International Education Standard (IES) 8 (revised)
IFAC has issued International Education Standard (IES) 8, Professional Competence for Engagement Partners Responsible for Audits of Financial Statements (Revised).
IES 8 prescribes the professional competence that professional accountants are required to develop and maintain when performing the role of an engagement partner responsible for audits of financial statements.
Under the revised IES 8 professional accountants performing the role of an engagement partner will be required to develop and maintain professional competence that is demonstrated by the achievement of learning outcomes. They will also be required to undertake CPD that develops and maintains the professional competence required for this role.
The following guidance has been issued by IFAC:
When is the change taking effect? IES 8 (Revised) becomes effective on 1 July 2016 at which point the extant IES 8 will be withdrawn.
Who is the subject of IES 8 (Revised)? The engagement partner responsible for audits of financial statements, as defined by the International Auditing and Assurance Standard Board (IAASB), is the subject of IES 8 (Revised). During the development of IES 8 (Revised), it became clear that this is a role that is common to every audit engagement and, from a public interest perspective, the engagement partner has ultimate responsibility for the performance of the audit.
What is required? It is the responsibility of the professional accountant performing the role of an engagement partner to develop and maintain professional competence by undertaking relevant CPD activities, which include practical experience.
Why does IES 8 (Revised) highlight the importance of professional competence within the requirements? IES 8 (Revised) recognises that only those professional accountants who develop and maintain the professional competence specified in IES 8 (Revised) will be able to deal with the complex situations that engagement partners face during their careers. By focusing on professional competence, IES 8 (Revised) helps to:
contribute to audit quality
promote the credibility of the audit profession
protect the public interest.
What is the relationship between practical experience and CPD? CPD includes practical experience. Practical experience is workplace and other activities that are relevant to developing competence. Practical experience as described in IES 5 has to be:
of the necessary depth and breadth to develop and maintain professional competence
measurable and verifiable.
For example, through practical experience, an engagement partner may develop an understanding of an industry an entity is operating in. This knowledge obtained through practical experience could be used to assess the business risks faced by the entity and to help inform audit risk assessments.
Further information about these requirements will be provided to members in due course. You can also find further information on IFAC’s website here and here
“This article includes extracts from the IAESB Staff Questions & Answers Publication, Implementation Support for IES 8, Professional Competence for Engagement Partners Responsible for Audit of Financial Statements (Revised) of the International Accounting Education Standards Board published by the International Federation of Accountants (IFAC) in December 2015, and is used with permission of IFAC. All rights reserved.”