International Education Standard 8
International Education Standard 8 (IES8) Revised is effective from 1 July 2016 and is aimed at ensuring that each Audit Engagement Partner develops and maintains the necessary competencies to perform the role effectively. It replaces the previous version of IES 8. The guidance on this web-page supercedes all previous guidance issued.
This page is relevant to you if:
- You are a CA who holds the position of Audit Engagement Partner, wherever based in the world;
- You are a Responsible Individual (RI) in an ICAS audit registered firm, whether an ICAS member or not; and
- You are working towards becoming an Audit Engagement Partner.
This is also relevant to all ICAS audit registered firms, as they are responsible for ensuring that their Audit Engagement Partners comply with the requirements.
The previous version of IES8 applied to all “audit professionals”, however the revised standard is aimed at Audit Engagement Partners only. It is, however, far more prescriptive in relation to the competencies and learning outcomes required, and is a “must read” for all Audit Engagement Partners.
What is IES8 (Revised) and when does it apply?
What is it?
An education standard, issued by The International Accounting Education Standards Board (IAESB).
What is its purpose?
It is aimed at protecting the public interest by requiring an Audit Engagement Partner to develop and maintain the necessary skills and training to perform the role effectively and to ensure audit quality.
It recognises that only those professional accountants who develop the required competencies specified in IES 8 (Revised) will be able to deal with the complex situations that Audit Engagement Partners face.
When does it apply?
It takes effect from 1 July 2016. It replaces the previous version of IES8.
Who does it apply to?
Who requires to comply?
It applies to Audit Engagement Partners only i.e. the designated individual responsible for the audit of financial statements.
The revised standard no longer applies to the wider role of “Audit Professional”.
For ICAS audit registered firms, the term Audit Engagement Partner means Responsible Individual (RI) (for corporate audit) and Key Audit Partner (KAP) (for Local Audit). This includes employee RIs/KAPs.
I am intending to become an Audit Engagement Partner (RI/KAP) soon – does this apply?
Yes, by the time you become an Audit Engagement Partner you will be required to demonstrate that you have all the competencies and learning outcomes. You, therefore, need to ensure that in the years leading up this role that you are planning for and developing those competencies. We advise you to plan your CPD well in advance of your promotion.
To become an RI in an ICAS audit registered firm for UK and Ireland audits, you require to complete an RI application form, provide CPD records for the last 2 years and provide a detailed Audit Experience & Competence Form. This application process asks for information on the IES8 (Revised) competencies. You will need to demonstrate compliance with the learning outcomes and competencies before your application is approved. A similar process applies for KAP applications for local audit firms.
What are the main changes?
It is very different from the previous version of the standard:
- The previous standard applied to all “Audit Professionals”, this version narrows it to Audit Engagement Partner only.
- It is far more prescriptive in relation to the competencies that a RI must develop and maintain.
- It now takes a learning outcomes approach – i.e. what you have learned, rather than what you have done.
- It recognises that the audit environment is dynamic and that the standard should apply “career-long”.
All previous guidance issued in relation to IES8 has been withdrawn and the guidance on this website is current.
The previous standard was not as far-reaching and could be dealt with by the firm conducting a fairly “tick-box” exercise for the audit professionals in the firm. The revised standard is more far-reaching. Audit partners are expected to consider their compliance within their CPD records and there is far more linkage between the performance appraisal process, training plans, CPD and the Audit Compliance Review process – this is explained later on this web-page.
What are the requirements?
IES 8 (Revised) requires Audit Engagement Partners to develop and maintain professional competencies which can be demonstrated by achieving specified learning outcomes. These are explained further below.
Does your annual CPD need to cover every learning outcome?
No. CPD only requires to be targeted at those aspects of the engagement partner role which are either new (i.e. the ‘develop’ part of CPD) or in need of update (i.e. the ‘maintain’ part of CPD).
What are the learning outcome?
The guidance “ICAS Guidance on IES8 Competencies & Learning Outcomes ” provides guidance on the requirements of IES8 and how these can be applied practically to audit engagement partners, and more specifically to RIs in ICAS audit firms.
What CPD is allowed and where does practical experience fit in?
What CPD is allowed?
You can use a wide range of learning and development methods (“blended-learning”) to develop your competencies and learning outcomes. In line with the ICAS CPD approach, we would view any activity which maintains or develops competence to qualify:
Where does practical experience fit in?
