The International Ethics Standards Board for Accountants (IESBA) has released a number of measures to protect auditor independence.
The body claimed that the introductions target two key areas for auditor safeguarding, namely non-assurance services (NAS) and fees paid by audit clients.
Included in the measures is a prohibition on audit firms providing NAS that may create a self-review threat to an audit client that is a public interest entity.
Also included are provisions to promote “more robust engagement”, address undue fee dependency on audit clients, create greater public transparency on audit fees, and provide guidance to steer auditors’ threat assessments and actions regarding NAS and fees.
Stavros Thomadakis, chairman of the IESBA, said that the body believes the changes to “represent a major advance in the public interest”.
He added: “Independence is fundamental to the role of auditors as corporate guardians and ultimately to public confidence in financial reporting and market integrity.
“With the significant strengthening of the NAS and fees provisions, we have taken bold steps to set an even higher bar for the standards of independence required of auditors globally, especially in relation to public interest entities.”
The revisions will become effective for audits of financial statements with periods beginning on or after 15 December 2022.