International Federation of Accountants IAASB Update DAVID CHITTY Member: IFAC SMP Committee Chairman: Accounting & Assurance Committee, Horwath International

International Federation of AccountantsInternational Federation of Accountants

IAASB UpdateIAASB Update

DAVID CHITTYDAVID CHITTY

Member: Member: IFAC SMP CommitteeIFAC SMP Committee

Chairman: Accounting & Assurance Committee, Chairman: Accounting & Assurance Committee, Horwath Horwath InternationalInternational

IFAC SMP Forum: 13 October, 2008IFAC SMP Forum: 13 October, 2008 Abuja, NigeriaAbuja, Nigeria

SMP and SME Issues: Audit and AssuranceSMP and SME Issues: Audit and Assurance

• IAASB Clarity Project UpdateIAASB Clarity Project Update

• IAASB Strategy IAASB Strategy

• IFAC’s ISA Guide and Other GuidesIFAC’s ISA Guide and Other Guides

• Participating in IAASB ProjectsParticipating in IAASB Projects

• Keeping up with IAASB DevelopmentsKeeping up with IAASB Developments

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IAASB Clarity Project UpdateIAASB Clarity Project Update

• Clarification complete end 2008

• Effective date: Audits for periods beginning on or after 15 Dec 2009

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• First redrafted ISAs focused on fundamentals…

– Risk fraud, quality control, documentation, reporting

• Recent efforts focused on higher risk areas…

– Estimates, fair values, related party transactions, groups

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• All ISAs redrafted to enhance clarity and eliminate ambiguity about ‘present tense statements’

• Requirements must be must be applicable in ‘virtually all cases’

• About 60% increase in requirements, as expected, BUT most of this in existing ‘grey letter material’

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• Considerations specific to audits of SMEs

– Highlighted in application material

– Incorporates guidance from existing material

– Additional guidance as appropriate

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• Significant REVISED ISAs include

– Overall objective of the auditor (ISA 200)– External confirmations (ISA 505)– Estimates and fair values (ISA 540)– Related parties (ISA 550)– Use of experts (ISA 620)– Group audits (ISA 600)

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IAASB StrategyIAASB Strategy

Strategic focus 2009-11

• Development of standards for capital markets and SMEs

• Adoption: monitoring and facilitating

• Responding to concerns about implementation

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Priorities for 2009-11 for SMPs include

• Revision of ISRE 2400 (review engagements): group of NSS from New Zealand, Canada and South Africa published consultation paper in September to assist IAASB’s consideration of issues (please comment)

• Provision of implementation support; several initiatives being considered

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Other priorities for 2009-11

• Pro forma financial information• Carbon emissions information• Fair value auditing implementation guidance• Impact assessments• XBRL• Research on auditors’ reports

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IFAC’s ISA Guide and Other GuidesIFAC’s ISA Guide and Other Guides

• ISA Guide published Dec 2007; developed by Canadian Institute of Chartered Accountants

• Based on ‘unclarified’ ISAs • Popular download (12,000+)• Free for use by all

http://www.ifac.org/smp/index.php#Resources• CD version available for free on request • Many translations in progress• Clarity version to arrive soon

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• Non-authoritative implementation guide– Not SME audit standard

• Covers all ISA requirements– But not a substitute for ISAs

• Integrated case study and some practice aids– Not a full set of audit programs

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• Canadian Institute has launched forms and checklists for sale to practitioners

– www.knotia.ca/store/iagforms• Australian Institute (ICAA) has adapted ISA

Guide and supplemented it with toolkit– www.charteredaccountants.com.au/A121542159

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• Quality Control guide: Q1 2009, CGA Canada

• Practice Management Guide: Q4 2009, Australian Institute

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• IFAC’s International Center for SMPs: news, information, resources http://www.ifac.org/smp

• IFACNet: global accountancy search engine http://www.ifacnet.com

• SMP/SME discussion board on IFAC website http://web.ifac.org/forum/SMP/1

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Participating in IAASB ProjectsParticipating in IAASB Projects

• SMPs represented on IFAC Board, IAASB and SMPs represented on IFAC Board, IAASB and

IAASB’s CAGIAASB’s CAG• Exposure drafts of proposed standards

– Views of SMPs and developing nations actively sought

– Regional member bodies strongly encouraged to comment

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Keeping up with IAASB DevelopmentsKeeping up with IAASB Developments

Wealth of information on IAASB website

• ISAs Handbook downloadable free-of-charge• Recently released ISAs individually available• Exposure drafts and comment letters• Audio recordings of IAASB meetings• IAASB papers in advance of meetings• Special communications such as clarity updates • Subscription to free quarterly IAASB and SMP e-News at

http://www.ifac.org/E-news/

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International Federation of AccountantsInternational Federation of Accountants

www.ifac.org/smp www.ifac.org/smp

13 October 200813 October 2008

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Documents

International Federation of Accountants IAASB Update DAVID CHITTY Member: IFAC SMP Committee Chairman: Accounting & Assurance Committee, Horwath International