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2023/04/23

Global observation(2023.4.23)

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International Accounting Bulletin: ISSB Ready to Negotiate Future Priorities

According to the International Accounting Bulletin on April 20th, the International Sustainable Development Standards Board (ISSB) announced that it will seek feedback on its priorities for the next two years.

According to the report, in May 2023, ISSB plans to issue an information request regarding its agenda priorities, with a comment period of 120 days.

Based on research on investor information needs, ISSB has identified four potential projects: biodiversity, ecosystems, and ecosystem services; Human capital; Human rights; And report integration.

The report states that in the information request, ISSB will seek feedback on the relative priority of potential projects, as well as feedback on the strategic direction of ISSB activities and the criteria for evaluating priority projects.

ISSB is also committed to making targeted revisions to the SASB standards to ensure that the references in the SASB standards are internationally applicable, as part of its efforts to maintain and strengthen the SASB standards.

The report states that this work is important as the SASB standard will serve as a guiding source for companies to identify sustainability related risks and opportunities, as well as related disclosures, when applying IFRS S1 reporting on topics outside of climate.


International Accounting Bulletin: Fraud related audit procedure will become a priority for PCAOB

According to the report in the International Accounting Bulletin on April 18, the U.S. Public Company Accounting Oversight Board (PCAOB) plans to pay more attention to fraud related audit procedure, continue to give priority to the risks related to major digital assets, and continue to select audits in the financial services industry for inspection.

The article states that PCAOB Chairman Erica Williams stated that prior to the priorities identified in PCAOB's latest staff report, there has been an increase in defects during the 2021 inspection and an increase in opinion sheets during the 2022 inspection.

Williams said, "By staying ahead of emerging risks, our inspection plan will hold the company accountable and drive investors to improve audit quality

The article states that last year, PCAOB discovered an increase in the number of audits with defects in the audit companies inspected by PCAOB in 2021 compared to the same period last year. Williams stated that the high defect rate in 2021, coupled with the addition of comments in 2022, is a warning signal. She requested that the auditing industry focus on improving audit quality and protecting investors.

The complete list of 2023 inspection priorities listed in the report includes:

● Fraud risk
● Audit and accounting risks
● Risk assessment and internal control
Specific considerations for financial services
● Specific precautions for brokerage dealers
● Mergers and acquisitions, including cancellation of SPAC transactions
● Digital assets
● Utilize the work of other auditors
● Quality control (especially talent retention and its impact on audit quality and independence)
● Other inspection areas (key audit matters, network security, and the use of data and technology in audits)

The report states that the target inspector team conducts in-depth reviews of audit companies annually, with a focus on auditing in 2023, including risks related to digital assets, first year audits, multi location audits, and significant or unusual events or transactions. 

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