Long Association Task Force

1. Long Association Task Force Marisa Orbea, Task Force Chair IESBA Meeting November 30-December 4, 2015 New York, USA

2. Long Association Report-Back September 2015 CAG –Cooling-off period for the EQCR • Support not unanimous • However recognition of careful balance reached between • EP and EQCR having the same cooling-off • Potential hardship • Concerns expressed about complexity

3. Long Association Report-Back October 2015 Board Teleconference –Cooling-off for the EQCR • General view that the draft reflects the Board’s intention • Continuing concerns about complexity • Questions about clarity of provisions and their application • FAQs drafted

4. Long Association Report-Back September 2015 CAG –Restrictions on Activities During Cooling-off Period • No consensus view reached: either “off is off” or activities appropriate • Some support for limited consultation after 2 years in the interests of audit quality • No new perspectives

5. Long Association Report-Back October 2015 Board Teleconference –Restrictions on Activities During Cooling-off Period • Concerns with tight restriction in 290.150E (limited consultation after 2 years) • Some adjustments made by Task Force: • “individual within the firm” changed to partner within the firm • Limited to the firm expressing the audit opinion • Concerns with “no other individual with the expertise” • Provision should apply whether cooling-off period is 3 years or 5 years

6. Long Association Report-Back October 2015 Board Teleconference –Recognizing Different Jurisdictional Safeguards • Some wording changes to make provisions clearer: • Reorder of conditions • Deleted “following appropriate due process and based on jurisdictional circumstances” • Recommend leaving inclusion of an “independent standard setter” • Concerns raised regarding: • Use of 10 years as a measure • Lack of alignment with EU regime unless joint audits are recognized

7. Long Association Joint Audits and Application of Jurisdictional Safeguards • EU: initial firm rotation period of 10 years can be extended once up to a maximum additional 10 years with tender or 14 years with joint audit • Current provision does not recognize joint audits as a safeguard • Adding joint audit is consistent with EU regime, but • Adds further complexity • Leads firm to 24 year maximum term (instead of 20 years with retender) • Should jurisdictional provision include reference to joint audit?

8. Long Association To Re-expose or not to Re-expose? Task Force Considerations • Consider there is no need for further consultation before voting on the provisions • Consider due process for re-exposure: • Substantial change to a proposal not aired in the ED so commentators have not had an opportunity to make their views known • Substantial change arising from matters not previously deliberated by the Board • Substantial change to the substance of a proposed international pronouncement

9. Long Association To Re-expose or not to Re-expose? Task Force Considerations • Task Force recommends re-exposure for: • Jurisdictional safeguards provision • Cooling-off period for the EQCR • EP for part of the seven-year time-on period • Task Force does not recommend re-exposure of any of the remaining provisions

10. Long Association Other Matters • Frequently Asked Questions • To be included in the explanatory memorandum • Effective date • Deferred pending Board consideration of re-exposure • Tentative extension of one year (to 2018) from the 2017 date proposed in original ED • If ED approved Board will be invited to consider the questions to be included in the EM