This independent report, commissioned by IFAC, highlights improvements that have been made to the financial reporting supply chain in recent years and identifies areas for further improving the usefulness of financial reports.

The International Federation of Accountants (IFAC), the global organization for the accountancy profession, is seeking nominations for the position of IFAC Deputy President and for members of its boards and committees for 2009, including three public member positions. IFAC member bodies, and in some instances members of the Forum of Firms and members of the public, may nominate candidates by April 15, 2008. The IFAC Deputy President and all members of IFAC's boards and committees are expected to act in the public interest and must sign a declaration committing to act with integrity and in the public interest in their role within IFAC.

Deputy President
IFAC member bodies may nominate individuals for the position of Deputy President for the period November 2008 to November 2010. Candidates for the position of Deputy President must be a current or nominated member of the IFAC Board. After serving a two-year term, the Deputy President will assume the Presidency of IFAC.

The Deputy President works with the President and Chief Executive Officer in implementing IFAC's Strategic Plan; represents IFAC among its member bodies, various stakeholders, and other external organizations; and chairs IFAC's Planning and Finance Committee. A nominee for the position of Deputy President should be a very senior and highly respected member of the profession with exceptional leadership skills. He or she should also have an awareness of the social and economic environment in which the global profession, IFAC and its member organizations operate.

Member Body Nominations for Board and Committees
Member bodies are also invited to nominate qualified candidates for open positions on the following IFAC boards and committees for terms commencing January 1, 2009:

• IFAC Board;
• International Auditing and Assurance Standards Board;
• International Accounting Education Standards Board;
• International Ethics Standards Board for Accountants;
• International Public Sector Accounting Standards Board;
• Compliance Advisory Panel;
• Developing Nations Committee;
• Professional Accountants in Business Committee;
• Small and Medium Practices Committee; and
• Nominating Committee.

Member bodies may submit more than one nomination for each board or committee, and they are encouraged to nominate candidates with varying backgrounds.

Public Member Nominations
IFAC is also seeking nominations for two public member positions on the International Auditing and Assurance Standards Board and one public member position on the International Public Sector Accounting Standards Board. Public members must be seen to be independent of any special interests and seen to be acting to represent society as a whole. Nominees for the public member positions must have an appropriate level of knowledge about the work of the respective standard-setting board, although they do not need to have a professional accountancy designation. IFAC member bodies, regional accountancy organizations, other organizations, accounting firms, and members of the general public may submit public member nominations, but in all cases the individuals nominated must clearly represent the broad public interest.

Forum of Firms Nominations
A total of five positions on the standard-setting Public Interest Activity Committees¹ are open to nominations from members of the Forum of Firms, an association of international networks of accounting firms that perform audits of financial statements that are or may be used across national borders. Two positions are open on the International Auditing and Assurance Standards Board, one position is open on the International Accounting Education Standards Board, and two positions are open on the International Ethics Standards Board for Accountants.

How to Submit Nominations
The Call for Nominations for IFAC Boards and Committees in 2009 describes the positions available and the qualifications required for each position, as well as the process for submitting nominations. The Call for Nominations may be viewed on IFAC's website at http://www.ifac.org/NominatingCommittee/index.php#Process. All nominations must be submitted by April 15, 2008 using the online Candidate Information System. For more information about the role and activities of each of IFAC's boards and committees, visit its website at http://www.ifac.org/.

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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets international standards on ethics, auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high quality performance by professional accountants in business.

¹ The standard-setting Public Interest Activity Committees are the International Auditing and Assurance Standards Board, the International Accounting Education Standards Board, and the International Ethics Standards Board for Accountants.

New requirements designed to enhance the rigor applied to auditing accounting estimates, including fair value accounting estimates, were released today by the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC). International Standard on Auditing (ISA) 540 (Revised and Redrafted), Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, requires the auditor to focus attention on areas of higher risk, accounting judgment, and possible bias, thereby assisting the auditor to form appropriate conclusions about the reasonableness of estimates in the context of an entity's financial reporting framework.

