Welcome to IFAC's Translations and Permissions eNews.

In This Issue:

1. Ibero-American Cooperation Framework for Sustainable Spanish Translations Established
2. Update of Policy Statements
3. Updated Translations and Permissions Reference Materials Available
4. Event Scheduled Regarding Adoption and Implementation of International Standards in the Former Soviet Republics in Europe and Central Asia
5. Newly Available Translations: September 2012–December 2012

1. Ibero-American Cooperation Framework for Sustainable Spanish Translations Established

In October 2012, IFAC and its member bodies Instituto de Censores Jurados de Cuentas de España, Federación Argentina de Consejos Profesionales de Ciencias Económicas, and Instituto Mexicano de Contadores Públicos formally agreed to establish an Ibero-American cooperation framework to achieve longer-term, sustainable processes for a single, Spanish translation of international standards and other IFAC publications.

The resulting landmark Memorandum of Understanding was commemorated with a formal signing ceremony that included the Interamerican Accounting Association, the IFAC recognized regional organization for Latin America and the Caribbean. The newly created Executive Committee of the Ibero-American Cooperation Framework will have its inaugural meeting in early February 2013 to plan the way forward.

For more information on Spanish-language or other translations, please visit the IFAC Translations Database. 

2. Update of Policy Statements

While IFAC greatly appreciates the significant contributions made by many of its stakeholders in the adoption and implementation of international standards, it also must adapt to the increased cost of high-quality international standard setting. In December 2012, the IFAC Board introduced an annual license fee, or waiver fee depending on the circumstances, for use of IFAC copyrighted materials. Such fees contribute to funding the continued activities and mission of IFAC and the independent standard-setting boards it supports.

The introduction of the fee structure is the only change of substance to the policy statements. The fee structure is outlined in Policy for Translating and Reproducing Standards Published by the International Federation of Accountants, and Policy for Reproducing, or Translating and Reproducing, Publications of the International Federation of Accountants.

3. Updated Translations and Permissions Reference Materials Available

4. Event Scheduled Regarding Adoption and Implementation of International Standards in the Former Soviet Republics in Europe and Central Asia

IFAC, the International Auditing and Assurance Standards Board (IAASB), and the International Accounting Standards Board (IASB) will be hosting an invitation-only event in London, May 15-16, 2013, focused on developments in International Standards on Auditing and International Financial Reporting Standards, with discussion of their adoption and implementation in the former Soviet Republics in Europe and Central Asia. Translations, including Russian and other languages, of IAASB and IASB pronouncements will be a significant topic of discussion.

5. Newly Available Translations: September 2012–January 2013

• Albanian—New IFAC Publication Provides Support for Professional Accountants Improving Internal Control (2012)
• Arabic—Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Third Edition (2011)
• Azeri—Handbook of International Public Sector Accounting Pronouncements (2011)
• Danish—International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus (2011), International Standard on Related Services (ISRS) 4410 (Revised), Compilation Engagements (2012)
• Dutch—Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Second Edition (2010), International Auditing Practice Note (IAPN) 1000, Special Considerations in Auditing Financial Instruments (2011)
• Finnish—Handbook of the Code of Ethics for Professional Accountants (2012), Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements (2012)
• French—International Framework for Assurance Engagements (2012)
• German—International Framework for Assurance Engagements (2012), Handbook of International Public Sector Accounting Pronouncements (2011)
• Hungarian—Integrating Governance throughout an Organization Helps Achieve Sustainable Success (2012)
• Italian—How to Cope with Pressure to Lower Fees (2012), SMP Quality Control Guide Orientation Slides (2012), Guide to Quality Control for Small- and Medium-Sized Practices, Third Edition (2011), Guide to Practice Management for Small- and Medium-Sized Practices, Second Edition (2011)
• Kazakh—Handbook of International Public Sector Accounting Pronouncements (2011)
• Latvian—Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Third Edition (2011), Guide to Quality Control for Small- and Medium-Sized Practices (2011)
• Romanian—New IFAC Publication Provides Support for Professional Accountants Improving Internal Control (2012), How to Cope with Pressure to Lower Fees (2012), Competent and Versatile: How Professional Accountants in Business Drive Sustainable Success (2013), International Good Practice Guidance: Principles for Effective Business Reporting Processes (2013)
• Russian—Handbook of International Quality Control, Auditing, Review, Other Assurance and Related Services Pronouncements - Part I (2010), Handbook of International Public Sector Accounting (2011)
• Slovak—Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities, Third Edition (2011)
• Slovenian—Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements (2010), International Auditing Practice Note (IAPN) 1000, Special Considerations in Auditing Financial Instruments (2011), International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus (2011)
• Spanish—International Public Sector Accounting Standards (IPSAS) 32 and Improvements to IPSASs (2011), IAASB Strategy and Work Program, 2012–2014 (2012), Feedback Statement: The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications (2012), Helping Small- and Medium-Sized Practices Meet the Challenges and Seize the Opportunities of Tomorrow” (2012), Guide to Using International Standards on Auditing in the Audits of Small- and Medium-Sized Entities (2010), Guide to Practice Management for Small- and Medium-Sized Practices (2011)
• Swedish—Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements (2012)
• Thai— Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements (2010), International Standards on Auditing Modules (2009/2010)
• Turkish—IFAC SMP Quick Poll: May-June 2012 (2012)

