The International Auditing and Assurance Standards Board (IAASB) today released its consultation paper, Enhancing the Value of Auditor Reporting: Exploring Options for Change, to obtain views on enhancing the quality, relevance and value of auditor reporting on an international basis.

The consultation paper seeks to determine whether there are common views among users of audited financial statements and other stakeholders about the usefulness of auditor reporting. It describes issues with current financial reporting, including a perceived “information gap,” identified by some stakeholders. It then sets out possible options for change and seeks input as to whether such options might be effective in enhancing auditor reporting and the communicative value of the auditor’s report.

“The auditor communicates to financial statement users primarily through the auditor's report,” noted Prof. Arnold Schilder, IAASB Chairman. “Over the past several years, the IAASB has developed International Standards on Auditing addressing auditor communication and reporting with the aim to address the expectations gap and, more recently, to promote international consistency in auditor reporting. The IAASB believes that now is the time for a more fundamental review of auditor reporting to ensure, in the public interest, that it can meet the information needs of financial statement users in a global business environment with increasingly complex financial reporting requirements.”

The IAASB is also seeking information about the potential implications of changes in auditor reporting, as well as about possible implementation challenges. The paper recognizes that not all of the options explored are able to be implemented by the IAASB on its own—some would require collaboration with national standard setters, regulators and/or legislators to develop or implement.

“This consultation is aimed at gathering views from around the world to inform the IAASB about whether there is consensus about the need to enhance auditor reporting and, if so, how an enhanced model might be achieved,” said James Gunn, IAASB Technical Director. “Investors and financial analysts have signalled to us they want additional, and more pertinent, information for their decision making. The IAASB wants to better understand these views as well the views of others, including users of audited financial statements of small- and medium-sized entities and public sector organizations, preparers, auditors and other key participants in the financial reporting process.”

How to Comment
The IAASB invites all stakeholders to respond to its consultation paper. To access the consultation paper or submit a comment, visit the IAASB’s website at www.ifac.org/publications-resources/enhancing-value-auditor-reporting-exploring-options-change. Comments on the Consultation Paper are requested by September 16, 2011.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

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. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Auditing and Assurance Standards Board (IAASB) today released for public comment proposed revised International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

Proposed ISAE 3000 is a principles-based standard that can be applied effectively to a broad range of assurance engagements. Such engagements may range from assurance on statements about the effectiveness of internal control, for example, to direct engagements such as performance or “value for money” audits, to possible future engagements addressing integrated reporting or corporate social responsibility reporting.

“Proposed ISAE 3000 includes requirements that enable consistent high-quality engagements, while being sufficiently flexible to apply to the broad range of relevant engagements,” noted Prof. Arnold Schilder, IAASB Chairman. “This is an important balance. ISAE 3000 is the overarching standard for current and future topic-specific ISAEs and assurance engagements where no separate ISAE exists. As a result, it needs to be sufficiently robust, yet not so unwieldy as to be impractical to apply. Equally, the ISAE should facilitate innovation in the evolving field of assurance, not act as an impediment.”

Proposed ISAE 3000 covers both reasonable and limited assurance engagements. Among other proposals, the ISAE introduces guidance designed to help readers better understand these two levels of assurance. It also includes guidance addressing direct engagements that have become common in the public sector and have been undertaken increasingly in the private sector. “Since 2003, when the existing standard was approved, practitioners and national standard setters have gained considerable experience with ISAE 3000 that has helped identify a number of opportunities to clarify how some of the core underlying concepts should be applied in practice,” explained James Gunn, IAASB Technical Director.

Proposed ISAE 3000 also includes material from the existing International Framework for Assurance Engagements that is necessary for the ISAE to be understood without reference to the Framework. Accompanying the exposure of the proposed ISAE are also proposed consequential amendments to the Framework reflecting the impact of the proposals in ISAE 3000.

How to Comment
The IAASB invites all stakeholders to comment on its proposals. To access the exposure draft or submit a comment, visit the IAASB’s website at www.iaasb.org/ExposureDrafts.php. Comments on the exposure draft are requested by September 1, 2011.

About the IAASB
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

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. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Auditing and Assurance Standards Board (IAASB) today released its 2010 annual report. The report highlights the IAASB’s ongoing work to promote the adoption and implementation of its clarified International Standards on Auditing (ISAs), and the issuance of a number of proposals in areas where there is demand for new and innovative assurance and related services other than audits of financial statements.

“A number of projects underway are addressing issues that are at the forefront of our stakeholders’ minds, and our efforts can be best summarized as a pursuit of three goals: clarity, quality, and relevance,” said IAASB Chairman Prof. Arnold Schilder. “Developing assurance standards in new areas has taught us that wide consultation becomes even more critical to ensure the public interest is being met.” Accordingly, the annual report details the extensive outreach and liaison activities undertaken during 2010 with key groups, such as regulators and audit oversight bodies, national auditing standard setters, accounting standard setters, governments and public sector organizations, and accounting firms.

Noted James Gunn, IAASB Technical Director, “The IAASB’s debates on its 2010 standard-setting proposals are likely to evolve during 2011 as stakeholder responses are received. We hope that the new interactive format of the 2010 annual report allows those interested in the IAASB’s work to more easily stay abreast of developments in our initiatives.” The annual report also catalogues the tools and resources that have been developed to support the clarified ISAs and makes reference to the ongoing consultation on the IAASB’s work program for 2012–2014.

A report from Linda de Beer, the newly appointed chairman of the IAASB Consultative Advisory Group (CAG), describes the work of the CAG in providing input to the IAASB. The IAASB also continues to receive oversight from the Public Interest Oversight Board (PIOB).

