IRBA NEWSLETTER ISSUE 47

Issue 47 | July - September 2019 4 STANDARDS THE FOLLOWING TOPICS ARE DISCUSSED IN THIS ISSUE: • Standards: o Audit Quality Indicators (AQIs). o SAAPS 4 (Revised 2019), Letters of Specific Inquiry to the Entity’s External Legal Practitioner Regarding Litigation and Claims Involving the Entity. o Alert: Two-and-a-half months left before the effective date of ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures. o Engagements on Legal Practitioners’ Trust Accounts. o Illustrative Auditor’s Report for Engagements on the Compliance of the Attorneys’ Trust Accounts. o Minor editorial amendments made post-issue to the South African Auditing Practice Statement (SAAPS) 3 (Revised May 2019), Illustrative Reports. o Guide for Registered Auditors: Auditing in the Public Sector (Revised August 2019). o IAASB projects in progress. o Compliance with the Companies Act – CIPC launches a checklist. • Ethics: o Proposed amendments to the IRBA Code of Professional Conduct relating to registered candidate auditors. o IESBA proposes changes to Promote Role and Mindset Expectations of Professional Accountants. o IESBA launches the eCode. o IESBA projects in progress. AUDIT QUALITY INDICATORS (AQIs) The IRBA continues to analyse submissions of the information that was received from JSE-accredited audit firms earlier in the year; and it plans to publish a report regarding the AQIs. In addition, the IRBA has prepared guidance for audit committees, in the form of a pamphlet, on the use of AQIs. The pamphlet will be issued to audit committees and others through an appropriate platform. For further information on AQIs, refer to the following two Accountancy SA articles: • Audit Quality Indicators: Promoting Transparency; and • Audit Quality: The Global Quest for the Best Indicators. Registered auditors are referred to the IRBA webpage dedicated to AQIs for further resources regarding this topic. COMMITTEE FOR AUDITING STANDARDS (CFAS) South African Auditing Practice Statement (SAAPS) 4 (Revised 2019), Letters of Specific Inquiry to the Entity’s External Legal Practitioner Regarding Litigation and Claims Involving the Entity The CFAS, at its meeting on 21 August 2019, approved the issuing of South African Auditing Practice Statement (SAAPS) 4, Letters of Specific Inquiry to the Entity’s External Legal Practitioner Regarding Litigation and Claims Involving the Entity , for use by registered auditors. SAAPS 4 (Revised 2019) was issued on 29 August 2019. SAAPS 4 (Revised 2019) is aimed at providing practical guidance to a registered auditor who is required to seek direct communication with the entity’s external legal practitioner, in line with paragraph 10 of the International Standard on Auditing (ISA) 501, Audit Evidence – Specific Considerations for Selected Items (ISA 501). The revised SAAPS has been updated for the following: • Name change; • Amendments to the Illustrative Letter of Specific Inquiry to the Entity’s External Legal Practitioner regarding Litigation and Claims Involving the Entity; • Amendments to the illustrative letter to align it with ISA 501; and • Amendments to reflect terminology that is understood in South Africa. SAAPS 4 (Revised 2019) is effective for letters of specific inquiry requested on or after 1 September 2019. It is available for downloading in both PDF and Word formats on the IRBA website . Alert: Two-and-a-half Months Left Before the Effective Date of ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures Auditors are reminded that the International Standard on Auditing (ISA) 540 (Revised), Auditing Accounting Estimates and Related Disclosures , is effective for audits of financial statements for periods beginning on or after 15 December 2019. As previously communicated by the IRBA on 8 November 2018 and 5 February 2019 , respectively : • The International Auditing and Assurance Standards Board (IAASB) issued ISA 540 (Revised) on 3 October 2018. • At its meeting on 6 November 2018, the IRBA Board approved ISA 540 (Revised) for adoption, issue and prescription for use by registered auditors in South Africa. • ISA 540 (Revised) becomes effective for financial statement audits for periods beginning on or after 15 December 2019. Early adoption of ISA 540 (Revised) is permissible and is encouraged by the IRBA. • ISA 540 (Revised) may be downloaded from the IRBA website . The ISA 540 (Revised) Implementation project page has been added to the IAASB website as a repository for implementation