters, the fllwing were raised: Mr. Frtin sught further clarificatin abut the reasn fr nt specifically addressing cultural differences in the prpsed text. Ms. Agélii nted the IESBA had determined that it is imprtant t deal with issues relating t culture in a principles-based manner. Accrdingly, the IESBA had established a list f factrs aimed at assisting PAs determine the intent behind an inducement. The IESBA believes that the intent test and the prvisins in the cnceptual framewrk prvide sufficient guidance t assist PAs t deal with different cultural influences that might exist acrss jurisdictins. Mr. Hansen asked whether, in additin t the requirement t cmply with laws and regulatins, the Cde shuld als require PAs t cmply with internal plicies and prcedures f the emplying rganizatin. Ms. Agélii explained that it may nt be apprpriate fr the Cde t have a general requirement t cmply with an emplying rganizatin s internal plicies and prcedures given that they may nt be cnsistent with the Cde. Mr. Dalkin expressed a view that nn-cmpliance with internal plicies and prcedures shuld be dealt with by the PA s emplying rganizatin rather than thrugh the mechanism f prfessinal ethics. He als questined whether establishing such a requirement wuld be within the IESBA s remit. Mr. Sing cncurred with Mr. Dalkin, nting that the Cde already sets ut clear expectatins fr senir-level PAIBs t establish the right tne at the tp. Mr. Hannafrd added that the enhanced cnceptual framewrk includes applicatin material t explain that the existence f cnditins, plicies and prcedures, including thse f the PA s emplying rganizatin, might have an impact n the identificatin and evaluatin f a threat. Ms. Agélii thanked the CAG Representatives fr their input. E. Safeguards Mr. Hannafrd intrduced the tpic, nting the bjectives f the sessin. He indicated that the IESBA had cnsidered respndents feedback n the Expsure Draft Prpsed Revisins Pertaining t Safeguards in the Cde Phase 2 and Related Cnfrming Amendments (Safeguards ED-2) and the Task Frce s preliminary prpsals during its June 2017 meeting. Mr. Hannafrd then summarized the respndents feedback and the Task Frce s revised prpsals incrprating the IESBA s input. He then reminded the CAG that certain prpsals in Safeguards ED-2 were develped jintly with the Structure Task Frce and that the tw Task Frces had wrked very clsely in prgressing their wrk. Amng ther matters, the fllwing were raised: NON-ASSURANCE SERVICES (NAS) INITIATIVE Mr. Hlm wndered abut the timing fr the IESBA s NAS prject given that the PIOB had flagged the need fr such a prject when it apprved the limited changes t the NAS prvisin in Mr. Page 8 f 11

9 Hannafrd explained that the IESBA had already agreed t a pre-cmmitment n NAS as flagged in the IESBA s April 2017 strategy survey, and that cmmencement f this wrk is anticipated in Dr. Thmadakis added that the NAS initiative is an imprtant pririty fr the IESBA nce current wrk streams are cmpleted. APPROPRIATENESS AND EFFECTIVENESS OF NAS SAFEGUARDS Mr. Dalkin questined whether the reasnable and infrmed third party test is relevant t a PA s determinatin abut whether a safeguard is effective. Mr. Hannafrd respnded that it is. Messrs. Ilnuma and Yurdakul re-emphasized IOSCO s cmments n Safeguards ED-2 relating t the need fr mre guidance in the Cde t explain hw PAs shuld determine the effectiveness f safeguards. Mr. Hannafrd explained that the Task Frce believes that PAs determinatin f the effectiveness f safeguards requires the exercise f prfessinal judgment based n an understanding f specific facts and circumstances. Mr. Gunn suggested that the Task Frce cnsider prviding further cntext r guidance t help PAs better understand and apply the cncept f an apprpriate prfessinal as used in many examples f safeguards invlving a review. Mr. Dalkin nted that Mr. Gunn s suggestin gave rise t a dcumentatin questin in terms f whether dcumentatin wuld help anther prfessinal review the relevant wrk. Mr. Hannafrd nted that the Cde includes dcumentatin prvisins relating t certain tpics, fr example, independence, cnflict f interest and NOCLAR. He explained that sme stakehlders have called fr additinal dcumentatin prvisins in the Cde in light f the enhancements made t the cnceptual framewrk. Mr. Hannafrd nted that respnding t thse calls is utside f the Safeguards prject scpe and will require crdinatin with the IAASB. Mr. Hansen wndered abut the cncept f using an apprpriate prfessinal t review NAS wrk perfrmed. Mr. Hannafrd explained that this individual culd be smene external t the firm and that this wuld be a matter fr the firm t decide depending n the specific facts and circumstances. Mr. Hansen nted that he wuld have difficulty with a firm prviding bkkeeping services t an audit client and the firm then engaging an external prfessinal t review that wrk. Mr. Hannafrd explained that the Cde already prhibits bkkeeping services fr public interest entities (PIEs) except in relatin t administrative services that are f a rutine and mechanical nature. Mr. Dalkin expressed cncern abut the cncept f rutine and mechanical as he believed that it is subject t abuse. He nted that auditrs can prepare financial statements and that in the GAO s experience, they are best placed t implement changes in financial reprting standards. He was f the view that it wuld be difficult t mitigate the self-review threat in such a case. Mr. Hannafrd respnded that preparing financial statements is nt a rutine and mechanical service. RECRUITING SERVICES Mr. Hansen expressed supprt fr the prhibitin relating t certain recruiting services as he des nt supprt exceptins. Hwever, he suggested that the Cde be clearer abut which recruiting services are permissible. Ms. McGeachy-Clby agreed and nted that the prhibitin f certain recruiting services cntinues t be an issue fr sme SMPs. OTHER MATTERS Ms. Manabat questined whether there is a need fr having an explicit verarching statement in the Cde indicating that independence is the respnsibility f the individual PA. Mr. Hannafrd Page 9 f 11