CPD includes practical experience, including workplace and other activities that are relevant to developing competence. It should be:
- of the necessary depth and breadth to develop and maintain professional competence; and
- measurable and verifiable. For example, through practical experience, an audit engagement partner may develop an understanding of an industry an entity is operating in. This could be used to assess the business risks faced by the entity and to help inform audit risk assessments.
How does it link to the ICAS CPD approach?
IES 8 (Revised) fits in well with the ICAS CPD Requirements. We have four stage output based approach to CPD. This ties in with the competencies and learning outcomes required in IES 8 (Revised).
The first column in the table below explains the ICAS CPD approach and the second column explains how IES 8 (Revised) can be applied to this approach.
Step 1 - Define current and future role(s)
Define in broad terms what is expected in your current role. Future career options and goals should also be taken into consideration.
How IES8 (Revised) can be applied
Are you intending to be an Audit Engagement Partner in the future? - in which case you will require to consider which of the IES8 (Revised) learning outcomes you still need to develop before taking on this role.
If you are already an Audit Engagement Partner? - consider your audit clients, the particularly complex or specialist aspects of any clients, or how you see your audit client base developing?
Step 2 - Deciding on training and development needs
Decide on the skills and knowledge levels needed to meet the expectations identified in step 1 and which will enable effective performance. These should be compared against existing skills and knowledge levels to help identify training and development needs.
How IES8 (Revised) can be applied
As an Audit Engagement Partner you will require to consider all of the competencies /learning outcomes in IES8 (Revised) and consider which (a) need to still be developed and (b) which need to be maintained or updated. See “What are the requirements” for more information about IES8 (Revised) learning outcomes.
You will need to keep up to date on developments within your jurisdiction to ensure you can identify what technical areas require your focus each year.
You should therefore be able to identify “gaps” that need to be addressed by this year’s CPD.
Step 3 - Developing or undertaking a personal development programme
Identify and plan to undertake CPD activities that are relevant to your role and which will help meet the training and development needs identified in Step 2. Wherever possible, you should aim to undertake a breadth of CPD activity.
How IES8 (Revised) can be applied
This is where you should plan your CPD activities to meet the “gaps” identified above which need to be addressed in this year’s CPD.
Step 4 - Record when you have undertaken a particular CPD activity
Reflect on the learning outcome of an activity, decide if it has had an impact on your skill or knowledge levels and then provide a brief statement to this effect
How IES8 (Revised) can be applied
For each CPD activity undertaken, explain the CPD activity undertaken and how this has achieved the learning outcomes. You should tie these learning outcomes back to IES 8(Revised)
Please see "Example CPD Records" for worked examples
Example CPD records (how to implement IES8 in practice)
We have produced two example records:
- An Experience Audit Engagement Partner; and
- An Individual Working Towards Becoming an Audit Engagement Partner.
These show how IES8 is applied for two audit professionals at different stages in their career. The existing partner is focussed on technical developments for existing audit clients and Audit Compliance Review results, whilst the Senior Manager who is going to be an Audit Engagement Partner soon is focussing their CPD around the personal and interpersonal skills needed to be a partner.
We hope these examples, which are illustrations only, are useful in illustrating how IES 8 can be applied in practice.
What is the audit firm’s role?
How does IES 8 impact on my firm’s policies and procedures?
Audit firms require to ensure that the firm’s policies and procedures, such as training, mentoring, induction, performance appraisal. CPD and HR programmes, support compliance. The extent of any changes required to comply with IES 8 (Revised) will depend on how comprehensive your existing ISQC1 policies and procedures are.
The extent of procedures will also depend on the size and nature of your firm. Smaller firms, such as sole practices, will require more simplified procedures than more sizeable firms.
How does my firm assess compliance?
Your firm should ensure that audit engagement partners are complying with IES8 (Revised) and that this can be supported in their CPD records & performance appraisals (if conducted) – this should be done by ensuring that CPD records are reviewed to ensure that the learning outcomes in IES8(Revised) can demonstrated.
Are performance appraisals mandatory?
Whilst ISQC1 does not mandate performance appraisals, they may be one of the most effective ways of evidencing learning outcomes, particular for the non-technical ‘softer skills’ (see “What are the requirements”).
Whilst this is not feasible for sole practitioners, the standard makes the introduction of this approach more important for multi-principal firms.
We would advise that, if you use a performance appraisal process, it records whether the partner has maintained or achieved the main competencies and learning outcomes in IES8(Revised) and that this is also linked into the partners’ CPD records.
What role does the Audit Compliance Review process have?