Please Check IFAC’s Translations Database Regularly for Updates

The list of new translations of IFAC publications by third parties is continuously updated; please visit the Translations Database  for the latest information available.

The latest IFAC SMP Quick Poll, conducted in late 2012, showed that the smallest accounting practices and their clients are not immune to macroeconomic instability. With the continuing sovereign debt crisis, a double-dip recession in the Eurozone, and rising inflation in some regions, economic uncertainty pervaded many of the responses to the poll of small- and medium-sized accounting practitioners (SMPs). Despite these concerns, SMPs remain cautiously optimistic, showing their resilience and perseverance during challenging times.

After keeping up with new regulations and standards, three issues related to the health of the economy—attracting and retaining clients, pressure to lower fees, and rising costs—topped the list of challenges faced by SMPs. Similarly, respondents indicated that their clients, small- and medium-sized entities (SMEs), are most challenged by regulations followed by economic uncertainty. Respondents generally expect little change in business performance in the coming year; however, slightly more SMPs (5 points more) indicated they expect business to improve in the coming year compared to those who said the same at the end of 2011. They expect this growth primarily to be driven by revenue from new clients.

While respondents identified the reputation and credibility of the profession as a top issue facing the profession in 2013, they generally ranked public perception of the profession in their country/jurisdiction as average to above average and expect this perception to improve by 2025.

“As drivers of growth and development, small businesses are extremely important to the health of local and global economies. We must not underestimate the value of this sector and the role that accountants play in supporting SMEs as trusted business advisors. Therefore, regulators and standard setters need to be mindful of the impact their requirements have on SMPs and SMEs; as the poll results show, this is an area that continues to challenge both small businesses and their accountants,” said SMP Committee Chair Giancarlo Attolini.

The poll report includes notable variations by region and size of practice in addition to trend data based on previous polls where available. 

The year-end 2012 poll received 3,767 responses and was conducted in 17 languages from November 21 to December 31. The poll, conducted twice in 2012, is intended to take a snapshot of key challenges and trends influencing SMPs globally; since the responses were not geographically balanced, the results are not necessarily representative of SMPs on a global or regional basis. IFAC wishes to thank the many member and regional organizations that helped with translation and distribution of the poll. 

About the SMP Committee
The SMP Committee of the International Federation of Accountants (IFAC) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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This report provides a summary and, where appropriate, analysis and commentary including possible limitations of the data from the poll conducted November 21-December 31, 2012. This edition of the poll received 3,767 responses and was conducted in 17 languages.

Participating Panelists in order of presentation:

Jay Hanson—PCAOB Member

Dan Montgomery—IAASB Deputy Chair           

Joel Osnoss—Global IFRS Leader, Deloitte

Steven Buller—BlackRock

Introduction

Good afternoon everyone. I appreciate the opportunity to be with you today. As panelist Jay Hanson from the PCAOB mentioned in his remarks before me, there are many interesting ongoing developments affecting the auditing profession, and I think most of us would agree, in light of the global financial crisis, there is even more of a role for auditors to play in helping restore the confidence of analysts, investors and others in financial reporting and increasing the relevance of the financial statement audit.

