Table 4 Data structure for arguments... | Emerald Publishing

Table 4

Data structure for arguments seeing potential in the content of Part 10, prohibition of component auditors, qualitative characteristics and how Part 10 is associated with audit quality

First-order concepts	Second-order concepts	Aggregate dimensions
Arguments from the submissions that saw potential in the new Part 10 Part 10 is coherent and ringfences the use of the ISA for LCEs to the simplest groups, avoiding any risk of scope toward more complex groups The IAASB is recommended, after having considered the comments received on exposure, to adopt the ISA for LCEs, including Part 10, without re-exposure It is supported that the IAASB develops the LCE standard by adding the new Part 10, the time is optimal for creating the standard and the part 10 should be included Arguments from the submissions that saw potential in the proposed prohibition of the use of the ISA for LCEs for group audits when component auditors are involved In practice, component auditors are typically used in more complex group audit situations in which the use of the proposed ISA for LCEs would not be considered appropriate The prohibition is in line with the nature and circumstances of a typical LCE for which the standard should be intended It was recommended that, if the IAASB continues with the proposed prohibition, the Board should initiate an early post-implementation review, which should focus on the impact or effect that the current group audit scope has had on the overall application of the ISA for LCEs Arguments from the submissions that saw potential in the qualitative characteristics The suggested qualitative characteristics used to describe the scope of group audits are suitable The inclusion of these additional characteristics to describe “typical” less complex groups is important to ensure an appropriate entry point to the LCE ISA for group audits There should not be hard lines drawn on limits such as qualitative characteristics because then professional judgment cannot be applied, but, for the sake of consistency of application, the proposed limits were seen as reasonable It needs to be made clear that qualitative characteristics are guidance and that ultimately the determination of whether a group is less complex is a matter of professional judgment by the auditor Arguments from the submissions that were discussing about audit quality and Part 10 The IAASB expects that the auditing process will become more effective and efficient once the ISA for LCEs is in force and adopted. This expectation has implications for audit quality CLs discussed the prohibition of the use of a component auditor, except in the sole circumstance in which their physical presence is necessary, and how this relates to audit quality CLs highlighted the need to add clarification that the audit approach and, in particular, whether to use component auditors should not be driven by the group auditor's desire to use the ISA for LCEs CLs discussed that the proposed group-specific qualitative characteristics are associated with audit quality. For instance, while the proposed group-specific qualitative characteristics were supported, there were concerns that, as currently written, they could lead to inconsistencies in application by the stakeholders, creating confusion in the practice on when the ISA for LCEs can and cannot be used. This might have implications to audit quality	Part 10 is important part of the ISA for LCE standard The IAASB should move forward with the standard The proposed prohibition is seen relevant Essential to have clear criteria but there should be room for professional judgment The prohibition of the use of a component auditor and suggested qualitative characteristics have implications to audit quality	The proposed Part 10 has limitations, it still provides a solid framework within which to undertake an LCE group audit and a promising basis for further development Auditors' professional judgment should not be underestimated High audit quality can't be achieved unless there is standardization

First-order concepts	Second-order concepts	Aggregate dimensions
Arguments from the submissions that saw potential in the new Part 10 Part 10 is coherent and ringfences the use of the ISA for LCEs to the simplest groups, avoiding any risk of scope toward more complex groups The IAASB is recommended, after having considered the comments received on exposure, to adopt the ISA for LCEs, including Part 10, without re-exposure It is supported that the IAASB develops the LCE standard by adding the new Part 10, the time is optimal for creating the standard and the part 10 should be included Arguments from the submissions that saw potential in the proposed prohibition of the use of the ISA for LCEs for group audits when component auditors are involved In practice, component auditors are typically used in more complex group audit situations in which the use of the proposed ISA for LCEs would not be considered appropriate The prohibition is in line with the nature and circumstances of a typical LCE for which the standard should be intended It was recommended that, if the IAASB continues with the proposed prohibition, the Board should initiate an early post-implementation review, which should focus on the impact or effect that the current group audit scope has had on the overall application of the ISA for LCEs Arguments from the submissions that saw potential in the qualitative characteristics The suggested qualitative characteristics used to describe the scope of group audits are suitable The inclusion of these additional characteristics to describe “typical” less complex groups is important to ensure an appropriate entry point to the LCE ISA for group audits There should not be hard lines drawn on limits such as qualitative characteristics because then professional judgment cannot be applied, but, for the sake of consistency of application, the proposed limits were seen as reasonable It needs to be made clear that qualitative characteristics are guidance and that ultimately the determination of whether a group is less complex is a matter of professional judgment by the auditor Arguments from the submissions that were discussing about audit quality and Part 10 The IAASB expects that the auditing process will become more effective and efficient once the ISA for LCEs is in force and adopted. This expectation has implications for audit quality CLs discussed the prohibition of the use of a component auditor, except in the sole circumstance in which their physical presence is necessary, and how this relates to audit quality CLs highlighted the need to add clarification that the audit approach and, in particular, whether to use component auditors should not be driven by the group auditor's desire to use the ISA for LCEs CLs discussed that the proposed group-specific qualitative characteristics are associated with audit quality. For instance, while the proposed group-specific qualitative characteristics were supported, there were concerns that, as currently written, they could lead to inconsistencies in application by the stakeholders, creating confusion in the practice on when the ISA for LCEs can and cannot be used. This might have implications to audit quality	Part 10 is important part of the ISA for LCE standardThe IAASB should move forward with the standardThe proposed prohibition is seen relevantEssential to have clear criteria but there should be room for professional judgmentThe prohibition of the use of a component auditor and suggested qualitative characteristics have implications to audit quality	The proposed Part 10 has limitations, it still provides a solid framework within which to undertake an LCE group audit and a promising basis for further developmentAuditors' professional judgment should not be underestimatedHigh audit quality can't be achieved unless there is standardization

Source(s): Table by the authors