The IFAC SMP Advisory Group (SMPAG) is pleased to respond to the IESBA Exposure Draft on Proposed Revisions to the Code Relating to the Definition of Engagement Team and Group Audits.
Today, the International Auditing and Assurance Standards Board (IAASB) published key takeaways from its recent Paris conference on the audits of financial statements of less complex entities (LCEs). Drawn from two days of discussions with more than 130 participants from 33 jurisdictions, the takeaways indicate a strong steer for the IAASB to finalize the develop of a separate standard for audits of financial statements of LCEs in the public interest.
Key takeaways focus on themes around the continuing need for a timely global solution comprising a separate, standalone standard; working towards a common understanding of what an ‘LCE’ is and that this should also appropriately include audits of group financial statements; ways to support adoption and implementation of the standard; and the importance of communication about how the standard helps serve the public interest.
Along with the feedback from the public consultation on the exposure draft of the landmark new LCE standard, the key takeaways will help shape the draft standard and IAASB actions. The IAASB will next discuss the proposed LCE standard at its June meeting, which will be livestreamed on YouTube.
Integrated reporting has been adopted as a market-led initiative by thousands of private and public sector organizations around the world to help them understand and communicate their value creation and performance to investors and other stakeholders.
To enhance trust in integrated corporate reporting, boards need to oversee the integrity of the integrated report and underlying reporting process. To help them, IFAC has worked in partnership with the Institute of Internal Auditors (IIA) to develop Executing the Board’s Governance Responsibility for Integrated Reporting—the second installment in IFAC’s integrated reporting assurance series. It highlights how boards execute their accountability responsibility for integrated reporting and integrated reports with the coordination of all lines of governance and the support of internal auditors.
Board responsibility statements incorporate multiple internal assurance activities across all lines of governance and management and support the integrity of the integrated report and the underlying processes, systems, and information. This installment highlights the concepts and tools needed to deliver such statements. These can also be applied to regulated forms of management commentary in many parts of the world, including management discussion and analysis, strategic report, operating and financial review or the Task Force on Climate-Related Financial Disclosures.
“The IFRS Foundation’s announcement on the future of integrated reporting and the International Integrated Reporting <IR> Framework confirms that the International Accounting Standards Board (IASB) and International Sustainability Standards Board (ISSB) will assume responsibility for the <IR> Framework from July,” said Kevin Dancey, IFAC CEO. “Within the IFRS Foundation, the Framework will be further developed to help companies prepare an integrated report and support connectivity between the reporting required by the IASB and the ISSB. This installment of IFAC’s integrated reporting assurance series shows how directors can deliver confidence in integrated reporting through coordinated and connected internal and external assurance activities.”
“As an integral component of effective organizational governance, internal audit plays a critical role in instilling trust and confidence in the completeness, accuracy, and reliability of the information that forms the basis of the organization’s integrated report,” said Anthony Pugliese, CIA, CPA, CGMA, CITP, president and CEO of The IIA. “As noted in the widely accepted Three Lines Model, internal audit provides objective assurance, independent from management, of internal controls critical to achieving organizational objectives, including objectives related to integrated thinking and reporting.”
Access Executing the Board’s Governance Responsibility for Integrated Reporting.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
About The IIA
Established in 1941, The Institute of Internal Auditors (IIA) is an international professional association with global headquarters in Lake Mary, Florida, USA. The IIA is the internal audit profession's global voice, recognized authority, acknowledged leader, chief advocate, and principal educator. Generally, members work in internal auditing, risk management, governance, internal control, information technology audit, education, and security.
IFAC releases second installment of integrated reporting assurance series
Boards of directors need to oversee multiple internal assurance activities across organizations in discharging their responsibilities for the integrity of integrated reporting.
This Handbook contains the complete International Public Sector Accounting Standards, published as of January 31, 2022. It also includes the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.
While there has recently been significant progress towards the development of a global baseline for sustainability reporting in the private sector, public sector sustainability reporting has yet to move forward in the same way. Governments are significant in expenditure and employment terms in all jurisdictions, as well as in the global bond market. How and where they spend the money they raise through the taxes everyone pays will therefore be critical in successfully delivering the United Nation’s Sustainable Development Goals (SDGs), and making meaningful progress on climate change. As a result of expected differences in focus and coverage compared with the private sector, global public sector sustainability reporting guidance will be required to bring the necessary transparency and comparability to government activities in this important area.
In response to stakeholder demand, including from the World Bank, today the International Public Sector Accounting Standards Board® (IPSASB®) launched a global consultation on developing a sustainability reporting framework for the public sector. To kick-off the discussion, the IPSASB has issued its Consultation Paper, Advancing Public Sector Sustainability Reporting. Comments are requested by September 9, 2022.
“The IPSASB has the experience, processes, and relationships to develop global public sector sustainability reporting guidance efficiently and effectively,” said Ian Carruthers, IPSASB Chair. “We are ready to take on this responsibility, and the consultation paper we released today outlines how we would tackle this critical work through collaboration with others, and building on our 25 years of standard setting experience.”
The aim of the public consultation process is to evaluate the demand from stakeholders for global public sector specific sustainability reporting guidance, as well as the degree of support for IPSASB developing such guidance, the priority areas for coverage, and how this might be approached.
Within this consultation paper, the IPSASB proposes to:
To this end, strong stakeholder support and commitment are essential. The consultation paper lays out what the IPSASB believes is necessary to get started now, and the resources, including additional funding, required, to deliver public sector specific sustainability reporting guidance, in a timely manner.
How to Comment
Visit the IPSASB’s website to access the Consultation Paper. Comments are requested by September 9, 2022. The IPSASB encourages IFAC members, associates, and Network Partners to promote the availability of this Consultation Paper to their members and employees.
About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.
Comments are due September 9, 2022
The International Public Sector Accounting Standards Board® (IPSASB®) has released its Mid-Period Work Program Consultation Summary. The Consultation Summary confirms the projects added to the IPSASB’s work program, and explains the process followed to obtain stakeholder feedback on the Board’s original proposals, as well as the reasons for the IPSASB’s decisions.
“In determining which projects to add to its 2022 work program, the IPSASB has had to balance delivery of its current financial reporting work program with the strong support for the projects proposed in the 2021 Mid-Period Work Program Consultation, and the demands from stakeholders for sustainability reporting guidance,” said IPSASB Chair Ian Carruthers. “The Board’s decision to add four projects to its 2022 work program reflects the balancing act needed to address the diverse needs of the IPSASB’s many stakeholders.”
The four projects added to the IPSASB’s work program where work will be undertaken during 2022 are:
(a) Presentation of Financial Statements;
(b) Differential Reporting;
(c) Reporting Sustainability Program Information (Limited-scope project); and
(d) Global Consultation on Advancing Public Sector Sustainability Reporting.
The IPSASB originally proposed to add another four limited-scope projects. These all received strong stakeholder support, so the projects below have been added as pre-commitments for the IPSASB’s future Work Program, with work to start as resources become available from 2023 onwards:
(a) IPSAS 21, Impairment of Non-Cash Generating Assets;
(b) IPSAS 31, Intangible Assets;
(c) IPSAS 33, First Time Adoption of Accrual Basis IPSASs; and
(d) Practice Statement: Making Materiality Judgements.
About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.