10 nted that the issue f respnsibility fr independence was dealt with as part f the Structure prject and is addressed in paragraph f the restructured Cde. Mr. Kktvedgaard asked CAG Representatives whether they had any cncerns t the Safeguards prject being taken frward t its final stage. N cncerns were raised. F. Strategy and Wrk Plan Dr. Thmadakis and Mr. Sing intrduced the sessin by prviding backgrund and cntextual infrmatin abut the prcess fr establishing the IESBA s Strategy and Wrk Plan. They then summarized the feedback received n the IESBA s April 2017 Strategy Survey and the Planning Cmmittee s preliminary views. STAKEHOLDER ENGAGEMENT Sme CAG Representatives expressed cncern that respndents t the strategy survey appeared dminated by firms and IFAC member bdies. There was a lively discussin abut the actins that the IESBA might take t encurage investrs, preparers and crprate gvernance rganizatins t respnd t its cnsultatin dcuments. Dr. Thmadakis nted that the IESBA actively seeks t btain respnses frm all stakehlder grups. He welcmed assistance frm the CAG t encurage their rganizatins and thers in their netwrks t respnd t the IESBA s cnsultatin dcuments. Mr. Kktvedgaard suggested the need fr establishing innvative appraches t btain input frm certain stakehlders. Fr example, he suggested that the IESBA cnsider: Targeting certain stakehlders abut specific aspects f each cnsultatin dcument. Tailring the message in the first ten lines f each dcument in a manner that is respnsive t the basic questin f why this is imprtant t yu. Using varius technlgy slutins t generate interest, fr example, webinars, webcasts, vide cnferences, and ther scial media. PRIORITIZATION OF PROJECTS AND INITIATIVES Mr. Kktvedgaard asked each Representative fr indicatins abut his r her tp fur r five pririties amng the list f pssible standard-setting initiatives fr the next strategy perid as set ut in the strategy survey. Representatives prvided their views fr the IESBA s further cnsideratin. Amng ther matters, the fllwing als were raised: Mr. Dalkin nted that sme f the tpics such as tax planning and related services culd ptentially break new grund. Other tpics, such as dcumentatin, did nt appear t be significant prjects and culd perhaps be cnsidered as part f anther prject. On the distinctin between PIEs and nn-pies, he was f the view that there is a need fr sme cnsistency, at least frm an ethics perspective. Mr. Hansen nted that the PCAOB was fcused n the tpic f tax planning in the cntext f listed audits. On the tpic f materiality, he als nted that the questin was whether materiality shuld be a relevant cnsideratin in the cntext f independence, as the auditr is either independent r nt. 2 Part 4A, Sectin 400, Applying the Cnceptual Framewrk t Independence fr Audit and Review Engagements Page 10 f 11

11 Messrs. Hansen and van der Ende expressed interest in the fees initiative and questined why it was nt ne f the thirteen t be ranked. Mr. Sing nted that this initiative is a pre-existing cmmitment fr the IESBA. Mr. van der Ende nted that fr the Basel Cmmittee s Audit Subgrup, the pre-cmmitment n prfessinal skepticism is very imprtant. In his view, the Cde seems t fcus mre n the negative (i.e., what the PA cannt d). The Audit Subgrup had discussed what culd instead be dne t encurage new entrants t the prfessin t d. Ms. McGeachy-Clby highlighted the imprtance f a cst-benefit analysis fr any prject that the IESBA decides t undertake. WAY FORWARD The CAG will be prvided an pprtunity t prvide input n the draft IESBA Strategy and Wrk Plan cnsultatin paper in March G. PIOB Observer s Remarks Mr. Hlm cngratulated the Mr. Kktvedgaard n his leadership f the CAG discussins in which many gd ideas were shared. He als thanked the Representatives fr their active participatin and cntributins. H. Clsing Remarks Mr. Kktvedgaard thanked all CAG participants fr their engagement in the discussins. He als thanked the PIOB fr hsting the meeting. Mr. Kktvedgaard nted that the next IESBA CAG meetings will be held in New Yrk, USA, n March 5, 2018 and September 10, 2018 respectively. He then clsed the meeting. Page 11 f 11