Auditing Standard ASA 102 Compliance with Ethical Requirements when Performing Audits, Reviews and Other Assurance Engagements (reissued March 2018)
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Compliance with Ethical Requirements when Performing Audits, Reviews and Other Assurance Engagements
Application
This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit or review of a financial report for a half-year, in accordance with the Corporations Act 2001;
(b) an audit or review of a financial report, or a complete set of financial statements, for any other purpose;
(c) an audit or review of other financial information;
(d) other assurance engagements; and
(e) a firm required to comply with ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements.
Operative Date
This Auditing Standard is operative for engagements with reporting periods ending on or after 31 March 2018.
Introduction
Scope of this Auditing Standard
This Auditing Standard includes a requirement for auditors, assurance practitioners, engagement quality control reviewers and firms to comply with relevant ethical requirements, including those pertaining to independence, relating to audits, reviews and other assurance engagements.
Objective
The objective of the auditor, assurance practitioner, engagement quality control reviewer and firm is to comply with relevant ethical requirements, including those pertaining to independence, relating to audits, reviews and other assurance engagements.
Definition(s)
For the purposes of this Auditing Standard, the following terms have the meanings attributed below:
(a) Assurance practitioner means assurance practitioner as defined in ASQC 1.
(b) Auditor means auditor as defined in ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
(c) Engagement quality control reviewer means engagement quality control reviewer as defined in ASQC 1.
(d) Firm means firm as defined in ASQC 1.
(e) Relevant ethical requirements means ethical requirements that apply to the auditor, assurance practitioner, engagement quality control reviewer and firm. In Australia, these include the applicable requirements of APES 110 Code of Ethics for Professional Accountants, issued by the Accounting Professional & Ethical Standards Board Limited (December 2010 incorporating all amendments to May 2017), the applicable provisions of the Corporations Act 2001 and other applicable law or regulation.
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Requirements
Compliance with Relevant Ethical Requirements (Ref: Para. A1-A7)
The auditor, assurance practitioner, engagement quality control reviewer, and firm shall comply with relevant ethical requirements, including those pertaining to independence, when performing audits, reviews and other assurance engagements.
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Application and Other Explanatory Material
Compliance with Relevant Ethical Requirements (Ref: Para. 6)
A1. The auditor, assurance practitioner, engagement quality control reviewer, and firm are to have regard to the applicable requirements of APES 110 Code of Ethics for Professional Accountants, issued by the Accounting Professional & Ethical Standards Board Limited (December 2010 incorporating all amendments to May 2017), which are to be taken into account in determining whether relevant ethical requirements referred to in paragraph 6 of this Auditing Standard have been met. In relation to audits and reviews undertaken in accordance with the Corporations Act 2001, the provisions of Division 3 Part 2M.4 of the Act may also apply.
A2. APES 110 establishes the fundamental principles of professional ethics and provides a conceptual framework for applying those principles.
A3. The fundamental principles of professional ethics, as described in APES 110, include:
(a) Integrity;
(b) Objectivity;
(c) Professional competence and due care;
(d) Confidentiality; and
(e) Professional behaviour.
A4. APES 110 illustrates how the conceptual framework is to be applied in specific situations. It provides examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles and also provides examples of situations where safeguards are not available to address the threats.
A5. In the case of an audit engagement, it is in the public interest and required by APES 110, that the auditor be independent of the entity subject to the audit. APES 110 describes independence as comprising both independence of mind and independence in appearance. The auditor’s independence from the entity safeguards the auditor’s ability to form an audit opinion without being affected by influences that might compromise that opinion. Independence enhances the auditor’s ability to act with integrity, to be objective and to maintain an attitude of professional scepticism.
A6. The fundamental principles in APES 110 are reinforced in particular by:
(a) The leadership of the firm;
(b) Education and training;
(c) Monitoring; and
(d) A process for dealing with non-compliance.
A7. The definition of terms in APES 110 may differ from the definitions of those terms in Australian Auditing Standards including terms defined in ASQC 1, ASA 200 and ASA 220 Quality Control for an Audit of a Financial Report and Other Historical Financial Information.
In complying with the requirements of this Auditing Standard, the definitions used in APES 110 apply in so far as is necessary to interpret the ethical requirements of ASQC 1, ASA 200 and ASA 220.