International Federation of Accountants IFAC SMP Committee Guides Bernard Scicluna Member – IFAC SMP Committee President – Malta Institute of Accountants

International Federation of Accountants

IFAC SMP Committee GuidesIFAC SMP Committee Guides

Bernard SciclunaBernard SciclunaMember – IFAC SMP CommitteeMember – IFAC SMP Committee

President – Malta Institute of AccountantsPresident – Malta Institute of Accountants

IFAC SMP FORUM 2009IFAC SMP FORUM 2009

Beijing, ChinaBeijing, China

28 October 200928 October 2009



ISA Guide

QC Guide

PM GuideOther



ISA Guide

QC Guide

PM GuideOther

• Largely SMP Committee reaction to the issue of the Largely SMP Committee reaction to the issue of the audit risk standards, around 2004audit risk standards, around 2004

• Secure the provision of guidance on the application Secure the provision of guidance on the application of current ISAs in the audit of small entitiesof current ISAs in the audit of small entities

• For example, new standards required documentation For example, new standards required documentation of 5 components of internal controlof 5 components of internal control– Control environment, risk assessment procedure, Control environment, risk assessment procedure,

information system, control activities, monitoring information system, control activities, monitoring of controlsof controls

ISA Guide

• IFAC Board Approval (Beijing 2006) effectively IFAC Board Approval (Beijing 2006) effectively established operating framework for SMPC Guides:established operating framework for SMPC Guides:

• Will not constitute a standardWill not constitute a standard– Will provide non-authoritative guidanceWill provide non-authoritative guidance– Will be an IFAC SMPC publicationWill be an IFAC SMPC publication– Will be subject to a rigorous QC review processWill be subject to a rigorous QC review process– Will not be approved or endorsed by IAASB / IESBAWill not be approved or endorsed by IAASB / IESBA

• Full copyright will rest with IFACFull copyright will rest with IFAC

– All IFAC Member Bodies will have free-of-charge All IFAC Member Bodies will have free-of-charge unrestricted rights to use content for their own domestic unrestricted rights to use content for their own domestic productsproducts

Operating framework for Guides

Guide to ISAs for Use in the Audit of SMEsGuide to ISAs for Use in the Audit of SMEs Issued Dec 2007Issued Dec 2007 Developed by the Canadian Institute of Chartered Developed by the Canadian Institute of Chartered

Accountants (CICA)Accountants (CICA) Over 20,000 downloadsOver 20,000 downloads CD version also available free-of-chargeCD version also available free-of-charge IFAC’s 2IFAC’s 2ndnd most popular publication in 2008 (after most popular publication in 2008 (after

IFAC Handbook)IFAC Handbook)

ISA Guide

Guide to ISAs for Use in the Audit of SMEsGuide to ISAs for Use in the Audit of SMEs Member bodies may adapt for local useMember bodies may adapt for local use ICAA – localized names and references, road-show ICAA – localized names and references, road-show

of training sessions, toolkit of checklists / forms of training sessions, toolkit of checklists / forms (available for purchase)(available for purchase)

MIA (Malaysia) have also adapted ISA GuideMIA (Malaysia) have also adapted ISA Guide CICA has developed a pack of forms and CICA has developed a pack of forms and

checklists to accompany the Guide (available for checklists to accompany the Guide (available for purchase)purchase)

A number of translations done or in process; A number of translations done or in process; French and Spanish completedFrench and Spanish completed

ISA Guide

Around 400 pagesAround 400 pages Covers ISAs as at 31 Dec 2006 (as per 2007 IFAC Covers ISAs as at 31 Dec 2006 (as per 2007 IFAC

Handbook)Handbook) Covers all aspects of the audit process, divided into Covers all aspects of the audit process, divided into

three phases:three phases: Risk Assessment / Risk Response / ReportingRisk Assessment / Risk Response / Reporting

Integrated case studyIntegrated case study Dephta Furniture Inc. – family owned furniture Dephta Furniture Inc. – family owned furniture

making factory with 19 full time staff, many making factory with 19 full time staff, many family membersfamily members

ISA Guide Features

Updated version expected Q1/2010Updated version expected Q1/2010 Will cover clarified ISAs as per 2009 IFAC Handbook Will cover clarified ISAs as per 2009 IFAC Handbook

effective for audits of periods beginning ≥ 15 Dec 09effective for audits of periods beginning ≥ 15 Dec 09 Among other improvements, the clarified ISAs specify Among other improvements, the clarified ISAs specify

more clearly the Objectives, Requirements, and more clearly the Objectives, Requirements, and Application and Other MaterialApplication and Other Material

36 ISAs: 1 new, 16 revised & redrafted, 19 redrafted36 ISAs: 1 new, 16 revised & redrafted, 19 redrafted Estimated that there are 30% more requirements in Estimated that there are 30% more requirements in

clarified ISAs than in the black letter ISAsclarified ISAs than in the black letter ISAs Draft text over 500 pages (from 400), including a Draft text over 500 pages (from 400), including a

second case study based on a micro entitysecond case study based on a micro entity

ISA Guide Update

Volume 1: Volume 1: Basic concepts of a risk based ISA auditBasic concepts of a risk based ISA audit Directed at practitioners and students with little Directed at practitioners and students with little

or no understanding of ISAsor no understanding of ISAs Expected - Approx 225 pagesExpected - Approx 225 pages