The 2010 IAASB annual report can be downloaded from its website.

About the IAASB
The IAASB (www.iaasb.org) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the PIOB, which oversees the activities of the IAASB, and the IAASB CAG, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC (www.ifac.org) 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. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

International Auditing and Assurance Standards Board (IAASB) Chairman Arnold Schilder explores the future of audit and the challenges facing the profession.

The International Auditing and Assurance Standards Board (IAASB) today released for public comment a discussion paper exploring key issues relating to disclosures in financial statements. Titled The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications, the paper highlights recent trends in the range, volume, and complexity of financial statement disclosures, and explores issues and practical challenges in preparing, auditing, and using them. In addition, in order to stimulate further debate on audit quality, and in its continuing efforts to facilitate robust audits in the public interest, the IAASB today also released a publication titled Audit Quality: An IAASB Perspective.

Financial Statement Disclosures
“Over the past several years, we have witnessed a transformation in the nature and extent of disclosures; for example, it is now common to see disclosures that are more forward-looking or qualitative,” noted Prof. Arnold Schilder, IAASB chairman. He added, “Such disclosures are critical—as one investor said to me, ‘We care more about the “soft stuff.”’ This development, however, raises important issues and challenges for preparers and auditors alike. Through this discussion paper, the IAASB seeks to better understand different viewpoints on a range of issues about financial statement disclosure practices, as well as the implications from an auditing perspective.”

The discussion paper addresses critical issues such as challenges in preparing disclosures, the nature and extent of evidence for different types of disclosures, and the application of the concept of materiality to disclosures. Views from all stakeholders are sought, and the discussion paper asks specific questions of preparers; investors, lenders, and other creditors; regulators; and auditors. A consultation period of over four months has been provided to enable stakeholders to consider the complex issues addressed in the discussion paper.

Audit Quality
“Audit quality is at the heart of the IAASB’s mandate to set high-quality auditing standards,” noted Prof. Schilder. “However, while our clarified International Standards on Auditing (ISAs) make an important contribution to audit quality worldwide, they are not the only element of audit quality. Also, it has been clear from our various stakeholder outreach efforts that there are many different perspectives on audit quality. This publication aims to help raise stakeholders’ awareness of the many different views and influences on audit quality, as well as of the complexity and multifaceted nature of audit quality.”

“The publication is intended to stimulate further thought and discussion on audit quality among stakeholders, while recognizing the importance of international consensus on audit quality matters,” explained IAASB Technical Director James Gunn. “At the same time, the IAASB recognizes that more can be done to maintain and enhance audit quality. The IAASB will continue to explore how it may do so throughout 2011 and beyond.”

How to Comment
The IAASB invites all stakeholders to comment on its proposals. To access the discussion paper on financial statement disclosures or submit a comment, visit the IAASB’s website at www.iaasb.org/ExposureDrafts.php. Comments on the discussion paper on financial statement disclosures are requested by June 1, 2011.

Perspectives on audit quality and views on key audit quality issues are welcomed by the IAASB at any time. They may be submitted in writing to one or more of the key IAASB contacts listed in the audit quality publication.

About the IAASB
The IAASB (www.iaasb.org) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC (www.ifac.org) 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. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

This publication introduces a specific initiative of the IAASB to contribute to the debate on audit quality. It highlights several important perspectives on audit quality, as a means to stimulate thoughts and discussions amongst stakeholders in the financial reporting process. It also provides an indication of the IAASB's plans to consider pursuing a future project on audit quality.

The International Auditing and Assurance Standards Board (IAASB) today released for public exposure proposed International Standard on Review Engagements (ISRE) 2400, Engagements to Review Historical Financial Statements. This revised standard is the second IAASB proposal in recent months that addresses the growing international need for robust standards for services that can be used by entities that are either not required or do not elect to be audited. 

“The financial statement review engagement is an important service in meeting evolving regulatory, market, and business reporting needs, in particular in the small- and medium-sized entity (SME) sector,” noted Prof. Arnold Schilder, IAASB Chairman. “The proposed standard seeks to establish clear and robust requirements governing the practitioner’s performance of a review engagement, and thus serves to fulfill its purpose of enhancing users’ degree of confidence in an entity’s financial statements.”

A review of financial statements in accordance with the proposed ISRE consists primarily of making inquiries of management and others within the entity involved in financial and accounting matters, applying analytical procedures, and evaluating the sufficiency and appropriateness of evidence obtained. The practitioner reports on whether anything has come to the practitioner’s attention that causes him/her to believe that the financial statements, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework. The procedures performed in a review are substantially less than those performed in an audit, and the practitioner does not express an audit opinion.

“A financial statement review is, and should be seen as, a distinct service from a financial statement audit. It is essential that users are able to clearly distinguish between the two,” said IAASB Technical Director James Gunn. “An important aspect of the proposed standard therefore is the form and content of the practitioner’s report. The IAASB seeks comments on whether the proposed report communicates clearly to users the work performed and the limited assurance obtained in a review engagement.”

The proposed ISRE will help practitioners around the world who perform review engagements converge towards use of a globally accepted benchmark, and facilitate development of practice in jurisdictions that currently do not have national standards in this area.

How to Comment
The IAASB invites all stakeholders to comment on its proposals. To access the exposure draft or submit a comment, visit the IAASB’s website at www.iaasb.org/ExposureDrafts.php. Comments on the exposure draft are requested by May 20, 2011.

About the IAASB
The IAASB (www.iaasb.org) develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by IFAC.

About IFAC
IFAC (www.ifac.org) 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. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

Notes to Editor:
In October 2010, the IAASB released proposed International Standard on Related Services (ISRS) 4410, Compilation Engagements.