ISA 540 (Revised and Redrafted) adopts a risk-based approach to the audit of accounting estimates including fair value accounting estimates. It addresses matters such as the auditor's evaluation of the effect of estimation uncertainty on risk assessments, management's methods for making estimates, the reasonableness of assumptions used by management, and the adequacy of disclosures. The ISA provides expanded guidance on auditing fair value accounting estimates, including audit considerations relating to the proper application of the requirements of the financial reporting framework relevant to such estimates and the use of models in valuations.

"We are clearly in an environment where the measurement and disclosure of fair values are of great importance, with recent market experience highlighting the difficulties that arise in valuing financial instruments. It is, therefore, timely that the IAASB has issued its revised standard to provide enhanced guidance on auditing accounting estimates, particularly fair value ones determined on the basis of a complex valuation model or significant unobservable inputs," states John Kellas, Chairman of the IAASB, adding, "We are confident that the standard will enhance current practice and promote consistency worldwide."

ISA 540 (Revised and Redrafted) combines ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures (Other Than Those Involving Fair Value Measurements and Disclosures), and ISA 545, Auditing Fair Value Measurements and Disclosures. The IAASB concluded that the similarities between estimates and fair value estimates could be emphasized, and redundancy eliminated, by combining these two standards. The new standard forms part of the IAASB's ambitious 18-month program to redraft existing standards and to develop new and revised standards following the clarity drafting conventions.¹

Mr. Kellas explains: "Although ISA 540 (Revised and Redrafted) is effective for audits of financial periods commencing on or after December 15, 2009, the date when all the standards redrafted under the IAASB's Clarity project become effective, it deals with a subject of considerable current concern. In this climate, auditors will be well aware of the need to understand the accounting principles and rules relating to accounting on the basis of fair value, and to give appropriate consideration to their application. Auditors may therefore wish to consider the material in the new standard as they complete their 2007 audits, and plan and perform those for 2008 and 2009 engagements. Other existing standards may also be particularly relevant, for example, those on the use of experts by the auditor and on the auditor's consideration of the going concern basis of accounting."

The IAASB also recommends that auditors be alert for relevant guidance that has been, or may be, issued by other organizations: for example, the paper, Determining Fair Value of Financial Instruments under International Financial Reporting Standards (IFRS) in Current Market Conditions, issued in December 2007 by the world's six largest accounting firms (under the auspices of the Global Public Policy Committee); the US Public Company Accounting Oversight Board's Staff Audit Practice Alert No. 2, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists, also released in December; and the UK Auditing Practices Board's (APB) Bulletin 2008/01, Audit Issues when Financial Market Conditions are Difficult and Credit Facilities may be Restricted.

ISA 540 (Revised and Redrafted) can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store.

Task Force on Fair Value Auditing Guidance
To address some of the valuation difficulties highlighted by the problems in the world's major financial markets, the IAASB plans to explore whether and how to supplement ISA 540 (Revised and Redrafted) as soon as practicable with implementation guidance on auditing fair value estimates. Any such guidance would have the aim of raising awareness of issues and best practice on a timely basis and further promoting audit consistency. Accordingly, the IAASB agreed in December 2007 to establish a Task Force to consider how best to approach the development of possible further fair value auditing guidance.

The demand for implementation guidance from a number of constituencies, including regulators, was recognized in the IAASB Consultation Paper, Proposed Strategy for 2009-2011. That paper raised the possibility that the IAASB might develop guidance for auditors on the audit of complex valuation models. However, recent developments in the financial markets, in particular the current lack of market liquidity, have persuaded the IAASB to create the Task Force now to take this idea further even though the responses to the Consultation Paper have yet to be fully analyzed.

The Task Force, chaired by a member of the IAASB and to comprise interested parties with relevant perspectives and expertise, will consider aspects of the audit of financial statement items measured at fair value and make recommendations to the IAASB for matters that require priority attention.

About the IAASB and IFAC
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

¹Key elements of the clarity drafting conventions include: establishing an objective for the auditor with respect to the subject matter of each standard; clearly distinguishing requirements from guidance on their application; avoiding ambiguity through eliminating the present tense to describe actions by the auditor and using more imperative language where a requirement was intended; and other structural and drafting improvements to enhance the overall readability and understandability of the standards.