All audit firms, will require to ensure that the annual cold file review process assesses the RI’s compliance with the learning outcomes and identifies any areas which require development. This should then link into both:
* The performance appraisal process (as above, if there is one): and
* The training programme and CPD process.
For more information relevant to firms please see “How will ICAS monitor compliance”
ICAS audit firms: How will ICAS monitor compliance?
As part of the Audit Monitoring visit to your firm we will assess compliance with IES8 (Revised). This will be achieved by reviewing a number of areas, as follows:
The RIs’ CPD records will be reviewed to ensure that the CPD record identifies learning outcomes that require to be developed/maintained and that there has been appropriate CPD planned to achieve these learning outcomes and reflect on the learning outcomes.
We will review the performance appraisal process, if any, to determine that the firm has assessed the RIs’ competencies. We will check to see whether there is a link between any areas needing development in the performance appraisal to the CPD record.
Audit Compliance Review
We will check the cold file reviews to ensure that the cold file review process assesses the competencies and learning outcomes of each RI, and how any areas for development link into the performance appraisal and CPD process.
Audit Engagement Files
A significant part of our work on ICAS Audit Monitoring visits is reviewing audit engagement files. Our review of the audit quality of the files will provide us with evidence as to whether the majority of learning outcomes have been evidenced on file.
Review of ethical compliance
On every visit we:
- assess the firm’s ethical policies and procedures;
- discuss all potential ethical issues;
- review independence declarations. This will provide us with evidence as to whether the ethics based learning outcomes have been achieved.
Other policies and procedures
We will assess all other policies and procedures - such as any induction, mentoring or training programmes – to determine how these support IES8 (Revised) compliance.
If a firm is found to failing in any of the above areas, consideration is given to the individual and collective significance of the matters raised both to the individual audit and to the firm’s audit procedures on a whole, and an assessment made of the effectiveness of CPD and whether audit competence has been maintained. Any actions required will be highlighted in the monitoring report which will be discussed in detail with the firm at the visit.
ICAS members not in ICAS audit firms: How will ICAS monitor compliance?
What is our responsibility?
Whilst ICAS is not responsible for monitoring the audit firm, ICAS has a responsibility, as your professional membership body, to monitor your compliance with CPD requirements and compliance with International Education Standards 7 & 8.
How do we monitor compliance?
The Annual Declaration:
Each year via the Annual Return, ICAS will ask members to self-certify that they have met their CPD requirements for the year.
The Annual Sample:
Each year ICAS selects a sample of Members to submit their CPD records. Members selected for monitoring will be asked to show that they have complied with the CPD requirements and their CPD record should mirror the four steps professional development process. ICAS will be checking for a discernible and reasonable process of professional development in keeping with a member's role and career stage.
For Audit Engagement Partners, we would expect the Member to consider IES 8 (Revised) and consider the competencies and learning outcomes in the standard that require to be (a) attained or (b) updated. Please refer to our example CPD records in “Example CPD records (how to implement IES8 in practice)”
The monitoring process is further explained in the CPD requirements section of icas.com
How does it link to IES 7?
IES 7 is the overarching standard which requires all professional accountants who are members of an IFAC (International Federation of Accountants) membership body to maintain professional competence.
IES8 explains how the requirements of IES7 require to be applied for Audit Engagement Partners.
Why was the standard revised?
- align all International Education Standards;
- provide a closer link with the competence and capability requirements set out in International Standards on Auditing (ISA) 220 and International Standard on Quality Control (ISQC) 1;
- provide more clarity who it applies to;
- recognise that it is career-long requirement, taking account of significant changes in the audit environment.
In complying with IES 8, will practical experience be considered a relevant CPD activity by your professional body?
Yes – practical experience will be considered a relevant activity for the purposes of CPD. We will be monitoring compliance as part of the audit monitoring visit and we will also assess whether the experience and competence meets the requirements by assessment of the quality of the audit files. If there are audit quality issues then this could lead to concerns over the competence areas. We will also assess compliance through consideration of performance appraisals.
- IES 8 (Revised)
- CPD Example Record: Experienced Audit Engagement Partner PDF [302 KB]
- CPD Example Record: Individual Working Towards Becoming Audit Engagement Partner PDF [259 KB]
- IAESB Implementation Support For International Education Standard (IES 8) (Revised)
- IFAC IES8 Webcast for Audit Engagement Partners
- IFAC IES8 Webcast for Audit Firms
- ICAS Guidance on IES8 Competencies & Learning Outcomes PDF [218 KB]