- Consultation Paper seeks views on auditor independence matters pertaining to audits of Investment Schemes when these Schemes involve “Connected Parties”
- The consultation aims to inform the IESBA’s consideration of whether its International Independence Standards are sufficiently clear and fit for purpose for such audits
- The IESBA welcomes comments from all interested parties, including financial industry representatives, audit firms, experts, investors, regulators and jurisdictional standard setters
The International Ethics Standards Board for Accountants (IESBA) today issued a Consultation Paper seeking feedback on whether revisions to the International Code of Ethics for Professional AccountantsTM (including International Independence StandardsTM) (the “Code”) are necessary to address the independence of auditors when they carry out audits of Collective Investment Vehicles (CIVs) and Pension Funds (collectively referred to as “Investment Schemes” or “Schemes”).
Investment Schemes enable investors to pool their funds and often rely on external parties (“Connected Parties”) for functions typically managed internally in conventional corporate structures. This structure introduces specific relationships that are highlighted in the Consultation Paper and need to be carefully considered to ensure that any threats to auditor independence are identified and appropriately addressed.
According to the Investment Company 2024 Factbook, total net assets of worldwide regulated open-end funds, which include CIVs, stood at around US$69 trillion in 2023. As collective investment structures continue to evolve and the number of investors and assets under management increase globally, the IESBA recognizes the need for robust and clear independence standards and guidance to maintain public trust in the audits of these Schemes.
“Investment Schemes play a critical role in both the savings and retirement of ordinary citizens and in the development and growth of our economies,” said Gabriela Figueiredo Dias, Chair of IESBA. “This underscores the high level of public interest, and therefore the fundamental role of the independent audit, in this segment of the global financial system. Through this consultation, we are inviting stakeholders to share their insights and perspectives on specific matters to ensure that our independence standards remain relevant and capable of consistent application across audits of these Schemes globally.”
Key areas of focus include:
- The definition of "related entity" in the Code and its applicability to audits of Investment Schemes.
- The Connected Parties that should be considered in relation to the assessment of auditor independence with respect to the audit of an Investment Scheme.
- The application of the Code’s conceptual framework when assessing threats to independence resulting from interests, relationships, or circumstances between the auditor of an Investment Scheme and Connected Parties.
The development of the Consultation Paper was informed by desktop research and stakeholder outreach during the course of 2024.
How to Comment
Stakeholders are invited to submit their comments electronically through the IESBA website by June 30, 2025. The feedback will inform the IESBA Project Team's report and recommendations to the IESBA on whether enhancements or clarifications to the Code are warranted.
For more information and to access the Consultation Paper, please visit the IESBA website.