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board within the International Federation of Accountants (IFAC), has issued two new standards to further convergence with International Financial Reporting Standards (IFRSs) developed by the International Accounting Standards Board (IASB). The two standards - International Public Sector Accounting Standard (IPSAS) 25, Employee Benefits and IPSAS 26, Impairment of Cash-Generating Assets - will improve the consistency and transparency of financial reporting by public sector entities. They can be downloaded from the IFAC online bookstore (http://www.ifac.org/store).

Employee Benefits
For most public sector entities, employee benefits have a major impact on financial performance and financial position. IPSAS 25 sets out the reporting requirements for the four categories of employee benefits dealt with in the IASB's International Accounting Standard (IAS) 19, Employee Benefits. These are short-term employee benefits, such as wages and social security contributions; post-employment benefits, including pensions and other retirement benefits; other long-term employee benefits; and termination benefits. The new IPSAS also deals with specific issues for the public sector, including the discount rate related to post-employment benefits, treatment of post-employment benefits provided through composite social security programs, and long-term disability benefits.

IPSAS 25 is effective for reporting periods beginning on or after January 1, 2011.

"The significance of reporting employee benefits fully and consistently cannot be overemphasized," states IPSASB Chair Mike Hathorn. "Not recognizing the costs and liabilities related to such obligations can severely undermine the reliability of a public sector entity's financial statements."

Impairment of Cash-Generating Assets
The role of most public sector entities is to provide services to citizens. However, some public sector entities (other than government business enterprises) may operate assets with the main purpose of generating a commercial return. IPSAS 26, which is based on IAS 36, Impairment of Assets, sets out the procedures for a public sector entity to determine whether a cash-generating asset has lost future economic benefit or service potential and to ensure that impairment losses are recognized in its financial reports. Non cash-generating assets, those used primarily for service delivery, are addressed separately in IPSAS 21, Impairment of Non-Cash-Generating Assets.

"In developing IPSAS 26, the IPSASB is responding to constituents who wanted guidance in dealing with the impairment of assets held by public sector entities for commercial purposes," notes Mr. Hathorn, adding, "The issuance of these two standards represents a further important step in the IPSASB's goal of convergence with IFRSs."

IPSAS 26 is effective for reporting periods beginning on or after April 1 2009.

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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), has agreed to amend the following International Standards on Review Engagements (ISREs) to clarify to which engagements each respectively is to be applied:

• ISRE 2400, Engagements to Review Financial Statements; and
• ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

The issue that had been brought to the IAASB's attention is that ISRE 2410 applies in the case of a review by the entity's auditor of interim financial information only, while ISRE 2400 applies to all reviews of historical financial information excluding those conducted by the entity's auditor. Thus, there would appear to be no directly relevant standard for reviews by the entity's auditor of historical financial information other than interim financial information.

To resolve the issue, the IAASB has amended ISRE 2410 to apply also to such reviews. This reflects the principal distinction between ISRE 2400 and ISRE 2410, which is that ISRE 2410 is written on the basis that the entity's auditor is able to use his or her audit-based knowledge of the entity when carrying out a review of any historical financial information. The most common example of a review engagement that might be undertaken by an entity's auditor is the review of interim financial information issued by a public company; other examples have arisen in practice, however, and the change makes clear that these also fall within ISRE 2410. When approving ISRE 2410, the IAASB did not intend to remove auditor's reviews of historical financial information (other than interim financial information) from the scope of the ISREs.

Furthermore, to align the application of ISRE 2400, ISRE 2410 and International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, the IAASB agreed to restrict the application of ISRE 2400 to a review of any historical financial information performed by a practitioner who is not the entity's auditor. Before this amendment, ISRE 2400 indicated that it may be applied "to the extent practicable" to engagements to review other information.

"These minor amendments, which are effective immediately, clarify the application of the ISREs and ISAE 3000 by eliminating a small gap in the apparent scope of the ISREs and ensuring that, as intended, there is no overlap in the scopes of the ISREs and ISAE 3000. As a result, practitioners will have no doubt about which standard is to be applied to a review engagement," explains John Kellas, IAASB Chairman.

