The IAASB aims to enhance audit quality by setting high-quality auditing standards and facilitating the convergence of international auditing practices. Their current strategy emphasizes responding to emerging issues while ensuring standards remain relevant, fostering cooperation with stakeholders like the PCAOB, and focusing on key topics such as professional skepticism and quality control. The IAASB seeks feedback on enhancing audit quality through various initiatives, including revisions to standards and the incorporation of technology in auditing.

1. The IAASB’s Work to Enhance Audit Quality
Prof. Arnold Schilder, Chairman

2. THE IAASB’S PUBLIC INTEREST MISSION
• Our objectives are to serve the public interest by
– Setting high-quality auditing, assurance, and other related standards;
and
– Facilitating the convergence of international and national auditing and
assurance standards,
thereby enhancing the quality and consistency of practice throughout
the world and strengthening public confidence in the global auditing
and assurance profession.
• Auditing and quality control standards serve a fundamental role in
underpinning audit quality and investors’ and other users’ confidence in the
audit and financial reporting.

3. HOW THE IAASB’S WORK SERVES INVESTORS
• Financial information must be relevant, timely and reliable to meet the
needs of users…
• Users of audited financial statements must have confidence that the
auditor has worked to a suitable standard and that “a quality audit” has
been performed…
• But users cannot often directly evaluate audit quality, so they look to
– The auditor’s opinion and other elements of the auditor’s report
– External oversight bodies and their reports on inspection findings – both at a
global level and on individual audit firms
– Other important elements of the financial reporting supply chain, like the
involvement of the audit committee and transparency reports

4. OUR FRAMEWORK FOR AUDIT QUALITY
• Primary responsibility for performing
quality audits rests with auditors, but …
• Each stakeholder plays an important
role supporting high-quality financial
reporting
• Audit quality is best achieved in an
environment where there is support
from other participants in the financial
reporting supply chain
• “Contextual factors” have the potential
to impact the nature and quality of
financial reporting and, directly or
indirectly, audit quality
4

5. OUR CURRENT STRATEGY AND WORK PLAN
• Our most important strategic objective is to ensure that our standards –
the International Standards on Auditing or ISAs –continue to form the basis
for high-quality, valuable and relevant audits conducted worldwide by
responding on a timely basis to issues noted in practice and emerging
developments
• At the same time, we cannot let auditing standards or the process to set
them inhibit innovation or stifle the potential best practices of the future
• And we are continually focused on engaging our stakeholders in dialogue
about public interest matters – their expectation is that we
– Use our voice as the global auditing standard setter and our robust due
process to develop globally-relevant solutions in coordination with others
 Coordination with national regulators like the PCAOB is often stressed, and is an
integral part of our process – the topics of mutual interest are MANY!

6. HOW THE PCAOB AND IAASB INTERACT
• Pleased to see growing and positive interactions between IAASB and
PCAOB
– Participation in each others’ advisory groups (SAG and IAASB Consultative
Advisory Group)
– Meetings with Board members and Senior Staff
 Started in the context of the Auditor Reporting project, but continues today
– PCAOB observership of IAASB Task Forces / Working Groups
 Accounting Estimates and Quality Control, perhaps others in the future
– Increased IAASB engagement with the International Forum of Independent Audit
Regulators and its Standards Coordination Working Group (of which PCAOB is a
member)
– Other touch points – PCAOB participation in IAASB professional skepticism panel,
liaison on PCAOB Audit Quality Indicators project, etc.

