Accounting news


IAASB revises standard for auditing accounting estimates

The International Auditing and Assurance Standards Board (IAASB) has revised International Standard on Auditing 540 Auditing Accounting Estimates and Related Disclosures, as part of its efforts to improve audit quality globally. The revisions include an enhanced risk assessment that requires auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty, and an emphasis on the importance of applying appropriate professional scepticism when auditing accounting estimates to foster a more independent and challenging sceptical mindset in auditors. Still subject to final approval by the Public Interest Oversight Board, the changes come into effect on 15 December 2019. 

KPMG South Africa to replace CEO

Nhlamulo Dlomu will step down from her role as Chief Executive Officer of KPMG South Africa, the firm announced this month. The move to find a new leader from outside the firm is part of its aim to restore its reputation following the corruption scandal involving VBS Mutual Bank and the politically-tied Gupta family, which has led to it losing several major clients and cutting jobs. Dlomu will remain at the firm, but take on a new global role with a focus on organizational cultural change and ethical leadership. She said: “It has been a huge privilege to lead KPMG this past year. Although it has been challenging, we have managed to stabilize the business.” Until a successor is found, the firm’s Chairman, Wiseman Nkuhlu, will serve as an executive chair.

EU plans to boost powers to counter financial crime

The European Union (EU) plan to counter money-laundering at banks urges a review of a series of high-profile cases but does not propose a comprehensive reform of EU rules, Reuters reported this month after seeing a draft document. The EU’s plan is in response to alleged scandals involving lenders in Denmark, Estonia, Latvia, Luxembourg, Malta, Spain, the Netherlands, United Kingdom and Cyprus conducting money-laundering schemes through foreign branches within the EU. The document, dated 29 October, mandates the European Central Bank (ECB) and the European Commission to review alleged money-laundering cases by mid-2019 with a view to “possible additional actions” to bolster the EU legal framework. It is subject to changes until its adoption in early December. According to Reuters, the draft does not explicitly mention forming a common agency to supervise financial crime, as demanded by the ECB.

U.K. Big Four face competition probe

Britain’s competition watchdog announced this month that it was launching an investiga – tion into the audit sector. The Competition and Markets Authority (CMA) will look into the dominance of the Big Four and whether the sector is “competitive and resilient enough to maintain high quality standards, ” following fears that the sector is not working well for the economy or investors. Andrew Tyrie, Chairman of the CMA said: “If the many critics of the audit process are right, it is not just the companies which buy audits that lose out; it is the millions of people dependent on savings, pension funds and other investments in those companies whose audits may be defective. ” The announcement came a day after the Financial Reporting Council said that it was working with the CMA to consider whether the Big Four should be banned from offering consultancy services to clients they audit.

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