Volume 2:Volume 2: Practical guidance for the audit of SMEsPractical guidance for the audit of SMEs Directed at practitioners with a reasonable Directed at practitioners with a reasonable

working knowledge of ISAsworking knowledge of ISAs Expected - Approx 200 pagesExpected - Approx 200 pages

ISA Guide Update



ISA Guide

QC Guide

PM GuideOther

• Quality Control for Firms that Perform Audits and Reviews of Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Historical Financial Information and Other Assurance and Related Services EngagementsRelated Services Engagements

• Originally effective as of 15 June 2005Originally effective as of 15 June 2005• Aimed at quality control procedures at the level of the Aimed at quality control procedures at the level of the

firm, not at engagement level (ISA 220)firm, not at engagement level (ISA 220)• Covering each of the following elements:Covering each of the following elements:

– Leadership responsibilitiesLeadership responsibilities– Ethical requirementsEthical requirements– Acceptance and continuance (client & engagement)Acceptance and continuance (client & engagement)– Human resourcesHuman resources– Engagement performanceEngagement performance– MonitoringMonitoring

ISQC1

Guide to Quality Control for Use by Small- and Guide to Quality Control for Use by Small- and Medium- sized PracticesMedium- sized Practices

Issued March 2009Issued March 2009 Developed by CGA-Canada Developed by CGA-Canada Over 8,700 downloads (to 15 Sep 2009)Over 8,700 downloads (to 15 Sep 2009) IFAC’s 3rd most popular publication in 2009 (after IFAC’s 3rd most popular publication in 2009 (after

IFAC Handbook + Code)IFAC Handbook + Code) A number of translation requests received; French & A number of translation requests received; French &

Spanish completedSpanish completed

QC Guide

Around 160 pagesAround 160 pages Deals with redrafted ISQC 1 effective 15 Dec 2009Deals with redrafted ISQC 1 effective 15 Dec 2009 Integrated case studyIntegrated case study

M&M – Sole practitioner with 5 staff, none of M&M – Sole practitioner with 5 staff, none of whom yet qualified as professional accountantswhom yet qualified as professional accountants

2 sample firm QC policy manuals (customizable)2 sample firm QC policy manuals (customizable) Sole practitioner with non-professional staffSole practitioner with non-professional staff 2 to 5 Partner firm2 to 5 Partner firm

Some key checklists & formsSome key checklists & forms Available in Word format for ease of translation, Available in Word format for ease of translation,

adaptation and customizingadaptation and customizing

QC Guide Features

General feedback on QC Guide positiveGeneral feedback on QC Guide positive Present Mar 09 version reflected redrafted textPresent Mar 09 version reflected redrafted text No major interventions considered necessaryNo major interventions considered necessary Updated version expected Q3/2010Updated version expected Q3/2010 Principally to conform to revised Code of Ethics for Principally to conform to revised Code of Ethics for

Professional AccountantsProfessional Accountants issued July 2009 and effective 1 Jan 2011 issued July 2009 and effective 1 Jan 2011 including independence requirements in 290 – 291including independence requirements in 290 – 291

QC Guide Update



ISA Guide

QC Guide

PM GuideOther

Guide to Practice Management for Use by Small- Guide to Practice Management for Use by Small- and Medium- sized Practicesand Medium- sized Practices

How to run a successful practiceHow to run a successful practice Admin & management areas common to SMPsAdmin & management areas common to SMPs Topics include practice structures, marketing, Topics include practice structures, marketing,

pricing, retaining and developing personnel, use of pricing, retaining and developing personnel, use of technology, succession planningtechnology, succession planning

Being developed by CPA AustraliaBeing developed by CPA Australia Plan to issue in Q1 or Q2 / 2010Plan to issue in Q1 or Q2 / 2010 Free for download - Member bodies / SMPs may Free for download - Member bodies / SMPs may

adapt for own useadapt for own use

PM Guide



ISA Guide

QC Guide

PM GuideOther

Consideration being given to developing ISA Guide Consideration being given to developing ISA Guide training materials (similar to ISA Modules)training materials (similar to ISA Modules)

Guide for SMPs to the Code of Ethics for Professional Guide for SMPs to the Code of Ethics for Professional Accountants ?Accountants ?

In Oct 09, IAASB released first 6 ISA Modules to In Oct 09, IAASB released first 6 ISA Modules to assist awareness and understanding of the newly assist awareness and understanding of the newly clarified ISAsclarified ISAs Brief video presentation + PowerPoint + speaker notesBrief video presentation + PowerPoint + speaker notes

IESBA also developed PowerPoint presentations with IESBA also developed PowerPoint presentations with speaker notes, and other documents to support speaker notes, and other documents to support implementation of the revised Codeimplementation of the revised Code

Other

www.ifac.org/smp Under ‘Resources’:Under ‘Resources’:

Translations databaseTranslations database IAASB Clarity Centre – ISA ModulesIAASB Clarity Centre – ISA Modules Speeches Speeches PublicationsPublications Discussion boardDiscussion board Relevant links; and moreRelevant links; and more

IFAC International Center for SMPs

http://www.ifac.org/smp

Documents

International Federation of Accountants IFAC SMP Committee Guides Bernard Scicluna Member – IFAC SMP Committee President – Malta Institute of Accountants