The amendments to ISREs 2400 and 2410 can be downloaded free-of-charge from the IFAC online bookstore (http://www.ifac.org/store).

About the IAASB and IFAC
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.

Seventeen international networks of accounting firms have reached a new milestone in their commitment to audit quality by becoming the first full members of the Forum of Firms. These international networks, whose member firms perform transnational audits, have reported that they have implemented a globally coordinated quality assurance program, committed to the use of International Standards on Auditing (ISAs), and met other quality and ethics requirements, the Forum of Firms announced today.

A list of the Forum's first full members is attached.

"The commitment of these networks to the Forum's membership obligations is a significant contribution towards consistent audit quality across borders - a goal consistently advocated by users of financial information as well as regulators and issuers themselves," states Forum Chairman David Maxwell. "The actions taken by the members of the Forum represent their dedication to achieving convergence of the various national audit standards to ISAs. This will contribute to the reduction of complexity, making audits more timely and efficient."

The Forum of Firms, formally established in 2002, is an association of international networks of accounting firms. These firms perform audits of financial statements that are or may be used across national borders. The Forum's goal is to promote consistent and high quality standards of financial reporting and auditing practices worldwide. It conducts its business through its executive arm, the Transnational Auditors Committee (TAC), which is also a committee of the International Federation of Accountants (IFAC). The members of the TAC are nominated by Forum members.

The networks comprising the group of first full members originally joined the Forum as provisional members. 2007 represented the first year provisional members could move to full membership. As of January 2008, of the 21 Forum members, 17 are full members and four are provisional members. The Forum's current provisional members are working toward becoming full members in 2008.

Membership in the Forum is open to networks and firms of all sizes that have transnational audit engagements or are interested in accepting such engagements and agree to meet Forum membership requirements. Members must promote the consistent application of high quality audit practices worldwide, including the use of ISAs, and support convergence of national audit standards with ISAs.

The Forum's membership obligations require:

• The maintenance of appropriate quality control standards in accordance with International Standards on Quality Control issued by the International Auditing and Assurance Standards Board (IAASB) in addition to relevant national quality control standards, and the conduct, to the extent not prohibited by national regulation, of regular globally coordinated internal quality assurance reviews;
• That policies and methodologies for the conduct of transnational audits that are based, to the extent practical, on ISAs issued by IAASB; and
• That policies and methodologies conform to the IFAC Code of Ethics for Professional Accountants and national codes of ethics.

For additional details on the Forum of Firms, please visit: http://www.ifac.org/Forum_of_Firms/. 

The International Public Sector Accounting Standards Board (IPSASB), an independent standard-setting board within the International Federation of Accountants (IFAC), has issued new requirements to help governments and other public sector entities consistently report on international aid, development grants and other forms of external assistance. The new disclosure requirements and recommendations are set out in the updated International Public Sector Accounting Standard, Financial Reporting under the Cash Basis of Accounting (Cash-Basis IPSAS).

Currently, there are a number of reporting practices between providers and recipients of external assistance that can be costly for recipients. The disclosures in the updated Cash-Basis IPSAS should reduce some of these multiple reporting practices, helping recipients to use resources more efficiently.

The disclosures represent one of a number of steps that the IPSASB has undertaken to enhance its Cash-Basis IPSAS. Recently, the IPSASB approved a project to consider how the standard could be improved based on the experiences of those using it. The project will review the implementation of the Cash-Basis IPSAS in various jurisdictions and assess whether any changes to the standard are needed. The project task force will be chaired by Ms. Erna Swart of South Africa, who became Deputy Chair of the IPSASB in January 2008.

"The introduction of requirements for external assistance disclosures represents the IPSASB's response not only to constituents who are recipients of external assistance, but also external assistance providers," states IPSASB Chair Mike Hathorn. "These disclosures, as well as broader initiatives undertaken by the IPSASB to improve the Cash-Basis IPSAS, will assist public sector entities in their efforts to strengthen their accountability."

The external assistance requirements are effective for reporting periods beginning on or after January 1, 2009.