As an independent standard-setting board, the IAASB does not represent the auditing profession, but rather seeks to establish requirements for the profession that respond to the public interest. And we do this on an international basis, recognizing that analysts and other users operate in a global environment and need confidence that audits, wherever they are undertaken, are to the same high standards and auditor communications are able to be compared and understood across borders.

In today’s environment, the audited financial statements are certainly important and a central focus of the information set available to users. But the spectrum of financial communications includes more than the financial statements: there is much information that is issued along with, but not a part of, the financial statements that users look to for insight into a company.

At the same time, the increasing complexity of business and financial reporting has increased the volume of financial statement disclosures and other information, which has led to calls for change in the way that information is presented and disclosed.  It also has led to calls for change in the way auditors communicate with users about the audit as well as auditor involvement with other types of information.

So the questions are: how are auditors involved with important information being communicated by entities to users? And how can and should they be more involved, and more relevant in their work? With that backdrop, I will highlight a number of IAASB initiatives aimed at strengthening the auditor’s role in relation to different types of information communicated to users of financial statements.

Auditor Reporting

Let me start with the auditor’s report and IAASB’s number one priority project to explore how to enhance its communicative value. While users certainly support the current “pass/fail” audit opinion, many believe there is scope for expanding what auditors say about the audit that was performed. Auditors are “the on-the-ground eyes and ears” acting on behalf of investors and other stakeholders; they understand the areas of the financial statements that pose the greatest risk for misstatements, as well as the areas that are most subjective and judgmental; and they bring to bear their expertise and professional judgments in formulating their opinions. So, many are asking auditors to give more insights about their work.

The IAASB has now done two public consultations on the subject of auditor reporting and the message is quite clear – users, especially investors, want to understand more about what auditors do, where auditors spend their time, and the areas where the most challenging discussions with management or with the audit committee took place. Some users have said that this would help them get better insight into the quality of the individual audit that was performed.

The main improvement to auditor reporting that the IAASB is exploring is a new section of the auditor’s report that we have referred to as Auditor Commentary. In our June 2012 consultation, we explored an objective for Auditor Commentary focusing on matters that, in the auditor’s judgment, are likely to be most important to users’ understanding of the financial statements and the audit and provided some examples of how the concept could be operationalized.

Respondents to our consultation supported the concept of the Auditor Commentary at a high level, and investors in particular favored increased transparency about what “kept the auditor up at night” and believed the role of the auditor was to flag the most challenging matters relating to the audit as a prompt for stakeholders to further engage directly with management and the audit committee on these matters. Investors and preparers and others, however, expressed concerns about the auditor being seen as providing original information about the entity. Preparers in particular felt it was their role to explain the most important matters in the financial statements to users and cautioned against the possibility of blurring lines of responsibilities. 

We are currently exploring a focus on key audit areas and significant auditor judgments as a useful way forward, and we will continue to debate how this could best be done, with plans to approve an exposure draft in June 2013.

The IAASB also is exploring auditor reporting on Going Concern. The global financial crisis has led to some criticism that earlier warning signals about going concern are needed. Our initial proposals were derived from the auditor’s current work effort in relation to going concern in an ISA audit. But respondents to our consultation were concerned about the risk that auditor reporting on going concern could be misinterpreted by users, thereby increasing the expectations gap. They also highlighted that going concern is first and foremost a financial reporting concept, and that a more holistic approach to change involving both accounting and auditing standard setters might be the most appropriate response to the calls for change.  The IAASB has been encouraged to work collaboratively with the IASB and FASB in finding the best way forward in this area.

One final point on auditor reporting. The IAASB recognizes the importance of alignment, to the extent practicable, with others currently addressing auditor reporting, including the PCAOB, the European Commission, and the UK Financial Reporting Council. For this reason, we see coordination and collaboration as an essential part of our work.

