John Selwood's Q&As
John tackles questions around the small company regime in Companies Act 2006 and other topical issues affecting small firms and small entity audits.
Q: I have seen articles written about the new International Education Standard (IES) 8 on maintaining audit partner competence. How does it apply to the typical small audit firm?
A: IES 8 Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised) applies from 1 July 2016. It will apply to you because ICAEW is a member of the International Federation of Accountants (IFAC) and has signed up to comply with the standards set by its International Accounting Education Standards Board.
The good news is that by applying ICAEW rules on continuing professional development (CPD) you will be complying with this standard. While this statement might make itappear that IES 8 is not an issue for individual firms and partners, the situation is not as straightforward as that, for two reasons:
- IES 8 may be very similar to what firms already do to comply with ICAEW rules and guidance on CPD, but IES 8 is more detailed and firms should look at the competences required of audit partners in IES 8 to ensure that the firm is adequately developing them.
- IES 8 is placing a renewed focus on engagement partner CPD. In my experience this interest in the quality and quantity of partner training has been building for a few years. There is anecdotal evidence from Quality Assurance Department visits and cold file reviewers that not all partners are doing enough to keep up to date. A particular problem can be that partners do not undertake appropriate specialist CPD in areas such as International
Financial Reporting Standards, charities, the regulations of the Financial Conduct Authority and so on. There can be a temptation for partners to delegate this to other members of the audit team – and some do give in to this.
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