Ethical and Quality Control Requirements When Undertaking Assurance Engagements

Abstract

In response to an increasing demand for assurance of non-financial information, the International Auditing and Assurance Standards Board (IAASB) has recently released a number of International Standards on Assurance Engagements (ISAEs). In response to concerns as to whether their use be extended beyond professional accountants to other assurance providers, the IAASB determined that public interest would be best served if all competent practitioners were able to use ISAEs to benchmark their work effort. It also determined that the ethics and quality control frameworks under which assurance engagements are undertaken should be disclosed in order to address concerns about inconsistency in their quality. This study examines assurance engagements to identify the ethics and quality control standards claimed to be used by assurance practitioners, both professional accountants and other assurance providers. It finds that, while most professional accountants reference the accounting profession’s Code of Ethics and Quality Control standards, there is still room for improvement. Further, the lack of any reference to codes of ethics or quality control standards by other assurance providers raises concerns over the IAASB’s determination to extend the use of ISAE standards to these other providers. Using multivariate analysis we further find that both the type of assurance practitioner and the stringency of a country’s reporting requirement on non-financial information are consistently related to the level of reference to both ethics and quality control requirements.