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Ref: BJB:ab

11 November 2014

PRIVATE AND CONFIDENTIAL

Ken Siong

IESBA Technical DirectorInternational Ethics Standards Board for Accountants

529 5th Avenue, 6th Floor

New York, New York 10017

USA

Dear Mr Siong,

Proposed changes to certain provisions of the code addressing long association of personnel with an audit or assurance client

We appreciate the opportunity to provide comment on the exposure draft. Our main concern relates to the proposal to extend the cooling-off period to five years for the engagement partner on the audit of public interest entities, as we cannot see how audit quality or a fresh-look would be enhanced by a five year cooling-off period as compared to the present two years. Our detailed responses to all 14 questions are attached to this letter.

Pitcher Partners is an association of independent firms operating from all major cities in Australia. Firms in the Pitcher Partners network are full service firms and we are committed to high ethical standards across all areas of our practice. Our clients come from a wide range of industries and include listed and non-listed disclosing entities, large private businesses, family groups, government entities and small to medium sized enterprises.

Please contact me or our Technical Director, Aletta Boshoff (03 8612 9318 or aletta.boshoff@pitcher.com.au), in relation to any matters arising in this submission.

Yours sincerely

B J BRITTENPartner

Winner Best Medium Accounting Firm 2013,Thomson Reuters Tax and Accounting Excellence Awards

Question 1 - Do the proposed enhancements to the general provisions in paragraph 290.148 provide more useful guidance for identifying and evaluating familiarity and self-interest threats created by long association? Are there any other safeguards that should be considered?

The proposed enhancements capture the practical considerations currently considered by our firm to identify and evaluate the familiarity and self-interest threats created by long association, and do not add more useful guidance for our firm.

The list of safeguards in proposed paragraph 290.149A should not be an exhaustive list, because the nature of safeguards would depend on the nature and significance of the threat.

Question 2 - Should the general provisions apply to the evaluation of potential threats created by the long association of all individuals on the audit team (not just senior personnel)?

No, the general provisions should not apply to all individuals on the audit team. The general provisions should continue to only apply to senior personnel, because junior personnel:

do not have the ability to influence the outcome of the audit, for example, by making key decisions; and

generally have limited interaction with senior management or those charged with governance.

The potential rotation of all personnel on the audit team is not ideal for client service, client cooperation and the overall knowledge and understanding of the clients industry and risk with the hands on client staff. One example of the negative impact of rotation of all members of the audit team on client service is that client knowledge is retained by audit team personnel and the greater the extent of rotation, the greater the loss of client knowledge. Currently, a common concern already raised by our clients is that they would like to see continuity of audit team personnel.

In our view, the consideration and documentation of the evaluation of potential threats created by long association of junior personnel on the audit team will create an unnecessary administrative burden on the audit team, because it will never lead to the identification of a threat that would require a safeguard.

Question 3 - If a firm decides that rotation of an individual is a necessary safeguard, do respondents agree that the firm should be required to determine an appropriate time-out period?

Yes, we agree that the firm should be required to determine an appropriate time-out period.

Question 4 - Do respondents agree with the time-on period remaining at seven years for key audit partners on the audit of public interest entities?

Yes, we agree that the time-on period should remain at seven years for key audit partners involved in the audit of public interest entities.

Question 5 - Do respondents agree with the proposal to extend the cooling-off period to five years for the engagement partner on the audit of public interest entities? If not, why not, and what alternatives, if any, could be considered?

We do not agree with the proposal to extend the cooling-off period to five years for the engagement partner on the audit of public interest entities. To our knowledge, there is no evidence (empirical or otherwise) to suggest that audit quality was compromised when a key audit partner only served a two year cooling-off period. We cannot see how audit quality or a fresh-look would be enhanced by a five year cooling-off period. The audit engagement partner has to ensure a quality audit is performed in each and every year, and the audit engagement has to comply with legally enforceable auditing and ethical standards.

Audit quality is impacted by various factors and small and medium sized audit practices have implemented various safeguards to address potential threats to independence. Independence of appearance is important, but should be evaluated within realistic and practicable measures especially for small and medium sized audit practices.

In our view, the current cooling-off period of two years is appropriate to ensure a fresh-look by the new engagement partner.

Question 6 - If the cooling-off period is extended to five years for the engagement partner, do respondents agree that the requirement should apply to the audits of all public interest entities?

No, if the cooling-off period is extended to five years for the engagement partner, it should only be applied to the audits of listed entities. In Australia, the rotation requirements are stricter for listed entities than other public interest entities.

Question 7 - Do respondents agree with the cooling-off period remaining at two years for the EQCR and other key audit partners on the audit of public interest entities? If not, do respondents consider that the longer cooling-off period (or a different cooling-off period) should also apply to the EQCR and/or other key audit partners?

Yes, we agree that the cooling-off period for engagement quality control reviewers and other key audit partners should remain at two years.

Question 8 - Do respondents agree with the proposal that the engagement partner be required to cool-off for five years if he or she has served any time as the engagement partner during the seven year period as a key audit partner?

We do not agree with this proposal. In emergency situations, for example illness of the engagement partner, another audit partner with knowledge of the client, for example the engagement quality control reviewer, could be involved as engagement partner for one particular year only. In this situation, the engagement quality control reviewer would be required to cool-off for five years, because he or she was the engagement partner for only one year in an emergency situation.

Question 9 - Are the new provisions contained in 290.150C and 290.150D helpful for reminding the firm that the principles in the general provisions must always be applied, in addition to the specific requirements for key audit partners on the audits of public interest entities?

N.A.

Question 10 - After two years of the five-year cooling-off period has elapsed, should an engagement partner be permitted to undertake a limited consultation role with the audit team and audit client?

Yes, we agree that the engagement partner should be permitted to undertake a limited consultation role with the audit team and audit client, especially since we are of the view that the cooling-off period should only be 2 years. However, the nature and scope of limited consultation should be further explained before we are able to make a fully informed comment.

Question 11 - Do respondents agree with the additional restrictions placed on activities that can be performed by a key audit partner during the cooling-off period? If not, what interaction between the former key audit partner and the audit team or audit client should be permitted and why?

We do not agree with the additional restriction placed on activities that can be performed by a key audit partner during the cooling-off period. In particular, we do not agree with the proposal that the former key audit partner cannot be responsible for leading or coordinating the firms professional services to the audit client or overseeing the firms relationship with the audit client (sometimes referred to as the relationship partner).

We also do not agree with the proposal that the former key audit partner cannot undertake any other role, including the provision of non-assurance services that would result in significant or frequent interaction with senior management or those charged with governance.

Question 12 - Do respondents agree that the firm should not apply the provisions in paragraphs 290.151 and 290.152 without the concurrence of those charged with governance?

Yes, we agree that the firm should not apply the provisions in paragraphs 290.151 and 290.152 without the concurrence of those charged with governance.

Question 13 - Do respondents agree with the corresponding changes to section 291? In particular, do respondents agree that given the differences between audit and other assurance engagements, the provisions should be l