7. OUR INVITATION TO COMMENT – ENHANCING AUDIT QUALITY
• Consultation to explore the way forward on three fundamental topics –
professional skepticism, quality control and group audits
• Feedback from the consultation will shape the IAASB’s standard-setting
efforts and address key public interest issues
– Fostering an appropriately independent and challenging skeptical mindset of
the auditor
– Enhancing documentation of the auditor’s judgments
– Keeping ISAs fit for purpose
– Encouraging proactive quality management at the firm and engagement level
– Exploring transparency and its role in audit quality
– Focusing more on firms (including networks) and their internal and external
monitoring and remediation activities
– Reinforcing the need for robust communication and interactions during the
audit

8. • What is professional skepticism?
• What are the skills/competencies required to exercise
PS?
• What are the impediments affecting the consistent
application of PS?
• How can the concept of PS be emphasized in the
context of the projects on quality control, group
audits, and accounting estimates (ISA 540)?
• What other actions may be necessary by the IAASB /
International Accounting Education Standards Board /
International Ethics Standards Board for
Accountants? Framework? Guidance? Training? …..
PROFESSIONAL SKEPTICISM: KEY QUESTIONS BEING CONSIDERED

9. QUALITY CONTROL‒QUALITY MANAGEMENT APPROACH
• Exploring a more proactive, scalable
and robust response to managing
quality:
o More easily adaptable to rapidly changing
business environment
o Focus on monitoring and remediation –
investigating root causes of identified
deficiencies, reassessment of quality
risks and implementing remedial actions
o Emphasis on importance of firm
governance, including leadership
responsibilities for quality
o Tone at the top – where is more
emphasis needed?

10. QUALITY CONTROL (cont.)
• Emphasis on importance of the role and responsibilities of the
engagement partner
• Exploring transparency reporting trends, including feasibility of
international requirements
• The impact on audit quality of evolving audit delivery models
• Involving other auditors that are not component auditors – is more
guidance needed?
• Firms that operate as networks – are more requirements and guidance
needed?
• Monitoring and remediation (including “root-cause” analysis)
• Engagement quality control reviews – reinforce importance and elevate
prominence

11. • How to drive a “top-down” approach as groups become more complex and
structures continue to evolve
• Focus on roles and responsibilities of the group engagement partner and
group engagement team, including sufficient and appropriate involvement
in component auditor’s work
• Acceptance of a group audit (including access issues)
• Component materiality
• Work on components that are not significant
• Consolidation procedures
• Emphasis on importance of strong two-way communication between group
engagement team and component auditors
• Requirements and guidance for component auditors?
GROUP AUDITS (OTHER AUDITORS) – NEED FOR A FRESH LOOK?

12. ISA 540 – AUDITING ACCOUNTING ESTIMATES, INCLUDING FAIR VALUES
• Accelerated standard-setting efforts to revise our standard, with a focus on
– Enhancing the ISAs to be sufficient and appropriate for the evolving and
complex business environment of today
 Strengthen auditor’s work, including the use of an auditor’s expert
 Drive auditors to perform appropriate procedures
 Address challenges encountered in practice
– Fostering an appropriately independent and challenging skeptical mindset of
the auditor
 Direct how the auditor obtained sufficient appropriate accounting estimates
in relation to significant accounting estimates
– Communications, interactions and documentation, as well as transparency
 Communications with audit committees, as well as supervisors or other
regulatory or oversight bodies
 Auditor reporting and involvement of engagement quality control reviewer

13. OTHER INITIATIVES
• ISA 315 – Identifying and assessing risks of material misstatement through
understanding the entity and its environment
– Interactions with a number of other projects; exploring common inspection
findings e.g., significant risks, tests of controls, documentation, scalabilty
– Understanding the business is fundamental in order to apply professional
skepticism
• Data analytics and effects of technology on the audit
– What are the potential benefits (and risks) to audit quality? Do the standards
today restrict innovation? Do they need to change to reflect increasing use?
• Integrated reporting
• Other topics monitored by our Innovation Working Group
– Corporate governance
– Cybersecurity

14. THE IAASB’S AUDITOR REPORTING STANDARDSAuditor’sReport
Audit Opinion – Required to be presented first
Key Audit Matters – Required for listed entities
Going Concern – Additional focus
Other Information – Enhanced work effort and new section
Responsibilities – In the audit; Independence and ethical
obligations; Engagement partner (listed entities)
Effective for 2016 audits – feedback from UK and early adopters has been very positive!

15. www.iaasb.org