10 October 2012

FEE commented on IESBA Exposure Draft on Proposed Change to the Definition of "Those Charged with Governance"

FEE welcomes the IESBA’s ED to align more closely the Code’s definition of “those charged with governance” with the definition contained in International Standard on Auditing 260 (ISA 260) Communication with Those Charged with Governance.

Specific comments:

Application and Explanatory Material

FEE agrees with the IESBA’s proposal to amend the Code’s definition to align it with the definition in ISA 260 with the exception of the specific reference to application material as it is found in ISA 260. However, the inclusion of application and explanatory material in the Code would benefit both professional accountants in public practice and in business in a variety of situations and jurisdictions and enhance consistent interpretation of the amended definition. Therefore, FEE recommends that application and explanatory material (similar to the one included in ISA 260) be added also to the Code.

Definition of “Management”

In the context of the addition of the term “management” (more precisely “management personnel”) to align the definition in the Code of “those charged with governance” with the definition in ISA 260, FEE notes that “management” is defined in ISA 260 (and the IAASB’s Glossary of Terms) but it is not defined in the Code. FEE believes it would be helpful to add also to the Code (in the Definitions section) the definition of the term management from ISA 260 to ensure consistency in its interpretation and application.

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