Disclosures - Within and Outside the Financial Statements

Let me now turn to the topic of disclosures. Although the auditor’s opinion is on the financial statements as a whole, there are many important disclosures in today’s financial reports: many quantitative, but increasingly qualitative or narrative-based and more judgmental in nature. The natural questions that arise include whether all disclosures are being audited in the same way, and should they be? Is materiality the same for all the different types of disclosures? And should auditors help ensure that disclosures focus on the right information in the right amount of detail; if so, how?

The IAASB of course has a role to play in seeking answers to these and other important questions, and in September 2012 approved commencement of a new project addressing the audit implications of disclosures. As part of this initiative we will actively liaise with the IASB, FASB and others.

As you all know, there also is much important information presented in financial reports outside the basic financial statements,” such as MD&A. In September 2012 the IAASB approved for exposure a proposed revised standard addressing the auditor’s responsibilities relating to this “other information.” Auditors currently have a responsibility to read this information to identify any material inconsistencies with the audited financial statements. We propose enhancing this responsibility as there is much that the auditor can bring to bear in light of the auditor’s understanding of the entity and its environment acquired during an audit. The comment period on this exposure draft runs through to March 14, 2013.

All of the above is part of finding answers to the key question: “How can auditors and others in the financial reporting process assist in improving the quality and understandability of disclosures?”

Broader and Forward Thinking

Let me turn finally to other types of relevant information for users of financial statements.

Analysts and investors often cite a company’s earnings release, or preliminary announcements, as the key financial information used in decision-making. While some countries have requirements for auditor association with this information, there are currently no global requirements for auditors relating to earnings releases. The IAASB intends to leverage our experiences with our other information project, and undertake research to begin to explore what may be feasible in relation to possible requirements for auditors on earnings releases. We plan to commence this in 2014.

Also on the horizon is the concept of “integrated reporting,” which is being spearheaded by the IIRC (International Integrated Reporting Council). This topic is getting much attention and gaining momentum globally, as investors and others believe that corporate reporting should be more focused in more holistic explaining the entity’s value creation over time.

Moving to integrated reporting will no doubt have implications for companies but also for auditors, not only in relation to assurance on the financial statements included in an integrated report, but also in terms of the possibility of assurance on the entire integrated report. For this reason, the IAASB has formed a working group to track ongoing developments related to integrated reporting to ensure the IAASB is well-positioned to develop an appropriate response, perhaps in the form of standards, when the time comes.

This working group also will lead our forward thinking on other important areas such as XBRL and corporate governance reporting, where developments are happening quickly, and we remain committed to identifying early on where the IAASB’s future priorities need to be.

Closing

These are exciting and challenging times. It is now more important than ever for groups like IAASB, PCAOB, IASB, and FASB to work collaboratively. In addition, analysts, investors and preparers have to be engaged and outspoken about needs and concerns to help influence future direction, and all must work together to find common, meaningful and workable solutions to current and emerging issues.

Finally, I’d like to acknowledge the work of the CFA Institute and its support of the IAASB, as well as the importance of individual analyst feedback into the work of IAASB, which is very much appreciated.

Thank you for the opportunity to be here today.

Welcome to IFAC's Professional Accountants in Business Committee (PAIB) eNews.

In This Issue:

1. Business Reporting Process Guidance Released by PAIB Committee
2. Reminder: Comment Period Coming to a Close for Strategy and Work Plan
3. PAIB Committee Submits Comment Letters on Relevant Issues, Publications
4. ACCA Virtual Conference Includes IFAC Presentation on Sustainability and Accountancy
5. PUMA Environmental P&L Methodology Receives Independent Approval
6. COSO Seeking New Board Chair
7. Recent News, Events, and Publications of Interest

1. Business Reporting Processes Guidance Released by PAIB Committee

Principles for Effective Business Reporting Processes, new International Good Practice Guidance (IGPG), has been released by the PAIB Committee. The guidance helps professional accountants in business work with their organizations to enhance business reporting processes, and discuss the key issues of developing effective processes. At the heart of the new guidance are 11 key principles for evaluating and improving business reporting processes, which are complemented by practical guidance outlining the critical arrangements that need to be in place for effective business reporting. The guidance can also be used to prepare for enhanced forms of business reporting, such as integrated reporting, and is designed for organizations of all sizes, structures, and sectors, as all organizations need to produce high-quality reports.

