New listed and PIE definitions from December 2026
How the December 2026 amendments tied to the IESBA's listed and public interest entity definitions affect key audit matters, quality reviews and services.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Some audit requirements switch on or off depending on what kind of entity the client is. Key audit matters, engagement quality reviews and the strictest limits on non-audit services have all been tied to labels such as "listed entity" or "public interest entity". When the meaning of those labels changes, the scope of the requirements can change with them, without a word of the requirements themselves being rewritten.
That is what makes the December 2026 amendments easy to miss. This article explains what the IAASB says is changing, which requirements to look at, and how to check each client against the amended scope.
The IESBA definitions and the IAASB's narrow-scope amendments
The IAASB states that narrow-scope amendments resulting from the revised definitions of listed and public interest entities in the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants become effective in December 2026 and are included in the IAASB's 2026 Handbook. The IAASB's page for the 2026 Handbook records this alongside the other pronouncements taking effect at the same time.
In plain terms, the ethics board revised its definitions, and the auditing standard-setter has amended its own standards so that they work with the revised definitions. The amendments are described as narrow, but their effect depends entirely on which of a firm's clients fall inside or outside the amended scope. Read the amended text itself to see exactly which entities each requirement now covers; do not infer it from summaries.
Why "listed entity" wording in older guidance needs checking
Much of the guidance a firm relies on was written with the older wording. ACCA, for example, states that ISA 701 was issued by the IAASB in January 2015 and is required to be applied to the audit of all listed entities, and that ISQM 1 requires engagement quality reviews on audits of listed companies. Those statements describe the standards as they were written. From December 2026, the amended scope is what counts.
The same applies inside the firm. Methodology manuals, acceptance checklists, quality policies and report templates often say "listed" where the requirement now depends on amended wording. A search of the firm's own documents for "listed" and "public interest" is a quick way to find the places that need checking.
Key audit matters scope
ISA 701 applies to audits of complete sets of general purpose financial statements of listed entities. It also applies when law or regulation requires key audit matters for other entities, and when the auditor chooses to communicate them voluntarily. The first of those three routes is the one the amendments touch. For each client, ask whether the amended scope now brings it within the requirement to report key audit matters, or takes it out. Selecting key audit matters covers the work once they apply.
In Achekam, the engagement team drafts the auditor's report on standard ISA 700, 705, 706 and 701 wording, approval is refused while any bracketed placeholder remains, and only the engagement partner approves. Whether the key audit matters section belongs in a given report is a judgement the team makes against the amended scope; the drafting tool does not make it for them.
Engagement quality review scope
ACCA explains that ISQM 1 requires firms to perform an engagement quality review on audits of listed companies, on audits and other engagements where law or regulation requires one, and on engagements where the firm decides one is an appropriate response to quality risks. ACCA's examples of that third category include complex or high-judgement audits, audits with significant issues such as a material restatement, and engagements for which the firm has no prior experience.
If the amended definitions bring a client within the first category, the review becomes mandatory rather than a matter of the firm's judgement. In Achekam, a partner can name an engagement quality reviewer, who must be a partner or senior manager not on the engagement team, and that person must clear the audit report before it can be issued; the engagement partner cannot bypass that clearance. For a South African firm, Achekam does not require a reviewer for any engagement type, so naming one is the firm's decision under its own policies. Update those policies first, then name reviewers where they now require one. Which engagements need an EQR covers the policy side.
Non-assurance services for public interest entity audit clients
The definitions matter for ethics as well as for auditing. The IESBA's April 2021 revisions to its Code include a far-reaching prohibition on audit firms providing a non-assurance service that might create a self-review threat to an audit client that is a public interest entity.
If a client moves into the public interest entity category under the revised definitions, services the firm provides alongside the audit, such as bookkeeping, tax computations or valuation work, need to be looked at again under the stricter rules. Do this before the first affected period, not after the services have been delivered. Check, too, how your own country's ethics rules for auditors incorporate the IESBA Code.
Checking each client against the new definitions
A practical review for the audit portfolio:
- List every audit client with the facts relevant to the definitions: securities in issue and where they trade, regulated activities, size and the nature of its public interest.
- Apply the amended wording, as adopted in your jurisdiction, to each client.
- Record the conclusion and the reasoning on the permanent file.
- For clients newly inside the scope: plan key audit matters, name an engagement quality reviewer, and review non-assurance services.
- For clients newly outside it: decide deliberately whether to continue voluntary key audit matters or reviews, rather than dropping them by default.
- Repeat the check at each continuance decision, since a client's status can change.
Definitions rarely make headlines, but they decide which rules apply. A short portfolio review before the first affected year-end will tell the firm where its obligations have moved.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