The Cash-Basis IPSAS, together with other IPSASB standards and guidance, can be downloaded free-of-charge from the IFAC online bookstore: http://www.ifac.org/store.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international public sector financial reporting standards through the IPSASB, IFAC, through its independent standard-setting boards, sets ethics, auditing and assurance, and education standards. It also issues guidance to encourage high quality performance by professional accountants in business.

An active and well-established professional accountancy organization plays an essential role in promoting high quality practice in its country or jurisdiction. An important means to build strong accountancy organizations in developing countries is through collaboration and mentoring relationships with more established professional bodies. As part of its strategy to develop the accountancy profession worldwide, the International Federation of Accountants' (IFAC) Developing Nations Committee has released new guidance, entitled Mentoring Guidelines for Professional Accountancy Organizations, to support the development of collaborative and mentoring relationships between professional accountancy organizations.

The guidelines focus on supporting mentoring relationships designed to help accountancy organizations achieve compliance with IFAC's Statements of Membership Obligations (SMOs). The SMOs provide benchmarks to current and potential IFAC members to assist them in ensuring high quality performance by professional accountants. They require IFAC members to promote convergence to international standards and to have in place quality assurance and disciplinary programs.

"Experience has shown that mentoring relationships between professional accountancy organizations is one of the most effective means to strengthen the profession, particularly in developing economies," states Ignatius Sehoole, Chairman of the Developing Nations Committee. "These guidelines capture the experience and good practice of many IFAC members who have participated in this type of work in the past, and the committee hopes they will encourage other IFAC members to contribute to the development of the profession."

The new Mentoring Guidelines are also intended to help professional bodies in developing countries build sustainable capacity and to facilitate the sharing of accumulated knowledge between established professional bodies and organizations at an earlier stage of development. Various stages of mentoring are outlined in the document, including considerations before setting up a relationship, involving other entities such as government and aid agencies, and managing possible risks. The guidelines also include a sample Memorandum of Understanding. 

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 157 members and associates in 123 countries, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. Through its independent standard-setting boards, IFAC sets international standards on ethic, auditing and assurance, education, and public sector accounting. It also issues guidance to encourage high quality performance by professional accountants in business.

The International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), is releasing the last two exposure drafts written in accordance with the new clarity drafting conventions. It approved the exposure drafts of proposed International Standard on Auditing (ISA) 210 (Redrafted), Agreeing the Terms of Audit Engagements, and proposed ISA 710 (Redrafted), Comparative Information - Corresponding Figures and Comparative Financial Statements, at its meeting in Washington, D.C. in December 2007. Subject to any comments on exposure, the final standards will become effective for audits of financial statements for periods beginning on or after December 15, 2009.

The release of these exposure drafts marks the completion of the first phase of the IAASB's ambitious 18-month program to redraft existing standards and to develop new and revised standards following the new drafting conventions.*

"This is a major milestone on the IAASB's path to develop high quality international standards that are more readily understood, applied and enforced," emphasizes IAASB Chairman John Kellas, adding, "The redrafted ISAs provide more clarity as to the requirements which should contribute to improving the consistency of their application by auditors around the world."

"The IAASB is on track to complete the Clarity project by the end of 2008. When completed, 21 extant ISAs will have been fully revised, or updated and redrafted, in the last five years, and the remaining 11 will have been redrafted in accordance with the new conventions. In addition, International Standard on Quality Control 1 will have been redrafted and a new ISA on communicating deficiencies in internal control completed," explains Jim Sylph, Executive Director, Professional Standards.

How to Comment
Comments on the exposure drafts are requested by April 15, 2008. The exposure drafts may be viewed by going to http://www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org. They can also be faxed to the attention of the Executive Director, Professional Standards at +1 (212) 286-9570 or mailed to IFAC, 545 Fifth Avenue, 14th Floor, New York, NY 10017, USA. All comments will be considered a matter of public record and will ultimately be posted on IFAC's website.

About the IAASB and IFAC
The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.

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 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business. 

*For more information about the IAASB Clarity Project, go to http://www.ifac.org/IAASB/ProjectHistory.php?ProjID=0024.