2. Reminder: Comment Period Coming to a Close for Strategy and Work Plan

The comment period for the proposed Professional Accountants in Business (PAIB) Strategy and Work Plan for 2013-2016 closes next week—January 31, 2013. The proposed plan outlines specific initiatives to improve recognition of the diverse roles professional accountants in business perform and how they need to be positioned to drive successful and sustainable organizations. As professional accountants in business make up more than half of all accountants in the world, they have the collective power to significantly influence their organizations in implementing effective governance and an ethical culture supported by integrated risk management and internal control, sustainable leadership, and effective reporting and performance management.

Additionally, the comment period for Project and Investment Appraisal for Sustainable Value Creation, proposed new International Good Practice Guidance, closes on February 28, 2013. The proposed IGPG will help the accountancy profession facilitate sustainable organizations, financial markets, and economies by taking into account economic, environmental, and social considerations for project appraisal and investment decisions.

3. PAIB Committee Submits Comment Letters on Relevant Issues, Publications

The PAIB Committee has submitted multiple comment letters recently on topics relating to the work and needs of professional accountants in business.

• Responding to a Suspected Illegal Act
  The PAIB Committee submitted a comment letter to the International Ethics Standards Board for Accountants (IESBA)’s proposed changes to the Code of Ethics for Professional Accountants, Responding to a Suspected Illegal Act. In the letter, the PAIB Committee makes the case for the IESBA to clarify the need for the proposed revisions, modify the wording to change aspects of reporting an illegal act from a “requirement” to “apply or be able to explain,” allow for cultural or legal differences, and clarify that resignation over a suspected illegal act should be the last resort of a professional accountant, among other recommendations.

• COSO’s Internal Control over External Financial Reporting
  In response to the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s Internal Control over External Financial Reporting: Compendium of Approaches and Examples and Illustrative Tools for Assessing Effectiveness of a System of Internal Control, the PAIB Committee advocated for greater integration between internal control and risk management frameworks; revision of the internal control framework to embrace a wider perspective beyond applying internal control to reporting, operations, and compliance; and shortening the text of the framework.

• Invitation to Comment: Improving the Auditor’s Report
  The PAIB Committee’s response to the International Auditing and Assurance Standards Board (IAASB)’s Invitation to Comment, Improving the Auditor’s Report, drew heavily from Integrating the Business Reporting Supply Chain, which recommended specific improvements to auditor communication. The committee’s response emphasized the primary need for high-quality business reporting from organizations.

4. ACCA Virtual Conference Includes IFAC Presentation on Sustainability and Accountancy

The Association of Chartered Certified Accountants (ACCA) recently invited IFAC's Head of Professional Accountants in Business, Stathis Gould, to address its Global Virtual Conference during the Business Models for a Green Economy session. Mr. Gould’s session, which drew more than 300 participants, touched on the overall global context for issues of sustainability, examples of models in use, and embedding sustainability into business practices. The presentation slides and audio file are available on the IFAC website.

5. PUMA Environmental P&L Methodology Receives Independent Approval

Footwear company PUMA recently received approval from independent experts gathered by its parent company, PPR, to review its approach to environmental profit and loss(P&L). In 2011, PUMA became the first major company to release an environmental P&L statement and put an economic value on greenhouse gas emissions and water consumption (see July 2011 PAIB Committee eNews for more information). The results of this independent methodology review found that PUMA’s approach “clearly applied credible valuation approaches.” For more information, see The Guardian Sustainability Blog.

6. COSO Seeking New Board Chair

COSO is seeking a new chair for a three-year term beginning June 1, 2013. The current chair, David Landsittel, is stepping down after serving for four years.

7. Recent News, Events, and Publications of Interest

• The World Bank has published a new report on climate change, Turning Down the Heat: Why a 4°C Warmer World Must Be Avoided. The report argues that the world could see significant, problematic changes, including extreme heat waves, declining food supplies, and rising sea levels, if greenhouse gas emissions aren’t lowered.
• The International Integrated Reporting Council (IIRC) has released its prototype of the International Integrated Reporting Framework to “demonstrate progress towards defining key concepts and principles that underpin [integrated reporting] and support organizations’ ability to produce an integrated report.” Additionally, the IIRC has released:
  
• Emerging Examples Database to demonstrate emerging best practices;
• Understanding Transformation: Building the Business Case for Integrated Reporting;
• Video interviews with Pilot Programme participants discussing their experiences and approaches; and
• The Pilot Programme 2012 Yearbook: Capturing the Experiences of Global Businesses and Investors.

