• Register
Return to: Home > News > Standards > IESBA proposes five-year cooling-off period for audit partners

IESBA proposes five-year cooling-off period for audit partners

The International Ethics Standards Board for Accountants (IESBA) has issued for public comment proposals to strengthen auditor independence by addressing the risks of long association in audit.

The Exposure Draft (ED), Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client, consults on amendments to IESBA's Ethic Code, released in response to stakeholder concerns about auditor independence and the threats created by the long association of audit firm personnel with an audit client, IESBA said.

Through the ED, IESBA proposed to enhance partner rotation requirements by increasing the mandatory "cooling-off" period for the engagement partner on the audit of a public interest entity, from two to five years.

The proposals also strengthen restrictions on the type of activities that can be undertaken with respect to the audit client and audit engagement by any former key audit partner during the "cooling-off" period.

The ED clarified that, during the "cooling-off" period, the rotated partner shall neither be responsible for leading or coordinating the firm's professional services to the audit client. It also proposed prevent the rotated partner from overseeing the firm's relationship with the audit client (as a "relationship partner") or have significant or frequent interaction with the clients management.

In addition to the enhanced partner rotation requirements, the draft also includes several amendments to the general audit provisions applicable to all audit clients, providing a "more robust framework for identifying and evaluating threats to independence created by long association," the ED read.

According to the IESBA, the ED proposals have been developed after a benchmarking exercise of jurisdictional requirements, stakeholder outreach, and a survey that yielded more than 400 responses from standard setters, audit committees, regulators, and firms.

The ED is open for comment until 12 November 2014 and IESBA intends to finalise the revisions in the first half of 2015.

Related links

The International Ethics Standards Board for Accountants

ED: Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client

Top Content

    2018 Digital Accountancy forum and awards: Digital transformation

    The Accountant presents highlights from The Digital Accountancy Forum & Awards 2018 panel discussions

    read more

    2018 Digital Accountancy Forum and Awards: Tech deep dive

    The second panel session of the day saw experts discuss how new technologies should not just be seen as a threat, and could be used to improve accounting.

    read more

    Digital Accountancy Forum and Awards: The power of data

    The third panel discussion of the day saw panellists discuss some of the worries their clients have had, how to overcome them, and how data and technology are providing real business opportunities.

    read more

    Digital Accountancy Forum and Awards: The next generation

    With young people more mobile, and technology changing the industry rapidly, the final panel session of the Digital Accountancy Forum looked at how firms would need to adapt to the new reality

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.