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 129 countries, has issued new International Good Practice Guidance, Principles for Effective Business Reporting Processes. This principles-based guidance establishes a benchmark for professional accountants in business to establish more effective business processes in the organizations in which they work.

"An organization’s sustainable success depends on the support of stakeholders and the quality of their decision making,” said Roger Tabor, chair of the PAIB Committee. “High-quality reporting is essential to both, and needs effective business processes to deliver it."

This guidance is directed at all organizations wishing to enhance their reporting processes—no matter their size or structure, or whether they are private or public, as all organizations should have effective reporting processes to provide high-quality reports for their internal and external stakeholders.

“Professional accountants in business are often involved in the design, planning, execution, audit, evaluation, and improvement—or, in short, the implementation—of their organizations’ reporting processes,” said Karyn Brooks, chair of the PAIB Committee’s Business Reporting Task Force. “This International Good Practice Guidance covers the primary issues professional accountants in business should address in implementing effective reporting processes in their organizations.”

About International Good Practice Guidance
International Good Practice Guidance (IGPG) issued by the PAIB Committee cover areas of international and strategic importance in which professional accountants in business are likely to engage. In issuing principles-based guidance, IFAC seeks to foster a common and consistent approach to those aspects of the work of professional accountants in business not covered by international standards. IFAC seeks to clearly identify principles that are generally accepted internationally and applicable to organizations of all sizes in commerce, industry, education, and the public and not-for-profit sectors. Previously issued IGPGs are available on the IFAC website, including Preface to IFAC’s International Good Practice Guidance.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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This International Good Practice Guidance from the IFAC Professional Accountants in Business (PAIB) Committee helps organizations enhance their reporting processes and discusses the key issues professional accountants in business need to address when implementing effective reporting processes in their organization. At the heart of the new guidance are 11 key principles for evaluating and improving business reporting processes, which are complemented by practical guidance outlining the critical arrangements that need to be in place for effective business reporting.

The International Auditing and Assurance Standards Board (IAASB) today released for public comment a new Consultation Paper addressing audit quality. A Framework for Audit Quality seeks input from stakeholders internationally who have an interest in continually enhancing audit quality, including regulators, audit committees, investors, and audit firms.

Through the proposed framework, the IAASB aims to raise awareness of the key elements of audit quality, encourage stakeholders to explore ways to improve audit quality, and facilitate greater dialogue between key stakeholders on the topic.

“While the IAASB recognizes that high-quality auditing standards and well-qualified, competent, skeptical auditors are essential to a quality audit, there are many factors that contribute to maximizing the likelihood of quality audits being consistently performed,” said Prof. Arnold Schilder, IAASB chairman. “There is value in identifying and describing these factors and, thereby, encouraging audit firms and other stakeholders to challenge themselves to think about whether there is more they can do to increase audit quality in their particular environments.”

The IAASB is seeking responses to several questions listed in the Consultation Paper, in particular, whether the framework is clear, comprehensive, and useful. In developing the framework, the IAASB has also identified, with the input of stakeholders, a number of areas for consideration by both auditors and other participants in the financial reporting supply chain that may benefit audit quality on a global basis.

“The proposed framework describes the input and output factors that contribute to audit quality at the engagement, audit firm, and national levels. It also demonstrates the importance of appropriate interactions among stakeholders and the relevance of various contextual factors,” explained James Gunn, IAASB technical director. “We hope that A Framework for Audit Quality will generate discussion and that its active use by various stakeholders will result in positive actions in the public interest to achieve a continual improvement to audit quality.”

How to Comment
The IAASB invites all stakeholders to comment on the consultation paper. To access the document or submit a comment, visit the IAASB’s website at www.iaasb.org. Comments are requested by May 15, 2013.

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 the International Federation of Accountants (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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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